Volume 520, April 23 – April 26, 1942

DIARY Book 520 April 23 - 26, 1942 Regraded Unclassified - Book Page Advertising Council See Financing, Government: War Savings Bonds (Payroll Savings Plan) Airplanes Aircraft despatched - British Air Commission report - 4/24/42 520 251 Alien Property Custodian See Foreign Funds Control: General Aniline and Film Corporation American Bankers Association Executive Council meeting - report on - 4/24/42 261 Aurand, Evan - Lieutenant McCloy suggests to HMJr ae participant on B War Bond broadcast - 4/24/42 245 Australia See Gold Automobiles. Treasury HMJr asks Thompson to investigate car-sharing plans of employees and use of cars by Treasury officials - 4/27/42 369 a) Thompson memorandum - 4/27/42: See Book 521, pages 101 and 203 b) FDR's letter - 4/28/42: Book 521, page 218 c) First report to FDR - 5/29/421 Book 534, page 29 - B - Barth, Alan "Editorial Opinion on the War": Reporte suspended - 4/23/42 98 a) MacLeish offers HMJr successor report: Book 522, page 121 Budget, Bureau of Revised budget figures - 4/24/42 258 - C - Campobello, New Brunswick, Canada Automobile ferry correspondence - 4/23/42 91 (See also Book 524, page 66 - 5/5/42) Censorship, Office of Films and other photographic material entering and leaving United States: Customs cooperation extended - 4/23/42 95 China Stabilization Board: Chinese Treasury notes instead of fapi and circumstances governing inclusion of that portion of United States $50 million which has been secured by purchase of yuan by Secretary of Treasury discussed in cable from Adler at Chungking - 4/23/42 137 Chinese assistance to British Army in Burna: General Stillwell's telegram to Generalissimo - 4/24/42 278 Hong Kong and Shanghai Banking Corporation: Satablishment of branch at Chungking discussed by Hall Patch and Gause - 4/25/42 396 Regraded Unclassified - C - (Continued) Book Page Correspondence Mrs. Forbush's resund - 4/24/42 520 222 a) Sales tax opposition etill great b) Lotteries advocated extensively - È - Exchange Market Resumes - 4/23/42, etc. 153,295,403 - I - Federal Reserve Bank of New York See Stabilisation Fund Financing, Government War Savings Bonds: For War-Navy-War Production Board-Treasury talk, see Speeches by HMJr West Los Angeles Post Office: Lack of stamps discussed in correspondence with Post Office Department - 4/23/42 83 Payroll Savings Plan: 5000 or more employees - Federal Reserve System letter to all Federal Reserve Banks urging support of program - 4/23/42 66 Operations of in March - 4/24/42 214,217 Advertising Council offers assistance - 1/25/42 326 Conference of staff - 4/24/42 165 a) Issuing agents, Payroll Savings Plan, etc., discussed Phelpe-Dodge Corporation: Qualifying as issuing agent - 4/24/42 199 Work Projects Administration worker in Illinois dismissed because of purchasing of War Savings Bonde; reinstated later - 4/24/42 200 (See also Book 521, page 316) Progress report - 4/24/42 203 Comparative statement of sales during first 20 business days of February. March, and April, 1942 - 4/24/42 220 Godwin, Earl: To be provided with kind of material he wishes for broadcasts - 4/25/42 325 Foreign Funde Control General Aniline and Film Corporation: Crowley aske for release of all control to Alien Property Custodian and transfer of all records and files - 4/24/42 266 270 a) Treasury transfer France Review of situation by John Wiley upon advent of Laval to power (April 21, 1942) 122 Regraded Unclassified - G - Book Page General Aniline and Film Corporation See Foreign Funds Control Glass, Carter For "Glass Flan," see Revenue Revision Godwin, Earl See Financing, Government: War Savings Bonds Gold Java: Shipment arrives in New Orleans with bullion value of $2,539,000 to be placed with Federal Reserve Bank of New York earmarked for account of De Javasche Bank, Batavia - 4/25/42 520 376 a) Shipment delivered in Australia also reported Government Bond Market Recent Changes in Prices and Yields of Government Securities: Haas memorandum - 4/24/42 264 - H - Hawaii Bearer securities discussed by Ickes and HMJr in view of possible Japanese invasion - 4/23/42 24 Ickes, Harold L. - I - See Oil Inflation See also Silver Interest Rates: FDR to be urged in message to Congress to announce that interest rates will be held at present levels for duration - Bell memorandum - 4/23/42 18 Office of Facts and Figures offers support in voluntary savings program - 4/23/42 80 Interest Rate See Inflation - J - Japan Atrocity Stories: HMJr asks Kuhn to check for use on Treasury broadcasts 4/25/42 374 Java See Gold - L - LAFAYETTE, USS See Shipe Lend-Lease Report on purchases for week ending April 25, 1942 385 U.S.S.R.: Shipment of planes and tanks to - Kamarck report - 4/25/42 392 Regraded Unclassified - H - Book Page McCarran, Pat (Senator, Nevada) See Silver Merillat, Herbert Editorial Opinion on Taxes: Waiting for Guidance - 4/24/42 520 254 Military Reports British operations - 4/22/42, etc 154,155,297. 404,429 Coordinator of Information reports: The War This Week, April 16-23, 1942 158 British Home Intelligence Report, week ending April 22, 1942 - 4/25/42 405 British Ministry of Warfare Weekly Propaganda Digest 4/35/42, 407 Kamarck summary - 4/23/42 159 - N - New Zealand Dollar telegraphic transfers, etc. Procedure for negotiation with British Government outlined in cable to American Consulate General, Wellington - 4/23/42 148 (See also Book 521, page 190) United States paper currency and official drafts: Plan of procedure for disposal of - 5/8/42: See Book 526, page 319 - 0 - Office of Facts and Figures See also Inflation "Editorial Opinion on the War": Barth (Alan) reports suspended - 4/23/42 98 a) MacLeish offers HMJr successor report: Book 522, page 121 011 Conversion to Coal: Ickes aske about deduction on income taxes - 4/23/42 25 a) Ickes-Treasury correspondence - 5/12/42: Book 527, page 341 - P - Phelps-Dodge Corporation See Financing, Government: War Savings Bonds - R - Revenue Revision Glass (Carter) Plan: Sullivan memorandum describing - 4/25/42 371 Tax-exempt Securities: See Roosevelt, Franklin D. (Message to Congress) "b) Ickes-HMJr further correspondence - 5/29/42: Book 534, P. 128 Regraded Unclassified - a - (Continued) Book Page Roosevelt, Franklin D. Message to Congress: Rosenman-HMJr conversation - 4/25/42 520 298 Draft 2 301 Treasury suggestions. 314 Draft 4 410 a) No net income over $25,000 a. year after payment of taxes b) Interest from State and local securities should at least be subject to surtaxes c) HMJr's letter to FDR (not sent) advising against taxing directly or indirectly outstanding Federal obligations wholly or partially tax- exempt on any basis violating present exemptions 1) HMJr sends FDR copy of press conference on - 4/27/42: Book 521, page 56 - S - Securities, Government See Covernment Bond Market Shipping Port of New York: Daily report on vessels - 4/23/42 103 a) Transmitted to Douglas (Lewis), United States Maritime Commission - 4/23/42 109 Ships USS LAFAYETTE (formerly NORMANDIE): Congressional report on capsizing - 4/25/42 382 Silver Possible rise in price discussed in Henuerson-Treasury correspondence - 4/25/42 377 Legislation: Senator McCarran (Nevada) consults Treasury about possible recommendatione for repeal - 4/25/42 379 (See also Book 521, page 206 - 4/27/42) a) White memorandum - 4/27/421 Book 521, page 112 b) Conference: present: HMJr, HM III, White, Foley, B. Bernatein, and E. M. Bernstein - 4/28/42: Book 521, page 273 Speeches by HMJr Nation-wide War Savings Bonds broadcast May 4: Stimson, Knox, and Nelson asked to participate - 4/23/42 72 a) Nelson accepts - 4/24/42 198 b) Knox: unavoidable engagement - King will substitute: Book 521, pages 86 and 295 c) Stimson-HMJr conversations - 4/28-29/42: (Book 521, page 288 d) Talk postponed ( If 522, n 38 ( # 521, = 296 ( # 522. " 40 Army's Payroll Savings Plan for Divilian Employees: HMJr's talk with Stimeon for the newsreels - 4/24/42 196 Stabilization Fund Federal Reserve Bank of New York: Services rendered - resume' of - 4/24/42 276 Regraded Unclassified - T - T Book Page Tanks Production goals reviewed by Kamarck - 4/23/42 520 89 - U - U.S.S.R. See also Lend-Lease Purchasing Commission thanks HMJr for courtesies - 4/23/42 128 - W - War Savings Bonds See Financing, Government Work Projects Administration See Financing, Government: War Savings Bonds Regraded Unclassified TREASURY DEPARTMENT m 1 INTER OFFICE COMMUNICATION DATE April 23, 1942. TO Mr. Morgenthau FROM Mr. Gamble 2212 Answering your memorandum of today's date, we have a War Bonds Speakers' Bureau in every State organization and in every local community handling most of the speaking requirements. Occasionally, the Field Director's Office here in Washington is contacted for an outside or national speaker; such requests are channeled through Mr. Sloan's office. Regraded Unclassified TREASURY DEPARTMENT 2 INTER OFFICE COMMUNICATION DATE April 23, 1942. TO Ted Gamble FROM Secretary Morgenthau Who handles requests for men and women speakers for War Savings Bonds? Please let me know today. Regraded Unclassified TREASURY DEPARTMENT 3 INTER OFFICE COMMUNICATION DATE April 23, 1942. TO Mrs. Klotz FROM Mr. Gamble Srr The Secretary has asked me to give you a memorandum of various and sundry pieces of work which he assigns to me from time to time so that you will be able to follow up on such activities. There is attached a copy of a memo regarding information for handling War Savings Bonds speakers (the original has already gone to Mrs. McHugh). I am checking on future appropriate speaking engagements for Mrs. Morgenthau. Also, I'm checking on capable people to relieve Mr. Kuhn of some of the work in preparing speeches. finished Attachment. Completed when in operation 1.25 Regraded Unclassified 4 April 25, 1942. Mr. Morgenthau Mr. Gamble Answering your memorandum of today's date, we have a War Bonds Speakers' Bureau in every State organisation and in every local comunity handling most of the speaking requirements. Occasionally, the Field Director's Office here in Washington is contacted for an outside or national speaker; such requests are channeled through Mr. Sloan's office. Despond Rets of Regraded Unclassified 5 April 23, 1942. Mr. Harold Graves Secretary Morgenthau Be sure and talk to me today about Keith Morgan. See Iranes mems of 4/25/42- Regraded Unclassified 6 April 23, 1942. Mr. John Sullivan Secretary Morgenthau This will confirm my telephone conversation with you last night. I want to go after the companies, like the Jacks & Heintz Company in Cleveland, who are paying excessive salaries, and let's settle the question once and for all if we have the power to disallow those salaries. I think it's outrageous in companies with war contracts to pay these high salaries, and it will make for bad feeling in the country. I think it is up to the Treasury to take the leadership to either dis- allow them or go after legislation which will make it impossible. In any event, I would like you to start this at once. Please inform Mr. Helvering, who in turn should inform his people, that I mean business. I want an answer on this Cleveland Company by Friday if possible. See Sullians memoral 4/25 - See Hmps testimony filling talked to about 5/28/45 this 4/25- See mino submitted by fulluan 5/8/42. Regraded Unclassified 7 MEMORANDUM April 23, 1942. TO: The Secretary This FROM: Mr. Sullivan The Bureau of Internal Revenue has talked with Cleveland and we expect a preliminary report on the salaries and bomuses of officers and employees of the Jacks & Heints Company tomorrow morning, Friday, April 24th. Regraded Unclassified 8 April 23, 1942 8:30 a.m. Vincent Callahan: Good morning. HMJr: How are you? C: Fine. HMJr: Are you at your office? C : Yes, sir. HMJr: Bright and early. Vince, I sent you over a memo that ought to get there in a little time C: All right. HMJr: suggesting that we send around to the home of every Congressman a notice of this broadcast. C: Good. HMJr: Tonight. C: All right. HMJr: You'll get it, and you can work it out somehow or other. C: Well, we can get the post office up there to deliver it or something. HMJr: Somebody. Now, the thought I had 1s, I saw the notice, for instance, you sent Mrs. Morgen- thau. That's all right, but the envelope 1sn't. You ought to have some kind of an envelope that they know that - from the outside - it's a broadcast. C: Well, we can find something. HMJr: What? C: We can find something. I don't know offhand, Regraded Unclassified. 9 - 2 - HMJr: Well, if you can't get anything else, use my own personal envelopes. 0: The Secretary's? All rightie, fine. HMJr: And then mark it - couldn't they do it in longhand? C: Well, let's see - well, what we got - I'll tell you another mark that would be better - "By Special Messenger". HMJr: Well, something 80 that it will catch their eye. C: Yeah, something distinctive. HMJr: See? C: Yes, sir. HMJr: I just thought we'd give this thing 8. little distribution. C: Fine. HMJr: And you'll be getting it shortly. C: All right, sir. It's going to be a grand broadcast tonight. HMJr: Do you think 80? C: Oh, I know SO. The men who are doing the writing HMJr: Yeah. C : they came back from Mr. Kuhn, who had been talking with you, and they were very enthusiastic. HMJr: Good. C: They had to re-write it, of course, and they said they didn't mind it in the least, that it was 60 much better and had 80 much human interest in it. They were thrilled. Regraded Unclassified, 10 - 3 - HMJr: Well, that's a nice spirit. C: Yeah, it's grand spirit. Well, you started it yesterday when you dictated it, and they all got a great kick out of it. HMJr: Okay. C: Okay, sir. HMJr: All right. C: Good-bye. 11 April 23, 1942 10:10 a.m. PRESIDENT'S SPEECH Present: Mr. Sullivan Mr. Kuhn Mrs. Klotz H.M.JR: These two memos that you gave me of which I have no copies, the one I call the political speech, and the one on profits, please give copies to per 4/22 4/22/42 Mrs. Klotz for my file, because the President kept them both; and the part at the end where it said about, "If you freeze salaries, or something like that, "it would have a bad psychological effect." He says, "That is nothing but clap-trap. He says, "That is living twenty years ago. MR. SULLIVAR: That was in the memo, I think. H.M.JR: Whatever it was, de said, "That is just clap-trap.' MR. SULLIVAN: That is the memo you want 8. copy of? H.M.JR: Now, it was lucky I went over. In the first place, I think he entirely forgot that he promised me he would back me up on the War Bonds. When I reminded him, he said, "Of course, of course." He is only talking thirty minutes, but he said he was going to do very little taxes. This is what the President dictated. He said, "Give me something like this." Then we will have to give Mr. Kuhn a copy. "The Volunteer tax plan is working so well that it is believed not essential to change at this time to compulsory savings until we have had a chance to step up the volunteer plan to try to make it include practically everybody in the country." Regraded Unclassified 12 - 2 - MR. KUHN: In other words, he is holding the club of sompulsory savings over their heads. H.M.JR: Well, that is what he dictated, it is not essential at this time. MR. KUHN: That implies that-- E.M.JR: What is the matter with that? MR. KUHN: It is going to discourage buying and enthusiasm. It is the worst possible way to help the volunteer thing. It is better not to speak of it at all, in my opinion, than to make that kind of statement about it. I would rather have him neglect it altogether. H.M.JR: Well, leave out - you see, this doesn't check, because when he told me that I should go out Wednesday and Thursday night - I want to get away from the controversial question of compulsory and volunteer. VR. KUHN: And there is the controversy right off. H.M.JR: Listen, is Peter in town today? MR. KUHN: I don't know. I haven't seen him. We have that material that went over to Rosenman. H.M.JR: Anyway, Ferdie, if we clear our script this morning - we will, won't we? MR. KUHN: I hope SO. H.M.JR: We have got to. Then right after that, go on to this, will you? MR. KUHN: Surely. I would like to go back to the stuff that was sent over to Rosenman, which can be shortened. H.M.JR: But he is only talking thirty minutes, and I gather that twenty minutes will be on prices. He is going to say - I understood him to say he will say Regraded Unclassified 13 - 3 - Nothing on taxes. He said, "Well, Henry, if I say anything - this is all very nice, but I have got to talk twenty minutes on the prices and then ten minutes about the war." ne says, "I haven't got any time to talk about your taxes. Well, now, what I don't get is this, and as I say - but he did tell me - he now wants to go back and I told him I didn't remember it. I didn't want to give it. The reason I am 30 nervous, you know these fellows work and try to pump this into me in thirty minutes and this tax thing, I can't get it that fast. The Carter Glass plan of '33 or '34, he says, as he remembers it, left out any normal tax on Government bonds and you compute your income from the Government tax exempts and then apply 8. surtax. Well, you know what he 18 talking about. MR. SULLIVAN: That is right. H.M.JR: Now brush it off, will you? I said, "Do you want it for this speech?" He said, "No." But he says, "We have got to do something about the unusual cases of the corporation or the man who escapes, you see. Now, I read this stuff and he says it is all good, and John, if the old elbow ever was right, I was right last night when I told you fellows to go after these - the Jack and Heintz cases, and the Diamond T cases, and the rest of them, you see. We have got to do something sensational along those lines. If we don't we will get something that nobody likes, see. Now, we have got an organization over there. Let's go to it, see. I told the President - I mean, I am looking up to see whether he can use any of this stuff. But, certainly, I am personally going to go up and present it to the Joint Committee on Texation. NOW, I don't have to say it is an executive meeting. I will just give it to them and let them do the rest. Let them find out why the Diamond T employs three men at two hundred fifty thousand dollars a year here when I am ninety percent sure they can't take an order and the+ are most likely loaded up to here now. Now, he has told me unhesitatingly that I can see his speech Regraded Unclassified 14 where it affected the Treasury. I have got a call in a for Grace Tully, so pending that-- MR. SULLIVAN: Has it been written? H.M.JR: I don't think so, but he said he was going to work on it today and tomorrow. but I am here this weekend, but until I see it, I am not satisfied. The way he talked to me was as though he was surprised to think that I thought he was going to talk about taxes. MR. SULLIVAN: Well, I think the reason We are surprised is that all of the newspaper publicity has indicated that it was an over-all speech. H.M.JR: Well, I don't want - my guess is, you see, from what he told me about not asking for legislation, that he has taken my advice. My advice to Rosenman was, "Appeal to the hundred and thirty-five million people that they should do their part on prices, etc., etc. Use what you have and don't ask for any legislation. Instead of doing what the other fellows-- They wanted him to go with a message to Congress which was written. Now, I said, "I wouldn't do it that way. I would go to the country rather than the Congress, because you will get licked if you go to the Congress and I think you will win if you go to the people. Now, it looks as though he is going to do it my way. Now, the other day when denderson told his man Gilbert who told Harry White - Gilbert told him - that they completely wiped me off the slate this week. I didn't have 8. leg to stand on. Now, it looks as though the President is going to take my advice, but I don't believe until I see the thing in print and then hear it on the radio - I don't know, so I don't want to get too excited. MR. SULLIVAN: I am not too much disappointed about leaving taxes alone because unless he was going to be with us-- H.M.JR: Well, really there is nothing more for you (Sullivan) to do until I get the copy from Grace Regraded Unclassified - 5 - 15 Tully. MR. SULLIVAN: Except Jack and heintz. H.M.JR: Well, and-- to date on Carter Glass. person Relevan +/25/42 MR. SULLIVAN: And you want a memo to bring you up H.M.JR: Yes. MR. SULLIVAN: The Glass plan. H.M.JR: Yes, but John, old man, Jack and Heintz is one. MR. SULLIVAN: Well, I was using it just as a symbol. H.M.JR: Now, the way 1 would do, if I may make a suggestion, there are three hundred fifty companies, roughly, who have got eighty-five percent of the con- tracts, and I would take that list of three hundred fifty and say to your boys, "Of these which have made returns, I want to 20 after those first, If see. You can get that list from Nelson, the three hundred fifty. And there is no use fussing around with those that haven't made returns, but those who have, check them off. MR. SULLIVAN: That is right. H.M.JR: And then just 8.3 soon as we have got a dozen good ones that we have done, then we will go up on the Hill and say, we want a joint committee, and we will say it. We will leave it to these fellows to spread the word. What? MR. SULLIVAN: That is right. H.M.JR: And - but if we don't do that - I mean, we will never get this bill through unless - on our basis. We will get something terrible. You tell them Regraded Unclassified - S - 16 that it is orders from me and I think these corporations should know it now, no more extensions after the fifteenth of May unless it goes across my desk, and I won't give it to them. These companies with war contracts, no more extensions, see. But let's go after the boys that have filed. There are three hundred fifty companies who have got eighty-five percent of the business. It would be awful if the Utah Construction Company doubled the salary of the chairman of their board. (facetiously) Listen, John, put yourself in the frame of mind of a fellow, you are going to run from your district and you want some of this stuff, see. MR. SULLIVAN: Sure. H.M.JR: Blood and meat. Go up there on the thing and say, "By God, we took this thing. Sure this company did this thing, but did it benefit them? No, we dis- allowed it. What happened to the girl that got forty thousand dollars? Well, we got twenty-five thousand of it. We can't control that, but did the company benefit? No, it was disallowed and added to their taxes." We have got to get a little political on this stuff. MR. SULLIVAN: I am for it. H.M.JR: Now, Ferdie, there may be a meeting. If I hear, I will let you know. On this - there is supposed to be one between eleven and twelve on the Economic Board. If I hear of it I will let you know, but otherwise, we will do the radio script at eleven. MR. KUHN: Yes. Now, I have got those Lord and Thomas people. Do you want them in here at eleven or later on sometime? They are not interested in radio script primarily. They have got & bunch of ads that they have made that they want to show us. Our little group is meeting at two-thirty, Mrs. Morgenthau and Gaston-- 17 - 7 - H.M.JR: At two-thirty? MR. KUHN: Yes. And we will go over those ads. H.M.JR: O.K. MR. KUHN: I can present your apologies to them for this morning. H.M.JR: Now, what are we going to do - this other man, what's his name? MR. KUHN: Masius? H.M.JR: Yes. I have got a job I want him to do. MR. KUHN: He is here. H.M.JR: Well, I can take him off your hands, but what about Weir? MR. KUHN: Well, Weir will stick with me. I want him to look at that script, too. H.M.JR: Well, you can use Weir? MR. KUHN: Yes. Regraded Unclassified 18 Treasury Department Office of the Under Secretary Date: 4/23 To: The Secritary From: Here is memo about which I stoke over phone. DWB Regraded Unclassified 19 Interest Rates and Price Freezing According to the press, President Roosevelt will send B. message to Congress next Monday and speak to the people of the country on the radio the same evening on the subject of inflation. In this message he is expected to advocate 8. freezing of prices and costs, including, perhaps - at least to some extent - wages. This naturally brings up the question of whether some mention should be made of interest rates. The President's message would seem an ideal occasion to announce that in- terest rates will be held at around present levels for the duration of the war, Such a declaration, if incorporated in the President's message and talk, should probably be brief and non-specific. Such 8 declaration would appear to be opportune from two points of view: (1) It would be helpful to public morale if the country were assured that interest receivers will get no more favorable treatment than wage earners, business men, and landlords. (2) It should aid in steadying interest rates at a time when the volume of Federal financing is expanding very rapidly, and assist in bringing to the market funds which have been waiting for higher rates. W?N Regraded Unclassified 20 April 23, 1942 10:11 a.m. HMJr: Hello. Operator: Go ahead. HMJr: Yes. Jeese Jones: Henry? HMJr: Yes, Jesse. J: How are you? HMJr: Okay. J: Are you going to that BEW meeting at eleven? HMJr: I haven't got any notice yet. Well, I tell you, I've been over at the White House, and I don't know what my appointments are. Why? J: Well HMJr: Well, wait, let me ask my man, will you? J: Okay. HMJr: Just a minute, please. J: Yeah. HMJr: (Talks aside) Have I any notice on the White House at eleven? They told us yesterday it would be between eleven and twelve, Jesse, but I haven't had any confirmation. J: I see. Well, but you're - are you going to the meeting? HMJr: At the White House? Sure. J: Will you take somebody with you? HMJr: No. Regraded Unclassified 21 - 2 - J: It's - I didn't know - it's BEW business, you know, and I didn't know whether you took some of the boys with you or not. HMJr: Well, if I get the notice, I'd go alone. J: I see. Okay. HMJr: It's this - see if we're talking about the same - it's this Economic J: Board of Economic Warfare. HMJr: Yes. They said it would be sometime between eleven and twelve. J: I see. HMJr: Why, do you mean about - you're thinking about yourself? J: Yes. I was going, of course, and I was wondering if - I'à like to take Clayton along because he's been doing most of that work. HMJr: Yeah. J: And I just wondered whether or not HMJr: Well, if I go, I'm going alone. J: Okay. Thanks. HMJr: You're welcome. Regraded Unclassified 22 April 23, 1942 10:28 a.m. HMJr: Randolph, are you where you can listen? Randolph Paul: Yeah, I'm in a pay station. HMJr: Well, I don't want to raise your hopes too much nor mine, but I think we're all right. n. Oh, good. HMJr: I think we're all right, and we're P: You've come back from there, have you? HMJr: Yeah. We're going to Bee the copy that affects the Treasury P: Oh, swell. HMJr: and he seemed to be surprised to think that I thought he was going to write anything on taxes. How did I get that way? P: Hmm. HMJr: He didn't have time to fool around with taxes. P: Hmm. Well, that's kind of baffling though, isn't it? HMJr: What? P: That's baffling, 1sn't it? HMJr: Yeah. P: Well, I'm glad to hear that. HMJr: But anyway we're going to see whatever he eays. P: Yeah. Well, that's HMJr: And, as I say, he seemed - his attitude was, well, what makes me think that - he's only Regraded Unclassified 23 - 2 - got thirty minutes. He hasn't got time to go into all this stuff. P: Yeah. + HMJr: So that was his attitude. +' P: Yeah. HMJr: I thought I'd cheer you up. P: Thanks very much for calling me. HMJr: And that's just very, very much between us. P: Okay. HMJr: But we are going to see the speech. P: Well, that's swell. HMJr: So - - but he seemed to think, well, where did I get those funny ideas from. P: (Laughs) Well, that's curious. HMJr: Yeah. P: Curious and kind of baffling, but I feel en- couraged. HMJr: Okay. P: Thanks for letting me know. HMJr: Thank you. Good-bye. Regraded Unclassified First half of this sent to D. W. Bell; second half to Mr. Paul. 24 April 23, 1942 11:04 a.m. HMJr: Yes. Harold? Harold Ickes: Henry, two thinge. HMJr: Yes. I: A fellow from - went over to Hawaii - Hossack of RFC. HMJr: Cossack? I: H-0-8-s-a-c-k. HMJr: Yeah. I: He tells me that there are an enormous lot of bearer securities over there, and that if the Japs should swoop down there, all they have to do is to pick them up. HMJr: Oh, oh. I: And he said that 80 far, all they've ever done, the Army has invited those who owned Government securities to deposit them. HMJr: Yeah. I: with them, but nothing is done about these general securities. HMJr: Well, I'll be glad to have it looked into. We did a good job in the Philippines. I: You did a wonderful job, and we don't - God, they - there's - I think he said there's two hundred million over there. HMJr: Really? I: And we certainly don't want to be caught - we don't want a financial Pearl Harbor. HMJr: No. Well, I'll have it looked into right away. Regraded Unclassified 25 - 2 - I: And, of course, we'll be willing - I - you know I've got a damn good man over there, and - Ben Torron. HMJr: Oh, Torron. I: Torron's over there HMJr: Well, then, if I: as 8. special representative of the Secretary of the Interior. HMJr: Right. I: And he's a damn good man. You know that Ed Foley's worked with him for years. HMJr: Good. I: And we'll give you all the help that we can. HMJr: Well, I'll have the boys look into it right away. I: Now, another thing. HMJr: Yeah. I: In cases where it's going to be necessary to turn - to convert from oil heating to coal heating HMJr: Yeah. I: it's going to throw - now, just in my own case, I'm checking uo on the thing because I'm getting ready to convert - it's going to cost me at least a thousand dollars. HMJr: Yeah. I: Now, wouldn't it be worth considering allowing that as a deduction on income taxes? HMJr: (Laughs) I don't know, Harold. Unclassified 26 - 3 - I: Well, now, here. Just consider this. HMJr: Yeah. I: There's only one section of the country affected - the East Coast. HMJr: Yeah. I: It's a general war cost. HMJr: Yeah. I: Not only that, but they'll probably have to pay more for 011 and gasoline here. HMJr: Yeah. I: It seems to me that it throws an inecuitable burden. HMJr: Yeah. I: Think it over, anyhow. HMJr: Sure. Harold I: Yeah. HMJr: let me ask you. Did you make 8 joint statement with Nelson on either Friday or Saturday? I: On 011? HMJr: Yes. I: Yes. HM~r: Well, now, what day was it, because I didn't see it. Was it Friday or Saturday? I: I didn't see it either, as a matter of fact, but I think it was Friday. HMJr: Yeah. Well, I Regraded Unclassified 27 - 4 - I: I know it wasn't Saturday. HMJr: Somebody asked me about it, and I said, "I didn't see it." I: I think it was Friday. HMJr: Friday. I: Yeah. HMJr: Could you - would you mind telling your man to send me a I: I'll send you a release. HMJr: Would you have somebody send me over a copy of 1t? I: Sure, I'll be glad to. HMJr: And on the other thing, I'll look into it. I: All right. HMJr: I thank you. I: Good-bye. Regraded Unclassified s 28 April 23, 1942 11:13 a.m. HMJr: Hello. John J. McCloy: I just wondered whether you're up to date on this - on these take-overs. Have you been talking to - has White keot you informed about it? HMJr: The only thing that I knew, he said he thought you were about ready to do something. Mc: Yes. We're going to give you a check, but it turns out that the cost of those planes - the entire cost of them, which, as I understand, 1s being approved by the President today, only runs to about sixty-seven million dollars instead of the eighty. HMJr: I see. Me: So that figure 18 somewhat reduced. The other figure, the ordnance figure, we're outting through a directive today on it HMJr: Yeah. Me: subject only to clearing up with - between White and Phillips as to how the operation ought to take place. I have a clearance now from the Secretary, and we're all set. HMJr: Wonderful. Mo: Now, but that 1s going to reduce it - it's going to make it necessary to pick up other money HMJr: That's all right. Mo: same place else. HMJr: I suggest that the nicer way to do it would be to have you come over here to my office with a letter or check, and have Sir Frederick Phillips here, and have the thing done right here. Me: Okay. Regraded Unclassified 29 - 2 - HMJr: I thought that would be a nice way to do it. Me: Okay. I'll bring that old letter with me and you can re-deliver it. HMJr: (Laughs) I'll Mc: How'd you make out with Brink and Clear? HMJr: All right, but to be perfectly frank, it would have been better if I'd have had them separately. Me: Yeah. HMJr: I think it kind of held back a little bit. Mo: One waiting for the other to talk. HMJr: Yeah. Me: Well HMJr: Who was the man who was a full Colonel? Mc: The full Colonel was HMJr: The man who was not in Bataan. Me: That was Brink. HMJr: Brink. Me: Brink. HMJr: He made a particularly good impression. Me: He's very good. The other fellow is a little emotional. He had quite an experience out there. I didn't think he was cuite as good as the other chap. HMJr: Well, I tell you, I didn't ask him about Bataan or the details, because I imagine that so many people have. Mc: Yes. Regraded Unclassified 30 3 - HMJr: But I appreciate very much your sending them over, and I did get a lot out of it. Mc: If you want to talk to any one of them - either one of them individually again, why we can arrange it, but it's up to you. HMJr: What I would like you to keep in mind 1s this. We're starting something new tonight on the radio - we're having as our guest star, so to speak, Lieutenant Commander O'Hare. Me: Oh, yes. HMJr: And with us - working it in - and I'm going on the air for the War Bond sale, you see. Mo: Yeah. HMJr: Now, if you bring back any fellow that - who's made some outstanding accomolishment for the war Mc: All right. HMJr: I wish you'd let me know; we'd like to use him on the air and to help us. No: Right. Right. They're coming back all the time. HMJr: Well, the first one that comes back who has done some outstanding thing, will you let me know? Me: All right, I will. HMJr: Fine. Mc: Okay. HMJr: And then, I take it, when you're ready, you'll come over, and we'll have Phillips and we'll - I'll provide the liquor. Mc: (Laughs) Okay. What is White's first name? HMJr: Wait? Regraded Unclassified 31 - 4 - Mo: White, your HMJr: Harry. Mc: Harry? HMJr: Harry. Mc: Okay. HMJr: Yeah. Mc: Thank you very much. HMJr: Thank you. Regraded Unclassified 32 April 23, 1942 11:34 a.m. HMJr: Hello. Operator: Secretary Morgenthau is ready. HMJr: Hello. Grace Tully: Good morning, Mr. Secretary. HMJr: How are you? T: All right, sir. How are you? HMJr: Okay. I saw His Highness this morning. T: Yes, sir. HMJr: (Laughs) And he said that I could see that part of the speech, as it went along in draft form, that in any way affected us. T: I see. All right, fine. I'll tell them to send you a copy of it. HMJr: So will you do that for me? T: I will, indeed. HMJr: And yea sooner yea better. T: Well, look, I tried to get Mrs. Klotz yesterday too, Mr. Secretary. While I have you on the wire would you be good enough to ask her - she was busy with you - but now that I have you, will you let me know much we owe you on Missy's bonds. HMJr: Oh. T: I want to send you a check for it. HMJr: Really? T: Yeah. HMJr: Really? Regraded Unclassified 33 - 2 - T: So if you'd just ask her to let me have a written memorandum, you see, of the bill for Baby Bonds for Mise LeHand, you see, and the amount. HMJr: Yeah. I'll do that. T: So that I'll have it for the record. HMJr: Right. Did you leave word you called for her? T: Well, yesterday I called, and they said, I think, "She's in with the Secretary." HMJr: Oh. T: And 80 I said, "All right, I'll try again this morning." HMJr: Righto. I'll tell her that, and then you'll see that 88 the speech progresses, that I'm kept furnished with copies - Just the part that affects the Treasury. T: That affects the Treasury, right. HMJr: Righto. T: All right, sir. HMJr: Thank you. T: Right. Good-bye. Regraded Unclassified 34 April 23, 1942 3:30 p.m. HMJr: Hello. Operator: Mr. Mack is at home 111, but he can come to the phone. 5 HMJr: Who's there in Procurement? Operator: I have his secretary on the wire. HMJr: Let me talk to her. Operator: Right. HMJr: Hello. Operator: Go ahead. HMJr: Hello. Clifton Mack's Secretary: Yes, Mr. Morgenthau. HMJr: Mr. Mack is 111? S: Yes, he has a sore throat, 80 he decided he'd better stay out. I think he's some better today, and. HMJr: How long has he been sick? S: Yesterday and today. HMJr: Oh, just yesterday. S: Yes. HMJr: But he's better. S: Yes, he's some better today, and expects to be here tomorrow. HMJr: Will you tell him that Mr. John Martin is here from South Africa to represent them in purchasing. Hello. Regraded Unclassified 35 - 2 - S: Yes. HMJr: And he's heading up the South African Purchasing Commission. 3: Yes, sir. HMJr: And he'll be calling you for an appointment, and I'd like Mr. Mack to see him and to help him in every way that he can. S: Yes, sir. I'll give him that message. HMJr: John Martin. S: Yes, sir. HMJr: Thank you. Tell Mr. Mack I hope he'll be better soon. S: Yes, sir. I'll tell him that. HMJr: Thank you. S: Thank you. Regraded Unclassified 36 April 23, 1942 4:10 p.m. HMJr: This is only & little thing, but I'd like you to pass the word. The copying of this release for tonight Harold Graves: Yes. HMJr: if they'd done it over here in the Treasury, we'd have had Multilith G: Yes. HMJr: which is a nice job. I've been crying for that for two years. G: Yes. HMJr: We have a Multilith here. G: Yes. HMJr: Now, over - they did it over in War Savings G: Yes. HMJr: And they used the old Mimeograph, and it's a G: Bad job, I know. HMJr: Well, you know - a bad job. And see that they have a Multilith put in there from now on. G: I'll do it right away. HMJr: Because it makes such a difference in presenting it. G: Yes. HMJr: And as a result of it - if it had been Multilith, each man could have used that; now they ve got to re-type one copy for each person. G: Yes, I see. I'll take care of it. Regraded Unclassified 37 - 2 - HMJr: You agree with me on that. G: I do, I do. HMJr: Is that what you call it? G: That's right - Multilith. HMJr: Well, I've fought for that for two years, 80 I think now we have it, and have them put it in over at War Savings. G: Yes, sir. I'll do it. HMJr: It - - don't you agree with me? G: I do agree. HMJr: Can I forget about. it? G: You can, yes, sir. HMJr: Thank you. G: I'll see that it's taken care of, you bet. HMJr: Right. Regraded Unclassified 38 TREASURY DEPARTMENT WASHINGTON DEFENSE DEVINGS STAFF April 23, 1942 MEMORANDUM FROM: TO: Mr. Mr. Gilchrest Fitzgerald legh Herewith a list of the people who will be at the broadcast tonight from the Secretary's office: Secretary Claude, R. Wickard Mrs. morgenthing William Green, President of A.F. of L. William P. Witherow, President of the National Ason: of Migrs. Thomas C. Cashen, Chairman, Railway Labor Executives Asm'n. Photographas assoc Press, Harris Hewing, Treasury Mr. J. G. Leuhersen, Executive Secretary, Railway Labor Executives Ass'n. John W. O'Leary, Chairman, Executive Committee of the United States Chamber of Commerce Colonel and Mrs. E. W. Timberlake (with Mr. O'Leary) Mr. Philip Pearl (with Mr. Green) Lt. Comdr. H. B. Miller He D. Willer It. Comdr. Ed. H. O'Hare Mrs. Ed. H. O'Hare Mr. Gerald P. Flood, Asst. Director of Press & Radio Mr. Vincent F. Callahan, Director of Press and Radio Mr. Charles J. Gilchrest, Chief, Radio Section Mr. John Greene, Special writen Bryson Rasch, NBC - Announcer Jack Roney NBC = Donald Fisher, Marine Barracks Don Hunter - Engineer - NBC andrew, I Dem ann (Thein) B. Gibson, 'Leary's Secretary Harold Granes Ted Gangible mi This Ray Beough Chick Schwary Ferdurand Kuhu bil Hysth Hangtelings office) w. Elmer Dornel Hangttelings office) Regraded Unclassified secretary 39 Reading Copy 11 40 DOLLARS IN THE WAR Thursday, April 23, 1942 10:00 to 10:30 PM, EWT, Blue Network Launching of the Treasury Department's War Bond Quota and 10% Pay Roll Savings Campaign in which Labor, Management and Agriculture Pledge Support. LIEUTENANT COMMANDER O'HARE - RECENTLY AWARDED CONGRESSIONAL MEDAL OF HONOR SPECIAL GUEST The Program Henry Morgenthau, Jr., Secretary of the Treasury, will speak and preside Claude R. Wickard, Secretary of Agriculture William Green, President, American Federation of Labor Philip Murray, President, Congress of Industrial Organizations W. P. Witherow, President, National Association of Manufacturers John W. O'Leary, Chairman, Executive Committee, U. S. Chamber of Commerce T. C. Cashen, Chairman, Railway Labor Executive Committee Music by the United States Marine Band Regraded Unclassified 41 NOUNCER: Ladies and Gentlemen, this is (announcer) speaking from the Office of the Secretary of the Treasury of the United States. Present in Secretary Morgenthau's office are representatives of Agriculture, Labor, Management, and the armed forces in the person of the crack Navy combat pilot, Lieutenant Commander O'Hare. In just a few minutes you will hear from Lieutenant Commander O'Hare, and these leaders of the nation's basic activities, but first we switch you to the Marine Barracks where the United States Marine Band plays "The Stars and Stripes Forever" BAND: STARS AND STRIPES (TWO MINUTES) Regraded Unclassified 2 I I 42 ANNOUNCER: And now, Ladies and Gentlemen, Henry Morgenthau, Junior, Secretary of the Treasury. Mr. Morgenthau. SEC. MORGENTHAU: Good evening. Last Tuesday, at the White House, the President awarded the Congressional Medal of Honor to an outstanding American hero, a young naval aviator who fought alone against nine Japanese bombers. I should like to read what the President said about him: Regraded Unclassified - 3 - 43 SEC. MORGENTHAU: "Without hesitation, alone and unaided, (CONTINUED) he repeatedly attacked this enemy formation at close range in the face of their intense combined machine-gun and cannon fire, and despite this concentrated opposition, he, by his gallant and courageous action, his extremely skillful marksmanship, making the most of every shot of his limited amount of ammunition, shot down five enemy bombers and severely damaged a sixth As a result of his gallant action, one of the most daring if not the most daring single action in the history of combat aviation, he undoubtedly saved his carrier from serious damage." Regraded Unclassified 4 - 44 SEC. MORGENTHAU: That man, Ladies and Gentlemen, is with (CONTINUED) me in my office at the Treasury tonight. I am happy to introduce him to you: Lieutenant Commander Edward H. O'Hare. O'HARE: Thank you, Mr. Secretary. SEC. MORGENTHAU: Commander O'Hare, I wish you'd tell us 8. little something more about your experience with those Japanese bombers. Perhaps something that wasn't in the citation. O'HARE: Well, Mr. Morgenthau, it wasn't anything 80 very special. It might have happened to any other pilot on my ship. Those Japs just came along when I was in the air. Regraded Unclassified - 5 - 45 HARE: A few minutes sooner and it might have (CONTINUED) been one of the other pilots. I just got the breaks. SEC. MORGENTHAU: You're very modest about it, Commander. O'HARE: There wasn't much more to it, Sir. After I closed in on the bombers, I was too busy to think about anything except shooting down as many of them as I could. SEC. MORGENTHAU: And the result was highly satisfactory --- You were telling me a few minutes ago, Commander, that a good many of the men on your ship are buying War Bonds. The shore establishments of the Navy have rolled up a total of nearly twelve million dollars to help their country and help themselves. Regraded Unclassified - 6 - 46 HARE: Well, I don't believe they were thinking about their investment, Mr. Morgenthau. We just want to do everything we can to beat those Japanese. SEC. MORGENTHAU: You don't like them much, do you, Commander? O'HARE: I sure don't! And from what I've seen of the Japanese, Mr. Secretary, I'd say that if we can meet them on anything like even terms, we can beat them! Just give us enough trained men, enough ships and planes to approach even terms, and we'll come out on top! Regraded Unclassified - 7 - 47 SEC. MORGENTHAU: Thank you so much for coming here, Commander. I'd like to shake you by the hand. MUSIC: (COLD) "OVER THERE" ANNOUNCER: And now a message to the nation from the Secretary of the Treasury. Mr. Morgenthau. SEC. MORGENTHAU: Ladies and Gentlemen: I have invited Lieutenant Commander O'Hare to be here tonight, with the leaders of American labor, agriculture and industry, because this one man has proved that Americans have what it takes. He has proved that the American soldier or sailor of today is still just as good as the men who fought and won in 1918 "over there". Regraded Unclassified - 8 - 48 So. MORGENTHAU: He has proved that we Americans can win (CONTINUED) every time if we get anything like an even break. Lieutenant Commander O'Hare didn't have an even break. He was up there alone, one man against nine bombers. He dared to do the unbelievable, and he won. Every day men like O'Hare are doing the unbelievable on far-off fronts, holding the battle line of freedom until we can overcome the head-start of our enemies. In Lincoln's time, at the start of the War Between the States, they sang this song: "We are coming, Father Abraham, a hundred thousand strong. If - 9 - 49 So. MORGENTHAU: This time we are coming millions (CONTINUED) strong. We are coming with machines and men in overwhelming numbers, but in the meantime we can thank God for all the O'Hares, in all our fighting forces, who are keeping the flame of freedom alive. You and I, as civilians, are just as deeply involved in this war as Lieutenant Commander O'Hare when he fought those Japanese bombers. It is now high time for us civilians, as individuals, to make our own declaration of war against the enemy -- to fight, to work, to save with all our heart and soul. Regraded Unclassified - 10 - 50 SEC. MORGENTHAU: In a nation at war "spending as usual" (CONTINUED) is as dangerous as "business as usual". We ? can't have all we want for ourselves and still give Lieutenant Commander O'Hare and his millions of comrades-in-arms the weapons they need. Nearly ten million Americans are now cutting down spending and buying War Savings Bonds instead, but with the war costing 120 million dollars every day, ten million savers are not enough. All of us have got to save and buy bonds on a vastly greater scale. All of us have got to think war and act war in our personal lives. Dee - 11 - 51 SEC. MORGENTHAU: All of us who get a regular income (CONTINUED) should set aside at least ten percent of it every pay day for War Savings Bonds, and those who have been earning especially high pay in the war industries are going to set aside even more. The most convenient way to do this is through the Payroll Savings Plan, under which an employee authorizes his employer to set aside a certain percentage of his pay for bonds. If you are not doing this already, one of your first jobs in the war 18 to sign up tomorrow; if you have signed up already, then one of your first jobs in the war is to increase the amount of your savings every pay day. Regraded Unclassified - 12 - 52 SEC. MORGENTHAU: We on the home front have got to do our (CONTINUED) part as well as O'Hare did his. We have got to reach our goal of a billion dollars a month in savings by July, and every State and every county has got to do its share. We have got to enlist an army of 50 million War Bond buyers. Some people say it can't be done. Well, here in my office tonight is a man who last year announced a production program BO big that some people said it couldn't be done. He called upon the farmers of America to produce vast new quantities of food for freedom. - 13 - 53 SEC. MORGENTHAU : The farmers answered his call and they are reaching his goals. He is here to tell us what he thinks of our new War Savings goal: my friend and Cabinet colleague, the Secretary of Agriculture, Claude Wickard. SEC. WICKARD: As you said, Mr. Secretary, this country can count on its farmers to produce all the food that is needed for victory. I know it also can count on farmers to ouy their full share of the War Savings Bonds that are needed for victory. I am confident that I am speaking for all American farmers when I tell the rest of the nation that farmers are ready to do everything they can -- to make every possible sacrifice -- in the fight to preserve our democratic way of life. Regraded Unclassified 14 I I 54 SEC. WICKARD: They are going right ahead, in spite of scarcities of materials and of labor. Our country needs dollars to win the war and War Savings Bonds are one of the ways of raising that money. Already farmers are buying those bonds out of their larger incomes this year. I want to urge every one of you, as strongly as I can, to buy as many more bonds as you possibly can. Some farmers, especially those with debts to pay, may not be able to meet the goal of using ten per cent of their net incomes for bonds. But others, I am sure, can do much better than ten per cent. Regraded Unclassified - 15 - 55 SEC. WICKARD: Farmers are hit hard when inflation (CONTINUED) gets out of hand. Buying War Savings Bonds is a way to check inflation. Farmers may need nest eggs if the present period of good prices ends. Bonds will provide that nest egg. Those are two very practical reasons for joining in the plan for systematically buying War Savings Bonds. But I know that the real reason why farmers will do their share is because the country needs their help. If that means going without things they would like to have, farmers will make that sacrifice gladly. They are producing for victory and they will save for victory. - 16 - 56 COND ANNOUNCER: A few minutes ago, Mr. Morgenthau, you called on us all to double our purchases of War Bonds. In the traditional American way, the way of democracy, you put the problem before us...the people. Here are spokesmen for millions of people. ANNOUNCER: William Green, President of the American Federation of Labor. MR. GREEN: The cost of living directly concerns every American. When it gets out of control and shoots sky-high we have inflation. an economic disaster which America must prevent by every practical means. It shrinks the dollar of the workingman by raising the prices of necessities he must buy for himself and his family. Regraded Unclassified - 17 - 57 GREEN: CONTINUED) It forces the Government to pay much more for the war supplies for our armed forces. Labor has consistently urged action to keep the cost of living within reasonable bounds and has supported to the fullest extent every measure taken by the Government in this direction. Among these measures, the War Savings Program holds a major place. That is why the American Federation of Labor, just two months ago, launched its billion-dollar drive for War Bonds. We called upon our five million members to buy War Bonds -- and buy them every week out of their pay. Our members are responding in a wonderful way. More than $300,000,000 already has been subscribed. Regraded Unclassified - 18 - 58 AR. GREEN: Have no doubt that labor will do its (CONTINUED) part in the War Bond Campaign. Secretary Morgenthau has just said that ten per cent of the national income must go into War Bonds. Every worker will, I am sure, keep up with this quota. This is a voluntary program. It is thoroughly American. The whole American people have their hearts and souls in this war and will not hold back with their money. To every member of the American Federation of Labor I say -- "Put yourself on this ten per cent War Bond quota AT LEAST and stick to it for the duration." Regraded Unclassified - 19 - 59 ANNOUNCER: William P. Witherow, President of the National Association of Manufacturers. MR. WITHEROW: The majority of the officers and employees of the eight thousand firms we represent in our organization, the National Association of Manufacturers, already are investing heavily in War Bonds. I am asking tonight that they invest more, much more than ten per cent of income in the Bonds which buy our fighting men the planes, tanks and torpedoes they must have. But our job, as executives of manufacturing concerns throughout the country, is more than the job of ourselves investing ten percent of our income in Bonds. - 20 - 60 MR. WITHEROW: It is our responsibility to cooperate with (CONTINUED) our employees and their labor representatives by establishing a Payroll Savings Plan : through which they may invest at least ten per cent of their pay in Bonds every pay day. Already more than eighty percent of our members have put these Payroll Savings Plans in operation. And I believe you can count on every firm every factory ... every one of the eight thousand firms we represent, to move immediately to make this wonderful voluntary plan available to every employee. Our efforts must know no waste. This war for survival permits no squandering of assets. - 21 - 61 MR. WITHEROW: It is a struggle in which the idle or ( JONTINUED) hoarded dollar is a soldier asleep at his post. The man who dissipates his income, the woman who insists on having what she can easily do without - they are betraying their country as if they were furnishing military information to the enemy. We heartily approve of this American way of financing our war: The voluntary way and we will voluntarily do more than we are asked to do, week after week, month after month, until the war is won. ANNOUNCER: Thomas C. Cashen, Chairman of the Railway Labor Executives Association. Regraded Unclassified - 22 - 62 MR. CASHEN: Employees operating the Rail Transportation System of our country are on their toes to speed up the movement of raw materials to factories, and finished materials of war to waiting ships. We have also established committees of our unions and the management urging every employee to purchase United States War Bonds under the Payroll Savings Plan. Most employees have already signed up. Within the next few days, the others will be called on again. Our members realize that every possible dollar of their earnings must go into War Bonds. 23 I 1 63 CASHEN: Speaking for the railroad employees of this (CONTINUED) country, I can assure our Government that we will do our share and more than our share. And I make this further pledge: We are going to invest to the fullest extent of our ability by purchasing U. S. War Bonds for the purpose of assisting our country to win this war. I am confident we will exceed ten per cent of our total income. I repeat, the one million, two hundred and fifty thousand railroad employees will not only keep men and munitions rolling and arriving on time, but we will buy the Bonds to help pay the bill. Regraded Unclassified - 24 - 64 NOUNCER: John W. O'Leary, Chairman of the Executive Committee of the United States Chamber of Commerce. MR. O'LEARY: Voluntary action of the people is fundamental in representative democracy. Because your plan, Mr. Secretary, is based on voluntary action, it presents a challenge which the million business men comprising the underlying membership of the Chamber of Commerce of the United States will do their utmost to meet. Within the year business and industry has been called upon to increase production at what seemed an impossible rate. The goals then set are now either reached or in sight. - 25 - 65 FUONTINUED): The achievement has given us courage that we can also reach the goal which you have set in this essential campaign to provide the funds for war. So, Mr. Secretary, you may be assured of the spirit and temper of the vast membership of the Chamber of Commerce of the United States expressed in the determination to do everything humanly possible to double monthly investments in War Bonds and to accomplish this goal to promote investment of ten percent of income in these securities regularly, through Payroll Savings Plans. We recognize the need for speedy action. To attain that end we give our full support to your voluntary plan of investment. - 26 - 66 MOUNCER: Philip Murray, President of the Congress of Industrial Organizations. MR. MURRAY: A8 President of the C.I.O. I am proud of the record our affiliated organizations have already made in the purchase of War Savings Bonds. Their response has been generous, wholehearted and practical. Members of the C.I.O. responded to the attack on Pearl Harbor when the United Automobile Workers, one of the great bodies affiliated with the C.I.O., pledged $50,000,000 worth of bonds to help finance the replacement of the U.S.S. Arizona which was sunk in that attack. They raised $50,000,000, and pledged a second $50,000,000. - 27 - 67 MURRAY: Many other unions in the C.I.O. have set (CONTINUED) themselves tremendous goals which have been a spur to all workers, and not alone those organized in the trade union movement. Now we have cet ourselves the task of increasing our purchases, BO that we may make our contribution toward the Treasury goal of a billion dollars a month. But, we must remember, some workers cannot, under their present earnings, maintain their well-being in health and decency and lay aside any of their meager earnings in savings, either under the present voluntary system or under a compulsory program which has been proposed. i - 28 - 68 MURRAY: That is one reason why the present voluntary CONTINUED) system, with real participation in its administration by labor as well as management, can provide that flexibility which makes it possible to distinguish between those who can and those who cannot participate in the program. However, we are not setting ourselves a goal of only ten per cent. Those of our workers who have a high level of earnings have set themselves higher goals. We feel that the voluntary nature of the present program is best designed to build the enthusiastic support for both the War Savings Program and the war effort as a whole. - 29 - 69 MURRAY: Organized labor is doing its share to CONTINUED) set the pace for the community as a whole to follow. Only full participation by every segment of our community will make this program a success. We pledge, Mr. Secretary, that we will do our share. SEC. MORGENTHAU: Gentlemen. I know that I can count on you all. Thank you, very much. ANNOUNCER: On this program you have heard Henry Morgenthau, Junior, Secretary of the Treasury, call on this nation to double previous purchases of United States War Bonds and War Stamps. Regraded Unclassified - 30 - 70 ANNOUNCER: You have heard the leading representatives (CONTINUED) of Agriculture, Labor, and Management pledge whole-hearted support: The Honorable Claude R. Wickard, Secretary of Agriculture, Mr. William Green, President of the American Federation of Labor, Mr. William P. Witherow, President of the National Association of Manufacturers, Mr. Thomas C. Cashen, Chairman of the Railway Labor Executives Association, Mr. John W. O'Leary, Chairman of the Executive Committee of the United States Chamber of Commerce, Mr. Philip Murray, President of the Congress of Industrial Organizations -- and Lieutenant Commander Edward H. O'Hare of the United States Navy. 71 - 31 - ANNOUNCER: (CONTINUED) Ladies and Gentlemen -- The National Anthem! MUSIC: "THE STAR SPANGLED BANNER" is 72 April 23, 1942 Dear Henry: I am writing to ask whether you would be willing to appear with me on 1 nationwide War Savings broad- cast from my office on the evening of May 4th. As you know, we are out to get ten per cent of the nation's income invested regularly in War Savings Bonds, and we have developed definite quotas for every state and county. This particular program, to be called "What Happens to our Money?" is designed to show the nation how War Savings money is being spent in the war effort. The program will be broadcast from 9:30 to 10:00 P.M. Washington time over both the Blue and Mutual networks. I sincerely hope you will be able to participate. May I hear from you soon? Sincerely, Heary Honorable Henry L. Stimson Secretary of War Washington, D. C. FK:b1b - Regraded Unclassified 73 April 23, 1942 Dear Frank: I am writing to ask whether you would be willing to appear with me on a nationwide War Savings broad- cast from my office on the evening of May 4th. As you know, we are out to get ten per cent of the nation's income invested regularly in War Savings Bonds, and we have developed definite quotas for every state and county. This particular program, to be called "What Happens to our Money?" is designed to show the nation how War Savings money is being spent in the war effort. The program will be broadcast from 9:30 to 10:00 P.M. Washington time over both the blue and Mutual networks. I sincerely hope you will be able to participate. May I hear from you soon? Sincerely, (signed) lease Honorable Frank Knox Secretary of the Navy Washington, D. C. FK:blb n.m.c Copies $ Memorage Regraded Unclassified 74 April 23, 1942 Dear Donald: I am writing to ask whether you would be willing to appear with me on 6. nationwide War Savings broad- cast from my office on the evening of May 4th. As you know, we are out to get ten per cent of the nation's income invested regularly in War Savings Donds, and we have developed definite quotas for every state and county. This particular program, to be called "What Happens to our Money?" is designed to show the nation how War Savings money is being spent in the war effort. The program will be broadcast from 9:30 to 10:00 P.M. Washington time over both the Blue and Mutual networks. I sincerely hope you will be able to participate. May I hear from you soon? Sincerely, THAT Honorable Donald M. Nelson Chairman War Production Board Washington, D. C. FK:blb come By Diam 5:20 Regraded Unclassified 75 STANDARD FORM No. 14A TREASURY DEPARTMENT APPROVED BY THE PRESIDENT MARCH 10, 1926 WASHINGTON TELEGRAM CHARGE TREASURY DEPARTMENT, APPROPRIATION FOR OFFICIAL BUSINESS-GOVERNMENT RATES Expenses of Leans-War Savings Staff (The appropriation from which payable must be stated on above line) 5. a. - - - 3-14117 April 25, 1942 Mr. H. W. Anderson Vice President General Motors Corporation Detroit, Michigan I was very such interested to have your report on the splendid employee participation achieved in the first four days of your Mar Bond Drive. The goal you have all set for yourselves to be reached by May first is indicative of the results which can be attained when employees and employers work as one mind for the interest of our country. uple Hong Henry Morgenthau, Jr. Secretary of the Treasury Regraded Unclassified H 76 A S WU E 41 80/75 GM DETROIT MICH APR 22 1222P DM 1 18 HENRY MORGENTHAU JR T E SECRETARY OF THE TREASURY WASHIC 1 KNOW YOU WILL BE INTERESTED IN PRELIMINARY RESULTS OF E G GENERAL MOTORS EMPLOYEES WAR BOND DRIVE FOR VICTORY. R A WITH INCOMPLETE REPORTS IN FOR FIRST FOUR DAYS OF CAMPAIGN: P H 36 PLANTS OR DIVISIONS ARE 100PERCENT; 41 PLANTS OR DIVISION ARE 90 TO 100PERCENT; THE REMAINING 17 ARE BETWEEN 60 AND 90PERCENT; NONE BELOW 60PERCENT. GENERAL MOTORS EMPLOYEE FAMILY AS A WHOLE OVER 90PERCENT PARTICIPATION. BY MAY 1ST EXPECT ALL PLANTS WILL E A BE ELIGIBLE FOR TREASURY FLAG H W ANDERSON. 116P G R. P Regraded Unclassified 77 Treasury Department Office of the Under Secretary Date: 4/23 To: The Secretary From: Bowptraller's letter to WorDept on Detroit situation DWB COMPTROLLER GENERAL OF THE UNITED STATES WASHINGTON 78 COPY April 23. 1942 3-23385 The Honorable, The Secretary of War. Xy dear Kr. Secretary: There has been informally presented to me this date by the Office of the Undersecretary of War a proposéé directive emplifying the procedure approved by my letter of February 20, 1942, 3-23888, relating to the reimbursement of contractors for amounts deducted from salaries and wages for the purchase of War Savings Bonds. The pro- poned directive is as follows: "1. The procedure proposed by the Secretary of Vor and are- proved by the Comptroller General of the United States in his de- cision of February 2, 1942, B-23888, is for application, except that in the case of A manufacturing establishment the contracting officer may approve a modification of the procedure ES outlined herein. Under either procedure, reimbursement for salaries and wages may include pay- roll deductions nade for the purchase of War Savings Bonds. "2. The contractor will withhold from each pay roll the amounts authorized in writing by the respective employees. The total amount withheld will be deposited immediately with a bank insured by the Federal Deposit Insurance Corporation in a separate account or necounts, but it is unnecessary to use a separate account for each contract. Such special brink account or accounts shall be no desig- nated às to indicate clearly their special character and purpose and vithdrawals from such accounts shall be only for the mirpose of pur- chasing Yer Savings Bonds for delivery to employees. or for refunding employees' payments on subscriptions. Refunds by the employer of em- ployees' deductions may be made by checks drawn on the special account or out of the employer's funds, in which latter event the employer may withdraw an equivalent emount from the special account. Regraded Unclassified 79 - 2 - "3. The employer will maintain appropriate records of all transactions involving employees' subscriptions including a periodic reconcilement of the total amount of employees' payments on un- issued bonds with the balance in the special bank accounts. The transactions in the special benk account or accounts and the sub- scription ledgers showing the individual employees' accounts are to be subject to eudit by authorized representatives of the Government. Unon termination of the pay-roll deduction plan, the contractor will furnish to the contracting officer a summary of the transactions and lists of undelivered bonds and unclaimed account balances. II The procedure proposed appears to be entisfactory, and will meet the requirements of this Office. Sincerely yours, (Signed) Lindsay C. Warren Comptroller General of the United States. 80 APR 23 1942 April 17, 1942 Dear Archie: This is just to thank you for your letter of April 11th in which you tell se about the views of your Board regarding compulsory savings. As your letter indicates, the Board did not have the benefit of an actual survey of public opinion before reaching its decision. If you should decide to have such 8 survey made, I should be very much interested to hear of the results. Incidentally, I should like you to know how much I appreciate the offer of help and cooperation which you gave me at luncheon yesterday. I know that the Office of Facts and Figures can be of immense help in making our voluntary savings program a success. Sincerely, (Signed) Heavy Hon. Archibald MacLeish, Director, Office of Facts and Figures, Washington, D. C. Photofills n. FK/cgk File to Thomson Regraded Unclassified OFFICE OF FACTS AND FIGURES WASHINGTON April 11, 1942 Dear Mr. Secretary: Your department has asked for the views of the Board of the Office of Facts and Figures on the question of public morule involved in a compulsory savings plan. I take it that there are two main questions involved: (1) Whether the public at large would resent compul- sion in this matter. (2) Whether compulsory savings would destroy a feeling of voluntary participation which the bond purchasing program stimulates. Although this Office has not undertaken B. specific test of public reaction on this question, we believe that we have enough background information to be able to make a judgment. On the first question, it is the view of the Board that the public would not resent compulsion in this matter any more than it resents compulsion in the payment of heavy taxes, or compulsion in being drafted for the armed service. Our indicia of public opinion have pointed again and again to the fact that the country is ahead of the Government in its desire to accept restriction and sacrifice if necessary for winning the war. On the second question, it is the view of the Board that, although the bond program has made a valuable contribution in stimulating a sense of voluntary participation, our entry into the war and the increasing opportunities for direct participation in war industries and in civilian defense have diminished the necessity for the stimulus which the bond program has given. Indeed, there may be some question as to whether the fact that the purchase of bonds involves no risk and carries with it a. profit in the form of interest does not divert the sense of secrifice which the war has called forth. Regraded Unclassified The Secretary of the Treasury - - 2 - 4/11/42 It would seem to me that == good denl of wintever public resentment might result woul-1 be diminished IT a compul- sory savings plan were based on a principle of graduation accord- ing to ability to pay, in the light of indo tax schedules. If I may, I should also like to point out what you have, of course, considered, that a compulsory savings program could be put before the country as il positive contribution to post-war reconstruction, in that it would provide o fund of purchasing power to stem a possible post-war recession. 1=ithfully yours, am health Archibuld MacLeish The Director The Honorable The Secretary of the Treasury Washington, D.C. Regraded Unclassified 83 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE April 23, 1942. To The Secretary Harold Graves FROM I am attaching a letter from the Third Assistant Postmaster General, enclosing to Mr. Mahan a report from the postmaster at Los Angeles regarding the alleged lack of facilities at the West Los Angeles post office for the purchase of Defense Savings Stamps, about which Mrs. Elizabeth Hill of West Los Angeles complained to you. Regraded Unclassified mr thaves 84 INVISION OF POSTAL SAVINGS in YOUR REPLY REFER TIME Post Office Department LKB THIRD ASSISTANT POSTMASTER GENERAL Mashington April 20, 1942 Mr. Sydney D. Mahan, War Savings Staff, Treasury Department, Washington, D. C. My dear Sir: There is enclosed for your information a copy of a letter written by the postmaster at Los Angeles, California, to Visa Elizabeth Hill in reply to her letter of March 11 to the Secre- tary of the Treasury in which she made the statement that no bank or post office in West Los Angeles had savings stamps of the 10-cent and 25-cent denominations for sale, Very truly yours, Ramsey Third Assistant S. Postmaster Blach General. Enclosure. Regraded Unclassified COPY 85 UNITED STATES POST OFFICE si Savings Section Los Angeles, Calif. AJA April 15, 1942. Viss Elizabeth Hill, 634 S. Gramercy Pl. Los Angeles, California My dear Miss: Your letter of March 11 addressed to the Secretary of the Treasury concerning the lack of facilities for obtaining Defenee Stamps at West Los Angeles, has been referred to this office for reply. Your statement to the effect that the post- master at West Los Angeles advises he cannot secure the stamps is not understood. The post office at West Los Angeles is operated as a regular station of this office and a sufficient supply of Defense Stamps is available at all times to meet the normal requirements. The address of the station is 1544 Purdue Ave. You are also advised that banks are permitted to purchase Defense Stamps from the post office for resale to the public, or course, you understand we cannot compel banks to carry Defense Stamps purchased from their own funds but insofar as we know every bank in California is cooperating. Please advise me of any specific instance where there is a bank or post office not selling Defense Savings Stamps. Very truly yours, MARY D. BRIGGS, Postra ster by Frank Huber Money Order Cashier. CCI 3rd Asst. P.N.C. Fostal Savinga REP/AJM Regraded Unclassified 86 COPT BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM To the Liaison Officers of All Federal Reserve Banks Dear Sir: At the informal request of the Treasury Department, there is en- closed a photostat copy of a statement prepared by the Department's Division of Research and Statistics relating to the operation of pay roll savings plans (for the purchase of War Savings Bonds) by companies having 5,000 or more employees. The statement shows, for your District, the name and address of each company, the number of employees, whether company has a pay roll savings plan, and whether company is an issuing agent, For the information of the Office of the Secretary of the Treasury, it will be appreciated if you will furnish us at your early convenience, the following information with respect to each company shown in the statement as having a pay roll savings plan that has not qualified as an issuing agent: 1. Whether your Bank has contacted the company, and, if no, whether by correspondence or by personal visit (or both). 2. Brief statement of the reasons given, if any, for not qualifying. 3. If the information is readily available, what agency 18 now issuing the bonds sold under the pay roll savings plan. 4. Any additional information or comments which you feel may be of interest to the Office of the Secretary in this con- nection. It will be appreciated if you will furnish the above data in dupli- cate so that one copy may be turned over to the Office of the Secretary and the other retained in our files. We have been advised informally that Mr. A. L. Mille, Jr., Technical Assistant, Office of the Secretary of the Treasury, has been designated by the Secretary as the Department's contact representative to cooperate with the Federal Reserve Banks in their efforts to increase the number of large corporations qualifying as issuing agents, and will be glad to furnish all possible assistance in this connection. Very truly yours, L. P. Bethes, Assistant Secretary. Regraded Unclassified 87 CONFIDENTIAL UNITED STATES SAVINGS Bouns Comperative Statement of Sales During First Nineteen Business Days of April, March and February 1942 (April 1-22, March 1-23, February 1-23) On Basis of Issue Price (Amounts in thousands of dollars) I : Amount of Increase : Sales Percentage of Increase : : or Decrease (-) : or Decrease (-) Item : : : : April : March : April : March : April : March : February : over : over : over : over : : : : March : February : March : February Series 1- E - Post Offices $ 59,172 $ 65,877 $ 74,939 -$ 6,705 9,062 - 10.2% - 12.1% Series E - Banks 169,969 195,418 269,925 - 25,449 - 74,507 - 13,0 - 27.6 Series 1. Total 229,140 261,294 344,863 - 32,154 - 83,569 - 12.3 - 24.2 Series 1 - Banks 27,659 30,731 43,917 - 3,072 - 13,186 - 10.0 - 30.0 Series G - Banks 117,592 137,927 208,842 - 20,335 - 70,915 - 14.7 - 34.0 Total $374,391 $429,952 $597,622 55,561 $167,670 - 12.9% - 28.1% Office of the Secretary of the Treasury, Division of Research and Statistics, April 23, 1942. Source: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of United States savings bonde. Note: Figures have been rounded to nearest thousand and will not necessarily add to totale. Regraded Unclassified CONFIDE UNITED STATES SAVINGS BONDS Daily Sales - April, 1942 On Basis of Issue Price (In thousands of dollars) Post Office Bank Bond Sales Bond Sales All Bond Sales Date Series I Series E Series F Series G Total Series E Series I Series G Total April 1942 1 $ 2,476 $ 10,517 $ 2,380 $ 9.608 $ 22,504 $ 12,993 $ 2,380 $ 9,608 $ 24,980 2 2,999 8,264 2,119 7,570 17,953 11,263 2,119 7,570 20,953 3 3,222 7,572 1,185 6,235 14,992 10,794 1,185 6,235 18,214 4 2,778 9,292 1,387 5.334 16,013 12,070 1,387 5.334 18.790 6 4,961 13,035 2,329 8,027 23,391 17,996 2,329 8,027 28,352 7 2,958 5.722 834 8,983 15,539 8,680 834 8,983 18,497 8 2,309 9,610 1,142 6,562 17,314 11,919 1,142 6,562 19,623 9 2,906 9,304 955 5,715 15,974 12,210 955 5,715 18,580 10 2,730 8,052 1,573 5,261 14,885 10,782 1,573 5,261 17,615 11 2,150 5,224 668 2,720 8,613 7,374 668 2,720 10,762 13 4,619 17,572 2,432 8,604 28,609 22,192 2,432 8,604 33,228 14 2,513 6,152 1,076 3.333 10,561 8,665 1,076 3.333 13,074 15 2,584 5,102 1,251 5.374 11,728 7,686 1,251 5,374 14,312 16 3.472 10,008 1,400 7.773 19,180 13,480 1,400 7.773 22,652 17 2,690 8,076 850 3.695 12,621 10,766 850 3,695 15,311 18 3,111 7.175 948 3.303 11,426 10,286 948 3,303 14,537 20 5,252 13,334 2,227 9,001 24,562 18,586 2,227 9,001 29,314 21 2,517 6,845 977 3.703 11,525 9,362 977 3,703 14,042 22 2,925 9,112 1,925 6,793 17,830 12,037 1,925 6,793 20,755 Total $ 59,172 $169,969 $ 27,659 $117,592 $315,219 $229,140 $ 27,659 $117,592 $374,391 Office of the Secretary of the Treasury, Division of Research and Statistics. April 23, 1942. Source: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of United States savings bonds. Note: Figures have been rounded to nearest thousand and will not necessarily add to totals, Regraded Unclassified 89 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE April 23, 1942 TO Secretary Mor genthau Mr. Kamarck FROM Subject: of Possible Interest: The llew Tank Production loals, 1. According to the figures which were made available to ne by the War Production Board, the most important change in the new production program is in the tank goals. The over-all program is being slashed 15 percent and tanks 1,2 percent. In March we were producing tanks at the rate of 12,000 & year. (The March production f1 jures are in round numbers: no heavy tanks, 600 medium and 400 light, or a total of 1,000 tanks.) We were achieving this rate in spite of the feet that only 10 to 15 percent of the plants which could produce tanks were converted to war production. The new production program, in round figures, is as follows: Tanks Old New Light 20,000 10,000 Wedium 25,000 15,000 Havy 500 150 Total 45,000 25,000 "ther Fighting Vehicles Armared cars 12,000 Pan carriers (on 11ght tank chassis carrying mostly 35 m., with a few 57 nim. _"ns) 8,000 Total 20,000 E. The importance of the change in the tank production program cannot be under-estimated, Tanks are undoubtedly one of the most Important armament items. From the stand- wrint of the 1942 campaigns, tanks probably out-renk planes and ships In importance. Both the British and the Russians Regraded Unclassified 2 90 are not greatly inferior to the Germans in the air. The German successes in Russia and in Libya have been mainly due to German tank superiority: Stalin informed Beaver- brook and Harriman that tanks were the most vital Russian deficiency. In Libya, the British have been driven back because of their tank inferiority, in spite of their superiority in the air. 3. The 12,000 armored cars and 11,000 gun carriers which the new schedule calls for can not be regarded 8.3 sub- stitutes for tanks. They do not even approach beln a match for 11ght tanks. The Termans de have & l'ew amored cars in their panzer divisions which they use for = connaissance work, out the serlous M giting is done or the tanks. The organizational tables of our motorized divisions now call for tanks instead of armored cars to perform reconnaissance. The 6,000 sun carriers will mount guns no larger than those mounted in a light tank, but will not have the armor protection of B light tank. Its The crux of the tank program is the production of medlum and heavy tanks. It 13 doubtful If the Germans have any light tanks left in their armored divisions. Over e year 880, they started replacing the light tanks in their armored divisions with medium and heavy tanks. Our new armored divisions likewise are being built around the medium tank. Our 1942 production goal of 15,000 medium tanks (out down from the original goal of 25,000) Is to be compared with our army's estimate that the ermans have 15,000 tanks on the Russian front now. Conclusions 1. The new tank production goals represent a drastic retreat from the Victory Program. 2. In view of the requirements of our expanding army, It is more than probable that the reduced program moans that the vital tank needs of our Allies will not be met. Regraded Unclassified 91 APR 23 1942 My dear Mr. President: I have your memorandus of April 21, 1942, transmitting a letter addressed to Mrs. Roosevelt on April 3, 1942, by Mr. 0. L. Brown, President of the Lubeo Chamber of Commerce, relative to a fee charged the Campobello Auto Ferry, apparently for overtime services of customs officers. I have requested that & report be obtained from the collector of customs concerned and as soon as his report is received I shall advise you further in the matter. Faithfully yours, (21gned) E. Secretary of the Treasury. S.S. Agt 5:55 The President, The White House. time Howyor Regraded Unclassified THE WHITE HOUSE WASHINGTON April 21, 1942. MEMORANDUM FOR TII a -ill you let us know about this? ...... Regraded Unclassified COPY 129.15 Lubec, Maine 4/3 1942 Mrs. Franklin D. Rosevelt Dear Madam:- The Campobello Auto Ferry will not be able to run this summer providing the customs fee are not changed. As at present the fee is $13.00 on a Sunday one car or a dozen. As you know there is no such charges on the Campobello side. Thinking you might get some relief for us in this matter I am writing you in behalf of the Lubec Chamber of Commerce and the Campobello Board of Trade. Yours very truly (Signed) C. L. Brown Pres. Lubec C. of C. Regraded Unclassified 94 Dear Ougar I in very such pleased with the work the Bureau of Internal Revenue has done during the last week in assembling the requested information on the list of fifty-three compandes with large war contracts furnished to - by Mr. Donald W. Nelson, Chairman of the War Production Board. will you please convey to Deputy Commissioner Meeney, and those members of his unit who worked on this project, By thanks and ay congratulations for 4 good job quickly done. Sincerely yours, Honorable Only T. Helvering, Commissioner of Internal Reverna. n.m.c JLS:kb Regraded Unclassified 95 APR 23 Mr. Byron Price, Director, The Office of Censorship, Washington, D. C. Dear Mr. Price: The receipt is acknowledged of your communication dated April 8, 1942, stating that Boards of Review will be established at Los Angeles, California, New York, New York, and Rochester, New York, to aid in the cen- sorship of films and other photographic material enter- ing and leaving the United States, and that provision will also be made at Miami, Florida, New Orleans, Louisiana, E1 Paso, Texas, San Francisco, California, and Seattle, Washington, and other postal censorship stations for examining photographic material not passed upon by the Boards of Review. You request to be Informed of the name of someone in this Department who would be available for consulta- tion with the Boards at Los Angeles and New York. You also request that an alternate be designated. You ask if anyone will be available for consultation in the other cities mentioned. Mr. Gregory W. O'Keefe, assistent collector of customs, has been designated as the primary consultant to the Board of Review at New York, and Mr. Irving Fishman has been appointed as an alternate. Mr. Henry J. Nord, deputy collector of customs, has been designated as the primary consultant to the Board of Review at Los Angeles, and Mr. Hugo Wallenfels, Treasury representative, has been designated as an alter- nate. Messrs. Frank Gallagher, Jr., and John E. Caufield, Bureau of Customs employees, will be available for con- sultation to representatives of the Office of Censorship at Rochester, New York. Regraded Unclassified 96 - 2 - All persons named above have been given full authority to present the viewpoint of this Department in connection with censorship problems. After consultation with appropriate field offi- cials, a further communication will be addressed to you informing you of representatives of the Treasury Department who will be available for consultation at other ports where postal censorship stations are located. Sincerely yours, (Signed) Ri Correctorse 2272 Secretary of the Treasury. aty Memoriese Dison 5:20 File to yaston Regraded Unclassified THE OFFICE OF CENSORSHIP WASHINGTON April 8, 1942. The Honorable Henry Morgenthau, Jr., Secretary of the Treasury, Washington, D. C. My dear Mr. Secretary: To aid in the censorship of films and other photographic ma- torial entering and leaving the United States, we soon will es- tablish Boards of Review in Los Angeles, New York, and Rochester, N. Y. Provision also will be made at Miami, New Orleans, El Paso, San Francisco, Seattle, and other postal censorship stations for examining photographic material not passed upon by these Boards. This work undoubtodly will raise questions in which various Government agencies will have a direct interest. It would be extremely helpful if the Boards could have opportunity to obtain advice on specific films from a representative of your Department whenever such consultation might be helpful. Will you please give me the name of someone in your Depart- ment who would be available for consultation with the Boards at Los Angeles and New York? I shall appreciate it if you also will designate an alternate. Will anyone be available for consultation in the other cities mentioned? In every case, these represente- tives should have full authority to present the official viewpoint of your Department. I am enclosing an outline of the film censorship program. If I can supply any further information, please do not hesitate to re- quest it. Any suggestions vill be kelcomed. Sincerely yours, m him Byron Price, Director. Enclosure. (COPY) 97-A OFFICE OF CENSORSHIP Washington FOR RELEASE TO MORNING PAPERS OF FRIDAY, MARCH 27, 1942. A system for the examination of all kinds of films entering and leaving the United States was announced today by the Office of Cen- sorship. Boards of Review will be established at Los Angeles and New York to inspect motion picture productions and newsreels offered for ex- port. Personnel of the boards has not been announced. Facilities for examining pictures of many types are available also at other ports, and all material will be cleared as rapidly as possible, said the announcement by Byron Price, Director of Censor- ship. He explained that newsreels in particular would be handled so that views of happenings abroad would be available to the American people with a minimum of delay. The Bureau of Customs is cooperating in the film censorship program, and other Government agencies will be asked for advice on individual films. Besides applying to commercial motion pictures and newsreels, the examination will include amateur movies, still photo- graphs, and all other forms of photography intended for import or ex- port. Removal from the United States of exposed but undeveloped films is being prohibited, except to Canada, and such films will be re- turned to the sender. The same regulation covers unexposed raw film unless especially licensed. These provisions apply to travelers as well as to professional photographers and commercial organizations. Exposed films coming into the country will be examined after being developed under Government supervision, but importation of unexposed films except from Canada is banned. Following is a detailed outline of the program: 1. ADMINISTRATIVE MACHINERY 1. In order to review films produced in the United States for export and films imported into the United States, Boards of Re- view will be established at Los Angeles and New York. The Los Angeles Board will be concerned chiefly with commercial motion pictures at Regraded Unclassified 97-B & the point of production (Hollywood and environs), while the New York Board will be concerned with newsreels, motion picture productions and other photographic material produced or processed in the East for export from the United States, as well as with newsreels and film dramatic productions offered for import into the United States which the Bureau of Customs may submit for review. The Boards will act in general as advisory bodies to the Office of Censorship and the Bireau of Customs and-vill be under the chairmanship and the adminis- trative direction of the Office of Censorship. The Boards will have opportunity to seek the advice of Federal agencies having a special interest in photographic problems. Among these agencies are: the State Department, the War Department, the Navy Department, the Board of Economic Warfare, the Office of Coordinator of Information, the Office of Coordinator of Inter-American Affairs, and the Office of Coordinator of Government, Films. These agencies represent the various elements in problems posed by exportation of films - mill- tary security, Latin-American relations, extermal propaganda, and economic warfare. 2. Postal Censorship will provide facilities at appropriate points to review photographic material routed for export from or im- port into the United States. For material transmitted in the mails the Postal Censors in general will act without reference to any other agency. Postal Censorship offices will review material submitted by Collectors of Customs and give advice as to whether the shipment should be permitted to proceed, or they may recommend submission of the material to 5 Board of Review. Material received from Customs will be returned to the appropriate Customs officer with a recommendation. 3. Unless special provision has been made for examination else- where, Collectors of Customs at the points of exit or entry will examine all shipments of photographic films, plates and prints outside the mails and such material in mail packages requiring inspection for tariff pur- poses. Where no doubtful circumstances exist, they will license the export or permit the entry of the material. They will refer doubtful cases to Postal Censorship, which will return the material with ap- propriate advice. II. FILMS AND PRINTS FOR EXPORT 1. The bulk of commercial films, including dramatic and newsreel films, will be reviewed during production by the Boards of Review. For that purpose the Boards will establish contacts with the Motion Picture Producers and Distributors' Association and with other representatives of producers and exporters for assistance in Regraded Unclassified 97-C -}= working out review methods. On request of the producers or the Bureau of Customs, the Boards will review completed films offered for export. In concert with representatives of the producers and with the Customs Service means will be adopted for identifying true copies of films ap- proved for export, and Customs representatives at the point of origin will license, mark and seel shipments so as to make any further examina- tion unnecessary. This approval will obviate delays in the export of motion picture productions. 2. Collectors of Customs, where appropriate facilities for examination exist, will be authorized to examine at the point of origin, developed films, plates and prints and, if their export is to be permit- ted, to license and seal the packages so as to obviate examination at the point of exit. In doubtful cases, the nearest Postal Censorship office will be consulted. 3. Postal Censors will examine to the extent deemed desirable photographic materials passing through the mails. All films, plates and prints which have not been licensed for export or approved by Postal Censors will be examined by Collectors of Customs at the port of exit. Doubtful cases will be referred to Postal Censorship, which will return them with recommendation. Collectors of Customs may license such shipments, detain them or return them to the senders as circum- stances warrant. 4. All exposed films or plates are to be regarded as com- munications. Since they cannot be examined without development, their export, except to Canada, will be prohibited. This will be done by declining to license, under the Trading with the Enemy Act, the export of any undeveloped negatives. Exposed and undeveloped film offered for export. will be returned to the sender. 5. In view of the difficulty of determining in all cases whether film has been exposed, the export of any raw film to any destination other than Canada will be prohibited except under special Export Control license. Such licenses will be issued only to approved manufacturers, distributors and others who can supply adequate reasons for licensing a particular shipment. III. IMPORTS 1. Developed films, apparently intended for general showing in theaters, should be sent to the Collector of Customs at New York or Los Angeles for examination by the Board of Review. Other developed com- mercial films, when imported outside the mails and consigned to points other than New York or Los Angeles, will be examined at the port of entry Regraded Unclassified 9?-D if facilities are available; if no facilities are available, the films will be sent to the Collector of Customs in New York or Los Angeles for examination. If such films are imported in the mails, they will be examined by the appropriate office of Postal Censcrship. 2. Exposed and undeveloped commercial motion pictures, ex- cept newsreels, whether imported in or outside the mails should be for- warded to the Collector of Customs at New York or Los Angeles for pro- cessing in approved laboratories and examination by the Board of Review. Exposed and undeveloped newsreel films should be sent to the Collector of Customs at New York, whether imported in or outside the mails, for similar processing and examination. 3. Importation of unexposed film, other than that coming from Canada, will be prohibited except under special license. 4. All exposed and undeveloped still or motion picture film and plates presented for importation outside the mails will be examined at the port of entry if facilities are available, and if not, will be forwarded to the nearest Collector of Customs having facilities for pro- cessing and examination. However, when the importer of such film (in- cluding such film in the mails) designates a specific laboratory for the development of his film, and the laboratory designated has been approved by the Office of Censorship, the film shall be forwarded to the Collector of Customs in whose district the designated laboratory is located for processing and examination. Collectors of Customs will consult the nearest offices of Postal Censorship in doubtful cases. Where the volume of business of a particular laboratory warrants, examination of such film will be made by a committee consisting of a representative of the Office of Censorship, as chairman, one or more representative from the Customs Serviceand representatives of any other agencies deemed desirable. 5. All developed non-commercial films, motion or still, in- cluding photographs and plates presented for importation outside the mail, will be examined at the port of entry if facilities are available; if not, it will be forwarded for examination to the nearest Customs house having facilities. In doubtful cases, Collectors of Customs will consult the nearest Postal Censorship office. Postal Censorship will examine all undeveloped and developed non-commercial film imported in the mails. Regraded Unclassified 98 April 23, 1942 Dear Archie: I am very sorry indeed to hear that you have decided to suspend distribution of the weekly analysis of Editorial Opinion. I had been missing it and wondered what had happened to it. Personally, I feel that this little review gave me information which I could not get from any other source, inside or outside the Government. If you should reconsider your decision and resume publication, please be sure to put me on the mailing list. Sincerely, (Higaed) issued Honorable Archibald MacLeish, Director, Office of Facts and Figures, Washington, D. C. File to Hompson Photo file n.m.c. FK:blb By Memember Mames 4/25/42 Regraded Unclassified EXECUTIVE OFFICE OF THE PRESIDENT OFFICE FOR EMERGENCY MANAGEMENT WASHINGTON, D.C. A-ril 20, 1942 Dear Mr. Secretary: Because of the pressure of other work, it has been decided to suspend distribution of the weekly analysis of Editorial Opinion on The War which you have been receiving from this office. We hope that it has been of some interest and usefulness to you in the past. Faithfully yours, Amanum Archibald MacLeish Director, Office of Facts and Figures Hon. Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. C. Regraded Unclassified 100 APR 23 1940 Dear Jesse: I have your letter of April 21 and a copy of your letter to the President in regard to the use of silver as a substitute for copper in defense factories. I an assuming that you have sent copies of this corres- pondence to Donald Nelson. Sincerely yours, just (Signed) Heary Honorable Jesse H. Jones, Secretary of Commerce, Washington, Do C. Photo filme. By Messenge Dinon 5:20 File to Hompson EHF :mdm 4/22/42 Regraded Unclassified a R or THE SECRETARY OF COMMERCE EL GLVAN THE WASHINGTON April 21, 1942 Dear Henry: I hope you agree with DO that this 16 all Defense Plant Corporation should undertake to do in connection with the silver. You will recall that at Cabinet meeting the idea of any loss from abrasion or otherwise was poob-poohed. Sincerely yours, June Honorable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. C. Regraded Unclassified c 0 P Y THE SECRETARY OF COMMERCE 0 / WASHINGTON April 21, 1942 Dear Mr. Presidentr You will recell at Cabinet a wook ago the question of Defense Plant Corporation using silver in lieu of copper in the construction of aluminum plants. Defense Plant Corporation is prepared to bear the cost of transporting the silver to fabri- cating plants, the cost of fabricating this silver into bus bars and conduits, the restoration of the silver to bar form, and its return to the Treasury, less incidental weight lossage due to abrasion and fabrication, when requested by the President or the Secretary of the Treasury. I think this 1a all that should be expected of Defense Plant Corporation. If you concur, please advise the Secretary of the Treasury and ne, Sincerely yours, (signed) Jesse H. Jones Secretary of Commerce The President The White House Regraded Unclassified 103 ASSISTANT SECRETARY OF THE TREASURY April 23, 1942. MEMORANDUM TO: Secretary Morgenthau FROM: Mr. Gaston The attached daily report of vessels in New York harbor, as of Monday of this week, is rather interesting. You will notice that of the 304 vessels in port 29 were discharging and 42 lading, a total of 71 actively working cargo. Of the re- mainder 36 were idle at dock, 87 were in the stream and 110 were undergoing repairs. The repair item, according to Durning, is the chief bottleneck. There are many alterations to be made, besides ordinary maintenance and repairs due to war damage. In addition, Harry says, the work pro- ceeds very slowly at the shipyards and there is a great deal of loafing, probably due largely to green crews and lack of proper direction. The actual handling of cargoes is in general proceeding fairly well. wr 104 ROOM 125, GARGO DIVISION, 001 MONDAY, APRIL 20, 1942. DAILY REPORT OF VESSELS IN THE PORT OF NEW YORK Argentinian 5 Belgium 1 Brazilian 4 British 50 Cuban 1 Dutch 17 French 3 Greek 4 Honduren 2 Nicaraguan 1 Norwegian 39 Panamanian 25 Philippines 1 Polish 5 Portugese 2 Russian 6 Swedish 2 Swiss 2 United States 132 Yugo Slev 4 TOTAL 504 ACTION ON VESSELS Discharging 29 Idle 56 Lading 42 Repairs 110 Streem 87 TOTAL 304 STREAM 87 Ballast 19 Coastwise 13 Enroute 25 Laden 30 TOTAL 87 Regraded Unclassified SHEET TWO 105... TLAG NAME OF VISSEL ACT. PIER BLAG NAME OF VISSEL ACT. PIER DISTRICT 1 DISTRICT 8 Dat.* Tjileboet I 1 Bash Pen. 8 alvator R Robb. ID Amer. Constellation I 69th St. Amer. c/s Koolmotor R . Amer. Santa Klisa R Morees ID Br.* Davile R 1 Andr. Joseph T. Dickman R . Aner. 1.2. Barstow R - . JUST. West Isshaway R Dat." Arundo I Brkmater Amer. Oregoniam R R Amr. Pillory I . Amer. Columbian 2 . M. Empire Widgeon R Robb. ID AMOT. Caribster R - Amer. Inst Indian R # Amer. Pariemine I . h.' Silveresh L State Pier Amar. Gulfdise R 9 Nor. Hough Silvereleud L . R . Amer. Windrush Amer. Humarib R Cranes DD R . Amer. Coloradan Pan. Norlys R . Pol.* Harvik L 5 Bush Amer. Lone Ster R / = Nor.* Alaska L - Nor.* Moreg R W È D . Dunelmia Amer. Silver Sword L 2 Erie # art. Tenimber I Anor. Mounticut R 3 Erie Are. Rio Chico D 4 Bush Pan. Postias R Beards DO Br. Livingston R # Amr. Rio Parana R 44 Bklyn. Br. Stanbank D - Amer. Madison R . a. Flimston I 5 Bash Amr. Cristobal R 45 Bklyn. L el Br. Barrdale Amer. Gulfbird R Robb. DD Nor.* California Express R 8 Bush Amor. Tydol R . Nor. Magnhild R . Amer. Nancy Lykes (Ake 4) R . a. Tenasse R 17th St. Amer. Coastwise R . Pan.* Norvik R # Amr. Penamose R . Swiss St Gotthard R ! Br. Request #183 R . Arg. Norte R Amr. Dorethy Inckenbach 2 Amer. Norluma R 23rd St. M. Empire Ibex R Russ. Aserbaidjan R - Nor. Scebeli 2 # Amer. Atlantic Trader R ! Port. G11 Banes D 35 Eklyn. Russ. Michurin 2 27th St. Nor. Molda L 34 Bklyn. Nor.* Mirlo R # Nor." Temesis L $6 Bklyn. Dut. Hernes R . Mor.* Siranger L 37 Bklyn. Phil. Dona Aurora R V Nor." Polycastle R 38 Bklyn. Pan. Hindoo R . AUST. Empire State L Come Whfe Aner. Kentucky R - Aner. Hilton L 22 Eklyn. Nor. Primero R Amer. Bestrice L 25 Riyn. Pan. Alcedo R Br.* Empire Rasorbill L 26 Bklyne Amer. Nevada R Swies Bt Gergae D 24 Bklyn. Nor.* Solitaire R ! Swed. Astri R 19 Rklyn. Amer. Millinockwt R . Amer. Brooklyn Heights I 50 Hklyn. Braz. Tiredentes I 30th St. Braz. Midosi I . Bras. Mogy I of Braz. Poeone L - Amer. Vermont L Slat St. Regraded Unclassified 106 SHEET THREE 4-20-42 MIAD sur OF VESSEL ACT. PIER PLAG MR OF VESSIL ACT, PIER DISTRICT $ DISTRICT 9 Dut. Cottica D 4 Eklyn. Amer. Persoverance I Edgewater Tiberius D 4 Klyn. Amer. Alson Guard L "I" Who. Date Bradburn L 5 Eklyn. Nor. Bajemar L . Nor. Tara L 6 Rklyn. Amer. Narbo D 9 13 RR Bale." Belgian Airman L 8 Miyn. Amore Infoyette R Fletchers DD Br.* Empire Laywing L 8 Eklyn. Amer. Ipsuich R el Date Medee L 10 Eklyne Amer. Excellency R . Date Crijnasen L 11 Riyn. Anor, Familin 7. MoCormick R . Grk. Constantines E I 16 Bklyn. Amer. Beauregard R 1 Amer. Challenger L 18 Eklyn. Nor. Brush R . Sor. Fernbrook L Oak St. : Empire Jet R @ : Empire Wagteil D Huron St. Amer. Louise Lykes 2 - Pan.* Klwood R - DISTRICT 4 Pan.* Belgian Gulf R # Amer. Robert 3. Lee R Aner. Angeline I 14 B.R. Pan. Carmons R . ne de Noirmoutier I 15 B.R. Amer. Siboney R of Tr. Tax Duje R 28 E.R. Amer. Shickshimy R . Hond. Howard R 2 N.R. Pane Carbella R . Amer. Proctor L 5 N.R. Amer. T.H. Green R T & L DD R 9 N.R. Amer. Rio de Jeneiro R - Nor. Cadma Brice Ioennia P. Goulandris R 9 N.R. Amor. African Meteor R - S. George Washington L 18 N.R. Amer. Oklahoman R . Pr. Ile de Ouessant I 26 N.R. Amer. Seven Seas R . Fie Mont Everest I 26 N.R. Amer. Kentuckian R # Pol. Rosewie I 15 Hob. DISTRICT 5 Pol. Bleak D - : Marklend L 6th St. less. Cherokes D 36 N.R. Amer. Peter Kerr I 1 Hob. D 56 N.R. Pan.º Lookout R 2 Hobe Amar. Medina Amor. Pamino I 57 N.R. Amer. Tidewater Associated R . Amer. Kahuku R 37 N.R. Buss. Friedrich Engels R . R . Amer. Lillien Luckanbach D 42 N.R. Amar. Gold Harbor h.' HMS. 149 I 56 N.R. Buss. Tbilisi R = Amer, Alchibe D or N.R. Pan. Vagrent R If Amer. Santa Toresa D BY N.R. Amer. West Nohno R . Amer." Oldhem L 58 N.R. Amor. Virginia Dare D 3 Hob. Pan.* xi Lago I 59 N.R. Amer. Gateway City I 4 Hob. Amer. Falcon D 59 N.R. Arg. Rio Iguas: I 6 Hob. Amer, American Leader L 61 N.R. Amer. Aldobaran R 6 Hob. DISTRICT 6 Br. Portie I 95 N.R. 3' Cairnesk L 86 N.R. Br.* Empire Iber L 86 N.R. Amer, Lafayette I 88 N.R. b. Sourabaye I 90 N.R. Lochkutrine L 95 N.R. is Jamaica Planter I 96 N.R. Dut. Aruba L 97 N.R. Nor.* Tai Shan L 97 N.R. Regraded Unclassified BENET FOUR 102. TLAG NAME OF VESSEL ACT. PIER AMBOY DISTRICT 8 Br. Irene Myrtle R Amer. Broad Arros D 9 Rele D AST. Potlatch I Pt Nome pas. Denny ALBANY, NEW YORK Nic. Managua D . L # Nor. Askeladden Amt. Tacht 0 I Amor. Emeller I "D" J.O. Br. Western Head D Amer. Exmouth D " J.C. Nor. Pleasantville I "j" J.C. VISSELS AT ANCHORAGE AND IN THE STREAM Amer. Enorville City D "y" J.O. Br. Port St. John D Cleremont Pan. Colin L 7 ... 80-A L - Nor. Riseays Pan. Loida B 7.A. 21=B Amer. Wolverine D 7 G. RR Pan. Makina L F.A. 21=B Pan.* Peter Rurll B T.A. 19-C DISTRICT 9 Pen." Touraine B F.A 23 Swede Lima L 1.4. 23 Pan. J.H. Senior D Con Hook Yes Franka B 1.44 21-B - Alece Boout R Bayonne Ys. Kupe L F.A. 19 Buss. Donbas R . Amar. Altair C F.A. 21-B R . Amer. Eagle Amer. Carter Braxton C F.A. 25 Grk. Maliakos R Pt Johnson Amer. Arizpa L F.A. 24 R of Br. Ungava Amer.* Algie L P.A. 49-0 Nor.* Egda R Both DD Br.* Becheville L Take 20-d last. Jave Arrow R - Br.* Charles 7. Mayer L F.A. 23 Standard Arrow R € Br. Penhale L F.A. 23 Motorcarline R . Dut.* Breedijk L PA. 23 Amar. Wallace E. Pratt R . Dut.* Noesaniwi B Fahe 23 Amer. Baso Charleston R . Grk. Tassis B P.A. 21-B Cub. Caribe R Brewers DD Nor.* Hoegh Silverdawn L Fabs 49-0 Amer. Jean Lykes R - Nor.* Leiv Eiriksson L T.A. 23 Pan.* KL Almirante R - Nor.* NoT. Nielson Alonso L P.A. 23 Amer. Gulfpride I Gulfport Nor.* Prine B Take 21-8 Amer. Greylook D 2 S.I. Nor.* Tortugas L 7.4. 23 Port. Guine D 8 S.I. Amor. Marina L 32 Bklyn. Er." George Washington I 9 S.I. Nor. Para B Streem imr. Evelyn R 9 S.I. Br. La Pas L Streem Dat.* Kota Inten L 10 S.I. Arg. Ernesto Tornquist L Streem Dut. Java L 10 S.I. Amer. Jason I Streem Mor. Danio L 19 S.I. Amar. Achilles M Streen Br.* Imperial Monarch L 19 S.I. Amer. Harry Bowen M Stroms Br.* Rhexenor D 21 S.I. Amer. Kopperaton I Streem Br.* Calgarolite B 25 B.I. Amer. Thomas P. Beel 0 Strees Pan. Parm R 24 B.I. Amor. Min. He Machen È 8 troms Amer. Freeman M Streem FOREIGN TRADE ZONE Amer. Plymouth I Strees Amer. Christopher Newport 0 Streen Dut.® Leartes I (Laden) Dut.* Themisto Amer. Coronal B Streem I (Laden) Amar. Walter D. Noyes o Stream Amer, Remson Heights I (Bullast) Br. Starstone I Streem Amer, Dynastic R (Laden) Amore Buffolk 0 Strees Amer. Berkshire 8 Stream NEWARK, NSW JERSEY AIMT. Thomas Tracy o Streem Amer. Michael Tracy C Streen Mor. Evita L Amr. Winding Gulf 8 Streem Regraded Unclassified 108 SHEET FIVE 4-20-42 9KL8 AT ANCHORAGE AND IN THE STREAM CONTINUED Andre Maurice Trasy o Streem is Athelprince M Streem Expire Lightning 1 Strees Amor. Br. June L. Richards I Street Amer. Termessee I Strees ys. Ante Matkovie E Strees Amer. Eastern Crown I Streen is Balkoil E Strees Amer. Achilles I Streem Amer. Koro 0 Streem Amer. Alcoa Polaris L 58 N.R. Nor. Vest Insuble Streem Mor. Tabor B Streen Dut. Waterland L Streem Br. Port Rion L Stream is Empire Mahseer B Streen 1 Yankee Sword I Streen Amer. Wellhert 0 Streem B. Ville de Tenatave L Streem is Empire Tenar B Streem Mr. Olaf Borgh IN Streem E. Benffshire L 38 Rklyn. Br. Cymbule B Streem you have Bakke L Streem - Stad Vlaardingen 3 Strees is Empire Snow B Strees is War Admiral B Streem Nor. Kaia Kmidsen B Streem Amer. In. McTarnahan C Strees Anar. The 4. McKenny c Stream Nor. Long Haskon VII B Streem Nor. Bereas I Streen Russ. Ashkhabada L Streen Bor. Siljested B Streen Arg. Rio Gualeguay L Streem is Empire Zeal I Streen is James E. Hughes B Grafesend Bay Anur. H.R. Mallory L Streem : Empire Drus L Gravesend Bay Amer.® Senta Crus L Gravesend Boy Hond. Juniate B Streem Amer. West Keber L Strees Pan. xi Oceans L Gravesend Bay Key to Streem List B - Ballast C - Coastwise I - Enroute L - Laden + ARMED. Regraded Unclassified 1 109 April 23, 1942 Dear Lew: For your confidential infor- mation and guidance, I am enclosing herewith & memorandum from Mr. Gaston on the situation in the port of New York. To say that it is shocking is an understatement. Can you do anything about it? Yours sincerely, /s/ Henry Mr. Lewis Douglas, Chief Adviser, War Shipping Adm., U. S. Maritime Commission, Washington, D.C. File n.m.c. By Messenger Regraded Unclassified 109 April 23, 1942 Dear Lew: For your confidential infor- mation and guidance, I am enclosing herewith & memorandum from Mr. Geston on the situation in the port of New York. To say that it is shocking is an understatement. Can you do anything about it? Yours sincerely, /s/ Henry Mr. Lewis Douglas, Chief Adviser, War Shipping Adm., U. S. Maritime Commission, Washington, D.C. File Filo n.m.c. n.m.c. By Messenger Regraded Unclassified ASSISTANT SECRETARY OF THE TREASURY April 27, 1942. MEMORANDUM TO: Secretary Morgenthau FROM: Mr. Gaston The attached table lists the number of vessels, their nationalities and their action status, in the ports of Boston, Philadelphia, Baltimore, Norfolk, Charles- ton, Savannah, New Orleans, Galveston (including Houston and Corpus Christi), Los Angeles, San Francisco, Portland, and Seattle on April 24, 1948. It will be noted that of the 358 vessels at the fourteen ports listed on Friday, April 24, the "action status" was as follows: Total workint cargo: Discharging ..... 56 Lading .......... 89 145 Repairing 141 Idle 35 Total in streem: In tallart ...... 19 Laden 12 Coastwise ....... 1 Enroute on 37 358 Regraded Unclassified NO. OF NATIONALITY VESSELS ACTION STATUS Ban American 5 Discharging 2 Repairing British 2 Discharging 2 Lading 1 Repairing Panamanian 1 Lading 2 Repairing Norwegian 1 Lading 3 Repairing Greek 1 Repairing Honduran 1 Lading TOTAL 21 Philadelphia American 6 Discharging 4 Lading 9 Repairing 5 Idle 1 In stream...Coastwise British 2 Discharging 3 Lading 3 Repairing Norwegian 1 Lading 1 Idle Swedish 1 Discharging Panamanian 2 Repairing (loaded) 1 In stream....Ballast Belgian 1 Lading Portugese 1 Discharging TOTAL 41 ore American 2 Discharging 2 Lading Regraded Unclassified 2 NO. OF NATIONALITY VESSELS ACTION STATUS 28 Repairing 3 Idle 2 In stream Ballast British 1 Discharging 1 Lading 3 Repairing 1 Idle 1 In stream. Laden Panamanian 1 Discharging 1 Lading 3 Repairing Norwegian 1 Repairing Yugoslav 1 Idle Brazilian 1 Idle Greek 1 Lading Cuban 1 Lading Belgian 1 In stream Ballast TOTAL 55 Norfolk American 2 Discharging 7 Lading . 7 Repairing 1 Idle 4 In stream Ballast 4 If If Laden British 1 Lading 2 Repairing Panamanian 1 In stream Laden 1 R II Ballast 1 Repairing Portuguese 1 In stream Laden Yugoslav 1 Repairing TOTAL 33 Regraded Unclassified -3- NO. OF NATIONALITY VESSELS ACTION STATUS American 1 Discharging 4 Repairing 2 In stream. Ballast British 1 Lading Yugoslav 1 In stream. Laden Honduran 1 " # Ballast Panamanian 1 Repairing 1 In stream. En route TOTAL 12 warmah American 1 Repairing 3 Idle Panamanian 2 Repairing TOTAL 6 AA Orleans American 9 Discharging 5 Lading 2 Repairing 1 Idle 1 In stream En route British 2 Lading 1 Repairing Norwegian 1 Discharging 1 Lading 6 Repairing 1 In stream Laden 1 " " En route Honduran 3 Discharging 2 Lading 1 Repairing Panamanian 3 Lading 1 Repairing Regraded Unclassified -4- NO. OF NATIONALITY VESSELS ACTION STATUS Dutch 2 Discharging Mexican 1 Lading Canadian 1 Idle French 1 Idle Italian 1 Repairing (the ADA 0) TOTAL 47 Regraded Unclassified 5 NO. OF NATIONALITY VESSELS PORT ACTION STATUS American 3 Calver Discharging (Ins)weing Seaston 4 Lading Christi) 7 and Repairing 6 In stream Ballast 1 In stream Laden British 1 Discharging 1 Lading 1 Repairing Norwegian 1 Lading 1 Repairing 1 In stream Ballast Panamanian 1 Repairing Swedish 1 Lading Mexican 1 Repairing TOTAL 30 Les be les American 2 Lading 4 Repairing 3 Idle 1 In stream Laden British 1 Lading Norwegian 1 Lading 2 Repairing Dutch 1 Lading USSR 2 Repairing Mexican 2 Idle Argentinian 1 Repairing Honduran 1 Discharging TOTAL 21 American 5 Discharging 16 Lading 14 Repairing 4 Idle (coastwise schooners under 600 tons) 3 Idle British 1 Idle Regraded Unclassified - 6 - NO. OF NATIONALITY VESSELS PORT ACTION STATUS San Francisco Dutoh 2 Lading (Costinued) Norwegian 1 Repairing Panamanian 2 Lading Swedish 1 Lading Phillipine 1 Lading 1 Idle USSR 5 Repairing 2 Idle TOTAL 58 Portland, Ore. American 1 Lading 1 In stream Laden 1 In stream Enroute USSR 3 Repairing TOTAL 6 Seattle American 5 Discharging 9 Lading 5 Repairing USSR 4 Repairing 2 Idle 1 In stream Enroute Dutch 1 Idle Norwegian 1 Lading TOTAL 28 Regraded Unclassified RECAPITULATION NO. OF NATIONALITY VESSELS ACTION STATUS American 40 Discharging 52 Lading 84 Repairing 20 Idle 24 In stream TOTAL 220 British 6 Discharging 12 Lading 11 Repairing 2 Idle 1 In stream TOTAL 32 Canadian 1 Idle U.S.S.R. 14 Repairing 4 Idle 1 In stream TOTAL 19 Panamanian 1 Discharging 7 Lading 12 hepairing 4 In stream TOTAL 24 Regraded Unclassified NO. OF NATIONALITY VESSELS ACTION STATUS Honduran 4 Discharging 3 Lading 1 Repairing 1 In stream TOTAL 9 Norwegian 1 Discharging 6 Lading 14 Repairing 1 Idle 3 In stream TOTAL 25 Dutch 2 Discharging 3 Lading 1 Idle TOTAL 6 Swedish 1 Discharging 2 Lading TOTAL 3 Greek 1 Lading 1 aepairing TOTAL 2 1 Discharging Portuguese 1 In stream TOTAL 2 Regraded Unclassified -3- NO. OF NATIONALITY VESSELS ACTION STATUS Yugoslav 1 Repairing 1 Idle 1 In stream TOTAL 3 Brazilian 1 Idle Argentinian 1 aepairing Cuban 1 Lading Philippine 1 Lading 1 Idle TOTAL 2 Mexican 1 Repairing 2 Idle TOTAL 3 Belgian 1 Lading 1 In stream TOTAL 2 French 1 Idle Italian 1 nepairing TOTAL NUMBER OF VESSELS 358 Regraded Unclassified 120 April 24, 1942 Dear Admiral Land: Haston's anemof 4/28/1 n.r. I an sending you herewith a Treasury memorandum. I should be glad to have any comment that you care to make. Yours sincerely, (Signed) 1. Horgenthan. 11. Rear Admiral Emory S. Land, Chairman, U.S. Maritime Commission, Washington, D.C. File n.m.c. dy Memember Manue 10:30 am 4/25/42 Regraded Unclassified 121 April 24, 1942 Dear Admiral Land: I am sending you herewith a Treasury memorandum. I should be glad to have any comment that you care to make. Yours sincerely, (Signed) H. Borgenthan, In Rear Admiral Emory S. Land, Chairman, U.S. Maritime Commission, Washington, D.C. By Memenser Regraded Unclassified. Secrit handed to 122 ROUGH DRAFT n me John Wiley april 23 1942 April 21, 1942 pb The advent of Pierre Laval to power in France suggests the urgent necessity of intensifying efforts to impede in every way possible the course of French collaboration with Germany. Points of strategic interest in these efforts are: (1) The French Navy; and (2) North Africa, Madagascar, and other strategic regions in the French colonial empire. Since the middle ages, security to a Frenchman is repre- sented in terms of money. With the extreme frugality of the French nation, economic considerations are believed to play an important role in the average Frenchman's attitude towards the war. There has already been friction, indeed considerable difficulty, between the Free French and the British over the question of pensions and family allocations for the naval and military forces under General de Gaulle (Source: Admiral Auboyneau). If means could be devised where- by the French Navy, the armed forces in North Africa and, perhaps, the Colonial Civil Service too, could be assured by the United Nations that -- come what may -- salaries, 123 - 2 - pensions and family allocations would be guaranteed to all those who remained true to the cause of France and the United Nations, it might conceivably have an important propaganda value at this time. French contacts with the Foreign Nationalities Branch insist that the question of financial security among these categories of Frenchmen and their families could almost be the decisive factor in shaping their decisions in 8. moment of crisis. We are now presumably going to urge the French Navy to beware of 8. coup on the part of collaborationists and Germans; to beware of convoy duty in the guise of legiti- mate service to France, which might lead into the transport of contraband for Germany and into conflict with the United Nations. Our propaganda to the armed forces and authorities in North Africa will probably follow much the same line. The question may now be posed: Cannot our propaganda be substantially fortified by a declaration with respect to the salaries, pensions and family allocations? Would not such a declaration overcome, in some measure, the pecuniary reluctance in the minds of otherwise patriotic Frenchmen to turn against Vichy in the approaching moment of crisis? Regraded Unclassified 124 - 3 - From 8. financial point of view, the obligation assumed would not be great; from 8. psychological point of view, the advantages to be derived from such a declaration might be substantial. In any event, we are in 8. period of the war where no opportunity to improve the situation should be overlooked. Figures are extremely difficult to get -- at least with- out prolonged and detailed researches. The following are the best we have been able to obtain 80 far. In so far as the appeal is addressed to the Navy, it could probably be addressed to so much of it as is now in commission. It might be possible to estimate the fleet now in North African waters, but these personnel figures repre- sent estimates for the whole fleet for 1941. Officers' salaries $3,600,000 Crews' salaries $10,000,000 Family allocations $1,500,000 (Note that all costs are estimated at the present rates of exchange - roughly 40 francs to the dol- lar. All are in round figures.) Estimates for the "Colonial Army" (*) for 1942 allow: Personnel $20,000,000 "Social expenses" $1,000,000 It is extremely difficult to get figures for colonial adminis- (*) These figures may include West Africa - in which case the figure for North Africa should be & little more than half of those given. Regraded Unclassified 125 4 tration. Algeria, Tunis and Morocco have separate budgets as well as different methods of administration, making com- parisons difficult. Figures for the latest years are un- available. The following figures are given subject to con- siderable qualifications. For Tunis for 1939 we have lists of salaries for per- sonnel - including the central administration and Ministers, the "mixed tribunal", the French Justice and Police - total- ing about $578,000. For Morocco for 1939 we have a list of personnel - including the civil list and central administra- tion - totaling $1,800,000. The administrative personnel of Algeria - including the personnel of the central government, the Departments and the Communes, total $800,000. Various pensions, indemnities and allocations - difficult to classi- fy or characterize - would probably total another million dollars in this budget. These figures, rough and inadequate though they are, would seem to bear out the suggestion that the problem is not primarily one of economics. Indeed, 8. declaration on the subject belongs more to the realm of propaganda than to that of financial guaranties. When the United Nations Regraded Unclassified 126 - 5 - win the war, the French armed forces and civil authorities who are on the winning side will be taken care of anyway. If the United Nations should be 80 unfortunate as to lose the war, their commitments would have lost all importance. An item of considerable significance in respect of any financial commitments with regard to France is that the United States is the custodian of frozen French gold re- serves to the amount of $501 millions. From a psychological point of view, any propaganda based on such a declaration by the United Nations would have to be delicately shaped in order not to convey the impression that we were attempting to hire mercenaries; the emphasis should be on our complete readiness to see that French soldiers, sailors and civil authorities within specified areas received what was their due under French law. There might be an implication that those of the uni- formed and civil services who might choose the wrong side in the conflict would not fare equally well. An objection to the proposal, of course, is the fact that any guaranty made to elements of France might provoke pressure on the part of governments-in-exile to obtain sim- ilar commitments for themselves -- unless they could be dis- Regraded Unclassified 127 - 6 - suaded from 8. dog-in-the-manger attitude towards a maneuver that would be a purely strategic one. " JCW:BJ 128 Gablo Address Cable Address "Soupurchase Washington" The Soviet Government Purchasing Commission in the W S.A. April 23, 1942 3355 16ᵗʰ Street, N.W. Washington D.C. Dear Mr. Morgenthau: I wish to thank you for the courtesies extended to Admiral Akulin, Mr. Lukashev and me during our visit to your office yesterday, and to assure you of my appreciation of the cordial reception accorded us. I look forward to a most pleasant and gratifying relationship with you and your associates. Sincerely yours A. I. Belyaev Major General Chairman The Honorable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. C. 129 Treasury Department Division of Monetary Research Date April 25, 19 42 To: Miss Chauncey From: Mr. Southard For the Secretary's files. Need not be brought to his attention. MR. WHITE Branch 2058 - Room 2141 NOTE 130 April 24, 1942 In the attached despatch, conflicting figures reported for United States imports of U.S. currency a Argentina in January and February, 1942. The Second Federal Reserve District's reported receipts U. S. currency (which are collected and given to the press the Federal Reserve Bank of New York) were as follows: January February Total Receipts from all countries $1,248,000 $571,000 Of which from Argentina 505,000 253,000 F.D. C 131 0 P Y DEPARTMENT OF STATE Washington In reply refer to April 23, 1942 If 840.51 Frozen Credits/6042 The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and transmits for the information of the Treasury Department a copy of a despatch from the American Embassy at Buenos Aires, no. 4696, April 10, 1942, concerning repatriation of United States currency from or through Argentina. Enclosure: From American Embassy, Buenos Aires, no. 4696, April 10, 1942. eh:copy 4-24-42 Regraded Unclassified C DUPLICATE o P 132 Y Buenos Aires, Argentina, April 10, 1942. No. 4696 Subject: REPATRIATION OF UNITED STATES CURRENCY FROM OR THROUGH ARGENTINA The Honorable The Secretary of State, Washington. Sir: Referring to the Embassy's despatch No. 4396 of March 12, 1942, in regard to the repatriation of United States currency from or through Argentina, and with reference also to despatch No. 4647 of April 4, 1942, I have the honor to report that two conflicting news despatches were published here on March 12 under New York date lines. One of these, a United Press despatch published in La Prensa read, in translation, as follows: "The shipments of United States currency made by Argentina in the month of February reached only 253,000,000 dollars, as contrasted with 505,000,000, which they emounted to in January, according to & compilation of the Treasury Department. "Several financiers are of the opinion that this very pronounced reduction indicates that Germany has stopped its shipments to the United States, through Argentina, of dollar exchange appropriated in Europe.' On the other hand, the Associated Press despatch published in La Nacion, which purported to be based on information made available by the Federal Reserve Bank of New York, read as follows (also in translation): "The Federal Reserve Bank of New York has reported that Argentina has been the country which sent the most United States currency to the United States in the last month. The shipments amounted to 571,000 dollars, or about half the United States money received in the United States in February. "Argentina also had first place in the month of January with shipments totalling 505,000 dollars." Respectfully yours, File No. 851 For the Ambassador: JWG:cec Edward L. Reed, Counselor of Embassy Regraded Unclassified 133 April 83. 1942 Mr. D. V. Bell Mr. Districh with reference to my of April 20 regarding the acquisition of 1,200,000 sunses of silver for coinage purposes w the Federal Reserve Bank of New York for the Commenwealth Bank of Australia, the Federal today purchased an additional 500,000 emees at 35-1/20 per cause -999 fine for delivery seller's option April-May. This naise a total of 656,000 curses yurchased - to date. FD:1e:4/23/42 Regraded Unclassified C C P 134 Y DEPARTMENT OF STATE WASHINGTON In reply refer to FD 811.51/4168 April 23, 1942 The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses a copy of despatch No. 232, dated April 9, 1942, from the American Consulate General, Winnipeg, Canada, regard- ing proposed "Free Nations Victory Loan". Enclosure: Despatch No. 232, dated April 9, 1942, from Consulate General, Winnipeg, Canada. d THE FOREIGN SERVICE 135 NO. 232 OF THE UNITED STATES OF AMERICA AMERICAN CONSULATE GENERAL Winnipeg, Canada, April 9, 1942. SUBJECT: Proposed "Free Nations Victory Loan". THE HONORABLE THE SECRETARY OF STATE, WASHINGTON. 811.51/4168 SIR: As of possible interest to the Department, in particular the Treasury Department, I have the honor to report that in talking to the leaders of the many foreign racial groups of Western Canada, I gathered the distinct impression that a "Victory Loan" sponsored by the Free Nations (but actually by the United States), would be of considerable interest to them and similar groups in the United States, perhaps even more than a Canadian or an American loan. In discussing this matter with interested persons, I reached the conclusion that a "Free Nations Loan", PS/RA of which the proceeds would be used exclusively for the purchase of war weapons for the armed units of each respective group, would be of practical benefit. In the Province of Manitoba, for instance, there are thousands of Ukrainians, of which at least ninety percent are anti-German, but whose participation in the recent Canadian Victory Loan was not in proportion to their numbers or financial capacity. They prefer to help the Ukraine in a direct way, and are not satisfied with indirect help given the Ukraine by a subscription to a Canadian Victory Loan. This is also true of the Poles, Dutch, Norwegians, and other racial groups. As I am not a banker I am unable to discuss the detail operation of such a financial measure, but I am assured by my local banker friends that the Regraded Unclassified 136 -2- proposed measure is not without merit. Respectfully yours, A. Y. Klieforth American Consul General In triplicate; one copy sent to the Legation at Ottawa. 711 AWK/1t A true copy of the signed orig- inal. (1) L.T. Copy:bj:4-23-42 Regraded Unclassified 137 April 23, 1942 To: Adler, Chungking, China From: The Secretary of the Treasury and Mr. Fox Reference your cable of April 9, 1942, No. TF25. 1. Your paragraph No. 1 regarding Stabilization Board. According to the Agreement of April 1, 1941 the fund includes that portion of the US$50 million which has been secured by purchase of yuan by the Secretary of the Treasury through the Federal Reserve Bank of New York at the request of the Central Bank of China. As yet there has not been any yuan purchased by Bank the Treasury because the Federal Reserve/have not received from the Central Bank of China a request to that effect, and, therefore, the fund as yet does not include the US$50 million or any part of it. 2. Your paragraph No. 2 advises us that Central Bank is opening an account for Federal Reserve Bank in New York for the Chinese currency equivalent of US$5 million. The Secretary is, of course, prepared to purchase through the Federal Reserve Bank of New York the Chinese currency equivalent of US$5 million in accordance with the procedure outlined above. 3. Your paragraph No. 2 also outlines proposal of Board to hold Chinese Treasury notes instead of fapi. Since we presume that a quorum of the Board was present when this decision was made this proposal would seem to be in accord with the Agreement of April 1. 4. Your Section 2 gives gist of memorandum Board proposes to submit to Dr. Kung. Mr. Fox is inclined to oppose the proposal and thinks that it would be unfortunate if such action was taken. Treasury officials here feel Regraded Unclassified 138 -2- that the Stabilization Board should take no steps which would weaken its long-run position as this proposal would seem to do. We believe that the proposed curtailment of the sphere of activities of the Board is not compatible with its effective functioning. 5. Your cable of February 3, TF17, paragraph 4, asks for information to be obtained for Fox. A visit by Fox to New York banks has confirmed previous impression that information is not available as to amount of fapi held in Shanghai on Board's account nor as to amount of set-offs on books of bank not yet credited to the Board. The Bank of China in New York has kindly furnished Fox with a record of all transactions with the Board which can be forwarded to Chungking, if such information is not available in the Bank of China's offices in Chungking. However, information contained in your cable of April 18, No. TF28, would seem to make this unnecessary. ISF/efs 4/23/42 Regraded Unclassified 139 IM London This telegram must bE paraphrased before being Dated April 23, 1942 communicated to anyone other than a Governmental Rec'd 8:15 a.m. agency. (BR) SECRETARY of State, Washington. 2086, April 23, 9 a.m. FOR SECRET.RY OF THE TRE.SURY FROM CASADAY Department's 1511, April 10. Figures for 1939 are not available without much extra labor. BECAUSE 1939 was a year of transition from PERCE to war, it was felt that comparisons with pre-war 1938 and the war years 1940 and 1941 would not bE significant. Consequently the basic data were never prepared. One. The figures for total United Kingdom direct tax liabilities for the calendar years 1938, 1940 and 1941 in millions of pounds are, respectively, 474, 896 and 1,306. These figures include national de- fense contributions and EXCESS profits tax as WELL as income tax on the undistributed profits of com- panies. They are found by adding items two and four, table E, Page six of the new White Paper, command 6,347 and subtracting from that sum the death duties and property and 1 Regraded Unclassified 140 -2- #2086, April 23, 9 c.m. from London property transfer tax figures found in item 12, table 2, page 11 of the same document. It will bE noted that the figures given above for 1938 and 1940 represent slight revisions of the figures shown in item 15, table B of last year's White Paper, command 60,261. Two. The figures for total United Kingdom personal incomes after deduction of direct tax limbilities are found by subtracting the sum of items 11 and 13 of table 2, page 2 of command 6,347 from item 8, page 10 of the some document. The revised figure in millions of pounds for calandar 1938 is 4,256. The revised figure for calender 1940 is 4,982, while the figure for calender 1941 1s 5,309. "Command 6347 and other budget material requested in State Department's 1593, April 15, 7 p.m., W&S for- warded by air pouch April 17. Three. No prepared data are available on the number of persons in the various income groups in the United Kingdom but the Board of Inland REVENUE has agreed to furnish some matericl on this subject CB soon as limited staff facilities will allow. When this has been done, the data will be forwarded by cir pouch or by orble if the Treasury so instructs. RR MATTHEWS 141 April 83. 1940 Mr. Livesey Mr. Bictrich will you please send the attached telegram to the American Lendon, "Fer Casalog from the Secretary of the Treasury". Flich 142 90 Mr. L. 1. Casaday, American Ruberry, Lendon, Regland From the Secretary of the Treasury Please send W air youch the following reports listed in recent weekly summaries of reporting activities: (1) Adminis- tratien of Consumer Rationing and Limitation of Supplies, (2) Consumer Rationing-Stocks of Consumer Goods and Censumer Needs. MJH/grs -4/22/42 Regraded Unclassified 143 TEIEGRAM SENT DM April 23, 1942 This telagram must bE paraphrased before being 2 p.m. communicated to anyone other than a Governmental agency. (BR) AMEMBASSY, LONDON, (ENGLAND). 1745 For Casaday from the Secretary of the Treasury QUOTE. Please send by air pouch the following reports listed in recent weekly summaries of reporting activities: (1) Administration of Consumer Rationing and Limitation of Supplies, (2) Consumer Rationing-- Stocks of Consumer Goods and Consumer Needs. HULL (FL) FD:FL:BMcB Regraded Unclassified 144 April 25. 1942 av. Liveesy Mr. D. Wi Bell in accessance with telephonic commercation, alliga please send the failer- ing eable to the American soural, - righ Islande: "From Treasury. Reference your despatch Bo- 60, April 11, 1942. 1. For your information the Britten Government has agreed so the dillar I I 8 a details I $ 1 $ of the united states and the sale of United states currency for efficial purposes at the rate of 04.03-1/8 you pront not is Great Bottein est Treasury Northern Irelend and the that the wither bee called the peninion destral Denis respecting similar arrangumento as the basic of 04-03-1/2 you pound net is the storling area. 1. is order to facilitate the negotiation of and improve the rate for the sale of United states current and cheske drawn as the of the United states, the fellowing procedure is 3. to the - of ...... united states paper current, instruct the leak of Inc south sales. run, to proport liet is qualificate chowled the access of - donomination of sech kind of ourrenty coparately, and for rederal Security notes and to Federal Receive - notes, the 1400 met abov separately the - of sook consultation of the Leese of each healt, out currency is half vertically and sharp w write - of basis a each half is Latt. them deliver both halves and 11st is qualificate to Regraded Unclassified 145 - . . I É I a. Consuler officer will verify - of entreasy delivered to = use purchase 1 1 $ 2 IIIA to a I of united states through state Department the memos of currency 4a- livered to his. then treasury reserves this advice, payment la - spending amount will be unde to the now Teste correquentent for the Account of the Jost of New south vales, Date. Please include la your first telegram - of correopendent. Upon receipt and commission freesury receives right to state reinbursement for my surrency which le not gentras. Each not of belvee should be forwarded w separate carrier accompenied w a copy of the list. The third 0017 of list should be fervarded w otill eacther carrier. the American consuler officer will retain Sourth copy of liet. 5. All United states dollar checks them ⑉ the transpor of the E z r s 01 1 I I I and É 5 delivered to the American cencel, - accompanied w 1100 is triplicate with complete decoription of cash shook at fellows: taxe of I r due I i I I I I consuler officer will surefully verify checks against list and # visa treasury w telegram through state Department agreements - of checks delivered by beats. upon receipt of this advice, Treasury will effect payment is - to the New York correspendent of the Bank of Dow south usles. Commiss officer should instruct boak of New south valee to use all persible diligance is identification of page and doteguing validity of intervencate. back of New south vales should interes checks M follows: Regraded Unclassified 146 - 3 - Imme quote. pay to the order of the them of the United states for credit of our adomals with (asse of beats). signed bank of Bev I I I I subs É 1 11 last 8 1 r E south valoe only ter usual genates under laws applicable to the righ Islands. Consuler officer should forward checks accompanied w one copy of list be treasurer of valied states, insidagton, as promptly M possible w sefeet - 0017 of list should fellow w exparate carrier at engliest percible date. third our should be retained w sommler efficer. 6. (ensular officer should nabe M fee Insurance M III 2 1 B I 1 r I I I Lessee is shipment Act. 7. the designation of the bank of now south value se a depositary of poblic meades of the united States, M entitaed is the Treasury's letter to the need office of the and at sydney, dated recember 31. 1941. to hereby extended so carry as the procedure outlined in this telegram. 8. Please advise the - of now south vales, sure, the Jam of Nov sealend, seen, and other United states deverment efficials of appropriate parts herest. 9. 90 minimise mober of checks true an the Treasurer of the talled states, magnet that you advise disbursing efficers that they should cable through their responsive departments their loan] oursent requirements. vill then be mate to almoss dollar credits to the Dosh of New seath vales, sure. Regraded Unclassified 147 a e . the Department applicates the foregotag. my emposes insured to enerying ont the instructions centained is this telegrae be instated in regular scounts as separate Item for billing treasury is accordance with see. , - ag. pereign service Regulations. - Regraded Unclassified 148 April as. 1942 M. Livery ar. D. W. 2011 in with telephone converention. will pm please HDL the failow- lag sable to the merion Consulate secoral. vollington, New realand. "From treasury. 1. for your information the brittick devermants has agreed to the negotiation of dollar telegraphic transfers, chetter them as the treasurer of the talted states and the sale of United states arready for efficial purposes at the rate of $4.03-1/2 per pound ast is great Treasury Britain and Northern Irelend and the that the british devernment has cabled the penimies Central Jasks respecting sinilar arrengements on the backe of 04.03-1/2 per yourd ast in the storting area. 2. In order to facilitate the negotiation of the sale of United states currency end sheets 4ym an the them of the United states, the fellowing presedure so imported. 3. in the case of - United states paper currency, Lastruct the Seah of seu realand, vollington, to propare 1104 is r & I 1 y Revenue I a 1 % I rately, and fee rederal mates and the Federal Receive not notes, the list mash show separately the - of cash of the Leese of eath bank, out current is half vertically and storp of wite - of bank - each half is tab. the deliver both belves and list Regraded Unclassified 149 - I - is quatroplicate to commi, Vellington. m. comber afficer will varify - of - delivered to his against 11st propared w both and the be will telegraph treasurer of United States through state Department the - of 1 and $ deliners I recebres a altries, I * amt is corresponding 1 will be nade be the New Terms currespen- dont for the I of the bank of New realand, sellington. Please include is your first teleghts - of Upen receipt and comination Treasury right to claim refeirement for my currency which is not genuine. Resh est of halves should be for- varded w separate carrier assemyanied by a my of the list. the third my of list should be feturied w still mother currier. the American consular efficer will retain fourth my of list. 5. and Undited States dollar checks trum a the there of the United States negotiated w the Bath of New realand, rellington, are so be delivered to the Amrion teams, vollington. accupanied w list is tripliente with complete deccription of each shesk as fei- person's I injury 1 I % 1 1 1 - date of check. Censeler officer will curefully verify checks against list and 1 1 Itate 1 B I of checks delivered w lank. Eyes reseipt of this advise, treasury vill effect payments is currespending - to the you Term correspon- sent of the Bank of New instant, voilington. tensuler efficer cheald factors back of New zealend to use all Regraded Unclassified 150 - 3 - pessible diligance is idmitification of yourse and determining validity of endorsements. Back of the sealend should misres dada M follows: Issue quote. NJ to the order of the Insurer of the United States for credit d w account with ( of book). signed - of for 1 I I I I TIM late s r 1 Beu zealand saly for usual guarantee under Love applicable is lev realend. tearsler officer should feverá chesks accompanied w ⑉ copy of list to treatment of United states, mashington, # promptly w possible w sefeet - available. second - of list should fai- lew w separate currier as curriest possible date. Third - should be retained w consuler officer. 6. (namler efficer abouté unle M for insurance as shipments of both ourreas at chosis will be corred w - - Leases in shipment set. 7. the designation of the of Bev sealent, rellington, as a depositary of service of the United states, outlized is treasury's letter dated April 4. 1945. is hereby estended to carry est the presedure outlined in this telegram. 6. Please aivise the - of New sealend, wellington, and other United states Inventment officials of mystyriate parts hereef. 9. to minimise under of checks drum a the Treasure of the United states. registers that you atrice distursing officers that they I $ à I 1 I il 1 I Posty requirements. Arrengemento will them be made to advance dollar Regraded Unclassified 151 - a - credits to the Just of you secient, scillagion." the pepartment approved the foregoing. my empense insured is everying one the instructions esatained is this telegrom should be included in regular assembe as superate item for Milling to accurtance with see. , - 45. reseign service Regulations. I 1-13-18 Regraded Unclassified C C+ P Y 152 April 23, 1942. To: Mr. Bonsal From: Mr. Southard Below is the cable concerning which I spoke to you by phone this afternoon. Will you please send it to the American Embassy at Montevideo. "The Federal Reserve Bank of New York informs us that they have received an inquiry from the Central Bank of Uruguay inquiring about shipment by air of $5 million of gold bars. The Treasury Department is prepared, of course, to approve the shipment of gold to Uruguay whenever the Central Bank BO requests. However, the Treasury is interested in ascertaining why it is regarded necessary to ship gold from New York to Uruguay at & time when the risks of shipment are so great and when the costs of shipping are 80 high. Please make discreet inquiry and cable us at once as we would not wish to delay shipment if the Central Bank of Uruguay decides to have the shipment made." HDW:FAS:dmh 4/23/42. Regraded Unclassified 153 TREASURY DEPARTMENT INTER-OFFICE COMMUNICATION CORRECT DATE April 23, 1942 TO Secretary Morgenthau FROM Mr. White confidential Registered sterling transactions of the reporting banks were &8 follows: Sold to commercial concerns £32,000 Purchased from commercial concerns £10,000 Open market sterling was again quoted at 4.03-3/4. with no reported transactions. In New York, closing quotations for the foreign currencies listed below were as follows: Canadian dollar 12-1/2% Argentine peso (free) .2372 Brazilian milrois (free) .0516 Colombian peso .5775 Mexican peso .2064 Uruguayan peso (free) .5295 Venezuelan bolivar .2860 Cuban peso 3/16% premium There were no gold transactions consummated by us today. No new gold engagements were reported. In London, spot and forward silver remained at 23-1/2d, equivalent to 42.67#. The Treasury's purchase price for foreign silver was unchanged at 35#. Handy and Harman's settlement price for foreign silver was also unchanged at 35-1/84. In execution of an order from the Commonwealth Bank of Australia for the purchase of 1,200,000 ounces of silver, the Federal Reserve Bank of New York bought 500,000 ounces in New York today at 35-1/24 per ounce. It had previously purchased 156,000 ounces on April 20 at 35-3/84. This silver is to be used by the United States Mint to fulfill a coinage order for the Australian Government, We made no purchases of silver today. Regraded Unclassified 154 Copy No. 13 BRITISH HOST SECRET (U.S. SECRET) OPTEL No. 133 Information received up to 7 A.M., 23rd April, 1942. 1. COMBINED OPERATIONS In the early hours of 22nd April B. minor raid by two parties was carried out on the coast near BOULOGNE. The northern party landed without oppo- sition and carried out a reconnaissance but failed to reach their objective, one alight casualty. The southern party was unable to land oving to enemy opposition, The naval escort engaged enemy a rmed travlers one of which was damaged and another left on fire. No British ship WELD damaged and naval casualties were very slight. 2, NAVAL 21st/22nd. Off ORFORDNESS two motor gunboats engaged at least six E-boats one of which was set on fire. One motor gunboat was damaged. 22nd, An A/S patrol motor boat TITELS attacked and damaged by enemy aircraft south of FOLKE- STONE. 3, AIR OFERATIONS WESTERN FRONT. 22nd. Beaufighters damaged a six hundred ton merchant vessel off the Norwegian coast. 22nd/23rd. Aircraft were despatched COLOGNE 69; HAVRE 23; Seamining (BALTIC KIEL and HELIGOLAND) 64; Leaflets (ROUEN) one, Four aircraft are missing and one crashed. About seven enemy aircraft crossed the coast between POOLE and WEYMOUTH. A few bombs were dropped near WAREHAM, causing neither damage nor casualties, LIBYA. 20th/2lat, Wellingtons one of which is missing bombed BENGHAZI and laid sea mines in the harbour, MALTA. Between 13,59 hours 21 and 13.49 hours 22, 166 enemy bombers with fighter escort attacked aerodrome, Five of our aircraft vore destroyed on the ground and eight damaged, Ten Spitfires were damaged in combat but all pilots are safe, Fighters and anti-aircraft gunfire destroyed eight enemy aircraft, probably destroyed two and damaged nine. Regraded Unclassified 155 COPY 13 NO. BETTISH MOST SECRET 10.5. SECRET) OPTEL No. 199 Following in aupplementary remume of operational eventa covering period 16th - 23rd April, 1942, I. NAVAL It. 10 reported that GNEISENAU WAD being tomad from KIEL to GDYNIA about 11th. 6 merchant ships totalling 39,000 tono arrived TRIPOLI (L) during the work and 4 totalling 5,600 tona are believed to have arrived at BENGHAZI probably ino TRIPOLI (L). There are indications that the Japanese aircraft carriers re- cently operating in the INDIAN OCEAN and several cruisers have returned to Japanene miss. The main enemy submarine concentration was still in the Test Atlantic several being on outward and homeward passage. Others were at work in the BARENTS TD, 3 U-boats and a supply ship were reported in the South Atlantic on the 19th, Some were also operating off SYRIA, Shipping losses were lighter. Attacks on 11 ships were reported, 4 of which were sunk, During the week onding 22nd 936 ships where convoyed, Imports into the U.K. by ships in convoy during the work ending 18th totalled 679,000 tons including 165,000 tons of oil, Non-tanker imports for March were 1,981,500 tons, alightly more than half was food, A French Neval tanker and - armed merchant cruiser with 2 submarines are reported to have arrived at DAKAH on 20th. The tanker 10 probably one which was due to leave DIEGO SUARRZ on 15th March with 9,000 tons of fuel oil, the armed merchant cruiser loft TAMATAVE on 4th March, It is entimated that 250,000 tons of Japanese shipping has been sunk wince JAPAN went to war, 2, MILITARY In spite of the thaw fighting continues along almost the whole Russian Tront and is likely to increase as the ground dries. It still accur probable that the main German attack will be towards the DON accompanied by simultaneous sub- >idiary attacks further north to threaten MOSCOW and to pin dom Russian troops which wight be diverted to the southern front. A Gorman attack in the CRIMEA as a prolude to the chief operation may soon be expected, Evidence is still lacking that the Gerwans at present contemplate any large scale operations claewhere than against RUSSIA. The number of German divisions on the Russian Front in 179, In- cluiting 5 in Finland, there are also believed to be about 200,000 Humanian troops (9 to 10 divisions) and about 30,000 - 40,000 Bungarians, the latter engaged only - forces of occupation, Between 14 and 16 Finnish and 3 to 4 Italian divisions complete the Axis array. In LISYA Romol ta continuing to build up his strength expecially as regards mechanical transport, The Japanese advance in BURNA con- times widle at the namo time they appear to be regrouping their forces in the scoupied torritories, Their immediato strategy seems to be to isolate CHINA, oon- solidate their gains and be ready to scise any further opportunities. Their atti- trade towards MUSSIA in probably undecided and in to be formed by the turn of events, 3. AIR OPERATIONS UNSTERN FRONT. Although this period me noteverthy for 2 outstanding deglight operations, the Lancasters attack at AUGS BURG and the rocord number of Fighters sent over Northern France in 1 day - 653 . night work was curtailed by unfaveurable wonther and only included 1 heavy attack on HAMBURG. Nevertholose Sumber Command carried out nearly twice the amount of sec-mining as in the provious period and laid 253 mines, the energy in dentroyed and damaged 104 aircraft, Although our own lesses in air MALTA. The scale of attack averaged about 190 sortice per day and cost havy bringing our total casualties to 22 fighters destroyed and at loast 37 damaged Menting were only 4 Spitfires and 2 Hurricanes our losses on the ground were pirt of the German Mr Force capacity (A) by containing about 300 - 400 aircraft The stubborn defence by MALTA during the last 3 months has aboorbed an important which night have been used elsowhere and (8) by causing martago in aircraft and trained crown, It 10 natimated that since 1st January 228 Gorman aircraft in- cluding 104 JU 88% have been destroyed over HALTA to which must be added normal active=service mustage, Regraded Unclassified 156 - 2 - The scalo of effort by the German Force available shows that the utmost Le seing extracted from thom and implice that 2 sortion por day by aircraft must be comon and even 3 por day by no means rare particularly by fighters and dive bombure, This intensity over a emall heavily defended area mist be producing a high rato of surtage apart from airoraft actually destroyed and thore are good grounds for twinking that the number of aircraft lost to the onomy exceeds MALTA's claims, It Se not too such to say that with the ronewal of full-scalo operations in all theatros the wounds inflicted by the defenders of MALTA will be folt by the Corman Air Force for a long time, 4. EXTRACTS FROM PHOTOGRAPHIC AND INTELLIDENCE REPORTS ON RESULTS OF AIR ATTACKS ON ENEMY TERRITORY IN EUROPE DORTMUND. From photographs 16th April, a group of factorios to the cent sido of the town all engaged in constructional onginooring work have been oxtonsively imaged bosides other buildings in the vicinity. 3 workshops, 41 warebouse and several shods in the docks have been gutted. DUISBERG. On the 9th/10th March a steelworks manufacturing chiefly platos for shipa was very badly damaged, RHEINEERG. From photographs 11th April, a factory which is thought to produce 10 percent of the total German output of sodium carbonato was badly damagod. The population of the RUHR is stated to be uneasy. There in a marked desire to ROW outside towns but it is forbidden for work people to live more than ten Vilo- tures away from their work, NORTHERN FRANCE. Photographs confirm that at ROUEN and CAEN hite were obtained on the power stations and at LE HAVRE part of the power station roof has boen Burnt, 5. OFERATIONAL AIRCRAFT BATTLE CASUALTIES Metropolitan Arva - British in the air, bombers 18, fightors 9, Constal 7, Any Cooporation 1, Total 36. 4 pilots are safe, Enemy Probably Destroyed Destroyed Damaged Bombors 2 1 3 Fighters 7 4 6 Miscollanoous 2 1 Nil Total 11 6 9 MIDDLE EAST including MALTA - British In the Air On the Ground Bombers 3 6 Fightors 16 8 Others N11 2 Total 19 16 11 pilota safe, Enemy Probably Destroyed Destroyed Demigod Bombors 35 10 34 Fighters 12 5 13 Miscellanoous N11 1 1 Total 47 16 48 or the abovo totals, 30 more destroyed, 7 probably destroyed and 24 Immaged by A.A. Far East British und Allind In the atr, bombors 2) fightors 4, total 6. Regraded Unclassified 157 - 3 - Enemy Probably Desiroyed Destroyed Damaged Fighters 7 2 4 Miscellaneous 1 Nil N11 Total 8 2 4 NOTE: No account is taken of enemy aircraft destroyed on the ground in any theatre or of British naval aireraft casualties, 6, HOME SECURITY Although some bombs were dropped on every night except 1 most of thom fell in open country. Estimated casualties to 0600/23 killed 33, seriously wounded 74. 158 NUMBER 28 SECRET COORDINATOR OF INFORMATION THE WAR THIS WEEK April 16-23, 1942 COOK IDINA LOTO Printed for the Board of Analysts Copy No. 6 The Secretary of the Treasury Regraded Unclassified APRIL 16-23, 1942 SECRET Coordinator of Information THE WAR THIS WEEK With Pétain's acceptance of Laval and the creation of a frankly collaborationist government in France, the Germans have won a diplomatic victory of far-reaching implications. In the end it may involve the transfer to Axis control-in effect at least-of the French fleet and bases. Present indi- cations, however, suggest that Laval will move slowly at first, attempting above all to consolidate his domestic position. In the Far East, there is an enigmatic pause in the Battle of Bengal, and the Japanese are withdrawing from that area important elements of their fleet, including heavy units. This may reflect a decision that the costs of an assault on India would be too high, as suggested by the Japanese air losses over Ceylon. Or it may mean merely the withdrawal of carriers to obtain fresh complements of planes. Mean- while the recent doubling of Japanese air strength in Man- churia and Japan suggests an increasing interest in the Siberian area. At the same time the Japanese have again been feeling out the North Australian defense zone, but here their heavy air losses-as compared with those of the Allies-would scarcely encourage a significant forward movement. On the Russian front, the Soviets continue to claim gains, but the best evidence indicates that Russian attacks are aimed primarily at seriously hampering German prepara- tions for the expected spring offensive. Military observers credit the Russians with no advances of importance for several weeks past. 1 Regraded Unclassified SECRET SECRET Pétain Yields to the Collaborationist Tide World War was enough to convince large numbers of people On Sunday last Marshal Pétain asked the French people that his advice should be taken and that France should lay to follow him as it had on the occasion of the armistice of down her arms. His popularity and prestige, together with June 1940. With full knowledge that the assumption of a fundamentally egotistic belief in his own political impor- power by Laval would be considered AS nothing less than an tance, permitted such traitors as Laval to gather about him unfriendly act by the United States, the Marshal declared: and to support his political pretentions while seeking to foster "Pierre Laval will exercise under my authority the internal their own personal ambitions. Pétain's lack of faith in the and external policy of our country. It was with him at the cause of French democracy and his defeatist tendencies, as most tragie moment of our disaster that I founded the new recorded by Clémenceau and Foch from the last war, made it order which must assure the resurrection of France. only too appropriate that he take advantage of France's "Today is a moment as decisive as that of June, 1940; prostrate condition in order to force upon her in 1940 his ideas I again find myself with him to resume the national task, and of what a French government should be. This cast of mind that of European organization for which we together have laid has now made it perfectly possible for Pétain, despite his the bases." notorious personal enmity for Laval, to accept a regime The somewhat enigmatic nature of Pétain, and the vacil- pledged to full cooperation with the Germans. lating character of his policy have given rise to justifinble differences of opinion as to his willingness and ability to Laval Maps a Collaborationist Course for France resist the collaborationist demands of the Germans in the past. Now, however, his frank acceptance of Laval, who has Laval's formation of the new government obviously fulfills promptly embarked on a candid program of cooperation with hopes which he has long cherished. It is even reported on the Germans, has destroyed faith in the sincerity and useful- high authority that some years ago (and long before the ness of Pétain. The most striking index to this new attitudo collapse of the French republic) Laval conceived an anti- is quite obviously the recall for consultation of Admiral Leahy. democratic regime, to which Pétain had declared himself In future the Marshal is apparently to be viewed as a political sympathetic, and of which he, Laval, would be the effective front for the Laval regime, of value merely in winning for leader, covered by the cloak of the Marshal's popularity. that regime political adhesion among parts at least of the Without the popularity of Pétain, Laval obviously realizes French public. that in the present juncture he could do little, unless be One close observer of the French scene points out that were prepared to seek the full support of the German Army. Pétain's present action accords with much in his past. When In his Monday broadcast to the French people Laval France in the summer of 1940 was faced with the decision declared: "I have always affirmed that rapprochement be- whether she should surrender to the Germans or continue tween France and Germany was a condition of peace in Europe resistance in the colonies, the character and personality of Today no menace will prevent me from seek- Pétain played a decisive role. His great prestige in the first ing entente and reconciliation with Germany." 2 3 Regraded Unclassified SECRET Secret Only the future can reveal the precise form to be taken by manded the Strasbourg in the British attack on Oran, has been the policy here described by Laval in unvarnished terms. He given the naval command. In Tangier the Germans are has reserved for himself the key posts of Foreign Affaira, planning to establish diplomatic or consular representation, Interior, and Information (propaganda). He has chosen as and are attempting to establish a regime of extraterritoriality. collengues notorious collaborationists or men who are in any A very recent report tells of the arrival in Tangier and North event fully expected to do his will in realizing the new policy. Africa of "an extraordinary number of Germans" who, it is It is true that Darlan has been named successor to Pótain claimed, are coming for espionage and counter-espionage and commander in chief of all the armed forces, responsible purposes. only to the Marshal. But observers point out that the extent While Allied suspicions have been aroused over plans of Laval's power, notably over the Ministries of War and the regarding the movement of French warships from North Navy, will enable him to exert significant control over the African ports, it is reported that the French are calling for armed forces of France, and probably as a result to undermine more arms from the Germans to "protect" themselves against rapidly the position of Darlan. the British. In Dakar, the press and the radio, through directed propaganda efforts, are vehemently stressing loyalty to Pétain, while from Martinique Admiral Robert claims that his relationship with Pétain and Darlan has not changed. Laval's Apparent Intentions It is believed that Laval will make no spectacular changes Asia Naval Dispositions and the French Fleet at once. According to Anthony Eden, he will lie low for a time to quiet apprehensions in America as well as in France. This week's map presents in diagrammatic form the Laval probably hopes to mediate between Washington and locations of the naval units in Europe that the United Berlin and to acquire enough prestige in the New Order to Nations must wateh-themselves heavily engaged in Atlan- feather his own nest and that of France. He will do nothing tic, Pacific, and Far Eastern waters. Notable are the badly about Vichy warships for a time, Eden indicates, and neither battered but still powerful Italian battle fleet at Taranto; contemplates nor desires allowing Berlin to have them. He the German naval concentration at Trondheim-threatening might, however, use them to protect the trade of France with both the British Home Fleet and the Allied supply line to her dependencies. Laval would no doubt permit Nazi pene- Russia, while guarding against an assault on Norway; and tration in these areas, SO that a naval clash with Allied forces the seattering of the remaining Nazi fleet units among nu- might well result. He will foster the transfer to Germany of merous ports of the North and Baltic Seas, cleverly guarding French workers, but is unlikely to embark on so ambitious a against a repetition by the British of surprise torpedo-plane project as the conquest of territories held by the Free French. successes such as those at Taranto and Pearl Harbor. Here Eden concludes. the contral question is, of course, what the future will bring Certain changes are already in evidence, however. In when the damaged Schurnhorst and Gncisenau (perhaps along French West Africa Rear Admiral Paul Collinet, who com- with the pocket battleship Lützow and the aircraft carrier d 5 Regraded Unclassified SECRET SECRET Graf Zeppelin) are ready to join the Tirpitz and Scher to refer when they speak of the "menace" of the French navy. form A formidable battle line. Meantime, press reports of the presence of two British With Laval again in power at Vichy, the immediate issue, battleships, one of the new King George V class, in waters however, is the French fleet. Here, one can distinguish four near Toulon, suggest that the United Nations will not be separate elements of the French navy, in ascending order of raught napping by any surprise move of the new Vichy importance. First, there are the units already in Allied regime. hands-or as good as in Allied hands-including the old battleships Paris and Courbet in British ports, the battleship French Alternatives Lorraine and three heavy cruisers demilitarized at Alex- andria, and the aircraft carrier Bearn at Martinique. The present danger, however, is more complex than a mere Second are the ships at Dakar and Casablanea on the "surrender" of the fleet would suggest. There is also the Atlantic Coast of Africa. Here are France's newest battle- question of bases, notably Bizerte, in Tunisia. The use of ships, the Jean Bart and the Richelieu. The former, how- Bizerte as a base for supplying Axis armies in Libya last win- ever, is incomplete (nor does Casablanca appear to offer ter caused a grave crisis in Franco-American relations. And adequate facilities for its completion); the Intter, damaged if the new Vichy government were to turn over all its facilities by the British and with its bottom fouled, is probably of use to the Germans and Italians, the Axis naval and supply prob- only as a sort of floating shore battery. Furthermore, to lem in the Mediterranean would be considerably simplified. join the main body of the French fleet naval units from Yot the change would not be so great as some press com- Africa would be obliged to run the gauntlet of Gibraltar. mentators have suggested. There is considerable evidence Such a venture, hazardous at best, probably would have to that the British are no longer attempting to control the be attempted without the formidable air protection that was Western Mediterranean. The recent convoy to Malta, for in large measure responsible for the successful passage of the instance, came not from Gibraltar, but from Alexandria. Straits of Dover by the Scharnhoret and Gneisenau. Gibraltar apparently remains as 21. sort of naval outpost. Third in importance are the vessels in Mediterranean porta But to neutralize Gibraltar, as Malta has already been largely in North Africa. Lacking heavy naval strength, these units neutralized, would be of clear advantage to the Axis. For would be of real significance only if they joined the main this purpose, the use of the French base at Mers-el-Kebir French fleet at Toulon. It is barely possible that the resist- (Oran), less than 300 miles from Gibraltar, would be an almost ance of local authorities might prevent their junction with indispensable prerequisite. the bulk of the Vichy navy in any frankly collaborationist Laval's announced intention is eventually to reconquer the French colonies that have passed to De Gaulle. One observer gesture. Fundamentally, however, it is the fourth group, the fleet suggests that an ultimate Vichy attack on Syrin would not at Toulon, including four heavy cruisers and perhaps three only be in line with this policy, but would also give Laval a splendid pretext for what would amount to a surrender of his battleships fit. for service-the old Provence, and the new, Mediterranean fleet to the Axis. For an effort to reunite the fast Dunkerque and Strasbourg-to which commentators 6 7 SECRET SECRET French Empire, even though it meant joint action by the content with the practical mastery of these waters which they French and Italian navies against the British, would no doubt have already obtained. On the other hand, the advice issued fire the imagination of at least one wing of patriotic French- by the government of Madras for all non-essential civilians men. Certain naval officers in particular, outraged by the to leave the city, and the news of increased enemy merchant British attack at Oran, and their fomenting of "civil war" in ship movements in the Bay of Bengal, would point to A con- Syrin, are reported to be thirsting for vengeance on their tra- tinuing Japanese menace. ditional enemies. With the Indian peninsula on the alert, post-mortem state- ments on the failure of the Cripps mission were not lacking. Moditerranean Danger Spots The Chinese press reaction has in general been one of great In Syria itself, a personal struggle between General disappointment, tempered by the feeling that the Indian Catroux, the chief of the Free French authorities, and General problem is of such urgency that British and native leaders will Spears, the British commander, is embittering relations perforce continue negotiations and reach a satisfactory settle- between the two occupying forces. A report from Beirut ment. British newspapers see a certain gain from the break- suggests that Catroux, alarmed at the fact that the British down of negotiations: now the responsibility for India's future rests squarely with the Indians themselves. Further- are more popular with the natives than the French, is about to reorganize the government of the Lebanon in cooperation more, the British have won understanding and support from an initially hostile public opinion in the United States. with the Maronite Patriarch, spiritual director of about a third of the Lebanese. In Libya, sandstorms during the early part of the week The Japanese Shift Fresh Strength to the North completely stalled military operations, Although Malta, While an unconfirmed report from Finland pictures German Britain's much-bombed island fortress, last week suffered disappointment at Japanese failure to attack Siberia "as somewhat less damage and fewer casualties than in the expected," a reallocation of plane strength indicates increns- preceding period, its situation apparently remained as critical ing Japanese interest in that area. The number of military as before. In an unprecedented gesture, the King awarded planes in Manchuria and Korea was increased in the first the George Cross to Malta's entire civilian population. half of this month from about 300 to 700, and in Northern China (including Chahar) from 60 to 200. In Japan the Pause in the Bay of Bengal number was nearly doubled, rising from about 400 to more than 750. It is difficult to interpret the present lull in Japanese opera- tions against India. On the one hand, the report that the At the same time seven divisions, which were supposed to Japanese have withdrawn all the battleships and all but two have been in Japan proper, have dropped out of sight. Some of the aircraft carriers previously concentrated in the Bay of them are thought to be now in Manchuria, where there of Bengal, might suggest that for the present at least they are have recently been 18 divisions (12 on the border facing the Maritime Province). In addition, a convoy bearing 8 large 8 9 Regraded Unclassified SECRET SECRET number of Japanese troops recently left Singapore, bound were reported by Japanese sources to have struck at Tokyo. northwards. It is believed that its destination may be Dairen. And on the European continent there was increasing evidence that the Germans were speculating with some anxiety as to just where Britain and the United States might conceivably Renewed Activity in Australasia be planning to open up a second European front. With General MacArthur's sphere of authority delimited Reichmarshal Goering and his staff since April 4 have at last, and with United Nations aviators taking the offensive been at Serqueux near Forges-les-Eaux (Seine-Inférieure) in against Japanese air bases at Kupang, Salamaua, and Rahaul, Occupied France, according to a report from Vichy. The Allied optimism about Australia was on the increase. An- Belgian government in exile has stated that the Germans are cording to Lieutenant General Brett, United Nations Air evacuating civilians and laying land mines in the Sambre Commander, his fliers are destroying six Japanese planes to and Meuse region. And a Swiss report suggests that German every one of their own lost in action. At Rabaul, for instance, press quotations of American and English newspaper pre- Allied airmen destroyed 40 Japanese planes on the ground. dictions of a coming offensive represent a real endeavor to More recently, however, Japanese heavy bombers returned determine where such an attack might come. Here frank to the attack on Port Moresby (New Guinea). Coupled curiosity is a more convincing explanation than a claim, with reports of decreased activity in the Bay of Bengal, this ostensibly from Berlin, of complete information on "Roose- new attack suggests that the Japanese for the moment at velt's plan." least have abandoned aggressive intentions against India, Wednesday's commando raid on Boulogne has revealed and are again feeling out the defenses of the north Australian once again the vulnerability of the channel shores of Occupied zone. France-presumably one of the areas which the Nazis are protecting most heavily. With an estimated 900,000 men to guard the whole European coast from Bordeaux to Trond- Toward an Allied Initiative? heim, German forces for once are themselves spread danger- Thus far in the war, the Axis has held the initiative. ously thin. Operating on interior lines, and able to concentrate its strength with speed and a reasonable degree of secrecy, it has forced the United Nations to scatter their own troops The Japanese Radio Reacts to the "Bombing" and naval units over the whole globe-to defend all points The still mysterious American "air attack" on Japanese at once and none of them adequately. The result has been cities elicited copious comment from the Japanese radio. defeats, withdrawals, and defensive actions. Various broadeasts declared that the planes escaped in the Last week there were signs that in some theaters at least direction of the China continent. A characteristic propa- the initiative Was passing to the Allies. Apparently taking ganda note was sounded in the story of the machine-gunning advantage of the fact that Japanese carrier strength was of a school and the death of a student. And finally a sombre heavily engaged in the Bay of Bengal, American bombers chord Was struck by Major General Takaso Hiraguchi, 10 11 Regraded Unclassified SECRET SECRET member of the Imperial Headquarters Information Board, The Burma Road in Review who warned that such raids may be repeated on a large scale American observers recently returned from China and and that as for parachutists: "Such soldiers are different from realistic Chinese army officers in Washington for some time ordinary prisoners of war. If I am to state my personal have objected to the term "life-line" as descriptive of the opimon very frankly, they should have their arms, legs, and Burma Road. They point out that the Road can provide heads lopped off." certain priceless materials for Chinese arsenals and industries, but not the heavy supplies for an army in the field, Even The Chinese Take Over in Burma with the loss of Rangoon and Southern Burma, however, After reseuing a large number of British enoircled at the road will continue for some time to be a source of supply Venangyaung, Chinese forces in Burma, according to reports for China. from Chungking, recaptured this oil center and took over the According to an American transport expert who inspected greater part of the Burma front. This development followed the Road last summer, it will require from a year to 18 months. the destruction of the Yenangyaung oil wells, successfully to move into China the materials collected at Lashio and in executed by the British in the face of strong Japaneso efforts dumps along the lower part of the highway, Other reports to save the wells. Meantime, the former British defendera of confirm this estimate. An official survey conducted between the Irrawaddy sector have apparently retired to the north for November 30 and December 29, 1941, showed roughly a much-needed rest. 150,000 tons of goods of all categories in Burma en route to Despite the successful Chinese counter-attack, and Allied China. Of this total, almost half was already at Lashio or bombing of Rangoon and Port Blair in the Andaman Islands, points north. A month later, 22,000 tons of specifically lend- observers pointed out that there was little reason for opti- lease goods were on hand at Rangoon, of which 10,000 to mism about the Burma front. Chinese withdrawals in the 12,000 tons were trucks able to move out under their own Sittang area have paralleled those of the British on the power. Officers engaged in the evacuation of Rangoon have Irrawaddy, where the invaders have now returned to the reported that it was possible during February to move up- assault at Yenangyoung And the Japanese are evidently country the great bulk of the lend-lease goods which had adding to their attacks in these two sectors a third offensive accumulated there. northwest from Thailand in the Bawlake area. Press reports It is somewhat difficult to determine how much of this suggest that the recent Japanese naval concentration in the material has already arrived in China. Perhaps 15,000 tons Bay of Bengal may have been for the protection of troop a month would be a safe estimate. But of this total, three- convoys going to Rangoon. When these reinforcements fifths may be gasoline. Fundamentally, then, logistic dif- reach the fighting front, the Chinese defenders of Burma ficulties on the Road remain as crucial as ever. In a China may well be seriously outnumbered, and may also find them- where every gallon of gasoline is precious, and where the selves in n. still more disadvantageous position with respect current revival of stage transport indicates a supreme effort to heavy war equipment. to utilize every available conveyance, however primitive, the 12 13 Regraded Unclassified SECRET SECRET shipment of lend-lease materials to their final destination Although by now the ground is dry in the Crimea, such an must necessarily be slow. attack as that envisaged above is perhaps not to be antici- The reverse side of the coin is the difficulty encountered in getting strategic materials out of China to the United States. pated until the first or second week in May. Furthermore, some military commentators believe that a war of nerves As of mid-March, there were on hand for shipment from may go on until June, and that then the Germans may launch China more than 300 tons of bristles, 50,000 tons of tung oil, their main effort on Moscow, with only a holding attack to 200 tons of silk, 1,450 tons of tungsten, 1,850 tons of tin, and the south. Such a "northern" school of thought draws 5 tons of mercury. Air transport, for the present at least, would scarcoly be ndequate to move such large cargoes out attention to Soroka and Murmansk as possible points of German interest in the very near future-as lend-lease ship- of China. ments over the Arctic Sea route steadily increase in volume. Germany Reduces Her Rations German Spring Strategy The new German food rations effective April 6 involved As the period draws near when climatic conditions will average reductions of about seven per cent in bread and cercal permit a German spring offensive, newspaper speculation on products, 19 per cent in meats, and 17 per cent in fats and the direction and character of such a drive has become oils. For normal consumers, heavy workers, and long or increasingly plentiful. Press commentators, apparently ob- night workers, the cuts were proportionately greater than sessed with Germany's supposed need of oil, have largely average. For very heavy workers, however, the reduction restricted themselves to predicting an attack in the extreme Was below the general average, with the result that their south directed at Rostov and the oil fields of the Caucasus favored position became still more marked. Apparently pres. these new rations will continue to provide an adequate diet Informed military observers point out, however, that DI- for those in special working categories, but for normal con- drive for oil will doubtless be secondary to an effort to sumers a diet only on the margin of adequacy. destroy the Russian southern armies. If the latter objective Although these reductions are actually of a magnitude were attained, the former would naturally follow. Such an previously unparalleled for any of the commodities affected, offensive of annihilation might very well come in the form of they scarcely justify over-optimistic hopes, On the basis of a pincer movement on Stalingrad-the southern attack from DE study prepared in the Economics Division of the Coordi- the direction of Rostov, the northern from Kharkov or even nator's Office, it appears that the changes do not reflect a from Kursk. The eventual objective would most likely be critical situation in the food balance for the current crop the port of Astrakhan on the Caspian Sea, whose capture year (ending July 31). This is true even for fats and oils, would isolate the Caucasus from the rest of Russia, except in which the German position is particularly tight. Rather, for somewhat roundabout routes using the Caspian Sea we must look elsewhere for the reasons that have dictated itself. so drastic a step. 14 15 Regraded Unclassified SECRET SECRET Estimates of probable consumption requirements under the the defendants are not being given a fair hearing. According new rations suggest that bread grain supplies in the future to one story, the Turks have refused a direct request of the should more than meet requirements; here the Germans may Russian ambassador that the defendants be allowed to return even accumulate some surpluses as emergency reserves. Ade- to the Soviet Union. In fact, Russo-Turkish tension has quate quantities of meats are in all probability also assured become so great that the Turkish ambassador to Moscow for the crop year 1942-43. Even fats and oils should be able has felt obliged to leave for Ankara. to fill present ration requirements through the same period. Thus far, the Turkish government has restrained its press. The new reductions apparently represent an effort to adjust But according to a report from Ankara, the Turkish premier consumption to the long-run supply outlook. Conscious that recently told a conference of editors that he would give them the agricultural potentialities of the conquered lands cannot free rein if the Soviets continued their provocation. After soon be realized, the rulers of Germany are probably antici- the meeting, the report continues, the chief of the Turkish pating a less favorable supply situation, particularly after the Press Bureau warned that if the dispute came to a showdown, end of 1943. Essentially the rations reductions reflect, Turkey would not hesitate to go to war with Russia. More- therefore, some preparation for the possibility that the war over, diplomatic opinion in Ankara apparently views the will not be won this year or even the year following. present Soviet press offensive as an effort to induce the British In addition to the importance of these reductions in adjust- to make a definite commitment respecting Turkey's post-war ing the food balance, they may also net as a positive morale frontiers. factor: the new rations are more closely comparable with the Furthermore, on his return to Berlin, the Turkish ambassa- prevailing rations in countries actively cooperating with dor to Germany declared that after repairs to the Maritza Germany-Finland, Hungary, Rumania, and Italy. More- bridge have been completed in June, traffic between Germany over, the obvious Allied interpretation that the step reveals and Turkey will be resumed on a "vast scale." The ambassa- German weakness today may lead again to disappointed dor added that he was returning to Germany with hope for the hopes-nn item of no small value in the Nasi war of nerves. development of the traditional friendship and mutual confi- dence between Turkey and the Reich. Ruaso-Turkish Tenaion The Turks are still keeping everyone guessing, Although Plobiscite in Canada a prominent British statesman has recently expressed himself, in confidence, as pretty well satisfied with the state of Anglo- Voters in Canada on Monday will decide whether to release Turkish relations, strong indications last week appeared to the government of Prime Minister MacKenzie King from its point in a different direction. The trial of the "Communista" pledges regarding conscription for overseas service. Compe- accused in the recent assassination attempt on German tent observers are taking a gloomy view of the prospective Ambassador Franz von Papen line evidently aroused the reperoussions, both for Canadian national unity and possibly wrath of the Russian government and press, convinced that for her war effort. 16 17 Regraded Unclassified SECRET SECRET It is considered likely that the government will obtain a Opposition in the Province of Quebec large, but not necessarily overwhelming, majority in favor of release. Wide support is anticipated in the English-speaking French Canadian antipathy to conscription is not attrib- provinces, but the French Canadians, who constitute one- uted by observers to pro-Axis sentiments, but rather to the third of Canada's 11,400,000 inhabitants, are expected to inherent isolationism of the habitant, whose interests are oppose the government's appeal by majorities of between 65 described as resting solely in North America, and to the and 75 percent, according to authoritative estimates. Prime unfortunate experiences in 1917-1918, when thousands of Minister King has made it plain, however, that an affirmative young French Canadians fled to the backwoods to escape the vote in the plebiscite will not decide the conscription issue draft officer. definitively. The final decision can only be taken by the Opposition to the plebiscito in the province of Quebec has government and Parliament. been both vocal and turbulent. Student demonstrations have The apparent issue in the plebiscite, additional man power, been widely organized and serious. The provincial govern- could perhaps be more justly stated as controlled allocation ment. has avoided taking a collective stand, and its individual of existing man power-a sufficient number of volunteers for members have either avoided the issue or advocated a negative overseas service (from 15,000 to 20,000 If month for all the vote. The Catholic Church authorities have made no official services) are being regularly enrolled at the present time. pronouncement. While the hierarchy is said to be remaining But it is certain that the result of volunteer enlistment is a within the strict bounds of loyalty to the government, priests great inequality of sncrifice between English-speaking Ca- in the back parishes are reported to be openly counselling their nadians and French Canadians. This fact serves to exacer- tlocks to vote "no." The only important support from bate feeling between the two groups. Furthermore, volun- Quebec has come from that province's representatives in tary enlistment does not enable the government to plan Parliament, a majority of whom have supported the wisely the application of its man power as between service government. on the war and home fronts. Conservative industrial and Observers feel that a negative majority in French Canada mining interests in Toronto see the new law as a means of will mean a definite slowing of Quebec's war industry, which providing them with a more adequate labor supply. This among other things supplies vital aluminum stocks for the implies not only that the factories and mines in Ontario are Allied war effort. Passive resistance to the application of losing productive capacity as part of the price of their conseription is considered a certainty, along with considerable fighting zeal but also that their loss is Quebee's gain. Finally, political turmoil. This will probably be accompanied by an it is reported, Canadians are anxious to remove any sus- increased interest in the "separatist" movement, whose ultra- picions among their Allies-above all the United States- nationalist supporters believe that Quebec should become a that they are not accepting equal sacrifices in the war effort. separate Catholic and French-speaking state on the banks of the St. Lawrence. 18 19 Regraded Unclassified Secret SECRET The Significance of the New Role of General Ureta of Peru The promotion of able General Eloy Ureta, who com- manded and trained the northern Peruvian army which in- vaded Ecuador last July, to a post in which he can dominate Peruvian policy, has led to serious conjecture as to what his APPENDIX future attitude will be. His new role as commander of all THE JAPANESE IRON AND STEEL POSITION Seruvian military, naval and air forces, coupled with his vast popularity with the masses and army and his fsland- Steel capacity provides perhaps the most basic indicator of ing military talents, make him one of the more strategic a country's industrial potential for war. Japan's steel personalities of Latin America. empacity of eight million tons, as compared with ninety million Observers differ as to whether Ureta has pro-totalitarian for the United States, sets a definito upper limit to her ability sympathies, and wonder what influence he may have upon to replace losses in armaments and in naval and merchant the outwardly pro-United States attitude of the Prado tonnuge. Moreover, it is difficult to expand steel capacity Administration. It seems perfectly possible that, as a under present conditions. If losses are heavy, Japan's basie strong exponent of national expansion, he may sooner OF industrial limitations definitely restrict her ability to recup- erate. later initiate a drive to wrest further territory from Peru's neighbors. In domestic affairs he may represent a eta- In the past decade, under thestimulus of rapid industrializa- bilizing influence. tion and military needs, the Japanese steel industry has While Ureta undoubtedly wants to be Peru's next president. made great strides, At the same time, the industry became he appears at least outwardly loyal to President Prado, and increasingly dependent on foreign raw materials-a situation seems willing to wait until he can succeed him legally at the reflocted chiefly in steeply mounting imports of scrap from the next election. in December, 1945. Meanwhile Ureta's strong United States. Now she finds important sources of ferrous following among the Indian masses and the increased strength materials denied her just at the time when she needs to of Prado's administration resulting from the victory over increase her steel production by about fifty per cent. Ecuador, should enable Prado to pursue a stronger internal policy heneeforth. Japan's Steel Position in 1935 In 1935, when Japan was still at peace, her total supply of iron in all forms was nearly seven million tons, of which about two-thirds was from foreign sources. These imports were distributed in approximately the following percentages of the total supply: scrap-29, ore-28, pig iron-8, and steel-1% (see table). Most of the foreign scrap came from the United States, partly in the form of ships for dismantling 20 21 Regraded Unclassified SECRET SECRET and undoubtedly much of the scrap recovered in Japan eon- sisted of iron mined abroad. The imported ore came chiefly Japan's Iron Sources Shrink from British Malaya and China, with substantial amounts As a result of Japan's aggressive policies, a number of already from expanding exploitations in Australia and the the foreign sources of ferrous materials dried up, notably the Philippine Islands. The pig iron came from India, 21 normal scrap exports from the United States. In response to this source of supply, and exceptionally from Russia. situation, the Japanese steel industry drastically reduced the ratio of scrap to pig iron in steel-furnace charges and APPROXIMATE ORIGIN OF JAPANESE IRON RECEIVED increased its pig-iron output 80 as to maintain the sharp IN 1935 upward trend in the production of steel, It is understood Percent of total that pig-iron productive capacity has even outstripped steel, Japanese empire origin 33.1 and is now estimated at 10 million tons per year for the From ore (metal content) 15,8 empire against about 8 million tons for steel, Japan 3.0 This situation probably indicates that steel producing Korea 4.5 Manchuria funilities lag behind pig iron capacity. Unless Japan is to 8.3 Scrap develop further steel capacity within the empire-a difficult 17.8 Foreign Origin 66.9 and highly involved industrial problem-she would need to From ore (metal content) 28.2 seek these much needed additional steel facilities elsewhere. British Malaya 12.0 Short of central Siberia, however, the only important steel China (excluding Manchuria) 0.2 centers open to potential Japanese conquest are the Calcutta Australia 3.5 region in India and the Newcastle region in New South Wales, Philippine Islands 2.5 Other countries Australia, neither of which has an annual capacity of much .1 Pig iron (metal content) more than a million tons. 7.9 India 4.6 Russie (unusual) 3.3 The Iron Ore Bottleneck Scrap 29.3 Foreign ships dismantled in Japan 4.9 Even to find the resources required for her present pig-iron Importe 24.4 capacity of 10 million tons a year, Japan faces obstacles of United States 19.4 unusual difficulty. To produce that ten million tons of pig Other countries. 5.0 iron, Japanese blast furnaces would require about 20 million Steel (net imports) 1.5 tons of iron ore, nearly 15 million tons of coking coal, and three to four million tons of limestone. The limestone and 100.0 coal are obtainable in Japan itself, except for about three million tons of high grade coking coal which must be imported from North China to blend with the low quality Japanese coking coal. 22 23 Regraded Unclassified SECRET Japan herself mines only about a million tons of iron are per year; but, owing to rapid expansion of mining facilities in Manchuria and Korea, these countries may be able to produce not only the six or more million tons to meet the estimated capacity requirements of their own blast furnaces but also four million for export to Japan-not to mention one and a half million tons of pig iron. If one assumes another million tons of ore from China (Yangtze valley), Japan would still require about eight million tons of ore per year from other sources. The maximum reported production to date has been three million for British Malaya and the Philippines combined, and six million for India together with Australia. Other nearby sources are unimportant as yet. Unless she achieves further spectacular military successes, Japan faces a serious mining problem. And to maintain her blast furnaces operating at capacity she must ship millions of tons of iron ore long distances over seas dangerously exposed to attack. Japan's steel furnaces, moreover-predominantly of the open-hearth type-are readily discernible from the air and are considered highly vulnerable. Except in Man- churia, all Japan's iron and steel plants are along the coasts. The principal works, which include nearly half the empire's productive capacity, lie in an exposed position at Yawata, opposite Korea and near the western end of the Inland sea. 24 U.S. GOVERNMENT PRINTING CIFICE 1947 159 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE April 23, 1942 TO Secretary Morgenthau FROM Mr. Kamarck Subject: Summary of Military Reports Russo-German War The British Army estimates that the expected German offensive against Russia will probably not occur before the latter part of May at the earliest. This conclusion 18 based on two factors. Owing to the rapid thaw of unusually deep snow, the rivers are rising and the roads are becoming unuseable. The continuous Russian pressure during the last three months must have greatly delayed the Cermans in carrying out their plan to withdraw divisions for refit during the winter. (U.K. Operations Report, April 9 - 16, 1942) Supply Route to Russia In answer to the German concentration of attacks on the northern Russian supply route, the British have increased their escorts by additional destroyers. The battleships of the Home Fleet are acting as cover for the convoys. It is estimated that there are now twenty submarines operating against the Russian convoys. (This is slightly less than half the number which have been operating in recent weeks off the American coast.) The U-boats are not meeting with a great deal of success. The first report of a considerable loss was of the sinking of a British ship on April 16 while carrying twenty Hurricanes and twenty- five Matilda tanks (light tanks) to Russia. (U.K. Operations Report, April 9 - 16; April 21,1942) Regraded Unclassified 160 - 2 - Malta The heavy air attack on Malta continues. During April 20, 240 bombers, escorted by fighters, attacked. On April 22, 175 bombers were used. In these two days, the British lost eight planes and 21 more were damaged. Twenty-three Axis planes were destroyed, nine more were probably destroyed, and 24 damaged. Reinforcements of 47 Spitfires reached Malta on April 20. (U.K. Operations Report, April 21, 22, 1942) R.A.F. Activity From reconnaissance photographs, information on the results of the heavy R.A.F. March raid on Lubeck is now available. Nearly half the city, as distinct from the suburbs, has been almost totally destroyed, principally by fire, although there are traces of destruction caused by the two-ton bombs. Severe damage has been caused to warehouses at the docks and the railroad station in the northwest. (U.K. Operations Report, April 9 - 16, 1942) Japan British Military Intelligence states that there is still lacking any evidence of a complete joint plan be- tween the German and Japanese General Staffs. It is still impossible to ascertain whether the Japanese intend to move against northeastern India or to stop and consolidate their present gains. (U.K. Operations Report, April 9 - 16, 1942) Regraded Unclassified - - 161 OF POSSIBLE INTEREST The following analyses made by the British Political Warfare Executive might be of interest: France The wheat situation in France is becoming extremely serious. with the return of Laval, the end of the Vichy regime, as we have known it, seems apparent. Laval will probably 80 slowly at first, H1s immediate job is to keep France quiet during the spring campaigns and to put French economic resources and manpower at Germany's service. Germany undoubtedly plans to use the French merchant fleet to pro- voke a major clash between the French and British fleets. Laval will not want necessarily to sever diplomatic relations with America. He considers that he is popular in America and has family connections there. He lacks any sense of financial or political morality and he has great skill and experience in political maneuver and negotiation. Laval's principal weakness is that he has the conviction that he 18 more than B. match for anybody. As a result, he is a bad judge of popular opinion. The British policy to be followed is: "Toward the situation our attitude must to a large extent be governed by that of the American Government." Germany The first real evidences are appearing that the British bombings are having an effect on morale. The major worry of the Germans appears to be the out in rations and the potato shortage. (C. O. I., April 20, 1942) Regraded Unclassified 162 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE April 24, 1942. TO Mrs. Klotz FROM Secretary Morgenthau I would like to have the first draft of my radio broadcast. Give it to me, please, today. I marked it myself. Kept both drafts- fled 4/22/42 Regraded Unclassified, 163 April 24, 1942 Harold Graves and Ted Gamble Secretary Morgenthau Please think over the following suggestion: I would like to send a telegram to every State Chairman of War Bonds and ask him to consult each of his County Chairmen, and after consulting them, I'd like to get his promise to pledge that he will give me at least our May quota. Please draft this telegram. I want to make it a good, peppy sales talk to my State sales manager and let him consult each of his County sales managers. Please draft a telegram and after doing it, please talke to me. I would like to do this before lunch today. Completed 2RD Regraded Unclassified 164 April 24, 1942 At lunch I told Harry Hopkins that I had called up Miss Tully and told her I thought it was a mistake to put Mr. Brand in as head of the British Purchasing Commission because of his connection with Lazard Freres; that word came back that I should send for Lord Halifax and tell him, in no uncertain terms, how I felt. I mentioned this to Hopkins and asked him about it. He said, well, not to worry; that he knew Brand was not going to head it. I asked if he would assume the responsibility on the matter and he said he would and I could forget about it. Regraded Unclassified 165 April 24, 1942 4:35 p.m. DEFENSE SAVINGS BONDS Present: Mr. Graves Mr. Gamble Mr. Mills Mr. Sloan Mr. Bell Mr. Gaston Mr. Haas Mr. Tickton Mr. Kuhn Mr. Houghteling Mr. Callahan Mr. Mahan Mr. Coyne Mrs. Klotz H.M.JR: I asked so many of you because there are so many various things on this War Bonds that I wanted to check up. The first thing I wanted to ask about is, how often does the Federal Reserve Bank report on fiscal agencies, Tickton? MR. TICKTON: Number of issuing agents? H.M.JR: Yes. MR. TICKTON: Every week I get a telegram from every Federal Reserve Bank giving me the number of issuing agents subdivided by classes so that I know the number of corporations, the number of banks. Every Saturday I get that. You get that on Tuesday. H.M.JR: And this thing here? MR. TICKTON: That we get every week. That comes Regraded Unclassified 166 - 2 - from the state administrators. H.M.JR: That is the state administrators? MR. TICKTON: Yes. They give us the name of every company that has the pay-roll savings plan. Once a week that is brought up to date: H.M.JR: This is a different one? MR. TICKTON: This is the state administrators. H.M.JR: And the other thing is every Friday night? MR. TICKTON: The other thing is every Saturday, and we get it put together on Monday and you have it on Tuesday morning. That is from the Federal Reserve Banks. H.M.JR: Well, then, on the fiscal agency thing, New York is in good shape. They have twelve or fifteen people working there, did you say? MR. BELL: Ten, I think. MR. GRAVES: Fifteen, Dan, they told me Wednesday. H.M.JR: I thought it was ten. MR. GRAVES: They have just added some additional men. (Mr. Coyne entered the conference.) H.M.JR: Well, let me ask this. Which is the second most important state after New York? MR. GRAVES: Pennsylvania. H.M.JR: Well, what is the fiscal agency situation there? Regraded Unclassified 167 - 3 - MR. BELL: Well, Pennsylvania is divided between two districts. One is Philadelphia and the other is Cleveland. I think Philadelphia is working rather hard on it, but I think Cleveland probably just started, because they took their men and trained them. H.M.JR: Well, now-- MR. BELL: I should say that it is not as good in those two districts, certainly not as good in Cleveland as it is in New York. H.M.JR: When should Mills go back to Detroit to follow up on Ford and those other people? MR. MILLS: Mr. Bartelt - Mr. Secretary, Mr. Bell hasn't heard yet from the War Department. He was over there on other business and the Secretary thought that he would probably find out during the afternoon whether it had been cleared through the War Department. MR. BELL: It has been cleared with everybody up to the Secretary of War. Now, they were trying to get that thing out tonight, as a directive to the War Department agencies. After that is done, we will send copies of it to the Navy and Maritime Commission and ask them if they won't adopt the same procedure. H.M.JR: Well, if you approve, I would like Mills to start out and, say, go to Philadelphia Monday. MR. BELL: All right. H.M.JR: Cleveland Tuesday, and then Detroit, say, by Wednesday, if they are ready, keeping in touch with you. MR. BELL: It is all right. H.M:JR: And then he might go out to Chicago and then back. Regraded Unclassified 168 4 - MR. BELL: I wonder if it would be better for him to spend a day in New York and see what they are doing? They seem to be 8. little better organized on public re- lations than anybody else, don't you think, Harold? MR. GRAVES: I do. MR. BELL: And get that set up and then go around to the other banks. H.M.JR: Well, then, why doesn't he do New York Monday-- MR. BELL: Philadelphia Tuesday. H.M.JR: Philadelphia, then Cleveland. MR. BELL: That is right. Then Detroit and then Chicago. H.M.JR: Then Detroit and then Chicago, keeping in touch with Mr. Bell and me by phone, will you? MR. MILLS: Yes, sir. H.M.JR: New York, Philadelphia, Cleveland, Detroit and Chicago. But I would phone in each day. MR. MILLS: All right, sir. H.M.JR: Is that all right? MR. GRAVES: I am just wondering whether it ought to be Chicago and then Detroit, Dan, in view of the fact that Detroit is a branch of Chicago. MR. BELL: Well, that is all right. He is going to Detroit because of the particular situation that was created there as a result of this War Department directive, but I see no objection to reversing them, going to Chicago first and then Detroit. lie would be on his way back home. Regraded Unclassified- 169 - 5 - H.M.JR: Well, I would like to leave this so the minute the War Department directive is cleared, he can stop wherever he is and go to Detroit; and stay there long enough until you get those people. The minute that Mr. Bell says that War Department directive is clear, then I would like you to go to Detroit and get those big motor companies. Stay there until you get them. Is that all right? MR. BELL: That is all right. H.M.JR: After all, if you can get what's-his-name there - our State Administrator said he could get practically all these big companies in if we could get that War Department thing straightened out. That would be a lot of people. MR. BELL: I think General Motors has indicated that they are coming in. You remember, I sent you a memorandum. They were very much pleased with the New York setup. They were going back to Detroit to see if they couldn't immediately set up the procedure. H.M.JR: He will go to New York and he will make that trip, and when he hears this War Department stuff is cleared, we will send him to Detroit right away. Then this thing that I got word to you this morning, Tickton, about wanting a book for each state-- MR. TICKTON: Yes, sir. H.M.JR: Do you understand what I want? MR. TICKTON: I understand what you want. Do you really have to have them go down as low as five hundred? There are about five thousand firms that will have to be covered and checked. You want them all the way down? H.M.JR: Oh, yes. MR. TICKTON: It will take about fifteen people right straight through for a week in order to do it. Regraded Unclassified 170 - 6 - H.M.JR: That is very few people. MR. TICKTON: Well, you can't use more than that especially-- if you want to check every one of these companies, H.M.JR. No, I want it because - I want it. MR. TICKTON: O.K. (Laughter.) Will a week be O.K.? H.M.JR: Well, I don't have to wait for the ten states. MR. TICKTON: No, we will give them to you as we get them. H.M.JR: What is your deadline, Graves, to go to Chicago tonight? MR. GRAVES: Five forty-five. H.M.JR: What time do you have to leave the office? MR. GRAVES: Oh, five twenty-five. H.M.JR: Well, certainly he wants the New York first. This is a book now. MR. GRAVES: Yes, I know what it is. H.M.JR: And I want it from five hundred to five thousand. MR. GRAVES: I think that while Mr. Tickton is at it, I hate to add to his job any, but he might as well go ahead and give us the forty-eight states. As a matter of fact, two-thirds of the job will be done when you have done ten states. Regraded Unclassified 171 7 MR. TICKTON: That is right. MR. GRAVES: And he might as well have all the rest of it while we are at it. H.M.JR: O.K. Tickton, somebody told me you have a dark night shift now. MR. TICKTON: That is right. I have got thirty girls, all colored, with a colored supervisor. H.M.JR: I think that is wonderful. Somebody said they are graduates of Howard University. MR. TICKTON: Yes, sir. H.M.JR: All of them? MR. TICKTON: Not all of them. I have got more college graduates on my night shift than on the day shift. H.M.JR: And they are all colored girls? MR. TICKTON: Yes. I may not have them next week, though. If we move these people out to Chicago, they may not want to move. H.M.JR: You are not moving him to Chicago, are you Bell? MR. TICKTON: The job these particular people are doing will go to Chicago. The job on pay-roll savings plans will not go if we can avoid it, because you can't keep the schedules in Chicago and have the information here at the same time; but on this job we are doing, it consists of getting a geographical breakdown by counties, and it will have to go to Chicago because it will be more convenient to have it there. H.M.JR: Is that an Owens setup? Regraded Unclassified - 8 - 172 MR. TICKTON: No, that is 8 machine tabulating job that is being done aside from Owens. H.M.JR: How are you going to supervise that? MR. TICKTON: Well, that job is a self-contained unit which has been running for six months. H.M.JR: Can't you use those colored girls on some- thing else? MR. TICKTON: Well, we probably will. Jobs like this will provide work for these colored girls. H.M.JR: Well, I think it is most useful, because I don't know how other I could get hold of 8 State Administrator and tell him, "Now, either you are good or you are not good, "and here is the book and we will keep sending it to him once a week, you see. MR. GRAVES: Yes. H.M.JR: I think it would be very useful to you, wouldn't it? MR. GRAVES: Oh, yes, H.M.JR: Do you want to ask anything on that, anything else? MR. TICKTON: No, that - as long as I know that you want it for each state - and if I have a little time to get the thing going the first time, after that-- H.M.JR: I don't care so much. Just one little - who has got a pay-roll deduction plan, and who is a fiscal agent. The rest of the stuff is just decorative. MR. TICKTON: All right, we won't have it. H.M.JR: All right. Is that all right with you, George? Regraded Unclassified 173 - 9 - MR. HAAS: Yes, that is all right. MR. GRAVES: I think when those things are ready, we ought to have it in mind to provide copies to the Feds. MR. TICKTON: Once we get them, Mr. Graves, we can provide all the copies that you need. MR. GRAVES: Because it will be very useful to them in analyzing their situation, about who is 8 fiscal agent and who isn't. MR. TICKTON: The whole job is the first time you do it and after that keeping it up to date and dividing the copies is easy. H.M.JR: Now, the next thing, did you decide to send this telegram? I will read it out loud. It is to be signed by me and to go to the state administrators. "The whole country will be watching our quota drive in May. It is the first big chance of the War Savings Committee with a tangible objective to show their mettle. Full fulfillment of our May quota not only will stiffen the morale of the workers engaged in our own important task, but will give courage to all other parts of the war effort. Please convey this message to your key city and county chairmen, and after consultation with them wire me direct if we can count on your state for this accomplishment in May." Well, the last sentence is all right. I wouldn't word it just that way, but I haven't got time to fool with it. Where is Ted Gamble? MR. GAMBLE: Right here, sir. MR. GRAVES: Well, I think that that telegram ought to go, but that it ought not to go until these county Regraded Unclassified 174 - 10 - quotas have been announced. H.M.JR: When will that be? MR. KUHN: Monday, isn't it, Harold? MR. CALLAHAN: No, Friday, May 1. H.M.JR: Oh, why not until Friday, May 1? What is the matter? MR. CALLAHAN: Well, Mr. Secretary, we have the problem of covering the entire country in order to do an adequate and very sure job. That is the only way we can do it. MR. GRAVES: Of course the - the state organizations have been informed. This is a matter of getting it down to the county, local organizations, and it is a terrific distribution job to get it into all the papers and what- not. H.M.JR: Well, if that is the case, then this shouldn't go out until - 1 wouldn t send this out until-- MR. GRAVES: This time next week. MR. GAMBLE: A week from today. H.M.JR: Send it out on May 1. MR. GRAVES: Yes, that is right. H.M.JR: And take out some of the fifty-cent words. MR. GAMBLE: All right, sir. H.M.JR: Put in a few more Fuller Brush words, you know. MR. GRAVES: If we have time, hold it until Peter is here. ne can put in the Fuller Brush words. Regraded Unclassified 175 - 11 - H.M.JR: But you agreed to let it go? MR. GRAVES: Yes, I think it should go, by all means. H.M.JR: All right, good. Now, something is happening over in Virginia. MR. GAMBLE: That is correct. They are having a piedge campaign. H.M.JR: A pledge campaign? MR. GAMBLE: Yes, sir. H.M.JR: Well, the only other criticism I have got on that is that in New York you won't let me go for six weeks, but in Virginia they have received no instructions. Mrs. Eugene Duffield hasn't. MR. GAMBLE: Well, in the rural areas we were going ahead with B. campaign in Virginia, and they were so far along on the campaign that we didn't want to upset it; but in the heavily populated areas, such as Norfolk, they are going to change the campaign. H.M.JR: Well, there doesn't seem to be any in- structions, and she is actually going out and getting the money. MR. GAMBLE: Well, there is no instructions to the people who are going to conduct the pledge to change it, because we didn't want to upset it. H.M.JR: Well, in the first place, she has had no instructions and her interpretation is that she has been told to get so many dollars. MR. GRAVES: She means get pledges for 30 many dollars. H.M.JR: Why don't you ask her? Regraded Unclassified 176 - 12 - MR. GAMBLE: Well, I talked with the Administrator of Virginia-- H.M.JR: But ask Mrs. Duffield. Besides everything else, she is the head here for the League of Women Voters of Washington. Why not ask her? MR. GAMBLE: I will do that. H.M.JR: She is a smart girl and a New Dealer and ask her what she has been told to do. Her idea is, she was told to go out and get the money. She was given so many names. She says she has got to go out and get it, but nobody told her how. She is actually going out and getting the money. MR. GRAVES: Well, I think there is something wrong there. H.M.JR: I think it is wonderful. I don't think there is anything wrong. That is what I would like. MR. GRAVES: I don't think she has any such instructions as that. We will find out. H.M.JR: Will you? MR. GRAVES: I might say, generally, about this pledge thing that we have taken steps to stop the pledge campaign in states where the thing has not been begun or scheduled to be begun within the next few days, and in the states where we stopped the thing we intend to convert it over into something more like an order tak- ing campaign, such as we are attempting to work out in New York, and I hope in Chicago, but we are not upsetting the pledge campaign in states where it is already started or where it is scheduled to start within the next few days. H.M.JR: Now, at the Cabinet the President brought up the question of a Speakers Bureau, and I have raised 177 - 13 - that question twice in the last few days and I under- stand, Gene Sloan, you are the Speakers Bureau. Now don't look at anybody. Just look at me. They say if anybody wants a speaker you are the Speakers Bureau and will handle all speakers. Now don't anybody help him. Come on now, I won't say who told it. (Laughter) Do you? Ted Gamble had better crawl under the table. MR. GAMBLE: Well, that isn't exactly what I said, sir. 1 said if any of the national departments have re- quests for speakers, they channel them through Mr. Sloan's office and get a clearance on the people who are sent to the field, but our speakers are supplied largely by our state organizations. H.M.JR: You remember, I said if you wanted - who handles speakers and I asked you twice and you said Sloan. MR. GAMBLE: I said they channel through Mr. Sloan's office, sir. We don't have 8 Speakers Bureau as such. H.M.JR: Well, you admit that you are A channel? MR. SLOAN: Well, I admit that I am 8 channel in so far as our field organization is concerned, if I under- stand you correctly. If somebody offers to make 8. speech in 8. certain locality or area for us, or wants to volunteer his services, we write to clear him with the State Admini- strator and let him know that he is available and inform him about it. H.M.JR: In the reverse, supposing a state wants B. national speaker. What I am trying to find out is, who do they go to? And I got the distinct impression from Ted Gamble that they went to you. MR. SLOAN: They would come to our organization and in some instances we would supply one man, and in some another. H.M.JR: That is correct, isn't it? MR. GAMBLE: That is correct. Regraded Unclassified 178 - 14 - MR. SLOAN: We might supply it through Carlton Duffus, or Mr. Callahan, or Mr. Houghteling or somebody else in the organization who happened to know some one who was well qualified in that field. H.M.JR: Well, look, I think there is a missing link. I su gest that somebody be pinned in this organization, some one man and some one woman, whose job it is that if-- MR. GRAVES: Well, Mr. Morgenthau-- H.M.JR: Just let me finish, please. That if a state calls in and they want 8 speaker that they have them. Go ahead. MR. GRAVES: As Mr. Gamble has said, our speakers' panels are all attached to our state and local organizations. Now, when people want a speaker out of Washington they usually want Henry Morgenthau, Jr. We get letters and telegrams by the dozen asking for the Secretary of the Treasury to come out and speak. They are not interested in 8 speaker. They want the Secretary of the Treasury, and of course-- H.M.JR: Don't try to butter me, Harold. (Laughter) MR. GRAVES: No, that is exactly the way it is. MR. KUHN: That is true. MR. GRAVES: Now, we usually, of course, stall those things off and say, "The Secretary is not available." Then it comes down to a question of the people who are interested saying, "Well, all right, get Bell or provide 30me other person. They are after a certain individual. I don't think we ever do have any requests from anybody for a speaker in en anonymous sense. MR. KUHN: We do occasionally, Harold, get 8 request from some little community which wants a speaker and we refer that request to the State Administrator in his state, and it has worked out satisfactorily every time. Regraded Unclassified, 179 - 15 - H.M.JR: Well, I had 8 suggestion to make which I learned. I think that if this thing is going to be a success - and incidentally, in the room you will all be very much amused that when the President in Cabinet came around to Mr. Landis he said, What have you got to report today?" Landis said, "Well, I would just like you to know, Mr. President, your suggestion as to town meetings for war, it is going extremely well." You wouldn't know the Treasury had a thing to do with it. MR. KUHN: Well-- H.M.JR: I know. This is the thought I would like to have you fellows think about. Somebody suggested a Lawyers Association, labor people. I think we ought to run a kind of a school for speakers and train them. Not pay them any salary, but pay their traveling expenses, and really drill them in this thing SO that we don't have to use the extreme like Mrs. Floyd Odlum, which is an unusual case, and I think it is well worth considering, trying to train a dozen men or a dozen women and then have it grow in various areas, who are trained in what we want to get over. Take girls who graduate in economics from Vassar. Those girls have got at good education. They could be trained. Other girls - it doesn't have to be Vassar. OPA is doing just that, I think. They have given four Vassar girls jobs this summer. They are paying their expenses to go around and just speak. So this isn't original with me. But I wish you people would consider that. MR. GRAVES: Well, we will consider that. H.M.JR: Then they would know what we are trying to get over here and you could send them into various places, particularly where - there will be lots of places which won't pick up. MR. GRAVES: Of course, I think that is not adequate for our setup. I - there are literally hundreds and hundreds and hundreds of meetings being held throughout this country about War Bonds and hundreds of people are speaking and they Inclassified - 16 - 180 are speaking under the auspices of our local committees and our local committees provide the speakers, and SO far, I know of no particular difficulty in getting speakers who are entirely competent to do that. I don't know-- H.M.JR: I had in mind-- MR. GRAVES: We would do with a small list-- H.M.JR: I greatly doubt that. I will make a little bet with you that I can go into New York City and ask them to get their speakers together in B. room and you and I will sit down and let them ask us some questions, and the questions that they ask us, you will prove to be wrong. MR. GRAVES: I will take your bet. I will bet you as much as 8 package of Chesterfields, because as it happens in New York we have a very competent man in charge of our Speakers Bureau. I forget his name. At any rate, he is a professional at this business. H.M.JR: I will take you on. MR. GRAVES: A pack of Chesterfields. H.M.JR: As a matter of fact, you people have got to sell me on the field organizations and you had better be thinking how to do it. I am not sold through lack of knowledge. I don't know. MR. GRAVES: Yes. H.M.JR: I don't know. I don't know how you are training these three hundred thousand people, see. MR. GRAVES: But on this matter of speakers, I don't think that is any particular deficiency in our setup. H.M.JR: Well, do you mind proving it to me by taking me into a state? MR. GRAVES: No. You mean you would like to go to New York? H.M.JR: I don't çare. MR. GRAVES: But that was our bet. Our bet was New York. (Laughter) Regraded Unclassified 181 - 17 - H.M.JR: I will go to New York with you. You pick the state and I will pick the weapons. How is that? MR. GRAVES: No, but 88 a matter of fact, I think New York is very well taken care of. Now, other states, I suppose-- H.M.JR: All right, we will go to New York together. MR. GRAVES: All right. I would like to. I would like you to talk to the man who is in charge of speakers' bureau there. He is a very competent, able fellow and has done a fine job. H.M.JR: Now, you won't be here tomorrow, and I am relying on Gamble to be here at 9:30 to explain to this advertising group what our job is and I would like Kuhn here and Houghteling and Callahan and Mahan and Gaston, if he has the time, please. I would like to start it at some other place than my office. I would like to get it going. Do you want to do it in the theater? MR. KUHN: You can do it in room eighty-one where we have those conferences. H.M.JR: Let's do it in room eighty-one. MR. KUHN: I will try to get that room. That is a good place for it. H.M.JR: Let's do it in room eighty-one. But the idea is to get over to them this thing, right? MR. KUHN: Yes. H.M.JR: Now, anybody that has anything to do with War Bonds can take a crack at me. Bell? MR. BELL: No, I haven't any questions. MR. KUHN: I have some advertisements for you to clear. Regraded Unclassified® 182 - 18 - H.M.JR: Well, we can do those as we go home. Do you mind going home with me? MR. KUHN: No, but they are great big things. H.M.JR: I know. I want to live with them over night. Have you got your MacLeish thing tonight? MR. KUHN: No. H.M.JR: When is your next appointment? MR. KUHN: I have nobody. H.M.JR: I will put them in my bedroom; and if I sleep badly, I am against them. (Laughter) Have I ever told you my story about the lawyer and the elephant? There is the very famous Hindu woman lawyer, and she was reatined as & lawyer for the elephant. This elephant - his master died. This is & true story, about a hundred years ago. He left the elephant his entire estate because he was so mad at his family. He left it to the elephant, and this estate grew very, very valuable, and after B. hundred years the family tried to break the will, so they had 8. maharajah appointed, and this woman defended the interests of the elephant. The maharajah would receive all petition- ers at the top of a high flight of marble stairs. At his feet was an English bull dog. The woman lawyer ascended the stairs; and as she got up to the top of the stairs, she leaned over and patted the bull dog on the head, and the bull dog wagged his tail, and the maharajah said, "Your petition is granted, Madam, but I want to explain. Madam, your petition is granted, and you are dismissed.' She backed all the way down stairs; and when she got down stairs, the head of the court said, "How did you know the trick? She said, "What is the trick?" He said, "If the bull dog wags his tail, your petition is granted; and if he barks, you are refused. That is the way he decided everything. So I will live with these things tonight; and if I have no nightmares, I will accept them. Regraded Unclassified 183 - 19 - MR. KUHN: Some of them you have seen. These are the things that have been cleared by Mr. Gaston, Mrs. Morgenthau, Mr. Gamble, and myself. H.M.JR: In other words, you are daring me to go against you. (Laughter) All right, We will take them home in the car. Can you put them in the car downstairs? MR. KUHN: Yes, sir, MR. GRAVES: I would like to ask if Dano is going to have anything to do with this? MR. KUHN: Sure, he will. H.M.JR: Dano will look over in the back, and if he growls (Laughter) MR. GASTON: I am afraid they will all be cleared if Dano has anything to do with it. H.M.JR: You think his tail will keep wagging? MR. GASTON: Yes. MR. GAMBLE: I have nothing. MR. HOUGHTELING: No, sir. H.M.JR: Are you getting those AF of L men to work? MR: HOUGHTELING: Yes. I talked to them on the long distance phone today, and I have got an appointment Monday morning. I have got a table of organization that I am going to put up to them, and my man Goodman went up to Philadelphia with Philip Murray, and Philip Murray says that he will go along on the same sort of a plan, and that he wants to get together with Mr. Green and you and talk the whole thing out just as soon as possible. H.M.JR: Well, the sooner, the better. Regraded Unclassified 184 - 20 - MR. HOUGHTELING: All right, sir. H.M.JR: I will give you either Monday or Tuesday to invite them for lunch. MR. HOUGHTELING: All right, fine. H.M.JR: Including yourself. MR. HOUGHTELING: Thank you very much. H.M.JR: I missed you last night. MR. HOUGHTELING: I am sorry I couldn't be here. H.M.JR: Well, you can have either Monday or Tuesday. You had better make it Tuesday. Let's say Tuesday. I will give you Tuesday. MR. HOUGHTELING: I will try to get them both here. H.M.JR: I am crazy to get them started, and I will have these plants to show them, which plants we have the pay-roll deduction thing in. I am crazy to get them going. MR. HOUGHTELING: All right. MR. CALLAHAN: Mr. Secretary, you have appointed an editorial board which has slowed me up. H.M.JR: Slowed you up? MR. CALLAHAN: That is right. I am trying to get a lot of things out for May 1 for the quota campaign, and I send them over to the Treasury Department, and I don't get them back for EL day or two. It is not a complaint against Mr. Kuhn or Mr. Gaston or anybody else, but nothing happens. MR. KUHN: What have you got in mind, Vincent. (Laughter) Regraded Unclassified 185 - 21 - MR. CALLAHAN: Well, I am trying to put out a news- paper for May 1, and I have in mind a letter from the Secretary to be on the first page. MR. KUHN: It was cleared this afternoon at four o'clock. MR. CALLAHAN: We were to go to press day before yesterday. (Laughter) H.M.JR: You had better run a time clock on them, both of you. MR. CALLAHAN: I am not complaining, I am just-- H.M.JR: Well, you keep on complaining. It is all right to get results, but the editorial board stays, so you just put the pressure on the boys. MR. CALLAHAN: I am not trying to eliminate the editorial board, I am-- H.M.JR: But they are ready to meet every morning at ten thirty; and everything that comes over at ten thirty will be cleared on the same day. Is that right, gentlemen? If you get it over by ten thirty, it will be cleared on the same day. MR. GASTON: Or turned down. (Laughter) H.M.JR: But you have got to get it to them by ten thirty, and they meet every morning, and they will give it to you - there is no reason if they meet at ten thirty why they couldn't give you an answer by noon. MR. CALLAHAN: I am talking about forty-eight hours ago. I am not talking about today. H.M.JR: Well, I don't know. MR. CALLAHAN: You appointed the board, and it is hurting me, not helping me, and I am trying to move very fast, and I am losing out. Regraded Unclassified 186 - 22 - H.M.JR: Well, let me give you 8. little story. I went over to the Secretary of Wer this morning with a plan which was given me last night at nine o'clock to say to the soldiers in uniform that they must buy Defense Bonds, and I refused to say it. Now, if the editorial board had seen that, I never would have gotten it. As a result of that, I never left Mr. Stimson's office until five minutes of eleven this morning. I was there for an hour and fifty-five minutes. He kept four newsreels waiting an hour and three quarters while he rewrote the thing. Now, that was & question, if there had been somebody that had seen this thing, I am sure they would have caught it. I read this thing last night and this morning, and I said, "I won't say it." I get over there, and Mr. Stimson says, "I don't like it. I thought you wanted it." He sends for a man with two stars on his shoulder, in charge of War Department propaganda, and he looks at it, and he says, "No, Mr. Morgenthau is right.' Well, Mr. Stimson took the time, and it took him one hour and three-quarters to write a hundred and fifty words. So, I am more interested right now with the thing being right, but like everything else, Vincent, it takes time to get it started. They are organized now; and if you will get your stuff into Kuhn's office by ten o'clock any morning, there is no reason in the world why by noon it shouldn't be back with & yes or no. It certainly can't hold you up very much. MR. KUHN: They will get through most of the time. I wouldn't guarantee that. MR. CALLAHAN: I still say that I don't like the idea of the editorial board. H.M.JR: And I am saying - I am going to ask you, will you cooperate? MR. CALLAHAN: I will. 11.M.JR: And I will get it. But there is no reason in the world why you shouldn't get 8. clearance every day; and if you don't get it, you know these gentlemen. Regraded Unclassified 187 - 23 - MR. CALLAHAN: No, I am not complaining about the gentlemen on the editorial board, I am complaining about the idea. MR. KUHN: Mr. Secretary, sometimes-- H.M.JR: The idea is good. MR. KUHN: Sometimes a job has to be rewritten. It isn't just B. matter of yes or no. Today Mr. Gaston rewrote that letter for the newspapers and made it much better, but it takes time to rewrite. It isn't just B. matter of yes or no. H.M.JR: Well, Vince, the editorial board stays, so you will have to live with and like it. (Laughter) Give me your nice smile, see, When you smile, I always have to go against myself. MR. GASTON: I want to say that it is like every- thing that is new, it will work better after a little while. MR. CALLAHAN: Mr. Gaston, I think it will work better after a little while, but the Secretary of the Treasury has asked me to do some publicity by May 1. When May 1 comes and the stuff is not delivered, he asks Callahan, "Why," and he doesn't ask the editorial board. Right, Mr. Secretary? H.M.JR: Well, the purpose of this meeting is to have an exchange so that everything will run smoothly, and it is a good point; and I am sure these gentlemen will do better by you in the future, but I suggest you put a time stamp on when it leaves your office. Anything else? MR. CALLAHAN: No. H.M.JR: You see, I don't trust myself, Vince. It isn't as though I was passing on it. I have got other people to do it. I don't want to do what a number of Regraded Unclassified 188 - 24 - Cabinet officers have done. I would be sick tonight if I had gone ahead and made that appeal to the men in uniform to buy bonds, because I think it is wrong. I want this board to catch the things. You and I are both human. You will be very glad some day if they catch something that will keep you from making a mistake. MR. CALLAHAN: Mr. Secretary, may I ask that Mr. Callahan be invited to one of these meetings to see how they work? H.M.JR: They don't want you. MR. CALLAHAN: Well, we could see how quick they operate and how slow they operate and so on. H.M.JR: The board makes its own rules, I am sorry. I am not the editorial board. I picked them up for their integrity, and they can make their own rules. I am not going to make any rules. Mahan? MR. MAHAN: I was going to make that suggestion, that when there is a plan affecting a man, that he be allowed to be there to have his inning. I think if 8. thing is carefully thought out and planned, he has had reasons for doing it, and possibly should at that time be allowed to present his case, so to speak. H.M.JR: Well, they can make their own rules. All I know is how the President works. He asks you for sug- gestions. Then try to reach him while he is making a speech. But the board - they are self-governing. I haven't told them how to work. I just said I want them to pass on every important piece of literature or anything that is trying to influence public opinion, I want that when it is new to be passed on by this board for me to keep me from doing something like - well, Mr. Knox came out and talked about the Germans being our enemies, and the Chinese have never gotten over it. But anyway, you know these people, and you will have to fight it out with them, but the board stays. Regraded Unclassified 189 - 25 - MR. MAHAN: That is all right. H.M.JR: Sloan? MR. SLOAN: Nothing. H.M.JR: George? MR. HAAS: I have nothing. H.M.JR: Mills? MR. MILLS: No, sir. H.M.JR: Tickton? MR. TICKTON: I have the memorandum you sent to Mr. Bell about the telegrams to the Federal Banks on issuing agents. Will our current stuff take care of that? H.M.JR: Yes. MR. TICKTON: O.K. MR. BELL: This is apparently what you meant. That is going out to the Federal Reserve Board. H.M.JR: This is what? MR. BELL: This is going out to the Federal Reserve Board, I understand, today, about Mills' and McKee's talk. H.M.JR: I will read this. I didn't know about the other. I don't want to double up. But that post card stuff is disappointing to me. MR. BELL: We may get some more stuff on that later on. H.M.JR: I wish Haas and Tickton would think of another postal card check. Regraded Unclassified 190 - 26 - MR. BELL: It is a little early after the pay-roll deduction plan, I think. H.M.JR: Well, personally, I would like to do that - oh, I would like to do it once a week, George, for a while, that pay roll thing, sending postal cards to bond buyers. MR. BELL: Well, that is a little often unless you pick a different group, I think. H.M.JR: Well, I am willing to leave it to George, if you are. What? MR. BELL: I wouldn't do it once a week unless you are going to change names. H.M.JR: Oh yes, change names. MR. BELL: Well, you might do it that way. H.M.JR: Oh yes, take another bunch of names. MR. HAAS: We will talk it over. H.M.JR: All right. Herbert? MR. GASTON: I have nothing. H.M.JR: Harold? MR. GRAVES: Nothing. H.M.JR: O.K. Thank you all. MR. BELL: I think on that letter to the Federal, it had probably better go, but I don't think any more ought to go from the Federal. H.M.JR: Tonight? MR. BELL: I told Mills I thought that one ought to go. It would be embarrassing to stop it, but I don't think any more ought to go from the Federal. Regraded Unclassified 191 April 24, 1942. Dan Bell Secretary Morgenthau Please give me the draft of the telegram going to the Presidents of the 12 Federal Reserve Banks asking each one of them to give me a report on what they have done this week, up to and including Friday night, to get various companies to become fiscal agents. I would like them to do this each week until further notice. - Tribta is halling Whatever happened to those 12,000 postal cards that I asked each Federal Reserve Bank to send out - by now they ought to be baok and be analyzed. I should have the report. Please let me have that by noon Friday. du report Enall 4/24/42- Disinesed at Defence meeting 4/24- Hand to think about sending out portal cards each Follow up 4/29- much to different names - Regraded Unclassified 192 April 24, 1942 TO: Mr. Haas Mr.Tickton FROM: The Secretary Please find out from Mr.Graves or Ted Gamble which are the ten States they have decided to concen- trate on for our War Savings Bond drive. After you get those 10 States, I would like to have you prepare & book for me on each State showing what companies en- ploy over 500 but less than 5000 employees and indicate whether they have or have not adopted the payroll plan and whether they have or have not become issuing agents. I want the book just the same as you have given me for companies with 5,000 or more employees, but only put in the last three columns in these new books if they are easy to get. If they are not easy to get, forget about it. After you have read this memo, you had better clear it with me personally to make sure that you under- stand it. I would like to get this into the works at once. I want this book kept up-to-date once a week. Regraded Unclassified. 193 April 24, 1942. Ted Gamble Secretary Morgenthau I understand that across the Potomac in Virginia they have already started the quota drive. My informant is Mrs. Eugene Duffield, who told Mrs. Morgenthau. Please find out what is going on over in Virginia, and have they started their quota drive. Please report to me. fee Gambles memo of 4/24- Regraded Unclassified 194 TREASURY department WASHINGTON April 24, 1942 MEMORANDUM FOR THE SECRETARY: In answer to your memorandum inquiring as to whether or not a quota drive had been started in Virginia, please be advised that no such campaign is under way. In some of the rural areas, the pledge canvass is just now being started. In the urban areas, the pledge campaign has been stopped to permit us to accompany this operation with the firm pledge agreement. Ted R. Gamble FORDEFENSE BUY UNITED STATES EMITNOS BONDS - Regraded Unclassified 195 TREASURY DEPARTMENT WASHINGTON April 24, 1942 M MEMORANDUM FOR THE SECRETARY: With reference to our State organizations taking advantage of the tour of Lt. Comdr. O'Hare, please be advised that Ensign Oliphant, Lt. Miller and Lt. Comdr. Paul E. Smith, in charge of the public relations activities of the Navy, are at- tempting to arrange for us a tie-in along the line of O'Hare's itinerary. I am to hear from them again later this afternoon and will report to you. Ted R. Gamble FORDEFENSE BUY UNITED STATES SAVINGS SONDS - Regraded Unclassified TO: 196 Mrs. McHugh 4/27/42 The Secretary went to the War Department April 24th to speak for the newsreels with Secretary Stimson. The occasion was the launching of the Army's Payroll Savings plan for civilian employees This is the text of Secretary Morgenthau's talk. F.K. MR. KUHN Regraded Unclassified inle 4/24/42 197 SECRETARY MORGENTHAU: I am very glad to know that the 600,000 civilian workers in Army establishments are now able to join the millions of other civilians who are helping to finance the war with their sevings. Nobody would ask the men in uniform to do any more for their country than they are doing now. All America is grateful to them end proud of them. But the non-combatants in Army service can set an example to the whole country by saving every pay day for the purchase of War Bonds. As you know, the Treasury has begun a nationwide campaign in which every American who gets a regular income is being asked to set aside ten per cent of it for bonds and stamps. Whoever saves in this way will be helping his country now and himself tomorrow. Regraded Unclassified 198 WAR PRODUCTION BOARD WASHINGTON, D.C. OFFICE of DONALD M. NELSON April 24, 1942 CHAIRMAN My dear Mr. Secretary: I shall be delighted to appear with you on the nationwide War Savings broadcast from your office on the evening of May 4. As you know, we are anxious to help in any way we can in the tremendous job you have of selling war production bonds. Whilulam Sincerely yours Donald M. Nelson The Honorable Henry Morgenthau, Jr. Secretary of the Treasury BUS Visit se 199 THE UNDER SECRETARY OF THE TREASURY WASHINGTON April 24, 1942 TO THE SECRETARY: Mr. Jones of the Federal Reserve Bank of New York telephoned this afternoon that Phelps-Dodge Corporation qualified for its New York office as an issuing agent for War Savings bonds. This company also advised the Federal Reserve Bank that it wanted to qualify each of its branches as issuing agents, and the Federal Reserve Bank is securing applications from each of these branches through the various Federal Reserve Banks. I was also advised that the Federal had had a further conference with representatives of U. S. Steel Corporation. The Treasurer of this Corporation is favorably inclined to have the Corporation become an issuing agent and says he will take the matter up with the Executive Committee the next time it meets, which will be the first part of May. It now looks as if U. S. Steel will become an issuing agent. SWB DEFENSE BUY EVID STATES THIS lunna Regraded Unclassified 200 TREASURY DEPARTMENT Washington April 24, 1942. MEMO FOR THE PRESS: The Treasury was informed by the Works Projects Adminis- tration today that the removal of a WPA worker from the payroll in Illinois because he purchased War Savings Bonds resulted from misinterpretation by local officers of the regulation concerning the continued employment of a worker "...upon determination that a family is no longer in need " The discharged worker who had saved enough from his $12 a week salary to buy two $37.50 War Savings Bonds will be reinstated. The Works Projects Administration said that in view of the incident a definite interpretation of the regulation with particular regard to the purchase of War Savings Bonds is being sent to all district managers. In substance, the interpretation will state that if a worker is able to invest in War Savings Bonds or Stamps out of the comparatively small salary which he earns, there will be no restriction against such investment. -o0o- Regraded Unclassified. 201 TREASURY DEPARTMENT FISCAL SERVICE SUREAU OF ACCOUNTS WASHINGTON Lop THE COMMISSIONER April 21, 1942 TO MISS CHAUNCEY: ЬЕС Referring to your inquiry this morning regarding the newspaper clipping captioned "WPA Worker Loses Job when be Buys War Bonds", Mr. Y. H. Brummett, Assistant Commissioner of the Work Projects Administration, has advised by telephone that this case was a misinterpretation of the regulations 2500 issued by the Work Projects Administration regarding in- eligibility for continued employment on Work Projects Ad- ministration projects, and that the employee will be reinstated. The pertinent regulation reads as follows: "Certification shall be cancelled upon determination that a family is no longer in need, that no person is employable, or that no person is otherwise eligible for employment in accordance with the regulations of the Work Projects Administration." Mr. Brunmett also advises that a definite interpretation of this regulation is being sent out with particular regard to the purchase of War Savings Bonds, and that a copy will be mailed to this office. Such new interpretation vill state, in substance, that if a worker is able to invest in War Savings Bonds or Stamps out of the comparatively small salary which he earns, there will be no restriction against such invest- ment. Rumaned R. V. Marvell, Acting Commissioner of Accounts Attachment FORDEFENSE BUY UNITED STATES ENVINGS GONDS ARD TUMPS Regraded Unclassified 202 Times Therald APR 21 1942 He Did It on $12 a Month: WPA Worker Loses Job When He Buys War Bonds CHESTER, III., April 20 (C.T., the theory that a man able to buy P.S.).-A WPA worker here has war bonds does not need a WPA been fired from his job by the job, was admitted at the East St. Government because he saved Louis district WPA office by Earl enough from his salary of $12 a Clark, acting district manager. month to buy two $37.50 war Clark said there is no differen- bonds, It was disclosed today. tiation between war savings bonds The man is Robert L. Daniel, and any other kind of savings in 40, bachejor, who for the last year present WPA regulations, and that has been working as a WPA em- he had no alternative to discharg- playe in the Randolph county food ing Daniel after learning of his stamp office at Sparta. ownership of the bond) through the quarterly review which WPA That Daniel vu discharged on makes of its employes, Regraded Unclassified 202 Times Therald APR 21 1942 He Did It on $12 a Month: WPA Worker Loses Job When He Buys War Bonds CHESTER, III., April 20 (C.T., the theory that & man able to buy P.B.).-A WPA worker here has war bonds does not need a WPA been fired from his job by the Job, was admitted at the East Bt. Government because he saved Louis district WPA office by Earl enough from his salary of $12 a Clark. acting district manager. month to buy two $37.50 war Clark said there is no differen- bonds, It was disclosed today. Ustion between war savings bonds The man is Robert L. Daniel, and any other kind of savings in 40, bachejor, who for the last year present WPA regulations. and that has been working as & WPA em- he had no alternative to discharg- playe in the Randolph county food Ing Daniel after learning of his stamp office at Sparta. ownership of the bond) through the quarterly review which WPA That Daniel ww discharged on makes of its employes, Regraded Unclassified 203 April 24, 1942 TO: MR. HAROLD N. GRAVES SUBJECT: PROGRESS REPORT FROM WAR SAVINGS STAFF QUOTA CAMPAIGN Quota figures for every county in the nation are being serviced to all daily and weekly news- papers through arrangements made by the Press Section with the Associated Press, United Press, International News Service and Western Newspaper Union. The figures were supplied to the Washington offices of the press associations for mailing to their regional and state bureaus. They will be carried on state wire services for release in afternoon newspapers of Thursday, April 30. Copy of news story on the quota campaign released along with the figures is attached. In addition to this announcement of the figures by the press services, Western Newspaper Union is sending state maps, with the county quota figures written in, to all newspapers. Sample proofs of these maps are attached. Western Newspaper Union is also sending sets of editorial "ears", one column boxes, and & letter from the Secretary for publication in all papers. All of this material is being sent in the form of mats, and for papers which do not have metal casting facilities, in the form of metal plates. 805/160 Regraded Unclassified 204 - 2 - The quota campaign made front page news in virtually all newspapers on two days last week, on Monday, April 20 and on Friday, April 24. Special quota campaign publicity material for both press and radio is being mailed to all county chairmen, and state administrators. These kits include newspaper statements for release by mayors, county chairmen, presidents of county bar associations, medical associations, facts about bonds, radio addresses, spot announcements, interviews, suggestions for obtaining a maximum amount of publicity, and farm, club, labor, women's and sports page newspaper specialties. PAYROLL SAVINGS The Payroll War Savings Plan has now been installed by 63,747 concerns. A total of 19,874,893, or 65 per cent of the 30,400,000 employees of private concerns are now able to buy War Savings Bonds through Payroll Savings. An additional 1,420,007 employees of Federal, State and Local Governments, or 32 per cent of the 4,400,000 in this group, now have the Payroll Savings Plan available to them. Executive Order No. 9135, signed bythe President on April 16, established an Interdepartmental Committee for the futherance of the voluntary Payroll Savings Plan among employees of the Federal Government. Regraded Unclassified PAYROLL SAVINGS (continued) - 3 - 205 This committee's functions will be to: (1) Formulate and present to the Departments a uniform Payroll War Savings Plan (2) Assist the Departments and Agencies in its adoption and operation. (3) Recommend improvements in the program adopted each department. Distribution is now being made of the General Electric booklet which outlines the campaign being conducted by that company. The plan enormously increased employee participation in Payroll Savings. Copies of this booklet have been sent to approximately 22,000 firms employing more than 100 persons where the Payroll Savings Plan has already been established. Copies are also being sent to all members of Congress, the Cabinet, and to all heads of the various independent agencies and establishments of the Government; to the presidents and directors of the Federal Reserve Banks, and to members of the Board of Governors of the Federal Reserve. Distribution is now being made of duplicate copies of the Sales Reports on the progress of Payroll Savings Plan received from various companies throughout the country. These sales reports are photographed by the Eastman Kodak Company on microfilm and distributed to the State Administrators. The information contained in the reports keeps the Administrators advised about the percentage of participation and dollar investment in Bonds through Payroll Savings Plans in operation in Regraded Unclassified PAYROLL SAVINGS (Continued) 206 - 4 - their respective states. PLEDGE CAMPAIGN Two states plan changes in the starting dates of the Pledge Campaign. In New Jersey, the campaign starts on June 1, while in Maine, the campaign opening date has not been set definitely. In some states the house to house canvass method is being used. Others are carrying on the campaign along occupational lines. A few states are using specialized methods, as in North Carolina, where they have organized the work along the lines of their annual Community Chest drive, and workers from the Community Chest organization recruited. Georgia and Washington have set up their campaign as a military organization. The workers in Georgia are known as "Georgia's War Savings Army." Virginia's campaign is called "The Victory Pledge Canvass", while Indiana's will be called "MacArthur Week." In Maryland and Michigan the sugar retioning program will be used as a means of contacting responsible citizens for pledges. War Savings Committeemen will then follow up with the regular house-to-house canvass. NEWSPAPER CARRIER SALES Sale of ten cent War Sevings Stamps by the newspaper carrier boys of 864 newspapers now total 238,899,023. This is an increase of 12,370,283 ten cent Stamps, or their equivalent in Bonds or Stamps of larger denomination, since the report of April 16. Regraded Unclassified 207 - 5 - RADIO A special broadcast over the Blue Network on April 23 featuring Secretary Morgenthsu, Lt. Commander O'Hare and leaders of agriculture, labor end management highlighted the announcement of establishment of the county quota system. Radio Station KVOO, Tulsa, Oklahoma, is using billboards to publicize stars of the "Treasury Star Parade." These billboards, photographs of which are attached, are placed in hotels, department stores and other vantage points. Proctor and Gamble is sponsoring a $51,000 Bond contest over NBC and CBS networks -- a total of 234 stations -- which brings Bond messages to 25,000,000 homes weekly. This contest is also being publicised in seven mass coverage magazines, totaling over 26,000,000 circulation. A sponsor's kit containing material adapted for sale to local concerns has been sent to all radio stations. The National Association of Broadcasters has requested 200 of these kits for distribution at their annual convention. Hundreds of stations have written asking for additional kits and have voiced enthusiastic approval of the idea. PRESS Ed Reed, chairman of the Cartoonists Com- mittee, 1s now on tour, personally contacting the nation's Regraded Unclassified - 6 - 208 PRESS (continued) leading newspaper artists and editorial writers, to obtain special cartoons and editorials on the quota system for use beginning May 1. The decision to person- alize our request was necessary because virtually every War agency is now writing and telegraphing cartoonists with all sorts of appeals for their help. A special memo to the Press, released by the Treasury Press Department, was airmailed to all State Administrators and State Chairmen at t he request of the Secretary. A copy of the release, concerning the policy of WPA workers and their purchases of War Bonds, is attached. Postal Telegraph-Cable Company advises that all future printings of their jumbo telegram blanks will carry the War Savings Minute Man Cut. Sample blank is attached. War Bond feature articles by leading American Writers are now being released to International News Service, Associated Press and United Press. The material being given to each service follows: INS -- Articles by Kathleen Norris, Mary Roberts Rhinehart, Gilbert Seldes, Prof. Edwin Walter Kemmerer of Princeton, Jules Bogen, and a poem by Mary Craig Sinclair, wife of Upton Sinclair. AP -- Articles by Thomas Mann, Carl Van Doren, Lionel Edie, Prof. Benjamin M. Anderson and & poem by William Rose Benet. Regraded Unclassified - 7 - 209 PRESS (continued) UP -- Articles by S. J. Perelman, Erskine Caldwell, Dr. Elgin Groseclose and Rufus Tucker, and poems by Arthur Guiterman and Robert Nathan. To date, more than 30 magazines have advised us that during July, when all major magazines will have 8 special American Flag cover, they will include War Bond appeals on their covers also. Total circulation of the magazines who will carry War Bond slogans and emblems on their July covers is approximately 20,000,000. RELIGIOUS PRESS War Bond articles written by the Very Rev. Magr. William R. Arnold, Chief of Chaplains, U.S. Army; Charles E. Diehl, Moderator of the Presbyterian Church in the United States, and by Rabbi Solomon Goldman of Chicago, were sent out to religious publications. Editors of the Christian Herald, publication with the largest circulation among Protestant periodicals, advise that they will use 6. War Bond drawing on their cover in the July issue. EDUCATION Ten million School Pledge cards are now being printed to be ready for distribution by May 5. The main purpose of this pledge, which is separate and distinct from the regular pledge campaign, is to keep the War Savings Program active among school children during the Summer vacation months. The School pledge Regraded Unclassified EDUCATION (continued) - 8 - 210 calls for no fixed amount of savings and it gives every child an opportunity to Join in the nation's war effort. The Pledge, designed in red and blue on a white card, reads as follows: "A Pledge "To Every Soldier, Sailor and Marine Who Is Fighting to Save my Country "For you there can be no rest. For me there should be no vacation from the part I can play to help win the war. I therefore solemnly promise to continue to buy United States War Savings Bonds and Stamps to the limit of my ability, throughout my summer vacation and until our victory is won." WOMEN'S ACTIVITIES The Women's Division is preparing two special kits to be distributed to more than 15,000 leaders of Women's War Savings Committees throughout the country. Kit No. 1 concerns women's publications and has three purposes: (1) To describe all materials that are available for use by State and Local Chairmen of Women's War Savings Committees. (2) To provide these chairmen with some of the new and revised publications. (3) To suggest ways in which these materials can be used effectively. Kit No. 2 has as its subject National Women's Organizations. It contains the following material: (1) A brief statement of the policy of the Women's Section in working with national women's organ- izations. Regraded Unclassified WOMEN'S ACTIVITIES - 9 - 211 (2) Methods for state and local committees to use in working with state and local clubs. (3) A list of 221 national organizations' ad case histories of their War Savings Programs. BUSINESS PUBLICATIONS An appeal is being made to 1250 business publications and 2000 company publications urging strong editorial support of the "ten percent" and "Quota" plans as outlined by the Secretary in his letter to all business firms having 100 or more employees. A new advertising release (copy attached) was sent to business publications. COMPANY PUBLICATIONS Plans have been completed and approved for 8 spectacular visual presentation of our company publications program at the Chicago convention of the National Council of Industrial Editors Associations on May 14. The presen- tation is being produced for us by General Motors. It points up the urgent necessity for all workers to invest at least 10 per cent of their income in War Bonds. A. P. Alexander Jr., of the Coca-Cola Com- pany, will assume chairmanship of our Company Publications Committee, succeeding Merrick Jackson of General Electric, who has resigned to assume duties with the War Department. FARM PUBLICATIONS Thirty-five farm publications report that they will publish our special farm advertising release, "Let's Talk About Money and War." The 35 publications represent Regraded Unclassified - 10 - 212 a combined circulation of approximately 13,500,000 farm readers. The release was mailed to 50 publications. NEWSREELS Special newsreel shot of Secretary Morgenthau is currently showing in all five newsreels in all theatres throughout the nation. A War Bond newsreel feature of Dorothy Lamour is scheduled for release by all newsreels on May 7. The War Savings newsreel crews are now operating in Alabama, California, Florida and Virginia. COMMUNITY SING The Lucy Monroe Community Sing in Mobile, Ala., drew an audience of 15,000. All stores in the city were decorated and all civic and patriotic organi- zations took part in a parade in connection with the song fest. RALLIES Ilka Chase, Hugh Marlowe, Jessice Dragonette, El1 Seigmeister's ballad singers of America, and Barry Wood made personal appearances at 8, War Bond rally at Barnard College. The entire faculty of Barnard College and Columbia was present, and the event included special promotion on the university's own radio station; photographs in the Columbia Spectator, College newspaper, and a fifteen minute broadcast over the NBC network. Admission was the purchase of a $1.00 War Stamp. Stamp books and albums Regraded Unclassified - 11 - 213 RALLIES (continued) were autographed by the stars for additional Stamp purchases. TOWN MEETINGS In cooperation with OCD, the War Savings Staff staged four "Town Meetings for War" on Saturday, April 15, in Amenia, N. Y., Hannibal, Mo., Ontario, Calif., Tuscaloosa, Ala. Secretary Morgenthau sent special message to the Amenia meeting, while Donald Nelson sent a similar message to Hannibal, his home city. SPECIAL Gimbel Brothers in Philadelphia have converted their main show window into a booth for War Stamp sales. Labeled "Freedom Corner", and "War Stamp Center, U.S.A." it has proved an attractive display and has resulted in sale of many Stamps. Regraded Unclassified 214 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE APR 24 1942 TO Secretary Mor thau FROM Mr. Hass Bubject: Operation of payroll savings plans in 11,464 companies in March. 1. The attached table aummarizing the operations of the payroll savings plan in 11, 464 companies during March covers about 40 percent of the persons employed by industry or business exposed to the plan in the middle of that month. The data shown have been submitted to the Treasury during the past three weeks in response to your monthly letter to the companies having the plan, requesting information on the progress of the plan in their organizations. 2. The 11,464 companies reporting to the Treasury for March employed 7.1 million persons, some 3.7 million of whom (approximately 51.5 percent) actively participated in the payroll savings plan during the month of March. In the aggregate, these persons authorized their employers to deduct approximately 4.9 percent of their pay during the month for the purpose of accumulating funds for the purchase of savings bonds. On the average, this amounted to $8.05 for each one of the persons participating. 3. On previous occasions tables similar to the attached have been transmitted to you covering the operations of the payroll savings plan during the months of January and February. Those tables covered a smaller number of companies then appear on the table attached, but the proportions of the total number of persons exposed to the plan in those months that were covered were roughly the same 28 in the present table, 1.e. about 40 percent. A comparison of the percentages and the per capita figures (rather than the absolute figures) therefore will provide an overall picture of the progress made during the past three months in bringing up (1) the percent of participation in the plan and (2) the per capita amount of salary deducted once the plan has been installed. This comparison appears in the table that follows: Regraded Unclassified 215 Secretary Morgenthau - 2 Participation in Payroll Savings Plans Part I - Percent of total employees participating in plan : : : Size of Company : Jan. : Feb. : Mar. : : : Under 999 employees 50.3 55.2 57.9 1,000 - 4,999 employees 38.9 48.9 50.5 5,000 - 9,999 employees 42.1 43.5 49.4 10,000 - 19,999 employees 25.0 37.6 43.1 30,000 and over 29.1 39.7 47.8 Total - All companies 37.1 46.5 51.5 Part II - Average deduction per employee participating : : : Size of Company : Jan. : Feb. : Mar. : : : Under 999 employees $6.13 36.74 $7.12 1,000 - 4,999 employees 6.49 7.09 7.75 5,000 - 9,999 employees 5.71 8.54 9.01 10,000 - 19,999 employees 6.93 7.25 8.64 20,000 and over 9.97 9.31 9.45 Total - All companies $7.25 $7.69 $8.08 The secont part of the foregoing table has been classi- fled by size of company to show the progress that has been tale in medium-large companies -- those with from 5,000 to 19,999 employees -- since January. The fact that employees in small companies are deducting less than employees in large companies 18 without significance, however, since on the hasis of average earnings, employees in companies of all sizes are authorizing deductions from payrolls at about the same rate (see next to the last column of the attached table). Regraded Unclassified 216 Summary of the eration of Payroll Savings Plane in March 1942 (As reported to the Treasury by 11,464 companies participating in the plan in that month) : : 1 # : : 1 I = : 1 : Aggregate : : Percentage Average : : Number Asgregate number of : Parcentage Aggregate : Aggregate : Percentage : : : = Approximate deduction number payroll amount : of aggregate : of employees of tof employees: aggregate for : : # : of of of : : pay of par- = Size of company :companies: 1 participating : partici- : : aggregate payroll of ticipating employees : : # employees in payroll employees deductions :reporting: : : pating I I : pay : employees savings plans exposed : from pay deducted : employees : participating exposed : : participating in : : : deducted 1 March : T : : : : : : : 1 Under 100 employees 3,885 194,729 134,871 69+3 28,488,999 1,011,219 5-5 19,742,876 5.1 7.50 100 - 499 employees 5,220 1,185,729 694,877 58.6 166,170,808 4,956,605 2.9 98,548,093 5.0 7.13 500 - 999 employees 1,224 849,323 461,849 54.4 124,038,376 3,229,692 2.6 67,476,877 4.8 6.99 1,000 - 4,999 employees 952 1,904,439 961,075 50.5 303,897,298 7,452,858 2.5 153,468,135 4.9 7.75 5,000 - 9,999 employees 109 747,049 368,934 49.4 134,434,256 3,322,904 2.5 66,410,522 5.0 9.01 10,000 . 19,999 employees 37 538,476 231,990 45.1 99,267,038 2,005,134 2.0 42,784,093 4.7 8.64 20,000 and over 37 1,676,250 801,766 47.8 311,743,522 7,572,913 2.4 149,013,404 5.1 9.45 Total - All companies 11,464 7,095,995 3,655,362 51.5 $1,170,040,297 $29,551,325 2.5 $602,570,753 4.9 $6.08 Office at the Secretary of the Treasury, Division of Research and Stalistics. April 23, 1942 217 Analysis of Exposure to Payroll Savings Plans April 18, 1942 Number exposed Total number Percent to payroll in the of total savings plans country (estimated) exposed Part A - Summary by Number of Organizations Exposed I. Business organizations (1) Large railroads 158 167 95 (2) Other firms with 500 employees or more 5,815 7,344 79 (3) Other firms with 100 to 499 employees 15,316 26,853 57 (4) Subtotal - large firms 21,289 36,364 59 (5) Firms with less than 100 employees 42,458 * - (6) Total business organizations 63,747 * * II. Novernmental organisations # XII * III. Grand total 63,747 - * Part B - Summary by Number of Employees Exposed I. Business organizations (1) Large railroads 1,273,260 * * (2) Other firms with 500 employees or more 14,292,081 * 4 (3) Other firms with 100 to 499 employees 3,304,368 * - (4) Subtotal - large firms 18,869,709 * * (5) Pirms with less than 100 employees 1,005,184 * * (6) Total business organizations 19,874,893 30,400,000 65 II. Governmental organizations (1) Pederal Government 397,981 1,700,000 23 (2) State and local governments 1,022,026 2,700,000 38 (3) Total governmental organizations 1,420,007 4,400,000 32 III. Grand total 21,294,900 34,800,000 61 Office of the Secretary of the Treasury, April 24, 1942. Division of Research and Statistics. Excludes agricultural employees, military personnel, employees on WPA or NYA or CCC projects, proprietors, firm members, self-employed, casual workers and persons in domestic service. e- Data not available. Regraded Unclassified 218 Firms Employing 100 to 499 Persona Participating In Peyroll Savings Plans (AS reported by the Defense Savings Staff's State Administrators) : Number of firms with payroll : Total : Percent of total having payroll : savings plans : number : savings plans State : : : : of firms : I : : Jan. 10 : Apr. 11 : Apr. 18 : (estimated) 1 Jan. 10 I Apr. 11 : Apr. 18 Alabama 17 137 149 285 6 48 52 Arizone 15 42 43 58 26 72 74 Arkansas 22 43 44 142 15 30 31 Northern California 160 501 512 512 31 98 100 Southern California 495 753 756 1,171 42 64 65 Colorado 64 112 113 170 38 66 66 Connecticut 100 277 277 622 16 45 45 Delaware o 18 21 84 0 21 25 District of Columbia 8 51 52 152 5 34 34 Plorida 48 145 147 147 33 99 100 Georgia 56 126 133 589 10 21 23 Idaho, 19 30 31 50 38 60 62 Illinoi 48 1,245 1,300 2,252 2 55 58 Indiana o 403 415 586 0 69 71 lowa 4 153 165 271 1 56 61 Kansaa 114 275 276 276 41 99 100 Menturity 75 120 136 312 24 38 44 0 167 179 384 o 43 47 l'aine M\ 60 60 198 2 30 30 Taryland 32 165 177 405 8 41 1 Massachusetts 53 626 639 1,523 3 W 42 Michigan 137 670 689 1,022 13 66 67 Minnesota 181 376 376 399 45 94 94 Mississippi 30 58 59 143 21 41 41 !!ssouri 0 472 472+ 664 0 71 72 fontana 22 40 40 40 55 100 100 Vebráska 6 101 103 123 5 82 84 Tevada 8 14 14 24 33 58 58 Nov Hampshire 7 69 89 145 5 61 61 Yes Jersey 171 436 463 867 20 50 53 Yes Mexico 12 33 33 35 34 94 94 Yew York 505 2,008 2,060 4,239 12 47 49 North Carolins 29 270 282 499 6 54 57 North Dakota 4 12 14 29 14 hi 48 Chio. o 1,080 1,126 1,739 o 62 65 When 29 164 166 345 Uregon 197 211 a 48 48 21 271 73 78 Pennaylvania 713 1,655 1,682 2,032 35 81 83 Shode Island 49 148 154 224 22 66 69 South Caroline 13 71 71 174 7 41 47 South Dekota 5 19 21 21 24 90 100 Tennessee 0 199 199* W48 o 44 We Texas 74 285 326 1,375 5 21 24 Vtan 13 36 36e 111 12 32 32 Vermont 30 59 59 63 47 94 94 Virginia 31 265 281 338 9 78 83 Washington 71 232 234 323 22 72 72 Test Virginia 0 91 134 272 o 33 49 Wiscomsin 0 267 278 680 o 39 E Tyonin: 1 17 17+ 17 6 100 100 Aláska o 2 20 2 o 100 100 Bailroads 46 49 49 52 88 94 94 Total 3,541 14,864 15,365 26,905 13 55 57 Office of the Secretary of the Treasury, Division of Research and Statistics. Anril 24, 1942. Data are for April 11, insuruch as no April 18 report was received. Regraded Unclassified 219 Firms Employing 500 Persons or More Participating in Payroll Savings Plans (As reported by the Defense Savings Staff's State Administrators) : Number of firme with payroll : Total : Percent of total having payroll : savings plans : number : savings plans State : : : 1 of firms # : : : Jan. 10 : Apr. 11 : Apr. 18 : (estimated) : Jan. 10 : Apr. 11 : Apr. 18 9 50 54 76 12 66 71 Alabama 15 21 21 21 71 100 100 Arizona 09 17 17 18 33 94 94 Arkansas Northern California 114 160 163 196 58 82 33 Southorn California 123 170 172 172 72 99 100 Colorado 22 26 27 32 69 81 BL Connecticut 97 152 152 185 52 82 82 Delaware 2 17 20 28 7 61 71 District of Columbie 12 29 30 52 23 56 58 Florida 18 35 35 66 27 53 53 45 Georgia 35 61 64 143 24 43 Idaho 8 10 10 10 80 100 100 Illinoi 277 435 443 634 44 69 70 Indiana E 133 136 180 23 74 76 Iows 9 43 45 53 17 B1 85 Kansas 16 33 33 33 48 100 100 Kentucky 19 45 48 70 27 64 69 Louisiana o 39 39 85 o 46 46 Maine 42 54 55 55 76 98 100 Maryland 40 106 106 154 26 69 69 Massachusetts 41 281 281 370 11 76 76 Michigan 305 333 333 333 92 100 100 Minnesota 87 103 103 105 83 98 98 Mississippi 12 17 17 28 43 61 61 Missouri 0 162 162e 162 o 100 100 Ventana L 5 5 5 Bo 100 100 Nebranka 28 40 40 E. 68 98 98 Nevada 3 5 5 5 60 100 100 New Hampshire 17 30 31 31 55 97 100 New Jersey 185 249 254 254 73 98 100 New Mexico 5 6 6 6 83 100 100 New York 435 885 888 1,350 32 66 66 North Carolina 49 112 113 168 29 67 67 North Dakota o 1 1 1 o 100 100 Ohio 285 524 521 557 51 92 94 Oklahoma 22 41 41 62 35 66 66 Oregon 51 70 70 70 73 100 100 Pennsylvania 336 579 584 625 54 95 95 Rhode Island 58 74 76 90 64 82 PL South Carolina 27 73 74 96 28 76 77 South Dakota 3 la L 4 75 100 100 Tennessee 4 68 68» 106 F 64 64 Texas 36 61 73 187 19 33 39 Utah 8 10 10c 14 57 71 71 Vermont 10 13 13 13 77 100 100 Virginia 41 100 103 103 40 97 100 Washington We 65 65 74 59 88 88 West Virginia 2 45 50 67 3 67 75 Wisconsin 84 147 150 150 56 98 100 Wyoming o 1 10 1 o 100 100 Alaska o 3 30 3 o 100 100 Railroads 98 109 109 115 85 95 95 Total 3,185 5,842 5,924 7,459 43 78 79 Office of the Secretary of the Treasury, Division of Research and Statistics. April 24, 1942. 4 Data are for April 11, insamuch as no April 18 report was received. Regraded Unclassified 220 CONFIDENTIAL UNITED STATES SAVINGS BONDS Comparative Statement of Sales During First Twenty Business Days of April, March and February 1942 (April 1-23, March 1-24, February 1-24) On Basis of Issue Price (Amounts in thousands of dollars) : : Amount of Increase : Sales Percentage of Increase : : or Decrease (-) : or Decrease (-) Item : : : : April : March : April : March I April : March : February : over : over I over : over : : : : March : February : March : February Series 1- Post Offices $ 62,273 $68,174 $ 76,580 -$ 5,901 -$ 8,406 - 8.7% - 11.0% Series I - Banks 179,371 200,748 272,263 - 21,377 - 71,515 - 10.6 - 26.3 Series B - Total 241,644 268,922 348,843 - 27,278 - 79,921 - 10,1 - 22.9 Series P - Banks 29,464 31,630 45,065 - 2,166 - 13,435 - 6.8 - 29.8 Series G - Banks 123,519 141,531 210,465 - 18,012 - 68,934 - 12.7 - 32.8 Total $394,628 $442,083 $604,373 $ 47.455 -$162,290 - 10.7% - 26.9% Office of the Secretary of the Treasury, Division of Research and Statistics. April 24, 1942. Source: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of United States savings bonds. Note: Figures have been rounded to nearest thousand and will not necessarily add to totals. Regraded Unclassified CONFIDE UNITED STATES SAVINGS BONDS Daily Sales - April, 1942 On Basis of Issue Price (In thousands of dollars) Post Office Bank Bond Sales All Bond Sales Date Bond Sales Series E Series E Series 7 Series G Total Series El Series F Series G Total April 1942 1 $ 2,476 $ 10,517 $ 2,380 $ 9,608 $ 22,504 $ 12,993 $ 2,380 $ 9,608 $ 24,980 2 2,999 5,264 2,119 7,570 17,953 11,263 2,119 7.570 20,953 3 3,222 7,572 1,185 6,235 14,992 10.794 1,185 6,235 18,214 4 2,778 9,292 1,387 5,334 16,013 12,070 1,387 5.334 18,790 6 4,961 13,035 2,329 8,027 23,391 17,996 2,329 5,027 28,352 7 2,958 5,722 834 8,983 15.539 5,680 834 8,983 18,497 8 2,309 9,610 1,142 6,562 17,314 11,919 1,142 6,562 19,623 9 2,906 9.304 955 5,715 15,974 12,210 955 5,715 16,880 10 2,730 8,052 1,573 5,261 14,885 10,782 1,573 5,261 17,615 11 2,150 5,224 668 2,720 8,613 7.374 668 2,720 10,762 13 4,619 17,572 2,432 8,604 28,609 22,192 2,432 8,604 33,228 14 2,513 6,152 1,076 3.333 10,561 8,665 1,076 3,333 13.074 15 2,584 5,102 1,251 5,374 11,728 7,686 1,251 5,374 14,312 16 3,472 10,008 1,400 7.773 19,180 13,480 1,400 7.773 22,652 17 2,690 8,076 850 3,695 12,621 10,766 850 3,695 15,311 16 3,111 7,175 948 3,303 11,426 10,286 948 3,303 14,537 20 5,252 13,334 2,227 9,001 24,562 18,586 2,227 9,001 29,814 21 2,517 6,845 977 3,703 11,525 9,362 977 3,703 14,042 22 2,925 9,112 1,925 6,793 17,830 12,037 1,925 6,793 20.755 23 3,101 9,403 1,805 5,928 17,136 12,504 1,805 5,928 20,237 Total $ 62,273 $179,371 $ 29,464 $123,519 $332,355 $241,644 $ 29,464 $123,519 $394,628 Office of the Secretary of the Treasury, Division of Research and Statistics. April 24, 1942. Source: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of United States savings bonds. Figures have been rounded to nearest thousand and will not necessarily add to totals. Regraded Unclassified 222 MEMORANDUM FOR THE SECRETARY. April 24, 1942. Mail Report Following the Secretary's statement in regard to increased distribution of War Bonds through house to house canvassing and payroll deductions, a great many letters have come in -- in most cases commending either or both of these plans. Some general letters in regard to bonds, both favorable and unfavorable, are included herewith. A brief preliminary memorandum on the state- ment alone went down early this week, and an additional one, covering both favorable and unfavorable reactions is attached at the end of this report. Aside from this special group of letters, the general mail is along the line of that received during the last two or three weeks. Opposition to the Sales Tax still outnumbers endorse- ment of it by a very large proportion. There are a great many letters from individual telephone employees, many of them from very old people who are terribly worried about the threatened taxation program in its relationship to pensioned telephone employees. There has also been 8. great wave of letters advocat- ing lotteries -- many from former correspondents who have gained courage to present their idea again because of Senatorial discussion of the possibility of using this method of raising funds. There are still complaints about delays in receiving bonds after money has been sent for them, or in making necessary changes in the matter of beneficiaries, etc. I believe, however, that these complaints have fallen off considerably. The telegram sent out to the Federal Reserve Banks, over the Secretary's signature, regarding the postal card bond questionnaire, brought in B. great many responses. Through Friday morning, April 24th, these numbered 3,419. Regraded Unclassified 223 I - Comments on Present Emergency Attorney General Biddle transmits a. letter from U. S. Attorney Palmer of Los Angeles, which reads as follows: The Rafu Shimpo (Los Angeles Japanese Daily News.) con- ducted 8. campaign for funds among their subscribers to be used for the purpose of purchasing an ambulance for the use of the United States Army. They came to me to have me deliver the checks to the proper authorities in the United States Army, and I have received the fol- lowing checks drawn by the Rafu Shimpo on the First and San Pedro Office of the California Bank -- January 9, 1942 $ 377.50 January 14, 1942 478.00 January 22, 1942 842.38 February 10, 1942 1,676.21 Total $3,369.09 I am enclosing these checks for your disposition to the proper Army authorities so that they may be applied to the purpose intended. We have 8. list of the contributors, their residences and the amounts given. David W. Bailey, Director, Australian News & Information Bureau, N.Y.C. I have received from the Australian Dept. of Information an inquiry 8.8 to the suitability for use in Australia of the Disney Donald Duok film "The New Spirit". I have viewed this film, and it seems likely that it would be of use for propaganda purposes in Australia, if it could be made available. I understand from Mr. Leo Samuels, of Disney Productions, Inc., that the film is the property of the Treasury Dept., and that any arrangements to make it available to Australia must be made through the Dept. I would appreciate any advice that you can give me on this matter. Regraded Unclassified 224 - 2 - John R. Hendrickson, De Witt, Nebraska. I wish you would convey to our good President, or those in authority, that I am willing today to have them authorize our bank, or some one, to take over my business and property, all of my income for national defense for the duration of the war, and I will never ask to have them pay it back to me. I am not writing you this for publicity or notoriety, but for the sake of humanity. Please don't ever publish my name. Col. L. L. Harris, The Walt Whitman Hotel, Camden, N.J. I send the enclosed cartoons just to help to relax 8. busy mind. With best wishes to a very able and worthy Executive. Byron H. Clough, Atlanta, Georgia. We know that this world struggle is our war. The men over 55 years of age cannot pilot a bombing plane or fire a gun from the deck of a battleship. Those of us who are too old to get into a uniform or an ordnance plant to work, still have to pay heavier taxes, # & # War is not cheap, but let me remind you that it is 8. million times cheaper to let the men over 50 or 60 work than it is to lose. How can we make up our minds to produce and to fight with such an over- whelming number of planes, ships, tanks and guns if we are not allowed to do our part because we have 8. few gray hairs. You say you are in dead earnest when you say mil- lions more must take pert in the payroll saving plan; why not prove it by letting the men over 55, who are able, work as well as the young men? Fred Crumrine, San Diego, Calif. * I will be 60 years of age next June, and very much able-bodied. I have been in good health and able to do any kind of work in my line. I have expressed by every means possible my willingness to go anywhere to work, but to no avail. I answered an ad from the Los Angeles Drydock and Shipbuilding Co. for Lead Wiper, Plumber and Pipefitter. They sent me an ap- plication blank, which I filled out and returned. That is the last I have heard of it. Next, The Consolidated Aircraft told me to go home and take civilian employment, that my age was against me. Next, The Solar Aircraft told me the same thing. I have tried several times to enter the Solar. They are responsible for the death of with them as Foreman in the Hammer Dept. I have tried to one of my sons, yet I have another son who is employed Regraded Unclassified 225 get jobs in the Defense Housing Projects to no avail. Yet I have lost three jobs paying me $10 to $12 per day in civilian life, owing to Government Priorities on material. This is getting very much on my nerves. It seems strange that other men should be able to go into defense work, such as school boys and girls, and the Government says there is 80 much man power shortage. Why don't they take men that have long years of experience and put them to work? They will make the factories hum and there will not be so much quibbling about shortages in this and that. # # Mr. Morgenthau, please give my best regards to Mr. Roosevelt, and ask him if he is too old to work, as he happens to be about 4 or 5 months older than I. Tell him that I am very proud of him and have been trying to keep my place in the ranks, but have been held back by the very Government that I am trying to help. addressed to the President.) James L. Crump, New Orleans, 5 La. (Sends copy of letter # th Both the N.Y.A. and C.C.C. have a very definite place in our section of the Country. The N.Y.A. has helped a lot of young country boys to secure an education and at the same time remain at home and help their parents who could not afford to send them to college. As for the C.C.C, this group of young fellows have done marvelous work and could render tremendous ser- vice on the army reservation project and national forests, and I think should be broken up into units of 100 and 125 men each, so as to speed up the work in all the territories and thus give each and every boy 8. chance to join the C.C.C. and be close to home. Every young man in our section of the Country, whether white or black, returned from the C.C.C. camps knowing how to walk and carry himself correctly, we.a neat and polite, and knew not only how to receive orders but also how to give them. I sincerely trust that both the N.Y.A. and C.C.C., particularly the C.C.C., will be continued. Regraded Unclassified 226 4 Morton McDonald, Miami Power & Equipment Co., Miami, 310. I have an idea for raising funds to carry on this present war. * sk # It is true we are all buying stamps and bonds in an attempt to do our part, but it is no great secrifice for they represent a real investment. * * The great majority of the American people would like to be able to help in B. more definite way, especially some- thing that would intimately connect them with the war effort and not represent an investment. An outright gift to Uncle Sam of some definite piece of war equipment is my idea. Why cannot a list of costs of war material from rifles to air planes or ships be made up and offered to the public? We would all take pride in being able to say, "I bought a rifle for Uncle Sam today, or "My anti-aircraft gun is helping me do my bit against the Japs, or "I bought another parachute today to help some boy make e safe land- ing". These outright gifts would be more in the American way of helping to put an end to the Nazis and Japs. They would really be inspired by patriotism and not by gain. Suitable certificates could be printed and given to donors to hang in their homes or offices. Every one would be proud to be able to show they were doing their part in & concrete way and not expecting any benefits beyond the security of our great country. E. A. Allen, Minneapolis, Minn. For you personally. Mr. Morgenthau, while you'll likely never try it - and while I doubt that you have any personal political ambi- tions, but if you did have - and if you did try it - you couldn't be elected Dog Catcher of Van Buren, Arkansas, if the group above $4,000 could stop you. But the great masses would feel differently. * & $ The depression of the Thirties took the fat off our bones - stripped us down to muscle end bone. Our hides are tough. Hitler and the Japs are fighting a hungry bunch of Wildcats and haven't 8 chance. We are getting wilder every day and Heaven help the tired and poorly fed Jap and German soldier when this zeng of ours really gets going. When I got out of the Navy in the last war I was handed my rubber boots and a $15 check and told by my old firm that I couldn't 20 to " work for six months because they had a war contract. # Regraded Unclassified 222 Favorable Comments on Bonds Henry J. Bender, Jasper, Ohio. # 4b se Would it be possible to establish 8. Soldier's Bond" to be purchased by the citizens of each County for the use and ownership of its own boys? The money could be raised by social events similar to the campaign for Infantile Paralysis. A com- mittee could buy Bonds and place them in a bank or other- wise make sure of their safety. The Bonds could be registered in the name of each soldier until his return. In case of death, the Bond to go to his family. I know you can realize how good the boys would feel to know they have money, or will have, upon their return. Kindly give this 8. little thought and advise me of your opinion. I would like to see Pike County, Ohio, be the first to have the honor of trying out the plan. C. R. Brown, Tazewell, Va. This morning I received by mail 8 bulletin sent out by your Department entitled, "Our America", in which bulletin you were urging the pur- chase of War Bonds. As I turned to leave the office, Miss Louise Hurt, the local postmistress, told me her family had just been notified by the Navy Department that the submarine, of which her brother was in command, was 30 days past due, and that he presumably was lost. As I walked up the main street of our little town I noted that on the second page of "Our America" was a picture of Gen. MacArthur and underneath the picture the question, "Do we deserve them?" -- that is, Gen. MacArthur and his gallant men on Bataan. I wondered and was still turning the question over in my mind as I entered a local drug store. The few tables in the small store were practically full of people, and as I ran my eye over them, I all at once real- ized that 9 of them were WPA workers, so-called sanitary engineers, etc., smoking cigarettes and drinking COCA colas, and then it was that the answer to your question, "ARE WE WORTHY" came clearly and unmistakably "NO". I believe in Labor Unions, provided they don't have racketeers at the head of them, but I do not believe in "business as usual" by you and your associates of the present Administration, and there are millions like me. This war is lost to date - Regraded Unclassified 228 whether we can pull it "out of the fire" is another matter. If the Administration of which you are a part, from the President down, will whole-heartedly discontinue useless spending and quit trying to line up votes for future elections, and will spend the money we are pay- ing in taxes and for Bonds solely with an eye toward winning the war, you will be tremendously surprised at the response from the people as 8. whole. I know, because I am just one of those ordinary, commonplace, everyday folks. Dr. C. Perry De Boissy, (Retired), Tampa, Fla. I am old, in ill health, partly invalid and adversity stricken, and, therefore, I cannot do what I would like to do for National Defense. Although my earnings are exceedingly small, at the expense of my health and comfort, by de- priving myself of necessities of life I have been able to buy B. dollar's worth of Defense Stamps every week, and, unfortunately, it is the best I can do. Yet, I do not want any one to believe that I am a slacker and have failed to do my duty at B. time when every man is expected to do his best. There is nothing I hate more than PUBLICITY, so I beg you, Sir, to keep this letter 8.6 strictly personal. The only thing I would like to get is something to prove that, no matter the humbleness of my participation, I am doing everything in my power to do my duty. I AM NOT A SLACKER. Harold 0. Wright, Hollywood, Calif. The Postman left at our door this morning B. fine publication called "Our America". and published by your Department. There was one inspiring note to it which I hope you or some one in authority would follow up, namely, to have the children always give the hand salute to the flag, and never to use the outstretched hand salute again. I refer to the beautiful cover page of the publication. Here they are at hand salute -- it is the American form of respect to the flag. The faults of the outstretched hand in salute are obvious - the main one being the fact that it is too much like the salute of the Nazia, *** Regraded Unclassified 229 Y - Mra. W. R. Augur, Fanwood, N. J. I have recently heard that Clarence Pickett, Secretary of the American Friends' Service Committee, proposes to ask the Treasury Dept. to put out Civilian Bonds, in addition to War Bonds, on the plea that some Friends are opposed to buying War Bonds. I should like to say that there are those of us (Quakers) who hope that the Treasury Dept. will not do this. It would confuse the issue, and it is not nec- essary 8.6 Friends can give to civilian needs in a number of other ways, and through agencies already estab- lished. Many members of the Society of Friends are not "ultra-pacifist" in this struggle for our country's survival, and we are enlisting and buying War Bonds just like other Americans. The American Friends' Service Com- mittee, in the aspect of pacifism it at present supports, does not represent the entire membership of the Society of Friends. E. F. Conger, Steunton, Va. # # In the case of one prospective purchaser of not less than $50,000 worth of Bonds, I have been asked the probabilities of the Bonds not being paid when due. I feel that there are many people who, if they had assurance that the Bonds would be paid when due, and that the customer would prob- ably not have the rules switched during the time that he holds the Bonds, would be purchasers of these issues. I feel that if & notice could be given to the effect that under no consideration would the money be withheld from the customer when the Bonds become due, that you would immediately tap 8. tremendous buying power from people who are very suspicious. * # Frederick S. Allis, Jr., Faculty Director of Pledge Campaign at Phillips Academy, Andover, Mass. (Telegram) 99.2% of the undergraduates of Phillips Academy have signed pledges to buy Stamps regularly, 718 boys in all. Have promised the undergraduste body a congratulatory telegram from you. Will whoever opens this please draft something in the way of B. reply with some punch to it? I have referred to "My old friend Henry Morgenthau" in campaign speeches, and suggest that your reply begin, "Dear Fritz:" This would amuse the little men no end. Please shoot this off right away to make Wednesday's edition of the school newspaper. Regraded Unclassified 230 B Unfavorable Comments on Bonds H. Alfred Clover, Tracy, Calif. My wife is buying every Defense Bond she can. She was nine when World War I ended, and she doesn't remember some of the things I do. I wes sixteen then; and I'm still waiting with my Bond buying. 42 # * Back in '16 and '17 my father was 8. farmer in 8 small rural community. He Was one of the town "big-shots" on every Red Cross campaign and every Bond drive. I see them by the score in '42 -- the little fellow scraping the bottom of the barrel for enough pennies to buy another Bond, laying his mite on the altar of sacrifice for his country. * # * There's another side of the picture, too. I haven't forgotten those harsh days that followed the coming of Peace. The fenfare was over; the Liberty Loan trains, the speakers, the trophy exhibits, just 8 memory. The little fellow in business needed cash. His Bonds went on the block -- at a sacrifice. There was plenty of good hard cash to grab them up when ownership of U. S. Government Bonds meant big profits. * 4> 4> That is always the way it goes. The little fellow sacrifices. The big fellow gains. * 4+ # Our Administration is doing all it can, but let us not forget that big money that is wait- ing like B. vulture - waiting for that day when the conflict ends and those who have taken to heart our "Defense Bonds and Stamps" propaganda of 1942 shall find themselves fi- nancially stranded and ready to secrifice anew in order that they may not perish on the wastelands of financial chaos. *** H. M. Harper, University, Ala. # * * Twice within 8. few weeks I have found the Post Office floor here half covered with copies of an eight-page circular in several colors, distributed by your Dept. to unidentified box holders, urging them to buy Defense Bonds -- apparently the same circular both times. Probably much the same thing happened in all other Post Offices, though perhaps more than the average here, because most of the box holders here are students, who presumably have no income yet. These cir- culars must have cost several cents apiece, and the Govt. is not setting 8. very good example by wasting millions of them when the public is being urged to save paper. Any one who can read should already be sufficiently informed about Defense Bonds, through the newspapers. Regraded Unclassified 231 Hamilton Williams, N.Y.C. Upon seeing this picture (Crashing airplanes published in "Our America") I have decided never to buy a Stamp or War Bond. I'll not help kill others in a war into which Roosevelt betrayed our country at the insistence of 8. dying British Empire. Bernard M. Klein, Chicago, Ill. I have been purchasing Defense Bonds every week, in order to do my part in the defense of my country. Last night I heard broadcast over the radio 8. list of eight firms engaged in defense work who have been slowing up production. 4h # % There- fore, until I can be certain in my own mind that these firms and others of their ilk are cooperating with the Govt,, I am this date suspending my purchase of Bonds. Prof. S. L. Hornbeak, Trinity University, Waxahachie, Tex. I heard over the radio a few days ago that in the shipbuilding plants they were paying common country carpenters $115 per week for their work. I have been buying Defense Bonds when I found it possible, but I am discouraged from doing so if the money is to be wasted in paying such fabulous wages. George H. Gannon, Area Director, War Bond Staff, Yakima, Wash. It has been my privilege to work with the Defense Savings Staff since its inception last May. I have fol- lowed with a great deal of interest the entire program and our community of 27,000 people has now paid for $1,860,000 worth of War Bonds. # + # There is one phase of the program which disturbs me very much. Today I re- ceived on my desk the "Minute Man" for March 28, 1942. This is 8. well-printed and well-compiled piece of lit- erature, but 80 far as the program is concerned, it is absolutely useless. I have received in my personal mail box from your office, five complete sets of information regarding war securities. I have also received in my mail box from the local Post Office, several items. Our com- mittee has been flooded with sacks of literature which we cannot possibly use in the community because it is compiled by persons who have absolutely no conception of the psy- chology of our people. It would seem to me, as one on the Regraded Unclassified 232 - IO - firing line, that you would take hold of this matter and see that your money is put into something where it would do real good. % # Certainly those little folks who put in small amounts, dialike very much to see their money used and scattered around in useless printing. This is strong language, but I do not think language can be made too strong for this situation. Mrs. Charles E. Bradshaw, Wellville, Va. As secretary of 8. Home Demonstration Club, we have managed to save enough money to purchase 8. $25 Bond, but according to the rules governing the purchase, a small club cannot buy so small a Bond. We have 16 members, meet once 8. month, and our dues are five cents monthly. We send our leaders to State Leaders meetings and pay their expenses, then we have to pay State and County dues, give 8. present at Christmas to our Home Agent each year, so our five cent dues have to work real hard. I am explaining this because there are thousands of Home Demonstration Clubs in the United States, as well as many other small associations, and the women of the clubs are anxious to help in this small way. Multiplied by B. large number of clubs, this would make a worthwhile contribution. Please inform me, and the rest of the clubs all over the U.S.A., how they can legally purchase 8. small Bond. # Curtis C. Jordan, Asst. Cashier, The Pulaski National Bank, Pulaski, Va. On February 12 we sent two $1,000 Bonds to the Federal Reserve Bank, Richmond, Va., to be sent in for redemption. These Bonds were forwarded to Mr. W. Wesley, Chief, Division of Loans and Currency, Treasury Dept., Washington, D. C., on February 19th. We have written Fed. Reserve Bank, Richmond, Va., and also Mr. Wesley. The Bank tells us that it takes some time to adjust matters of this kind but we cannot get any reply to our letters to Mr. Wesley. Our customer bought some Bonds from us and also the local Postmaster and wasn't aware she had bought too many. # # Mrs. Mullins has called us on numerous occasions and is worried about her Bonds. She is talking quite a good deal and will hurt the sale of Bonds that her friends might buy. We understand that it takes time, but three months does seem an unnecessary delay. Would it be pos- sible to issue two $1,000 Bonds and date them back to January, 1942, since the Government has had the money all this year? Regraded Unclassified 233 - 11 George H. Bangert, President, The First National Bank, Kenmore, N.Y. # Officers from our bank are actively interested in Western New York Bank Association matters and although with practically every Treasury offering we subscribe the maximum amount permitted under our capital set up, we find many small banks in our section hesitate to follow this course, fearing that 8. subsequent increase in the coupon rate on Governments will result in 8. lower market value for outstanding issues, which could result in such B. large book depreciation in their account as to endanger their capital position. This feel- ing is prevalent because of the belief that sooner or later an intensive campaign must be inaugurated to urge more general subscription to Defense Bonds by people with money in savings accounts. If this does not increase the purchases in amounts deemed satisfactory by the Treasury, then some method of forced subscriptions by individuals and banks is inevitably necessary. Either one of these methods will naturally result in 8. large reduction in the total savings deposits in the banks and many banks will be obliged to sell Government Bonds to meet these with- drawals. At such a time if there is a bad market the losses can well ruin many small banks, if the withdrawals for subscriptions continue. To meet these abnormal with- drawals the banks can borrow on their Government Bonds at the Federal Reserve Bank, but these loans should be liquidated and the only way to do that is by the sale of the Bonds in the market. This hesitancy among small banks to purchase a substantial amount of each Treasury issue, provided the maturity fits into their schedule, can be cured, I think, if the small and medium-sized banks which cannot "live" on only short term low coupon Issues were reasonably assured that no future issues will carry a higher coupon than the present 21% issues. # # # Regraded Unclassified 234 - 12 - Favorable Comments on Taxation Mrs. Eulela Rushe, Nashua, Mont., forwards the following resolution: Resolved by the South Valley County Farmers Union in convention assembled this 31st day of March, 1942, that we heartily endorse the position taken by Secretary Morgenthau in regard to opposing the recommenda- tions of the Chamber of Commerce of New York State for a Federal Sales Tax, and in advocating increased levies on income in the higher brackets, and on corporation profits. L. M. Bates, Philadelphia, Pa. I wish to call your at- tention to the statement sent out by American Telephone and Telegraph to their bondholders, which is an indirect attack on your proposed taxes for the fiscal year 1943. Your attention is also called to what American Telephone and Telegraph has really done since the war began in 1939. They have done 8. good job for military and civilian war needs -- but that for them was business as usual, at a profit. They have done 8. good job in the civilian air craft warning service -- but that for them was understand business as usual, at & profit. * # # What I cannot is why American Telephone does not convert their telephone and teletype plants to the manufacture of optical and fire control equipment for the duration. These skilled workers are being kept out of vital war work, and worse still, Western Electric is reaching in to grab at least two mate- rials that we cannot replace -- Malayan tin and plantation rubber. It looks like our Army and Navy are being deprived of the use of these plants and materials simply SO that Mrs. Smith can talk to Mrs. Jones over the telephone, or that the bookmakers can have teletype results and keep money out of U. S. Bonds. American Telephone and Telegraph appears to be willing to win the war if it can be done without the loss of any dividends, the loss of a. single residential telephone, or the loss of one teletype customer. R. N. Gould, Tax Consultant, Omaha, Neb. M I know that you have strenuously opposed any compulsory buying of Defense Stamps and Bonds, and think you are absolutely right, as we Americans do not welcome compulsory measures. Regraded Unclassified 235 - 13 - We need go back no further than the 18th Amendment, with its disastrous results, as an example of taking away the peoples' rights even if for their ultimate good. From a. Government bookkeeping standpoint, and 8. method of indi- vidual accounting, the payroll tax would be simple, and you would have the past experience of both the Federal Social Security Tax, and the State Payroll Tax to be governed by. If some such tax is not put into the Revenue Act, under the new Revenue laws, I believe the general trend will be for B. Sales Tax, as that is one sure method of raising our needed revenue. *** Bertha Taylor, N.Y.C. I want you to know that I am for your tax program and against the Sales Tax. Mrs. C. F. Jones, President, Warwood Woman's Club, Wheeling, W. Va. *** We will support you in any demand for in- creased taxation or other measures that will out out the present alarming disparity between the buying power of the nation and the fest dwindling supply of consumer goods. The women of America, who do the nation's buying, look to our Government for strenuous action before too late. We know that sacrifice today, however painful, will save us from tenfold sacrifice later. Regraded Unclassified 236 14 Unfavorable Comments on Taxation Miss Emma Burkart, Chicago, Ill. One of our Chicago newspapers carried an article recently to the effect that you were aiming to destroy the private pension systems of the country, and since I am a pens there of an industrial company, I am naturally very much dis- turbed by such a statement. Mr. Morgenthau, it is hard for me to believe that you, or any one else connected with the Administration at Washington, would be guilty of such 8. base act, and it would certainly be 8. relief to know that nothing of the kind is contemplated. These people who are old enough to be retired would have 8. mighty hard time securing employment in a business world gone mad on age discrimination. I hope you will pardon me for ad- dressing you, for I know you are 8. very busy man, but I felt that I must have the fects. Wm. J. McKenna, Moorestown, N. J. I am absolutely opposed to a tax on future issues of State, County and Municipal Bonds. I am opposed because I am 8. small home owner and feel I pay enough tax on my home. Why must the small home owner continue to suffer when any branch of Government wants to raise more money? Be fair and honest with the people. You have advocated this tax. Now tell the people straight forwardly that & tax on future issues of municipal bonds is a tax on the home owners of the nation, and not on the purchaser of the bonds. A higher coupon will be de- manded; and who pays the coupon? The home owner in the com- munities that find it necessary to borrow money for essential purposes, of course. Do not insult the intelligence of us citizens by referring to this tax as 8. tax on rich bond holders. You know better, or at least, you should. Caroline B. King, Upper Darby, Pa. Since 1924 I have had 8 position with The Curtis Publishing Company of this city. I was Woman's Editor of the Country Gentleman. Earlier I was appointed Army Dietitian by Surgeon General Gorgas, and served in France during 1918-19. Still earlier I travelled over many sections of the United States lecturing on food conservation. # # In March, 1942, I was dismissed from the Curtis Publishing Company because of my age. My work, I was Regraded Unclassified 237 - 15 told, was highly satisfactory, but it was decided to put 8. younger woman in my place. The company, 88 is its custom, gave me no notice that I was to be dismissed, but in lieu of that notice, I was given a year's salary 8.8 a pension. I am 75 years old, and I feel that it will be almost impossible to secure another position. Therefore, this pension - a year's salary - will be all that I shall have to live upon the rest of my life. & * # My great worry now, and my reason for troubling you with my affairs, is my next year's income tax. I can meet the present tax, 1941, but B.S my company gave me the entire sum of my pension at once, and as I have no dependents, I shall have to pay perhaps one-half the total sum in income tax in 1943. The remainder will not support me for 8 very long period, and as I said, it will be all that I will have for the remainder of my life. Doesn't the law make some pro- vision for cases like mine? John T. Orr, Arlington, N.J. I have before me 8 short abstract which appears in this evening's paper, which is 80 incomplete that it does not make clear the intentions of your Dept., but there is an implication that Mr. Randolph E. Paul is making recommendations to Congress concerning pension funds. # $ 4 An official of the telephone company says that, " the Treasury recommendations, if en- acted, would make it necessary for AT&T to dissolve B. pension plan applying to 380,000 employees. # If As an employee of one of the companies owned by the AT&T, I am one of the 380,000 employees involved. I can only speak for myself, but I do feel that a poll of the other 379,999 employees involved would find that most all would agree with my viewpoint. Of all times in the history of the world, when every one should be putting his shoulder to the wheel, we must have at this crucial juncture, large groups of people sitting down to write their Congressmen, disturb- ing their own peace of mind and that of their associates, concerning such proposals, which are highly resented. In the face of such things, we read daily in the papers of money spent in every direction. " # # It was even reported in the papers last month that en appropriation of $900,000 wes given to Mr. LaGuardia to fritter away on B WPA project for training Piano Tuners and for the study of "Musical Therapy", and the training of persons in the repairing of torn sheet music. People are commencing to boil over when they read these things in the paper- Regraded Unclassified 238 - 16 - Philip Hochstein, Editor, Newark Star-Ledger, Newark, N.J. You may be interested in a survey of retail out- lets conducted by my newspaper with reference to the proposed increased Excise Tax on cigarettes. ### Every dealer interviewed was of the opinion that the proposed uneven tax would stimulate the sale of the lower price cigarette and discourage the sale of a higher price cigarette. This, as you can see, would have an adverse effect upon the tremendous income from the sale of the higher price cigarette. *** Regraded Unclassified 239 MEMORANDUM FOR THE SECRETARY. April 24, 1942. Supplementary Special Mail Report on "Ringing Every Doorbell in the Country" To the 19 letters reported in the memorandum of April 20th may be added 11 others specifically men- tioning the house to house campaign. Of these, 6 endorse the idee and are interested in serving as solicitors; 1 opposes it; 3 counter with plans of their own; and the last, a Quaker, asks about other ways of helping. Regraded Unclassified 240 - 1 - Favorable Comment Frank B. Hartmann, Secretary, New Jersey State Association of Letter Carriers, Camden, New Jersey. Your recent plan to canvass each home for the sale of War Stamps and Bonds was discussed by the Executive Board of the New Jersey State Association of Letter Carriers at a meeting on April 18th. As the Letter Carrier is familiar with every patron he serves, we feel it gives him the advantage neces- sary to put over this important work. We therefore volunteer our service as an added contribution to the war effort. Regraded Unclassified 241 - 2 - Unfevorable Comment Mrs. Elizabeth Huntington Adams, Winter Park, Flerida. My neighborhood is being canvassed from door to door - each householder being asked to buy U. S. War Bonds or Stamps. How can I be expected to pay taxes - my daily living expenses - help those of my family less for- tunate than myself - support church, charities, relief and all the extra overseas relief, and at the same time buy U. S. Bonds - when my income is shrinking month by month - by the Govt. 80 heavily taxing these fine companies thet pay me dividends? R. Moulton Pettey, National Director, National Association for the Calling of a United States Constitutional Conven- tion, New York City. It is sincerely and respectfully submitted that 8. better plan, and one which would undoubt- edly result in the disposition of many billions of the face value of these Bonds is to consider the proposition of effectuating a certain percentage of earnings (compen- sation and profits) periodically. # For instance, initial voluntary acquisition by payment of 8. certain per- centage of salary or profits at each pay day or income profit period in bonds graduated in accordance with the higher salary or profits. On a salary of $25 per week, prescribe 10%, payeble in War Bonds, and graduate upwards the percentage as the salary is greater. On profits, use the same ratio. The percentages of 10, 15, 20, 25, and 33 1/3 could be used. Mrs. Mattie E. Denning, Los Angeles, Calif. I am B. member of the Friends Church. I cannot buy War Bonds, but am willing to sacrifice for the sake of the country. I have already bought bonds put out by the American Friends Service Committee for the support of the Civilian Public Service Camps. Will that be considered part of the country as a whole, and will these bonds be recognized as proof that one is doing his part to help? If I buy U. S. Government Bonds instead of War Bonds, will your representatives accept them 88 proof that I am doing my part for the good of the country? Regraded Unclassified 242 MEMORANDUM FOR THE SECRETARY. April 24, 1942. Special Mail Report on War Savings Quota Campaign Of the 20 communications that refer to the investment of ten percent of income in War Bonds, only 6 express opposition to the plan. Regraded Unclassified 243 - 1 Favorable Comment Robert Theobald, Louisville, Ky. I want to congratulate you on your latest plan to advocate that the workers be urged to invest ten percent of their earning in Defense Bonds. I believe this plan would do more to combat infla- tion and would meet with the wholehearted support of every patriotic American. It would help in more ways than one, as while it would help to stop inflation, it would give the worker something to go on after this present emergency was over. Josie B. Ames, New Orleans, La. Every employed American should support this voluntary plan of yours 100%. It con- tains the very thing in life we are fighting for, THE RIGHT TO ACT VOLUNTARILY RATHER THAN COMPULSORY. I am notifying my employer of my decision to invest 10% of my weekly earn- ings in Bonds. E. S. Rothchild, Ritz Carlton Hotel, New York, The news- papers are giving you quite some publicity in your well- deserved endeavor through your campaign which is proposed to start May 1st to secure funds from the sale of War Bonds. 10% of income to be subscribed in that direction would be acceptable to many, but primarily there should be B. general enlightenment of the type of Bonds, the advantages under each particular bond issue that inure to the subscriber, and the features surrounding each issue. Walter Kutzleb, New York. This morning's New York Times carries an item from Washington with the heading "Treasury Opposes Compulsory Saving". That is good news, because, after all, "saving" has always been regarded 8. virtue and that can only be voluntary, if it wants to remain a virtue. John H. Yearsley, Detroit, Mich. Just read in Detroit Free Press about voluntarily spending at least 10 percent of your income for War Bonds. I am in hearty accord with this program. Regraded Unclassified 244 - 2 - Unfavorable Comment Mrs. Ruth Loomis Flagg, New York City. Have been much interested in your articles on "COMPELLING" people to buy Bonds and the concern you have over the failing off of the sale of Bonds. * # # When Washington clean house, remove the parasites, reduce unnecessary spending and stop throwing money away, the American people will respond. You'll have no trouble selling Bonds. Lloyd Barrick, Jersey City, N.J. Newspaper reports that every citizen is to be asked to invest ten percent of his gross income in War Bonds, regardless of his personal obligations, are disconcerting to one who has debts and insurance to meet. Such a plan seems indiscriminating. The income tax seems B. fairer way of getting increased revenue. * # +F Regraded Unclassified 245 April 24, 1942 5:26 p.m. John J. McCloy: Did you get the letter signed? HMJr: Yes. I was having it photostated for the President, and I told them to send it over to you tonight yet. Mc: Okay. Good. Now, you said the other day HMJr: Yeah. Mc: that whenever we had anybody coming from that area out there, that you'd like to know about it. HMJr: That's right. Me: When is your next broadcast? HMJr: May 4th. Mc: May 4th. HMJr: Yes. Me: I've got in my room General Aurand's boy, who's just come back from there HMJr: Oh, yes. Me: who's been dive-bombing the Japanese Navy. HMJr: Oh, really? Me: Yeah. And I think he might be the type that you'd be interested in. He's just told me his story. It's a very thrilling one, and I suggest that he might be a possibility. HMJr: Well, could I see him tomorrow? Me: What time, Mr. Secretary? HMJr: Oh, about twelve o'clock. Regraded Unclassified 246 - 2 - Me: Twelve o'clock. (talks aside) Can you see the Secretary of the Treasury? Good, I'll have him in your office. HMJr: Now, what's his title? Me: He's Lieutenant Evan Aurand. HMJr: Leven - Lieutenant Me: Evan, E-v-a-n. HMJr: Yes. Me: Aurand. Lieutenant Evan Aurand. He's a Navy - he's off one of the carriers and he's been on a lot of those transports. HMJr: He's Navy. Me: He's Navy. HMJr: Well, I'll be delighted to see him, but I was going to try to give you Army fellows a chance. Mo: Well, I - - he Just happened to be in my room. He's - his old man's Army. HMJr: Yeah. Me: Well, we're in on it enough. HMJr: Well Me: He's.- you ought to HMJr: I'd like to meet him, anyway. Re: Right. He has 8 very interesting story, and a very nice chao. HMJr: Lieutenant Evan Aurand. Mo: That's right. I'll have him in your office at twelve o'clock tomorrow. HMJr: Thank you 80 much. Me: All right. Okay. HMJr: Thank you. Regraded Unclassified 247 Willard Hotel Washington, D.C. April 24, 1942 My dear Mr. Secretary, I have just been advised that the Secretary of War is sending to the President for his approval a letter recommending that a preliminary payment be made to His Majesty's Government in the amount of $70,000,000 on account of specified aircraft and related materials requisitioned by the United States from His Majesty's Government shortly after December 7, 1941. It is indi- cated that the full compensation to be paid to His Majesty's Government will be determined in due course and any excess over the down payment would then presumably be paid to us. I hope that this procedure will not involve delay and that we shall be able to receive the advance payment by the end of the month. Yours sincerely, Hhillips The Honourable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. C. Regraded Unclassified 248 Original with 6 carbons returned to Mr. McCloy, War Dept., 4/24/42. Photostat to Dr. White. 2 Photostats to White House. 249 WAR DEPARTMENT WASHINGTON The President The White House My dear Mr. President: Pursuant to authority under the Act of October 10, 1940 (54 Statute 1090), the following described property of His Majesty's Government in the United Kingdom was requisitioned by the War Department on or shortly after December 7, 1941: Airplanes Quantity Estimated Cost LB-30 Liberator (B-24 4 engine Consolidated Bomber) complete 50 14,221,336 DE (A20A 2 engine bomber) Complete 213 31,035,246 Boeing Aircraft Corporation 132 19,209,432 Douglas Aircraft, Inc. 6 918,864 Douglas Aircraft, Inc. 75 10,906,950 322 Lightning (P-38 Lockheed interceptor 2 engine pursuit) complete 20 2,222,400 P-400 Airacobra (P-39 1 engine pursuit) 196 12.703,040 Bell Aircraft Corp. - complete 156 10,273,440 Bell Aircraft Corp. - complete except for propellers supplied under lend-lease 40 2,429,600 Total airplanes 479 60,182,022 Airplane engines 798 11,165,511 Total estimated cost ..... 71,347,533 The above estimated cost is based upon unit prices set forth in contracts of His Majesty's Government in the United Kingdom, with various manufacturers in the United States exclusive of any undetermined additional charges arising through acceleration, escalator or other similar clauses. -1- Regraded Unclassified 250 In smuch as n. fair and just compensation price for the air- mes and engines is not determinable finally nt this time in accordence with the Act of October 10, 1940, (54 Statute 1090), it Ls recommended that 8. prelimingry payment be made to His E.jesty's Government in the United Kingdom in an Amount of $70,000,000. Respectfully yours, Henry L Strinon Secretary of War Recommendation approved for the making of 6 preliminary payment of $70,000,000.00 pending the determination of a fair and just compensa- tion price. the NW April 25. 1942. -1- Regraded Unclassified 251 BRITISH AIR COMMISSION 1785 MASSACHUSETTS AVENUE WASHINGTON, D.C. TELEPHONE HOBART 9000 PLEASE QUOTE REFERENCE NO With the compliments of British Air Commission who enclose Statement No. 30 - Aircraft Despatched - for week ended April 21, 1942. The Honourable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. C. April 24, 1942. Regraded Unclassified DST SECRET 252 STATEMENT NO. 30 AIRCRAFT DESPATCHED FROM THE UNITED STATES DURING ENDED APRIL 21,1942 BY SEA BY FLIGHT DEL'D TIPE DESTINATION ASSEMBLY POINT ATR FOR USE DI C cobra U.K. U.I. 19 NG E Fortress II U.K. Canada en route 2 NA 7 Crane IA Canada Canada 5 J OLIDATED e U.K. Canada en route 3 rator II U.K. Canada en route 6 ISS yhawk IA Australia Brisbame 14 yhawk Middle East Port Sudan 3 CHILD U.K. U.K. 15 MARTIN Imore Middle East Port Sudan 6 11 Let II India Bombay 7 EED Budson III A AC5 U.K. Canada en route 1 AC 151 U.E. U.K. 24 Lodestar IIA Canada en route 2 U.E. tra Canada 5 Canada U.K. Canada en route 17 AMERICAN U.K. Canada en route 2 TEXAN 29 TALS 64 57 39 TITISH AIR COMMISSION pril 24th, 1942. Regraded Unclassified 253 MEMORANDUM April 24, 1942. TO: The Secretary FROM: ILS Mr. Sullivan I have a preliminary report of the investi- gation of Jacks & Heints, Inc. It is available whenever you wish to see it. 254 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE April 24, 1942 TO Ferdinand Kuhn, Jr. FROM Herbert Merillat Editorial Opinion on Taxes: Waiting for Guidance Editorial discussion of taxes and inflation has dropped off in the past week as the nation awaits the President's message outlining a broad attack against inflationary forces. The nature of the anti-inflation program has been the subject of lively speculation, but the press appears to be withholding comment until the program is authoritatively set forth. Secretary Morgenthau's announcement of quotas and canvassing to increase War Bond sales has led the press to conclude that compulsory saving is not on the program, for the present at least. Papers representing every part of the country and every shade of opinion have rallied to support an intensified bond sales drive, but many doubt whether the campaign will draw off enough purchasing power to reduce the inflationary gap to safe proportions. "We are for it, but we wonder if it will work," is a typical editorial attitude. Papers such as the Louisville Courier-Journal and Minneapolis Tribune, which have been urging compulsory Regraded Unclassified -2- 255 savings, regard the Treasury's attitude as unrealistic. The voluntary purchase plan, says the Tribune, "puts 8 penalty on patriotism and a premium on slacking." A compulsory savings plan is necessary to spread the load equitably. Many editorial writers have pointed out that if the voluntary purchase program does not show adequate results, compulsory savings or wage taxes will be inevitable. The Wall Street Journal and Philadelphia Inquirer urge that savings be "induced" by providing reduction or postponement of income taxes on income used to buy Savings Bonds. Higher Tax Goal Although the majority of the press has been cam- paigning for heavier taxes on low income groups -- a sales tax or B wage tax -- there has been little editorial demand for an increase in the tax revenue goal above the $7.6 billions proposed by the Treasury. Mr. Henderson's appeal for even higher taxes to combat inflation met with little editorial approval. Several papers have advised Mr. Henderson not to disturb tex waters which are already muddied. Some point out the difficulty in using taxes to combat inflation, noting that heavy taxes hit shrunken incomes as well as swollen ones. The Scripps-Howard papers, however, advocate heavier taxes than those recommended by the Treasury Regraded Unclassified -3- 256 on the ground that such taxes and compulsory savings are necessary to close the inflationary gap. "Secretary Morgenthau," they say, "is not representing the best interests of anybody when he opposes effective anti-inflation taxes and compulsory investment in war Bonds." Likewise, Ernest K. Lindley's column accuses the Treasury of being "the hardest and the highest" obstacle to an effective inflation-control program, by continuing to insist on voluntary bond sales and no increase in taxes above its original recommenda- tions. Price Control Editorial comment is varied regarding the role of price control in the anti-inflation program. Most papers agree that effective control of wages and farm prices is a prime necessity. While many find the Baruch "over-all" price ceiling 8 simple and attractive formula, others are disturbed by the inequities involved in freezing all prices as of 8 certain date. In general, however, the press expects and approves much stricter price control. The Patterson-McCormick papers stand almost alone in opposing strict price control. They oppose price- fixing and its handmaiden, rationing, as unnecessary and Regraded Unclassified -4- 257 irritating. "More and more people are asking why we are fighting to make the world safe for democracy when the bureaucrats are destroying democracy right here at home," says the New York Daily News. "We still think there is life yet in the law of supply and demand, and that it might be able to solve our war-shortage problem better than the bureaucrats can." Regraded Unclassified Release at / Pm Ander 258 FOR RELEASE FRIDAY MORNING, APRIL 24, 1942 Harold D. Smith, Director of the Bureau of the Budget, today issued revised budget figures which indicate much larger war expenditures and somewhat higher receipts than those included in the original 1943 budget. Director Smith estimates that during the current fiscal year ending June 30, total receipts will meet 36 percent of total expenditures; during the next fiscal year receipts will meet only 31 percent, assuming enactment by the Congress of the $7 billion of new taxes requested by the President in his budget of last January. These ratios are based on the following data in billions of dollars, including expenditures of the R. F. C. and its subsidiary corporations. Receipts Expenditures Fiscal Year 1942: Original Estimate 11.9 33.6 Revised Estimate 12.7 35.6 Fiscal Year 1943: Original Estimate 23.5 63.3 Revised Estimate 23.9 77.5 "As the current fiscal year draws to a close," Mr. Smith stated, "expanding war production requires that total war expenditures be now estimated at $28 billion, instead of the $26 billion which the President included in the budget submitted last January. This total is more than four times the expenditure of the preceding year. Moreover, the pace of our war effort is even faster than these annual figures would indicate. Thus, weekly expenditures have increased rapidly, and are up 70 percent since Pearl Harbor. Regraded Unclassified 259 - 2 - "Looking ahead into next year is extremely difficult. The scope of the war program has expanded rapidly. Capacities for increased war production are being enlarged by construction of new plants and con- version of industrial facilities. Total expenditures of $70 billion during the next fiscal year now appear attainable, as against original estimates of $56 billion last January. This new estimate is based on present legislation and price levels. "With such all-out war effort, about $50 billion of national income will remain for civilian use. This sum will provide more of the necessities of life than during the depression but less than during the past year. ( "Huge financing operations will be necessary next year to meet a tremendous deficit of $49 billion. This estimated deficit assumes that the Congress will enact $7 billion of new taxes. Even with that new tax legislation, total estimated receipts will meet less than a third of all Federal expenditures, "During the three years ending June 30, 1943, war appropriations and contract authorizations enacted or pending amount to $161 billion. Actual expenditures for the same period are estimated at $105 billion. "The following tabulation covers in detail the original and revised budget estimates for this and next fiscal year. In that tabulation expenditures for other than war purposes have not been revised because the 1943 budget has not yet been enacted. Ao submitted to the Congress, the 1943 budget called for a reduction of 8938 million from 1942 nonwar appropriations, excluding interest on the public debt which will rise by $500 million." Regraded Unclassified ORIGINAL AND REVISED BUDGET ESTIMATES 260 FISCAL YEARS 1942 AND 1943 (Assumes $7 billion of new taxes) (In millions) Fiscal Year 1942 Fiscal Year 1943 Original E Revised Original I Revised Estimate : Estimate Estimate It Estimate RECEIPTS: Internal revenue $12,198 $12,953 $17,261 $17,820 Railread Unemployment Insurance Act 9 9 10 10 Customs 368 375 297 245 Miscellaneous revenues and receipts 241 241 284 284 TOTAL RECEIPTS 12,816 13,578 17,852 18,359 Less net appropriation for Federal Old- Age and Survivors Insurance Trust Fund 872 871 1,365 1,441 NET RECEIPTS $11,944 $12,707 $16,487 $16,918 EXPENDITURES: War 23,997 26,000 52,786 67,000 Other: Legislative, judicial and executive 41 41 43 43 Civil departments and agencies 859 859 797 797 ( General public works program 714 714 578 578 Veterans' pensions and benefits 578 578 590 590 Aids to agriculture 1,117 1,117 854 854 Aids to youth 235 235 100 100 Social security 462 462 538 538 Work relief 942 942 480 480 Refunds 89 89 87 87 Interest on the public debt 1,250 1,250 1,750 1,750 Transfers to retirement funds 267 267 299 299 Supplemental items - regular 25 25 25 25 Total other 6,579 6,579 6,141 6,141 TOTAL EXPENDITURES $30,576 $32,579 $58,927 $73,141 EFICIT UNDER PRESENT TAX LEGISLATION 18,632 19,872 42,440 56,223 ECEIPTS FROM PROPOSED TAX LEGISLATION - - 7,000 7,000 EFICIT UNDER PROPOSED TAX LEGISLATION 18,632 19,872 35,440 49,223 DVANCES TO GOVERNMENT CORPORATIONS: War 2,000 2,000 3,000 3,000 Other 1,019 1,019 1,368 1,368 TOTAL ADVANCES 3,019 3,019 4,368 4,368 NCREASE IN PUBLIC DEBT DURING YEAR 21,651 22,891 39,808 53,591 C DEBT AT BEGINNING OF YEAR 48,961 48,961 70,612 71,852 UBLIC DEBT AT END OF YEAR $70,612 $71,852 $110,420 $125,443 Regraded Unclassified 4/24/42 261 Treasury Department Office of the Under Secretary Date: 5/2 From: To: The Secretary. Here are some notes on the Backers meeting last everk. DWB Regraded Unclassified 262 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE April 24, 1942 TO Mr. D. W. Bell FROM David Lilly Amt Subject: Executive Council Meeting of the American Bankers Association. 1. War Savings Bonds. The bankers in general were very pleased of their record in the sale of War Savings Bonds, pointing out that they were the first to enter the field and that a large percentage (they claimed 80%) of the War Savings Bonds were sold by them. Somewhat curiously, there seemed to be no objection to the expense of sale and issuance of bonds and they seemed quite willing to carry on without reimbursement. Furthermore, they were sorry that the public did not realize all that the bankers were doing in the sale of War Savings Bonds, but no national campaign to acquaint the public with this fact was considered. B. Government Financing. When Randolph Burgess suggested to the bankers in his address that they should take an active participation in the sale of Government obligations to their customers, he met a mixed reception. Some of the more aggressive bankers, notably James Leavell of the Continental of Chicago, were quite emphatic in their belief that the Treasury had not begun to absorb the surplus cash of various corporations, and, in their opinion, the Treasury was not likely to do 80 with the securities it now offers. Mr. Leavell made a suggestion which seems to me to merit some consideration. He felt, and the feeling WELB general among the bankers, that corporations as B. rule do not know how to subscribe to Government issues, in this instance the Certificates of Indebtedness, and they are not willing to take the chance of finding themselves with more cash invested than they had planned, Furthermore, the feeling was that the Certificate of Indebtedness issue did not in most cases fit the cash requirement dates of the corporations which were asked to subscribe, He suggested that a. "tap" issue be inaugurated which would allow the corporations to pick their own maturities at approximately 30-day intervals. He felt quite sure that his bank could raise at least $500,000,000 in the Chicago area alone from corporations at the first announcement of such an issue, and that there was probably even more money than this available that he did not know about offhand. Several of the more reactionary bankers agreed that if the Treasury were to design A. "tap" issue of 30, 60, 90, and 120 days, that the corporations would buy them readily, picking the maturities which would meet their cash requirement dates, but these bankers did not feel that it was their place to Regraded Unclassified 263 - 2 - pursuade their customers to buy such an issue. They felt that the sale could be made to the various industries by their own organizations, such as their trade associations, the Steel Institute, the Petroleum Institute, etc. Others were of the opinion that if such an issue were forthcoming, the sale could be handled by the agency best able to approach the corporation; & security dealer in one case, 8. trade association in another, or the corporation's banker in the third instance. All agreed, however, that such an issue would have a ready market. While at the meeting, I had several discussions with Henry Verdelin, Vice President of the Mutual Life Insurance Company of New York, concerning an issue designed for the use of insurance companies primarily. He was of the opinion that his company would be very much interested in a 20-year non- redecmable, non-negotiable bond, bearing a rate of somewhere between 2 and 3%, if, should the need arise for cash, the company would be allowed to borrow from the Federal Reserve Bank at à of 1% (or some percentage of the discount rate) after filing 8. certificate of distress which would demonstrate the company's need for cash due to the demands of policy holders. He seemed quite interested in such an issue and was of the opinion that it would have consider- able appeal to other insurance companies besídes his own. Regraded Unclassified 264 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE April 24, 1942 TO FROM Mr. Hear Secretary M Morgenthau Subject: Recent Changes in Prices and Yields of Government Securities The accompanying chart and table compare the yields of Treasury bonds and notes at last night's close (April 23) with those on March 19. All sectors of the market have been weak during the past week. Representative declines in taxable securities for this period have been 12/32 for the 2-1/2 percent bonde of 1967-72; 7/32 for the 2 percent bonds of 1948-50, and 3/32 for the 1 percent notes of March 15, 1946. De- clines in tax-exempt securities have been slightly less. As a result of these declines, prices of long-term taxable bonds are now slightly below those of March 19. This price decline 18 equivalent to one basis point on the long-term taxable average -- which has risen from 2.35 percent to 2.36 percent during this period. Prices of long-term partially tax-exempt bonds are still slightly above those of March 19. Note prices, which were already below those of March 19 last week, have slightly extended their losses. The average rate on this week's issue of Treasury bills was 0.32 percent. This compares with 0.28 percent last week and 0.20 percent in the week of March 19. During the past week (1.e., commencing last Friday) the Federal Open Market Account has purchased $55.6 mil- lions of Treasury bills and sold none (although $10.0 mil- lions of bills held by the Account ran off during the period). The only other transactions of the Account during the period were the purchases on Friday, April 17, of $2.1 millions of 2-1/4's of 1952-55 and $1.0 million of 2-1/2's of 1967-72. Regraded Unclassified 265 Price and Yield Changee of United States Securities March 19, 1942 to April 23, 1942 : : Prices Yields : Security = March 19, : : April 23, 1942 1942 Change : March 19, April 23, : : 1942 1942 Change : (Decimala are thirty-seconds) (Percent) Bills Average rate last issue # - # .20 .32 +.12 Certificates 1/2 II/1/42 , - 1 - .44 - Taxable Notes 3/4% 3/15/43 100.12 100.07 -.05 .37 .50 +.13 3/4 9/15/44 99.31 99.24 -.07 .76 .86 +.10 3/4 12/15/45 99.22 99.13 -.08 .84 .92 +.08 1 3/15/46 99.29 99.24 -.05 1,02 1.07 +,05 Taxable Bonde 3/15/48-50 101.28 101.24 -.04 1.67 1.69 +.02 rurs 2 6/15/49-51 101.04 101.01 -.03 1.83 1,85 +.02 ( 2 12/15/51-55 100.12 100,15 +,03 1,96 1,95 -,01 2-1/2 3/15/52-54 103,23 103.25 4.02 2.09 2.08 -,01 3-1/4 6/15/52-55 101.06 101.07 +.01 2.12 2.12 .00 2-1/2 3/15/56-58 103.05 102.29 -.08 2.24 2.26 +.02 3-1/2 9/15/67-72 100.27 100.27 .00 2.46 2.46 .00 Pholly Tax-exempt Notes 25 9/15/42 101,04 100.26 -.08 5/32* 3/32" -2/32" 1-3/4 12/15/42 101.11 101.04 -.07 2/32* .00 -2/32* I-1/8 6/15/43 101.04 100.29 -,07 .22 -33 +.11 I 9/15/43 101.03 100.28 -.07 .26 -37 +.11 1-1/8 12/15/43 101.16 101,06 -,10 .26 .40 +.14 1 3/15/44 101,10 101.04 -.06 ,34 .40 +.06 3/4 6/15/44 100,27 100.24 -,03 .37 .40 +.03 1 9/15/44 101.16 101.11 -,05 .39 .43 +,04 7/4 3/15/45 101.00 100.30 -,02 .41 ,42 +,01 Partially Tax-exempt Bonds 3-3/89 6/15/43-47 103.21 103.09 -,12 .41 .49 +,08 3-1/4 10/15/43-45 104.06 103.28 -.10 .57 .61 *.04 3-1/4 4/15/44-46 105.06 104,28 -.10 .72 .76 +.04 - 12/15/44-54 108.11 108.06 -.05 .91 86 -,05 P-3/4 9/15/45-47 106.06 106.01 -,05 .94 .94 .00 2-1/2 12/15/45 105.28 105.22 -.06 .90 .91 +,01 3-3/4 3/15/46-56 110.08 110,02 -.06 1.11 1,10 -.01 6/15/45-48 107.28 107.27 -,01 1,09 1,06 -.03 7-1/8 6/15/46-49 108.08 108.08 .00 1,13 1,08 -.05 L1/4 10/15/47-52 115.20 115.15 -.05 1,33 1,31 -,02 12/15/47 104.23 104,25 +.02 1.15 1,12 -.03 2-3/4 3/15/48-51 107.28 107.28 .00 1.38 1.35 -,03 2-1/2 8/15/48 107.07 107.07 .00 1,33 1.32 -,01 104.22 +.01 1,28 1.26 -,02 2 12/15/48-50 104.21 3-1/8 12/15/49-52 110.22 110,25 +.03 1.65 1,62 -.03 2-1/2 12/15/49-53 106.16 106.16 .00 1.60 1.59 -.01 2-1/2 9/15/50-52 106.20 106.22 +.02 1,66 1,64 -,02 2-3/4 6/15/51-54 108.18 108,19 +.01 1.74 1,73 -.01 - 9/15/51-55 110.20 110,19 -.01 1.78 1.77 -,01 2-1/4 12/15/51-53 104.29 105,01 +,04 1.70 1.68 -,02 1,65 -.03 2 6/15/53-55 103.10 103.18 4.08 1,68 2-1/4 6/15/54-56 104.28 105.01 4.05 1,80 1,79 -.01 2-7/8 3/15/55-60 110.00 110,04 +.04 2.00 1.98 -,02 2-3/4 109.10 109.12 +,02 2.01 2.00 -,01 9/15/56-59 2-3/4 5/15/58-63 109.12 109.16 +.04 2.07 2,06 -.01 2-3/4 12/15/60-65 110.00 110,04 *.04 2.10 2.09 -.01 April 23, 1942. Treasury Department, Division of Research and Statistice, Excess of price over zero yield, Regraded Unclassified 266 1933 FEDERAL DEPOSIT INSURANCE CORPORATION WASHINGTON OFFICE of THE CHAIRMAN April 24, 1942 Re: General Aniline and Film Corporation of Delamare My dear Mr. Secretary: I as sending you under separate cover a formal notification of the fact that I have directed the vesting in Be of the corporate stock of the subject company, and have requested that you release all control thereof to M. I understand that & report on the company is being prepared under your supervision and will not be completed for two or three weeks. I trust that you will continue with that work until it is finished; and request that you kindly send ne a copy thereof when it is completed. I would appreciate your arranging to send to this office such of your files and records as you think may be helpful to no in the administration of such property, including particularly all claims, and notices of claims, heretofore or hereafter filed with you pursuant to your vesting order dated February 16, 1942. Very truly yours, 90% Alien Leo Property T. emaly Crowley Custodian The Honorable The Secretary of the Treasury Washington, D. c. Regraded Unclassified FEDERAL DEPOSIT INSURANCE CORPORATION WASHINGTON OFFICE of THE CHAIRMAN April 24, 1942 & dear Mr. Secretary: Under date of March 11, 1942 I delegated to you all power and authority under Sections 3(a) and 5(b) of the Trading With the Enemy Act, as amended, conferred upon me by the President by Executive Order No. 9095, dated March 11, 1942. I hereby revoke such power and authority in BO far 8.9 they pertain to the corporate stock of General Aniline and Film Corporation of Delaware, which was covered by your vesting order dated February 16, 1942. In addition to the foregoing, and pursuant to the authority contained in the paragraph numbered 3 of Executive Order No. 9095, dated March 11, 1942: 1. You are hereby notified that the Alien Property Custodian has directed (pursuant to Vesting Order No. 5 dated April 24, 1942, a true copy of which is attached hereto) that there be veeted, and there has been vested, in him all of the shares of stock of General Aniline and Film Corporation of Delaware which were the subject of and covered by the vesting order issued by you under date of February 16, 1942 (or, in the event any or all of such shares have been canceled and new shares issued in lieu thereof, then such new shares representing a corresponding property ownership or interest in such corporation); and 2. It is hereby requested that you release All control of all such corporate stock to the Alien Property Custodian. Very truly yours, Lao T. Crowley Alien Property Custodian a Nonorable The Secretary of the Treasury Washington, D, C. Regraded Unclassified OFFICE OF THE ALIEN PROPERTY CUSTODIAN VESTING OF PROPERTY OF GENERAL ANILINE AND FILM CORPORATION OF DELAWARE Vesting Order No. 5. (a) I, Leo T. Crowley, Alien Property Custodian, acting under and by virtue of the authority vosted in me by the President pursuant to Section 5 (b) of the Act of October 6, 1917, as amended by Section 301 of the First War Powers Act, 1941, and pursuant to Executive Order No. 9095, dated March 11, 1942, finding upon investigation that the shares of stock of General Aniline and File Corporation of Delaware which were covered by the vesting order issued by the Secretary of the Treasury under date of February 16, 1942, and which are described therein, were at the time of the issuance of such vesting order the property of Nationals of a Foreign Country designated in Executive Order No. 8389, as amended, as defined therein, and that the action herein taken is in the public interest, do hereby order and declare that said shares (or, in the event any or all of them have been cancelled and new shares issued in lieu thereof, then such new shares representing a corresponding property ownership or interest in such corporation), including all interest therein, are hereby vested in the Alien Property Custodian to be held, used, administered, liquidated, sold or otherwise dealt with in the interest of and for the benefit of the United States. (b) Such property and any proceeds thereof shall be held in a special account pending further determination of the Alien Property Custodian. This shall not be deemed to limit the power of the Alien Property Custodian to return such property or the proceeds thereof, or to indicate that compensation will not be paid in lieu thereof, if and when it should be determined that such return or compensation should be made. (c) Any person not a national of & foreign country designated in Executive Order No. 8389, as amended, asserting any interest in said property, or any party asserting any claim as a. result of this order, my file with the Alien Property Custodian a notice of his claim, together 4th & request for hearing thereon, on Form APC-1 within one year of be date of this order, or within such further time 66 my be allowed. the Alien Property Custodian. This order shall be published in the Federal Register. Alien LEO Property T. Creamly 11 24, 1942 Regraded Unclassified 269 933 FEDERAL DEPOSIT INSURANCE CORPORATION WASHINGTON office or THE CHAIRMAN April 24, 1942 Re: General Aniline and Film Corporation of Delaware My dear Mr. Secretary: I as sending you under separate cover 8. formal notification of the fact that I have directed the vesting in Be of the corporate stock of the subject company, and have requested that you release all control thereof to me. I understand that a report on the company 1a being prepared under your supervision and will not be completed for two or three weeks. I trust that you will continue with that work until it 10 finished; and request that you kindly send se 8. copy thereof when it is completed. I would appreciate your arranging to send to this office such of your files and records as you think may be helpful to no in the administration of such property, including particularly all claims, and notices of claims, heretofore or hereafter filed with you pursuant to your vesting order dated February 16, 1942. I Very truly yours, Leo T. emaily Alien Property The Honorable The Secretary of the Treasury Washington, D. C. Regraded Unclassified 270 THE SECRETARY OF THE TREASURY WASHINGTON APR MEMORANDUM TO THE ALIEN PROPERTY CUSTODIAN In accordance with the request and direction = of the Alien Property Custodian, dated April 24, 1942, made pursuant to section 5(b) of the Trading with the enemy Act of October 6, 1917, as amended by section 301 of the First War Powers Act, December 18, 1941, and pur- suant to Executive Order No. 9095 and Vesting Order No. 5 issued pursuant thereto, I am transmitting to the Alien Property Custodian herewith the stock certificates representing 2,050,000 shares of Common B stock and 459,448 shares of Common A stock of General Aniline & Film Corporation, which shares were vested in me by virtue of an Order, dated February 16, 1942, issued pur- suant to section 5(b) of the Trading with the enewy Act of 1917, as amended. All of the stock certificates are in the name of the Secretary of the Treasury of the United States of America and have been duly and properly assigned to the Alien Property Custodian. Regraded Unclassified 271 - 2 - The 2,050,000 shares of the Common B stock of General Aniline & Film Corporation are evidenced by the following stock certificates: BB17 for 100,000 shares BB18 for 100,000 shares BB19 for 500,000 shares BB20 for 400,000 shares BB21 for 200,000 shares BB22 for 650,000 shares BB23 for 100,000 shares The 459,448 shares of Common A stock of General Aniline & Film Corporation are evidenced by the following stock certificates: Certificate Number Number of Shares JC/Al 100 JC/A04 1,500 JC/A05 500 JC/A06 1,500 JC/A07 500 JC/A08 20,000 JC/A09 10,000 JC/A010 10,000 JC/A011 10,000 JC/A012 5,000 JC/A013 5,000 JC/A014 5,000 JC/A015 500 JC/A016 500 JC/A017 500 JC/A018 132 JC/A019 300,000 JC/A020 50 JC/A021 90 JC/A022 726 Regraded Unclassified 272 - 3 - JC/A023 JC/A024 500 JC/A025 10,000 JC/A026 10,000 JC/A027 10,000 JC/A028 10,000 JC/A029 10,000 JC/A030 5,000 JC/A031 5,000 5,000 JC/A032 5,000 JC/A033 5,000 JC/A034 5,000 JC/A035 5,000 JC/A036 1,000 JC/4037 1,000 JC/A038 350 I have also transferred and released to the Alien Property Custodian all supervision, management and control over General Aniline & Film Corporation. Secretary of the Treasury. I, Leo T. Crowley, Alien Property Custodian, do hereby acknowledge receipt of the aforesaid stock certi- ficates for 2,050,000 shares of Common B and 459,448 shares of Common A stock of General Aniline & Film Corporation. I further acknowledge the release by the Secretary of the Treasury of all supervision, management and control over General Aniline & Film Corporation. Tear, Alien Property Creamy Custodian. Regraded Unclassified OFFICE OF THE ALTEN PROPERTY CUSTODIAN 273 VESTING OF PROPERTY OF GENERAL ANILINE AND FILM CORPORATION OF DELAWARE Vesting Order No. 5. (a) I, Lao T. Crowley, Alien Property Custodian, acting under and by virtue of the authority vested in ne by the President pursuant to Section 5 (b) of the Act of October 6, 1917, as amended by Section 301 of the First Kar Powers Act, 1941, and pursuant to Executive Order No. 9095, dated March 11, 1942, finding upon investigation that the shares of stock of General Aniline and Film Corporation of Delaware which were covered by the vesting order issued by the Secretary of the Treasury under date of February 16, 1942, and which are described therein, were at the time of the issuance of such vesting order the property of Nationals of & Foreign Country designated in Executive Order No. 3389, a.e amended, as defined therein, and that the action herein taken is in the public interest, do hereby order and declare that said shares (or, in the event any or all of them have been cancelled and new shares issued in lieu thereof, then such new shares representing 8 corresponding property ownership or interest in such corporation), including all interest therein, are hereby vested in the Alien Property Custodian to be held, used, administered, liquidated, sold or otherwise dealt with in the interest of and for the benefit of the United States. (b) Such property and any proceeds thereof shall be held in a special account pending further determination of the Alien Property Custodian. This shall not be deemed to limit the power of the Alien Property Custodian to return such property or the proceeds thereof, or to indicate that compensation will not be paid in lieu thereof, if and when it should be determined that such return or compensation should be made. (c) Any person not a national of a foreign country designated in Executive Order No. 8389, as amended, asserting any interest in said property, or any party asserting any claim as a result of this order, my file with the Alien Property Custodian a notice of his claim, together with a request for hearing thereon, on Form APC-1 within one year of the date of this order, or within such further time as may be allowed. by the Alien Property Custodian. This order shall be published in the Federal Register. Leer Alien LEO Property T. CROWLEY, Creamly Custodian 24, 1942 Regraded Unclassified 274 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE April 24, 1942. TO Mrs. Klotz FROM Secretary Morgenthau The memo which Gaston gave me on the shipping situation in New York - I want to send for Lew Douglas. I want a copy of that for Harry Hopkins at lunch today. Also ask Gaston whether he can get a similar report for Boston, Baltimore, Philadelphia, or any other important ports on the Atlantic Gulf Coast; also San Francisco, Seattle and Los Angeles. In other words, I would like to know what the situation is in all of the ports as of, say, today. Send out messages and get it for me. I'd like the answers back in Monday by the latest. Mr. Tickton can help Mr. Gaston if Mr. Gaston needs any help. (mr. Darton 4/27-) Finished Per 4/08/42- Regraded Unclassified 275 April 24, 1942. TO Supervising Customs Agents or Customs Agents in Charge st Boston, Baltimore, Philadelphia, Norfolk, Charleston, Savannah, New Orleans, Los Angeles, San Francisco, Portland, Seattle: With assistance of Collector please compile following information and transmit by teletype today total number seagoing cargo vessels in your part today classified as follows: (1) by nationality; (2) by action status, subclassified as lading, discharging, idle, repairs and in stream. Further subclassify in stream as follows: coastwise, ballast, enroute, laden. Sens to m Sharnhair his Special measing ii 10:40am 4-24-42 Regraded Unclassified 276 April 14. 1942 M. southard Mr. Districh with reference to year - of April the services the Pederal Reserve Bank readers the rund, the following 10 a brief receive of such services. 1. dold. (a) then the Fund selle gold be foreign sountries in nearly all @@@@@ the gold must be transferred from the Assey office to the Federal Reserve Beak of New Test for earnarit. this accossitates the Federal providing - to check and reseive the gold at the Assey office, transport 11 to the bank, weigh 10 and deposit as is carnaris. on meet purchases of gold from foreign countries by the Fund the Federal performs about the name work is noving gold be the Assey office. thes gold is purchased or sold for delivery at the Federal, physical treasfer of the gold met be nate free or to the Fund's account et the bank. (b) Occasionally the Federal aste se our fiscal agent is headling the severent of special gold consignants free the point of debertation to the Assay office or xist. & case is point is the resent Bassian gold shipment that arrived at Halifax. (a) Sold engaged for shipment to the United States is reported daily to the treesury, together with the partinent details in semerision with rush chipments. (4) Several months age the Federal (sive " considerable help is proving gold importe w country of accounts this information vse sollested for the Division of Monetary Research. Recently, the Federal also sesteted this office in proparing a report for the Memotary Research 48 the Fund's gold transactions for 1941. (e) From time to time the Federal calculates the chipping costs of gold from foreign countries to the United states. the recent inquiries tree South American countries on the rising costs of moving gold will be recalled in this commention. 2. Phabilication Agreements and Operations. (a) Is the preparation of agreements the Foreign Exchange Division and the Legal Department of the Federal are seamited. (b) All sperations under the agreements, rush as the purchase and sale of exchange, the purchase and osle of gold, the receipt of a deposit Regraded Unclassified 277 - a - to all revoust sash at the la Brasil, of the payment of Interest is reported be this affice. the Federal also provides M with all corrospondence in commetion with the operations under the agreements. 3. persics (a) oursent market developments - New York basics provide information and the Federal relays 10. Proquently the Federal gate information direct from foreign emitral banks and africas this office accordingly. (b) Image regulations - She Federal informs - of any regulations they receive and assist is or efferts to - smakenge control questions. MP. Mankay is using information supplied w the Federal is propering the foreign exchange date for Mr. White's Stabilization notaboak. 4. pollar and Dald Balances. The Federal's Pereign Associate Division reparts daily the transactions in shout 15 important above as well M their clesing belonces. 5. Esparts. the Federal estatains records of all transmations of the Fund and minits, case . year, a detailed resert of operations which is andited by a countr- too of !reasury employees. then information about the Pund's operations 10 assded, the Federal propares the accessary statements. 6. Distements. Ve receive from the Federal the fellowing: 2 daily statements of the read. 1 daily statement of gold and dollar accessis hold by the Federal for the "Pripartite" countries, this and Brasil. 1 daily statement of gold shipments enrosts to this country. 1 daily statement of Sev Test banks' sterling transactions with commercial concerns. 1 verify statement of gold and dellar balances and securities hold w the Federal for all foreign seconds. 1 verify statement of foreign enchange positions of selected basics and bankers is the second Federal Receive District. 1 weekly and 1 menthly cumlated statement of U.S. international gold assessate. Although ve are purchasing M silver under the Bilver Purchase Act at the procent time, the Federal novertheless keeps this office informed of silver market resditions. 29 also maintains recerds of all purchases, free which statements are propared for the Pressury visa requested. is continued is ay asservates to you dated April 13. my expenses is exemention with the filver Purchase not are charged to the Stabilisation had's but subsequently the Past is relatured for má expense free the Silver Purchase Act assount. Regraded Unclassified 278 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATEAPril 24, 1942 TO Secretary Morgenthau FROM Mr. Kamarck Subject: Comment on General Stillwell's Telegram to the Generalissimo 1. According to the facts available in Washington, the picture drawn by General Stillwell appears correct. 2. Translating General Stillwell's telegram out of its Burmese names, the action appears to have occurred 88 follows: Facing the Japanese, the Chinese held the left flank; the British, the right flank. The Japanese broke through the British lines near where they adjoined the Chinese. Having broken through, the Japanese proceeded to encirole the British. The Chinese sent their 38th division to break through the Japanese encirclement. This was done and the British escaped. The Chinese had then to fill the 40-mile hole resulting from the Japanese break-through. Since the new British lines were now 100 miles in the rear of the Chinese lines, the Chinese had to fall back from Pyinmana without executing their planned offensive. 3. The bulk of the "British" troops are A part of the Indian Army. The troops participating in the fight- ing in Burma are: British: 17th Indian Infentry Division 82nd Indian Infantry Brigade (equivalent to a U.S. regiment) 7th United Kingdom Armored Brigade (equivalent to 8 U.S. ermored regiment) Total of 20,000 men Chinese: 6 divisions, or 50,000 men. Japanese: 5 or 6 divisions, or 100,000 men- Regraded Unclassified 279 - 2 - 4. The Burmese fighting has demonstrated that the fighting efficiency of the Chinese 18 high. "The British collapse", of which General Stillwell speaks, does not necessarily indicate that British efficiency 1s low. The British troops in question have been fighting constantly since the first part of December with little relief, little Air support, few supplies and negligible reinforcements. They have been forced to retreat constantly through 8 hostile or indifferent population. It is quite likely that in accordance with the strategy of fighting against allies, that the Japanese have concentrated on attacking the British troops. In this way, there is hope of causing dissension in the allied camp. For political propaganda in Burma, Japanese attacks on the British rulers are more effective than attacks on the troops of Free China. Regraded Unclassified 280 SECRET MINISTER FOR FOREIGN AFFAIRS REPUBLIC OF CHINA April 23, 1942 Dear Mr. Morgenthau: The Generalissimo received the enclosed telegram dated April 21st from General Stilwell at the Burma front, in which you will no doubt be interested. Yours sincerely, they Enclosure The Honorable Henry Morgenthau, Jr. Secretary of the Treasury Regraded Unclassified SECRET 281 TELEGRAM TO THE GENERALISSIMO FROM GENERAL STILWELL DATED APRIL 21, 1942. "CHINESE TROOPS NOW WITHDRAWING TO NORTH FROM PTINMANA AREA. CHINESE 38th DIVISION ASSISTING BRITISH ON IRRAWADDY FRONT. BRITISH FAILURE EAST OF MAGWE TO PREVENT JAPANESE BREAK THROUGH IS ENTIRE CAUSE OF CHIMESE WITHDRAWAL. JAPANESE BREAK THROUGH RESULTED IN CAPTURE OF YENANGYAUNG OIL FIELDS AND CRITICAL THREAT TO CHINESE REAR VIA KYAUKPADAUNG AND ROAD TO NORTHWEST THROUGH MYINGYAN TO MANDALAY. IM ADDITION TO ABOVE A HOLE 40 MILES WIDE HAS BEEN CREATED BETWEEN KYAUKPADAUNG AND NATMAUK. CHINESE TROOPS FILLING THIS HOLE QUICKLY AS POSSIBLE. CHINESE FIFTH ARMY WAS ABOUT TO LAUNCH A COUNTER ATTACK FROM PYINMANA WITH EXCELLENT CHANCE OF SUCCESS AND BRITISH COLLAPSE CAME AT MOST CRITICAL TIME. IF OTHER COMMUNIQUES ARE ISSUED WHICH MIGHT REFLECT ON FIGHTING EFFICIENCY OF CHINESE TROOPS, I FEEL YOU SHOULD KNOW ABOVE FACTS." SECRET Regraded Unclassified 282 0 0 P Y DEPARTMENT OF STATE Washington In reply refer to April 24, 1942 FD The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses copies of telegram no. 231, dated April 23, 1942, from the American Consulate General, Sydney, Australia, giving the aggregate amount of Treasury checks received from the Commonwealth Bank on April 22, as $150,415.92. Enclosure: From Consulate, Sydney, no. 231, April 23, 1942. eh:copy 4-24-42 Regraded Unclassified C 283 0 P Y LM Sydney This telegram must be paraphrased before being Dated April 23, 1942 communicated to anyone other than & Governmental Rec'd 11:33 a.m. agency. (BR) Secretary of State, Washington. 231, April 23, 2 p.m. Reference my telegram no. 216, April 10. Referring to the Department's telegram no. 100, March 14, aggregate amount Treasury checks received from Commonwealth Bank last night $150,415.92. PALMER. GV eh:copy 4-24-42 Regraded Unclassified 284 TELEGRIN SENT PH April 24, 1942 This telegram must bE paraphrased before being 11 Palle communicated to anyone other than a Governmental agency. (BR) ANEMBASSY CHUNGKING (CHINA) 525 For Adler from the Secretary of the Treasury and For. QUOTE. REFERENCE your no. TF-25, April 9, 1962. l. Your paragraph no. 1 regarding Stabilization Board. According to the Agreement of April 1, 1941 the fund includes that portion of the US$50 million which has been secured by purchase of yuan by the Secretary of the Treasury through the Federal RESERVE Bank of NEW York at the request of the Central Bank of China. ..s yet there has not been any yuan purchased by the Treasury because the Federal RESErVE Bank have not received from the CENTRAL Bank of China 2. request to that Effect, and, therefore, the fund as yet does not include the US050 million or any part of it, 2. Your paragraph no. 2 advists us that Central Bank Regraded Unclassified 285 -2-4/325, April 24, 11 p.m., to Chungking. Central Bank is opening an account for Federal RESERVE Bank in NEW York for the Chinese currency Equivalent of US$5 million. The SECRETARY is, of course, prepared to purchase through the FEderal RESErVE Bank of NEW York the Chinese currency Equivalent of US$5 million in accordance with the procedure outlined above. 3. Your paragraph no. 2 also outlines proposal of Board to hold Chinese Treasury notes instead of fapi. Since WE presume that a quorum of the Board was present when this decision was made this proposal would SEEM to bE in accord with the Agree- ment of April 1. 4. Your Section 2 gives gist of memorandum Board proposes to submit to Dr. Kung. Mr. Fox is inclined to oppose the proposal and thinks that it would DE unfortunate if such action was taken. Treasury officials here feel that the Stabilization Board should take no steps which would weaken its long-run position as this proposal would sem to do. WE bEliEVE that the proposed curtailment of the sphere of activities of the Board is not compatible with its Effective functioning. 5. Your Regraded Unclassified 286 -3-325, April 24, 11 p.m., to Chungking. 5. Your cable of February 3, TF17, paragraph 4, asks for information to bE obtained for Fox. visit by Fox to NEW York banks has confirmed previous impression that information is not available as to amount of fapi hEld in Shanghai on Board's account nor as to amount of set-offs on books of bank not yet credited to the Board. The Bank of China in NEW York has kindly furnished Fox with a record of all transactions with the Board which can bE forwarded to Chungking, if such information is not available in the Bank of China's offices in Chungking. However, information contained in your cable of April 18, no. TF13, would SECT to make this unnEcEssary. HULL (FL) FD:FL:BHCB Regraded Unclassified Treasury Department 287 Division of Monetary Research 0 Date April 24, 1942 To: Mr Gase mr. Southard From: Mr. Southard a Gass I do not believe that this nude to be brought to the Suntary' s attention. - be MR. WHITE Branch 2058 - Room 214} 288 C 0 P I DEPARTMENT OF STATE Washington In reply refer to FD April 24, 1942 The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses copies of telegram no. 134, dated April 18, 1942, from the American Consulate, Fort de France, (Martinique), French West Indies, concerning 66 kilograms of native gold which French Guiana exported to Brazil in March. Enclosure: From Consulate, Fort de France, no. 134, April 18, 1942. ehicopy 4-24-12 Regraded Unclassified 289 C 0 P Y MEV Fort de France This telegram must be paraphrased before being Dated April 18, 1942 communicated to anyone other than a Governmental Rec'd 1:37 p.m. agency. (BR) Secretary of State, Washington. 134, April 18, 11 a.m. Referring to my despatch no. 193. March 24, French Guiana exported 66 kilograme native gold to Brazil in March. MALIGE NPL eh:copy 4-24-42 Regraded Unclassified 290 COPY Calcutta NMC This telegram must be para- Dated April 24, 1942 phrased before being communi- cated to anyone other than a Rec'd 6:01 p.m. Governmental agency. (BR) Secretary of State, Washington. RUSH 301, April 24, 4 p.m. Your 180, April 15, 5 p.m. Chartered Bank of India, Australia and China requests procedure be extended to its branches at Delhi, Kerachi and Bombay where American officers now numerous, SCHNARE JRL COPY:lap-4/25/42 Regraded Unclassified 291 INCOMING CABLEGRAM Date: April 24, 1942 From: Basle Federal Reserve Bank of New York, New York, #30 Attention: Mr. Knoke Please obtain license to buy from United States Treasury gold bars containing approximately 32,000 fine ounces to be held earmarked for our own Account No. 2 debiting our Account "B" with countervalue. (Sgd.) Bank for International Settlements. (Received by telephone from Federal Reserve Bank of New York, N. Y. 4:35 p.m. April 24, 1942) ime Regraded Unclassified 292 COPY OUTGOING CABLEGRAM April 24, 1942 State Bank of the U.S.S.R. Moscow No. 20 In accordance with request made by your Embassy in Washington through United States Treasury Department please cable how reimbursement to this bank is to be made fór express charges amounting to $26,445.14 incurred by us on shipment of goods con- signed to us and delivered to United States Treasury April 20, 1942. FEDERAL RESERVE BANK OF NEW YORK Copy: imc 4/25/42 Regraded Unclassified 293 C o P Y DEPARTMENT OF STATE Washington In reply refer to April 24, 1942 FD The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses copies of telegram no. 220, dated April 23, to the American Embassy, Montevideo, Uruguay, transmitting a message for Treasury con- cerning an inquiry received by the Federal Reserve Bank of New York from the Central Bank of Uruguay about a shipment by air of $5,000,000 of gold bars. Enclosure: To Embassy, Montevideo, no. 220, April 23, 1942. eh:copy 4-24-42 Regraded Unclassified C o P 294 Y TELEGRAM SENT HRL April 23, 1942 This telegram must be paraphrased before being 9 p.m. communicated to anyone other than a Governmental agency. (BR) AMEMBASSY, MONTEVIDEO. 220 The following is being sent you at the request of the Treasury Department: QUOTE The Federal Reserve Bank of New York informs us that they have received an inquiry from the Central Bank of Uruguay inquiring about shipment by air of $5 million of gold bars. The Treasury Depart- ment is prepared, of course, to approve the shipment of gold to Uruguay whenever the Central Bank so requests. However, the Treasury is interested in ascertaining why it is regarded necessary to ship gold from New York to Uruguay at a time when the risks of shipment are 80 great and when the costs of shipping are 80 high. Please make discreet inquiry and cable us at once as we would not wish to delay shipment if the Central Bank of Uruguay decides to have the shipment made. UNQUOTE. HULL (PWB) RA:PWB:MEG eh:copy 4-24-42 Regraded Unclassified 295 TREASURY DEPARTMENT INTER-OFFICE COMMUNICATION DATE April 24, 1942 TO PROM Mr. White CONFIDENTIAL Registered sterling transactions of the reporting banks were as follows: Sold to commercial concerns £ 78,000 Purchased from commercial concerns £127,000 Open market sterling held at 4.03-3/4, with no reported transactions. The Canadian dollar discount narrowed to 12-3/8% as compared with 12-1/2% yesterday. It vas reported that the Post Office purchased between 200,000 and 300,000 Canadian dollars in today's market. The Argentine free peso declined 7 points to a final quotation of .2365. In New York, closing quotations for the foreign currencies listed below were as follows: Brazilian milrois (free) .0516 Colombian peso -5775 Mexican peso .2064 Uruguayan peso (free) .5295 Venezuelan bolivar .2860 Cuban peso 1/4% premium Ye sold $1,120,000 in gold to the B.I.S., which was earmarked in B.I.S. account No. 2. Gold in this account is the property of that bank. In order to replenish the Stabilization Fund's gold balance, we purchased $450,000 in gold from the General Fund through the Bew York Assay Office. No new gold engagements were reported. The Treasury's purchase price for foreign silver was unchanged at 35#. Handy and Earnan's settlement price for foreign silver was also unchanged at 35-1/84. The Federal Reserve Bank of New York bought an additional 40,000 ounces of silver in New York today at 35-3/84 per ounce, to be used in the 1,200,000-ounce silver coinage order that the United States Mint is executing for the Australian Government. So far the Federal has purchased 696,000 ounces. We made no purchases of silver today. Regraded Unclassified 296 -2- The report of April 15 received from the Federal Reserve Bank of New York, giving foreign exchange positions of banks and bankers in its district, revealed that the total position of all countries was short the equivalent of $2,048,000. a. decrease of $294,000 in the short position since April 8. Net changes were as follows: Short Position Short Position Change in Country April 5 April 15 Short Position* England $ 905,000 (Long) $1,067,000 (Long) - $162,000 Europe 2,485,000 2,494,000 + 9,000 Canada 1,674,000 (Long) 1,659,000 (Long) + 15,000 Letin America 25,000 (Long) 159,000 (Long) - 134,000 Japan 160,000 160,000 -- Other Asia 2,288,000 2,344,000 + 56,000 All others 13,000 65,000 (Long) - 78,000 Total $2,342,000 $2,048,000 - $294,000 - Plus sign (+) indicates increase in short position, or decrease in long position. Minus sign (-) indicates decrease in short position, or increase in long position. CONFIDENTIAL Regraded Unclassified 297 Copy No. 13 BRITISH MOST SECRET (U.S. SECRET) OPTEL No. 134 Information received up to 7 A.H., 24th April, 1942, 1. NAVAL A British ship, in coastal convoy mas sunk by mine yesterday off the BREER, 2. MILITARY EURMA. Ns report received, RUSSIA. The Finnish comminique of the 22nd claims that Russian attacks along the line of the River SVIR have been repulsed with very heavy lesses. Recent Russian reports have indicated that severe local fighting has been in progress in this area during recent weeks, "Jut it 1a thought that the engagements have not been on the scale suggested by the Finns. Russian pressure is being maintained against the German 16th Army surrounded in the STARAYA RUSSA area and at a number of points in the Central Sector, 3. AIR OFERATIONS WESTERN FRONT. 22nd/23rd, About 100 tons of high explosive and in- centiaries were dropped in the COLOGNE area and large fires were seen. 134 sea nines were laid, 23rd/24th. 161 aircraft were despatched - ROSTOCK 143, Heinkel Assembly Works ROSTOCK 18, Four are missing and one crashed. Preliminary reports indicate that conditions were favourable and the Attack was successful, About 38 enemy air- craft were plotted, of which 21 flow over Scuth-West ENGLAND. Besufighters des- troyed two enemy bombers, MALTA. Between 3.30 p.m. 22nd and 11.30 a.m. 23rd 130 enemy hombers with fighter escort attacked the aerodromes, Five of our fighters mere destroyed on the ground and five other aircraft damaged, in the air, two of our fighters were destroyed and three damaged. Our fighters and anti-aircraft fire destroyed eight enemy aircraft, Probably destroyed one and damaged eight. SICILY. 22nd/23rd. Three Wellingtons made three attacks each on COMISO aerodrome, 4. HOME SECURITY 23rd/24th, Scattered bombing over DEVONS HIRE. Eight persons killed at Devon Mental Hospital, EXMINSTER, and five in EXETER, Some damage to public utilities and main railway line, Regraded Unclassified 298 April 25, 1942 10:43 a.m. HMJr: Hello. Oberator: Judge Rosenman. HMJr: Hello. Judge Rosenman: Henry. HMJr: Can I sell you a few War Bonde? R: Yeah, look. HMJr: Yeah. R: Henry, we wrote out a pretty long speech, and, as you know, he's going to send a message first; 80 last night he dictated from this thing that we'd written a message HMJr: Yeah. a: which 1s very rough and not finished. Now, I could send this over to you just as he dic- tated it, or this afternoon, I could send you something that would read a little better. Which do you want? HMJr: I'd like to have something now while my people are here. R: All right. I haven't even read it, you know, and it was dictated. MJr: Can I send a Secret Service man over to get it? R: Yeah. HMJr: Where shall he come to? R: Come to the Cabinet Room. HMJr: Well, I'll have him there immediately. Hello. R: Yeah. Regraded Unclassified 299 - 2 - HMJr: I'll send him over, and I'll tell him to ask for you. R: All right. Now, just remember that this 18 just first dictation of his. We haven't gone over it at all. There are some figures in there which you might want to correct and send back. HMJr: Yes. R: Will you send this back with the corrections? HMJr: I'll either send it back or walk it back. R: All right. Well, don't try to correct any language or anything, because it 1sn't final language. HMJr: Well, if we've got anything to suggest, we'll dictate a memo. How's that? R: Well, I haven't 8 thing now. There's some things about cost of living which I'll have to get your economist to finally give us the figures on. Will you have someone around tomorrow? HMJr: I'll have them available. R: I mean available, yeah. HMJr: Yes. R: Will you be around tomorrow? HMJr: I'll be around until four o'clock. R: Well, that's time - if not, after that, whom should I call? HMJr: Well, on what phases of it? R: Well, I mean, in case I went to get 8 figure checked or something. HMJr: Well, I think the best person would be Kuhn. K-u-h-n. Regraded Unclassified 300 - 3 - R: Yeah. He could get the people HMJr: He'll get what - Ferdinand Kuhn. You know R: And he'll be around tomorrow. HMJr: I'll tell him to be around. R: I don't mean in the office. HMJr: No, no. I'll tell him to stay - to keep in touch with the Treasury switchboard. R: That's right. HMJr: But I'll be available up until four. Then we're going up - it's my father's birthday. R: Oh, it 18? HMJr: Yes. R: I told you I saw him. HMJr: Yes. R: And we're trying to get him to run for Governor. HMJr: (Laughs) Well, thanks awfully, Sam, and anything that I can do, I'm available, and I'll have 8 man come over and get it. R: All right. HMJr: I appreciate your calling me. R: All rightie. Good-bye. Regraded Unclassified 301 Accord Deaft TO THE CONGRESS: 4-25-42 In certain ways the present world encircling war presents problems which were unthinkable during the First World War. But - in other ways -- the circumstances of today parallel those of 1917-1918. The theatres of combat today cover vastly greater areas. Many more millions of human beings are involved. The new factors of mechanical power, in the air and on the land, have produced radical changes in basic strategy and tacties. We may take comfort from the fact that in the earlier war, for nearly four years, the forces of aggression and barbarism were in the ascendancy; and in this new war the nations resist- ing the Axis Powers may have to fight for a long time before they have won on the fields of battle. Now, as then, the common enemy has all the advantage To at the outset; DOW, as then, it has cost, those who are defending our type of civilization bitter defeats and vast losses before they can establish the vital superiority in men and munitions which will turn the tide. Regraded Unclassified 302 DRAFT #2 - 2 - Taxixx Today we -- all the United Nations - are still in this period of preparation producing those twin necessities for victory, trained men and adequate tools. The United States was far better prepared for actual war on December 7, 1941, than it was on April 6, 1917. For over two years by a succession of Congressional Acts we had Instiated orinitiated and carried out safety measures for our own defense in growing # ^ volume and importance. There were the revisions of the Neutrality laws, the drastic increases of our Army and Navy/ and the instru- ments of war which they needed, the Selective Service Act, and the Lend-Lease law. Finally, after Pearl Harbor, the American people adopted a national program which would have been called fantastic by most of our population two years before. This program has called for the shifting of the major part of American industry from the products of peace to the weapons of war. Inevitably - but with the full approval of the nation - This insurers mapam # is dislocating industry, labor, agriculture and finance. It is disrupting, and will continue to disrupt, the normal manner of life of every American and every American family. In this, we Regraded Unclassified 303 DRAFT #2 - 3 - - follow the pattern of the first World War, although on a vastly greater scale. In that earlier war, however, there were certain economic factors which produced unnecessary hardships, and these hardships continued long after the signing of the Armistice. I use the word "unnecessary" because it is my belief that a very great deal of the suffering which was caused then can be avoided now. It is about the economic factors in war that I address essentially you today. They relate s primary to an easily understood phrase which affects the lives of all of us -- the cost of living. In 1918 and 1919, because rises in the cost of living which came with the war were not checked in the beginning, people in this country paid nearly twice as much for the same things at the end of the war as they did at the start of it. The rise in the cost of living ouring this war has begun to parallel the last. The time has definitely come then 44 must be to stop The spiral. While the cost of living, since the Autumn of 1939, has gone up about 20% so far, based on the average prices of necessities, Regraded Unclassified 304 DRAFT #2 - 4 - we must now make a determined effort to keep it from rising another 60% or 80% during the next year or two -- an effort, indeed, to hold it to somewhere near the present level. There are three obvious reasons for taking every step necessary to prevent this rise. First, when the cost of living spirals upward week after week and month after month, people as a whole are bound to become poorer, because the pay envelope and the provit envelope lag behind rising ^ retail prices. Second, the cost of carrying on the war by the Government and, therefore, by the people, will increase and save by many billions, and if we do not pay ^ to the limit of our ability now, we and our children will be burdened with unbearable debts in years to come. Third, there is an old and true saying that that which goes up must always come down - and you and I know the hardships and heartaches we all went through in the bad years after the last war when Americans were losing their homes and were looking their farms and their savings and/in vain for jobs. We do not intend to present the same disastrous situation after the war to those men who today are fighting our battles in all parts of the world. Regraded Unclassified 305 DRAFT #2 - 5 - We must therefore adopt as one of our principal domestic objectives the stabilization of the cost of living. The Government of the United States should provide a definite That program to attain end. 1 Relying on past and present experience, and leaving out dozens of details which relate far more to questions of list to method than to the objective itself, I recommend to & the Congress the following points; which Tahm Together may will be called our present national economic policy: 1. To keep the cost of living from spiraling upward, we must keep personal and corporate profits down to a reasonable rate, the word "reasonable" being defined at a low level. 2. To keep the cost of living from spiraling upward, we must fix ceilings on the prices which consumers and wholesalers and manufacturers pay for the things they buy. 3. To keep the cost of living from spiraling upward, we must stabilize the remuneration received by individuals for their work. 4. To keep the cost of living from spiraling upward, we must stabilize the prices received by growers for the products of their lands. Regraded Unclassified 306 SECOND DRAFT 5. To keep the clest of living from spiraling upward, n must encourage all citizens to contribute to the cost of winning this war by purchasing Government War Bonds with their earnings instead of using those earnings to buy articles for their E use which of necessity are scarce. 6. To keep the cost of living from spiraling upward, we of must ration all commodities which there is a scarcity so that they may be distributed fairly among consumers and not merely in accordance with financial ability to pay high prices for them. 7. To keep the cost of living from spiraling upward w must discourage credit and installment buying and encourage the paying off of debts, mortgages, and other obligations; for this encourages savings and adds to the ability of creditors so paid off to buy more War Bonds. I know that you will appreciate that these seven principal points, each and every one of them, will contibute in sub- stantial fashion to the main objective - keeping the cost of living dom. I give the solemn assurance to the Congress that if the objective is not attained, and if the cost of living does continue to rise substantially, I will 80 advise the Congress and ask for any additional legislation which may be necessary. Regraded Unclassified 307 DRAFT #2 - 7 - of the seven points which I have enumerated, it is my best judgment that only one of them requires legislation at the present time, for the very good reason that the Congress has already passed laws with respect to the others which seem ade- quate to meet the national policy enunciated. In the one 1tem where legislation is necessary, the subject is now under consideration in the House of Represent tives. I refer to the first item -- the purpose of which is to keep excess profits down and, at the same time, raise further large sums for the financing of the war. On this subject, I believe that the objective can be attained through tax processes. "e are now spending, solely for war purposes, the sum of about one hundred million dollars every day of the week. But before this year is over that rate of ex- pensiture will be doubled. This means that a sum equal to more than half of the entire national income more than 55 # out of every $1.00 made by any business or by any individual in the United States will be spent in the war effort. Almost the whole of these billions is being and will be spent within the United States itself. Regraded Unclassified 308 DRAFT #2 - 8 - Profits must be taxed to the limit consistent with continued production. This means business profits -- not only in making munitions, but in making or selling anything else. Under the proposed new tax law we seek to take by taxation all undue or excess profits. It is incumbent upon the Congress to define undue or excess profits, and anything in excess of that specific figure should go automatically to the Government. One of our difficulties is to write a law in which some clever people will not find loopholes, or in which some businesses will not be equitably included. I have suggested to the Chairman of the Committee on Ways and Means in the House of Representatives that some blanket clause could well cover, by a special tax, all profits of any kind of business which exceed the expressed defini- tion of the legal profit figure. At the same time, while the number of individual Americans affected 1s small, discrepancies between low personal incomes and very high personal incomes should be lessened, and I am inclined to believe that in time of grave national danger such as this no American citizen ought to have a net income.j after he has ca16 his taxes, of more than $25,000 a year. And any top limit objective Regraded Unclassified 309 DRAFT #2 - 9 - should seek to cover those net incomes which are made up in whole or in large part by returns from non-taxable securities. It is my belief that taxing such hitherto exempt incomes, by the method of surtaxes, would be wholly constitutional. I earnestly hope that the Congress will pass a new tax bill at the earliest moment possible. Such action is 1n- perative in the comprehensive all-out effort to keep the cost of living down. I do not believe that it is necessary for me to go into great detail in relation to the other six items which I have summarized. The second item, relating to price control on articles which consumers and manufacturers buy is, I think, definitely covered by existing law and is being put into effect as rapidly as possible. It is our effort to be fair, EXT but if our future experience reveals inequality or unfairness, corrections will, of course, be made. The third item, seeking to stabilise resuneration for work, is also definitely covered at the present time by existing laws and Executive Orders. If the cost of living remains relatively Regraded Unclassified 310 DRAFT #2 -10- stable, no one is going to be hurt. Strikes are at a minimum. Most workers in munition industries are working far more than forty hours a week and should continue to be paid at time and a half for overtime. The question of double time for Sunday, however, is & very different one. It is true that one day of rest in seven should be given to every worker. But, if we are going to keep our plants going seven days a week, that seventh day of rest will have to be staggered, and it will therefore not fall on & Sunday for every worker. However, when extraordinary circum- stances in any plant make it necessary for a laborer to work on his day of rest -- whether it be Sunday or not -- he should be paid double wages for that seventh day. The War Labor Board machinery has been generally accepted by labor and industry for the settlement of all disputes and organized labor has given up its right to strike during the war, Existing contracts between employers and employees must, in all fairness, be carried out to the expiration of those contracts. The War Labor Board will, of course, seek to remove inequalities and to give due consideration to the elimi ation of sub-standards of living. I repeat that all of these pro- cesses, now in existence, will work equitably for the overwhelming Regraded Unclassified 311 DRAFT #2 - 11 - proportion of our workers if ve can keep the cost of living down, and this policy will guide all Government agencies. In regard to item four - prices of farm products - the same general thesis holds true. For nearly nine years it has been the policy of the Government to seek an objective known as "parity" or, in other words, farm prices that give the farmer an assurance of equality in individual purchasing power with his fellow Americans who work in industry. Some of the products of the farms have not yet reached the stage of parity. Others have exceeded parity. Under existing legisla- tion a ceiling cannot be placed on certain products until they reach a level somewhat above parity. I am confident however that with price ceilings imposed in accordance with law, the average of all farm products can be kept at a parity ceiling. With respect to item five, the American people know that if we would raise the billions which we now need to pay for the war and at the same time prevent a disastrous rise in the cost of living, we shall have to double and more than double the seale of our savings. Every dime and dollar not vitally needed for absolute necessities should go into War Savings Bonds and Stamps Regraded Unclassified 312 DRAFT #2 -12- to add to the striking power of our armed forces. I have been urged by many persons and groups to recommend the adoption of a compulsory plan of savings by deducting a certain percentage of everyone's income. I prefer, however, to keep the voluntary plan in effect as long as possible. and as long as 1t is effective to meet the needs. With respect to item six, it is obviously fair that where there is not enough of any commodity to meet all civilian demands, those who can afford to pay more for it should not be preferred over those who cannot. I an confident that as to many basic necessities of life rationing will not be necessary because we shall strive to the utmost to have an adequate supply. But where any article becomes scarce, rationing is the democratic, equitable solution. Item seven should be made effective as soon as possible now that money is becoming plentiful. Those who comply with it will be grateful that they have done so when money becores tighter after the war. As to all of those items which do not require legislation, the executive departments and agencies whose functions and duties Regraded Unclassified 313 DRAFT #2 -13- are involved, will begin as quickly and expeditiously as possible to carry them out. The result will be to require of every one of us some share of sacrifice. Americans all will welcome this opportunity to share in the common effort of civilized mankind to preserve decency and dignity in modern life. sent the Press 4/25/FL 314 wiam Legislative and administrative notion to control the cost of (Ree Judge Rozeman living mark be supplemented by the volustary action of the American note - 4/26 send people. ment for /midy/y- Ima 1 y/w- I refer nov particularly to Item No. 5 in the program I - here suggesting, which calls for a very substantial increase is the buying of Yes Savings Bonds and Home, If these purchases are to have a acterial effect in restrulaing price Increases they must be mis out of current income, In almost every individual case they should be hig enough to INIS right self-denial, . substantial reduction for neet of - is the seale of expenditure that is comfortable and easy for w, Ve can't fight this war, - can't exert wer and offert, as a teste. No - have all " want if our soldiers and sailers are to have all they nood. The buying of Var Bonds the tes a double value. If 19 not for ourselves high quine, quotes that - giving up may things se wart, and If w stick to them, 90 - help pubstantially to provent disastrees increases in the east of living. 14 the - time, the neary we use to buy the bonds will buy the materials we need to fight the was Regraded Unclassified 315 Legislation is now needed in the field of taxa- tion. Fortunately an Administration program dealing with the whole tax field is now under consideration in the Congress , It is my belief that this tax program provides an essential weapon to keep the cost of living from spiraling, and I earnestly hope that the Congress will enact the entire program into law at the earliest moment possible. Such action is urgently needed in the comprehensive all-out effort to keep the cost of living down. The Administration's tax program not only provides for vast new amounts of revenue needed for the war; it also will have a direct effect in checking the rising cost of living, by reducing the demand for goods. It calls for heavy increases in individual tax ratos. It makes possible the collection of a part of the tax revenue at Regraded Unclassified - 2 - 316 the source. It calls for 41 increase of # billion in social security contributions, and finally, it calls for taxes on I list of non-essential commodities. Such a program will have a more direct effect in checking the cost of living than, for example, a sales tax which would lift the cost of every commodity and would fall most heavily on the very poor. Moreover, the Administration's tax program will have indirect effects of great importance in keeping the cost of living down. The mass of individual income tax payers, including millions of workers, will be will- ing and glad to accept heavy new taxes, and will not de- mand wage increases, if they know that excess profits are being recaptured by the Government. Accordingly, the Administration's program calls for a tax of almost 90 cente out of every dollar of excess Regraded Unclassified 317 - 3 - sorporate profits over half a million dollars. The 10 cents remaining are, in turn, taxed heavily when the individual stockholder receives them as income. It may be that these proposed excess profits taxes should be increased still further, but in any case the enactment of the present program would, in my opinion, give our workers the assurance they must have if they are to re- frain dega wage demands at this time. What is true of excess profits is also true of high individual salaries. Under the present tax proposals an individual would have to earn $289,000 in order to keep $50,000 of it after paying his taxes. In addition, the Government has powers, and intends to make full use of its powers, to serutinise payments for salaries, personal expense accounts, and other forms of business expenditures Regraded Unclassified 318 - 4 - which may be employed to avoid ****** profits texas. A company will not be allowed to deduct as business ex- penso extravagent payments which are in effect distribu- tions of earnings rather than legitimate payments for necessary services rendered, but those who receive such payments will be required to include them in current taxable income. At the same time, while the number of individuals affected is very mall, it may be wise to lessen still further the discrepancy between very low and very high bilieve personal insemes. I senstimes wonder whether, in time Champite no offered of great makimal danger such as this, any American 1m Brind citizen eught to have a net income, after be has paid his taxes, of more than $25,000 a year. Increasing income tax rates on a scale as heavy as that proposed makes it a moral duty to remove all Regraded Unclassified 319 - 5 - loopholes in the tax law and all special privilege. It is indenfensible that those who enjoy large Incomes from State and local securities should be immune from taxation while we are at war. As a minimum program we should immediately provide for taxing these securities on the same basis as United States long-term bonds issued prior to the enactment of the Public Debt Act of 1940; that is, interest on them should at least be subject to surtaxes. There is no question about the con- stitutionality of such a proposal. Regraded Unclassified 320 To Take the Place of No. 1, Page 4 L. To keep the cost of living from spiraling upward, we must tax heavily and we must keep per- sonal and corporate profits at a reasonable rate, the word "reasonable" being defined at a low level. Regraded Unclassified