Volume 537, June 5 – June 8, 1942

= DIARY Book 537 June 5 - 8, 1942 - A - Book Page Airplanes Aircraft despatched, week ending June 2, 1942 - British Air Commission report - 6/5/42. 537 183,185 Shipments to British Forces - Kamarck report - - 6/8/42.. 318 - B - Board of Economic Warfare Minutes of meeting June 4, 1942 - 6/8/42. 281 a) Discussion of 1) American Republic supplies 2) Wooden vessels 3) Shipping requirements' reduction through adjustments in food production and types of food being moved 4) Cargo planes Brame, Samuel (Collector of Internal Revenue, Richmond, Va.) See Glass, Carter Business Conditions Haas memorandum on situation, week ending June 6, 1942 - 6/8/42 286 - 0 - Canada See Gold China Central Bank of China to be sole bank of issue in future - a Kung victory - 6/8/42 352 Collector of Internal Revenue (Richmond, Virginia) See Glass, Carter Correspondence Mrs. Forbush's resume' - 6/5/42 145 - D - Deferments, Military Senate Committee reports on "conservative attitude of Treasury" - 6/8/42 234 Dutchess County See Financing, Government: War Savings Bonds - F - Financing, Government Securities Industry: Report on efforts made on recent issue of 2% Bonds, 1962-1967 - Buffington memorandum - - 6/5/42 90 Government securities recent changes in prices and yields: Haas memorandum - 6/5/42 92 - 1 - - (Continued) Book Page Financing, Government (Continued) War Savings Bonds: St. Louis, Missouri, invites HMJr to speak at meeting of National Display Men's Association - 6/5/42 537 49 Payroll Savings Plan: Treasury report on - 6/5/42 95 Analysis as of May 30, 1942 - 6/5/42 119 Dutchess County report for May - 6/6/42 214 E, F, and G Bonds-sales by States, May 1942 - 6/6/42 221 a) Gamble memorandum - 6/8/42 238 b) Tickton report on pledges - only about 30 - 6/18/42: See Book 540, page 177 Progress report - 6/8/42 241 $1 billion-a-month program: Letter and "Minute Man" sent to Cabinet members, Senators, Congressmen, etc. - 6/8/42 253 (For acknowledgements, see Book 538, page 91) - G - Gasoline Rationing See Revenue Revision Glass, Carter Asks HMJr to reappoint Brame (Samuel) Collector of Internal Revenue, Richmond, Virginia - 6/5/42 51 Gold Canada: Purchase and earmarking of gold in Canada discussed in letter from De Surinaamsche Bank, N. V., to Federal Reserve Bank of New York - 6/8/42 348 - H - Hansen, Alvin H. See Inflation - I - Inflation Hansen (Alvin H.) asks HMJr's help in pushing release of Government loan stocks of wheat and corn and effective wage stabilization - 6/5/42. 60 Internal Revenue, Collector of (Richmond, Virginia) See Glass, Carter - K - Kades, Charles L. Letter on leaving Treasury for the Army - 6/5/42 134 - L - Book Page Lend-Lease See also Procurement Division United Kingdom: Federal Reserve Bank of New York statement showing dollar disbursements, week ending May 27, 1942 - 6/5/42. 537 178 - M - Maybank, Burnet R. (Senator, South Carolina) See Revenue Revision Military Reports British operations. - 6/5/42, etc 202,227, 229,360 Coordinator. of Information reports: British PWE French subdirective, June 7-14 - 6/8/42.. 361 British PWE analysis of German Home Propaganda - 6/8/42 363 British PWE Italian directive, for June 5-11 RAF offensive - 6/8/42 365 Missouri, St. Louis See Financing, Government: War Savings Bonds Morgenthau, Henry, Jr. Affiliated Young Democrate of New York recommend HMJr for Governor - 6/8/42 231 - P - Procurement Division Mack fears plans for taking over of Lend-Lease buying by Service of Supply, War Department - - 6/5/42 2 - R - Revenue Revision Maybank (Senator, South Carolina) discusses with HMJr reimbursement to State for losses suffered through gasoline rationing - 6/4/42 42 a) HMJr-Sullivan conversation 45 Richmond, Virginia See Glass, Carter Roosevelt, Franklin D., Jr. Correspondence concerning one of five Secret Service men detailed to protection of his children - 6/5/42. 128 - S - St. Louis, Missouri See Financing, Government: War Savings Bonds Secret Service See Roosevelt, Franklin D., Jr. - 8 - (Continued) Book Page Securities See Financing, Government Stabilization Fund Report for April and May, 1942 - 6/5/42 537 88 - T - Taxation See Revenue Revision - V - War Savings Bonds See Financing, Government A June 5, 1942 9:00 a.m. Daniel Bell: I thought we ought to all be talking the same language as long as I'm going to be here and you fellows are going to be in there. HMJr: I see. B: And we've got a memorandum we thought we'd like to have you read over. HMJr: Well, I'll be ready a little later. B: It won't take you a minute. HMJr: Only 8. minute? B: Well, it'll only take you - just long enough to read a little over a page memorandum, and if there's any comment, we ought to change it before either one of us go into conferences. HMJr: Well, I can do it right now. B: All right. HMJr: This second. 00 - Mr. Thompson 2 June 5, 1942 9:50 a.m. Clifton Mack: Yes, sir. HMJr: I'm sorry. I've got all these meetings this morning, so let's take a couple of minutes and you tell me what you have on your mind. M: Very good. I have a hunch that the War Depart- ment's Service of Supply - that's Somervell's organization, you know HMJr: Yeah. M: are getting ready to take over some of the Lend-Lease buying that we're doing. Now, that's only a hunch on my part, but I think I've got a pretty good basis for it. HMJr: Yeah. M: And I don't want to be in the position of them writing a letter saying-to Lend-Lease-or taking action, and then we're on the defensive, you see. HMJr: Yeah. M: So I thought - I hated to bother you with it - but I thought that if sometime when it's convenient if you could just get in a word to McCabe about why can't - how's the Treasury getting along and could they - are there other non-military items the War Department is buying that we should get, because it seems to me that the trend should be the other way, you know, and HMJr: Well, what sort of things does Somervell want to buy? M: Well, the Engineer's Division are thinking in terms of taking over equipment - road building equipment. HMJr: Yeah. M: And all that. Well, we've been buying that for 3 - 2 - years. We're equipped to handle it. We know it. And they're thinking in terms of, as a matter of fact, of taking over a lot of these so-called non-military purchases that we're now handling for Lend-Lease. Now, this is information that I get from some of the men that have gone from War Production Board over to Army, and they have fancy commissions, you know, now. HMJr: Yeah. M: And they're thinking in terms of enlarging their buying, you see. HMJr: Well, Clif, I really don't think - and in the mood I'm in right now, I don't think I'd fight it myself very much. M: I see. HMJr: I mean - it's a war, and if that's what the Army wants..... M: Yeah. Well, I can see that view. HMJr: I mean it's - if we fight it and then they don't get the stuff, then we hold it up, and then it's our fault. M: Yes. Well, I can see that. Of course, my thinking is, that here we have an organization. We know we can turn out stuff faster than they can, you see. HMJr: I know. M: But I can see your view on that. HMJr: But it's - I would expect you to bring it to my attention. M: Sure. HMJr: And that's what you're there for, to fight for your own organization; but if I don't put up a real fight on that front, I hope you're not too disappointed. Regraded Unclassified 4 - 3 - M: No, that's perfectly all right, and I'd under- stand it. Now, there's one other thought, that sometime - there's no rush about it - but some- time when you have a few minutes, I'd like to talk with you. It has to do with conservation of materials and equipment like that HMJr: Yes. M: in terms of the all-over Treasury Department field service. HMJr: Yes. M: And it HMJr: What would you want to do on that? What's your idea? M: Well, I have in mind this, that - you see today, there's great stress on conservation of equipment and space, and manpower HMJr: Yeah. M: and you know the Treasury agencies through- out the field, they've grown up more or less in independent space HMJr: Yeah. M: and they're operating independent with each other as the investigative units used to do before you had that survey made and brought them together. HMJr: Yeah. M: Well, now, my thought 18 that - for example, in a city such as Chicago, where we have a good many Treasury agenciés located in probably a dozen different locations. HMJr: Yeah. M: If they could be brought together, for example, in a building like the Merchandise Mart Regraded Unclassified 5 - 4 - HMJr: Yeah. M: .....and then we could have consolidated space, consolidated service functions, we could save terrifically on equipment - which is tremendously important because later on we're not going to be able to get equipment - and the sooner we start to conserve, the better it 1s. HMJr: Well, you don't have to wait to talk to me. Talk with Norman Thompson. M: Very good. HMJr: And if the two of you agree, go ahead. M: Fine. HM~r: You don't have to - if the two of you agree, go ahead. M: Very good. HMJr: You don't have to wait on me. M: Well, that's fine. HMJr: What else? M: Well, those were the two principal things. HMJr: No, don't wait on me. Talk it over with Norman. M: All right. And as soon as I get something that looks specific, we'll send it over to you. HMJr: That's right. M: Fine. And we're taking over all buying of paper. We're doing that the first of July. We're going to do a real job on that, I know. HMJr: Good. M: Fine. HMJr: Thank you. M: Yes, sir. 6 June 5, 1942 9:55 a.m. HMJr: Hello. Daniel Bell: Hello. HMJr: Bell. B: Yes, sir. HMJr: If you think well of it, that special advisory group that I had, George Harrison and that bunch. B: Yeah. HMJr: What would you think of inviting them to come down a week from Monday? B: Be all right. HMJr: And tell them to be prepared to stay for two days. B: All right. HMJr: So then they could get hotel accomodations and that thing, you see. That would be before the financing. B: Yeah. HMJr: Then I'd like to talk things over with them. B: You want the same group? HMJr: Same group. B: What would you think of this time inviting them through the presidents of the Federal Reserve Banks. HMJr: Oh, no, no, no. B: All right. Well, I just thought maybe it would make them feel better. Regraded Unclassified - 2 - HMJr: Well, why should I invite George Harrison? B: oh, I - - what do you mean? HMJr: I mean - and B: Through them? Yeah. 12 HMJr: B: I see. Well, I just thought maybe it would make them feel better. HMJr: Well, don't they feel all right? B: Well..... HMJr: Are they in your room there? B: A couple of them, yeah. HMJr: Well B: Do you want somebody from the Coast this time? I haven't gotten any name which I'm entirely satisfied with. HMJr: Well B: I just have a couple of names. HMJr: There's an awful good banker down there at Los Angeles. A trust company. B: I got - you don't remember his name? HMJr: No, there's some trust company president down there. B: Well, I've got a name there. HMJr: What? B: I've got a name. I got a name from Los Angeles Cy Upham gave me. HMJr: You don't know what it 18? 8 - 3 - B: Just a moment. George M. Wallace. HMJr: Who? B: Wallace, President of the Security First National. HMJr: No, that's not the man. B: And a fellow by the name of Motherwell. HMJr: No. B: Wells Fargo, at San Francisco. He said those were the two best suggestions he could make for the Coast. HMJr: Well, I don't know these people. I don't want to invite anybody I don't know. B: Yeah. I don't know, and I can't..... HMJr: No. We'll let the West Coast go. Marriner Eccles can represent the West Coast. B: Well..... HMJr: No, I want to invite these people personally, to come down personally to - - with me. B: All right. HMJr: And they've got nothing to do with the Federal Reserve. No. B: You don't want - you said Eccles. You don't want Eccles in on that group? HMJr: No, I want to get a chance to talk. B: All right. This same group. HMJr: If you please. B: I'll invite them. HMJr: Thank you. B: All right. 9 June 5, 1942 10:00 a.m. WAR BONDS Present: Mr. Graves Mr. Gamble Mr. Coyne Mr. Mills Mr. Isbey Mr. Doherty Mr. Collins Mr. Moore Mr. Manning Mr. Patterson Mr. Ford Mr. Ludlow Mr. Carstens Mr. Pulliam Mr. Smith H.M.JR: Gentlemen, we asked you to come down here because the various States of which you are in charge are the more important States that we hope will sell the F and G Bonds. I guess Mr. Graves has been telling you that we here feel, and I am sure that you will agree with us, that we have really got to begin to sell the F and G Bonds. Up until now I don't think either Mr. Graves or I have put particular pressure on anybody to sell them, because I think we thought we would save that for June and July when we needed the money to make the quota; but this is the fifth of June and we haven't gotten off to a very good start so far in June on our sales in relation to what we need. Now, there has been an awful lot of argument back and forth as to who is going to have the responsibility to sell them, but we felt here that it has taken us almost a year and a half to build up this organization. I have got confidence in it, and I think, if given the proper help, that you men can give us what we need, and 10 - 2 - we thought we would have a meeting-first with me. I take it you know what it is all about. I would just like to go around the room and hear from each of you as to what you think you can do and what you think of this suggestion, which I take it Mr. Graves has laid before you. I think if we just go around and you tell me whether you think you can make it or you can't make it in June - you see, a lot of people in this town, for one reason or another, hope we are not going to make it. They have got their own selfish reasons, but I think with enough push and help we have got all these people that want to get in and help us sell F and G Bonds, and I think the thing to do is to take advantage of their offer. MR. COLLINS: I will make the quota in June, and the War Savings Staff and the Federal Reserve Bank are in perfect accord. We have already called in our various committee members for the Victory Fund, as well as appoint- ing a committee for the F and G's. We have already dis- cussed our county organization and the two chairmen of the F and G and the Victory Fund are in accord, so that we are working perfectly and in perfect cooperation wi th the Fed. I am sure I will be all right, Mr. Secretary. H.M.JR: Well, let me ask you this, because the statement that I have heard, not in relation to Illinois, but the criticism is that you have tried to sort of fight for the same men. Now, how are you divided up in Illinois between yourselves, the Federal Reserve and the Victory Fund Committee on the F and G? Where do you draw the line? MR. COLLINS: Well, Mr. Young, president of the Federal Reserve Bank, has appointed his committee, and he consulted me in appointing that committee. Then Mr. Young and I discussed the F and G committee, and in perfect accord we decided on a man who would organize our chicago and Cook County committee; and then between Mr. Young and myself we decided how we are going to operate through the county, and we have men on each committee. They are intermingling, but it is perfectly understood that one man on the F and G reports directly to me and has full charge of F and G over and against the Victory Fund Committee. 11 - 3 - H.M.JR: Does the man who is in charge of F and G - does he have to be on the Victory Fund Committee? MR. COLLINS: He is on the Victory Fund Committee. H.M.JR: What position does he hold? MR. COLLINS: Just a member. H.M.JR: He isn't their-- MR. COLLINS: He isn't their chairman or executive manager. H.M.JR: He is not? MR. COLLINS: No, sir. Our man is Mr. Whipple. H.M.JR: He is the best man? MR. COLLINS: I think SO. H.M.JR: Do you think he is as good as the executive manager of the Victory Fund? MR. COLLINS: Yes, I do. He has been quite active in our organization in the past with the investment bankers. H.M.JR: I see. MR. COLLINS: Very good man, very cooperative. H.M.JR: But you think you will get the results? MR. COLLINS: I think we will, yes, sir, and they are cooperating very well. H.M.JR: Are you satisfied with the setup? MR. GRAVES: With Illinois there has never been any change. Mr. Young, the president of the Federal Reserve, and Mr. Collins have always worked in complete harmony in relation with the setup. 12 - 4 - H.M.JR: But you are satisfied? MR. GRAVES: Perfectly. H.M.JR: Harold, have you told the people of this readjustment on the eight hundred million? MR. GRAVES: I have told them. I told them we had to sell three hundred fifty million dollars of F and G Bonds in June if we are to make our June quota. They all know that and know, I think, their respective shares in that job. H.M.JR: They know about the shift, about expecting more F and G's? MR. GRAVES: That is right. H.M.JR: And take all the E's you can get. MR. GRAVES: Yes, they know. MR. LUDLOW: Mr. Secretary, for Pennsylvania, without setting up a special F and G top committee, in May on our fifty-four million dollar ouota we reached thirty- nine percent in F and G. Those are the actual figures. H.M.JR: Thirty-nine? MR. LUDLOW: Thirty-nine percent, just under forty percent, which I think is pretty close to the National average of F and G two months ago. I don't know what it was a month before that. After the Victory Fund Committee was appointed, Dr. Williams, the President of the Philadelphia Federal Reserve, sent for me. He was working under the misapprehension that they were to begin by largely selling the F and G and gradually take it out of our county committees and end up by our having only the E Bonds. I immediately sent word to Mr. Graves that that would entirely disrupt our sixty-seven county organizations, Regraded Unclassified 13 - 5 - that we can't work all for E and let the F and G go to a new group. We have built up an organization and under the plan submitted this morning we can work admirably if Dr. Williams understands that that is the way that they are to do. N (Mr. Pulliam entered the conference.) MR. LUDLOW: Of the million of the three hundred and fifty for June, I am sure that Pennsylvania under the proposed plan can make its very full share - no doubt of it, but not if they break our committees down and give us simply the E and pass the F and G to some new group. H.M.JR: You have seen this draft? MR. LUDLOW: Yes, and we are very much in favor of it. H.M.JR: That is all right. MR. LUDLOW: It is quite workable and I know if Dr. Williams is told that that is the understanding of the Department - - the man he has brought in, Bendere, as his special assistant, will do a magnificent job with us. As 1 understand, we are responsible for the quota and therefore I want my. county chairmen to be responsible. I am going to set up in each county a special F and G committee, the head of which can be chosen by Dr. Williams and myself working together. That is our understanding of the plan, and it is a very workable plan. H.M.JR: The thing that I want in each county or each locality is the best man, irrespective of his tag. I don't care who he is.. He might be a lawyer or a doctor. MR. LUDLOW: In many cases he will not be a banker in Pennsylvania. 14 - 6 - H.M.JR: But whoever the best man is, with no tag on him, I want him to work for us. See? I mean, I don't care - he might be alawyer; he might be a doctor, or he might be anything. MR. COLLINS: In smaller counties where we have a particularly outstanding citizen whose word to other professions is all-commanding, he might be the very desirable man in that county. I have such in mind. H.M.JR: Now, Harold, is that all right with you? MR. GRAVES: Yes, it is. H.M.JR: You are satisfied? MR. GRAVES: You notice the qualification; he says if Mr. Williams will accept this program that it will work. H.M.JR: Mr. William's capacity is my fiscal agent; he will accept it. MR. LUDLOW: That makes it a very workable thing in Pennsylvania. H.M.JR: He will. He is there as my hired man. I mean, I don't know whether you gentlemen know, but we pay pretty nearly two-thirds of their expenses. I don't know whether you know that or not. Isn't it something like that? MR. GRAVES: Yes. H.M.JR: I think for the Federal Reserve Banks that we pay pretty nearly - what we pay the Federal Reserve Banks makes a difference of profit and loss. It makes a difference of about - I may be a little wrong, but it is somewhere in there. I think we pay about two-thirds of the expenses. The only work they have got, practically, is Treasury work. I mean, it has. been that way for a - 7 - 15 long time. They now do some other work, but for a long time-- Now, how about Massachusetts? MR. DOHERTY: Mr. Secretary, up until now our F and G program has been worked out under the auspices of the Massachusetts Bankers' Association, with a chairman in each one of the fifteen clearing-house districts, and the liaison between my office and the Federal Reserve hasn't been, probably, as good as it might be. We haven't exerted any particular pressure up until lately on the sale of F and G Bonds, except locally on the part of organizations and municipalities. H.M.JR: Excuse me - did you say if Williams accepts this thing, Pennsylvania will give me the quota? MR. LUDLOW: Absolutely - no doubt. H.M.JR: Excuse me. MR. DOHERTY: I think under the proposed setup that I would have to revamp my plans, but the question was raised on the occasion of Mr. Sparks' visit up there on the twentieth of May by a number of bankers as to pressure being exerted for accelerating the sale of F and G Bonds; and I thought it was good judgment to have a consistent statement, a resume of the contents of the memorandum on F and G Bonds, go out under the sponsorship of the Massachusetts Bankers' Association and that has gone out to every bank in Massachusetts. So I, personally, am of the opinion that in the main the real substance for realization of these quotas is going to come from numerous and well-developed pay- roll allotments, and that is what we have been con- centrating on. H.M.JR: I don't - I mean, Massachusetts won't make its June quota unless you sell 8. great many more F and G's. 16 - 8 - MR. DOHERTY: I realize that now. H.M.JR: Mind you, it is the E's that we want and we want it from the pay-roll allotment plan. That is what we want, but towards the public, 80 that they won't condemn the whole thing, I have got to get this F and G money. Now, there is a little hokum in the thing, and I realize it, but until this organization can get going and go through this mass of details to get the factories to put in the plan to become issuing agents, and all the rest of that stuff which takes 80 much time - until this thing can get rolling, we have got to put the pressure on the F and G and make up that which we may not get. And another thing, I realize perfectly well there is all this controversy in the papers about this tax bill; until that is passed, our job is doubly hard. MR. DOHERTY: There is no question but that publicity is a detriment in the installation of pay-roll allotment plans. I have found repeatedly-- H.M.JR: How are you as of ten-fifteen this morning on your June quota? MR. DOHERTY: That I don't know. H.M.JR: Not going to make any promises? MR. DO'HERTY: You mean promises for the realization of the June quota? I don't see any reason why we shouldn't make it because we have got the ability to make it. H.M.JR: Are you going to? MR. DOHERTY: I would say we ought to. H.M.JR: Is this arrangement now all right, I mean, this on F and G's? MR. DOHERTY: Yes, I have read and discussed the outline of organization. I think it is feasible and workable and practical in every way. 17 - 9 - H.M.JR: But you have got to make some changes? MR. DOHERTY: Yes. H.M.JR: O.K. MR. MOORE: Mr. Secretary, I can't commit Ohio so strongly to make its June quota. I don't believe we could make it without the extra support of F and G, but so far as the new plan of the Federal Reserve pumping up the F and G Bonds I think that would help very much and we will find no difficulty whatsoever in getting cooperation in getting it. H.M.JR: How is your man in Cleveland in the Federal Reserve? MR. MOORE: He is very splendid. We have - without knowing of this plan, we have already subordinated the State organization more or less to the Victory Fund Committee. H.M.JR: You will have to make a readjustment? MR. MOORE: I think we will in local communities, not so far as the State or ganization is concerned. I don't think we will have any trouble with that at all. H.M.JR: That means that in Ohio it will be one way, Illinois another? MR. GRAVES: I don't think they will be different. He doesn't mean that they will be different. It will be substantially the same-- H.M.JR: That is all right-- MR. GRAVES: ... in both Ohio and Illinois-- H.M.JR: That is all right as long as they get the results. 18 - 10 - MR. MOORE: That was my point a while ago. I don't see that it makes any practical difference who is subordinate so far as Cleveland, Ohio, is concerned. It may make a difference in Cincinnati or Dayton or Toledo, but those points we will have to iron out, and I think we can. H.M.JR: How about Indiana? MR. PULLIAM: I didn't - I have just read this memorandum. The first thing that we did out there after setting up - the first thing was the Labor Advisory Council to make sure we had the support of organized labor- on pay-roll allotment - very successful. The next thing was to set up, which we did in January, what we called the Victory Sales Council. I think it is largely. the same type of thing that you are talking about here. We have twenty-two of the leading bankers or large in- vestment bankers in the State. Those men have been given - every county in the State is covered by this Sales Council. We didn't have to put very much pressure on that sales organization for May. We knew our May quota was in the bag without too much pressure. Now then, they are already doing an excellent job for us on the June quota, and I believe that supplementing this I wouldn't like to disturb this Victory Sales Council in Indiana, because it is really set up to do just what you are talking about. They are charged with only one responsibility, to sell F and G Bonds. They know every- body in the State that can buy F and G Bonds. H.M.JR: Well, supposing - you didn't have the benefit of this talk with Graves and the others from nine to ten, so I think we had better-- MR. GRAVES: I think it might be well to pass Mr. Pulliam and let me talk aside with him. As I see it, Mr. Pulliam's problem there will be to adopt his present setup to this proposed organization, which I have no doubt can be easily arranged with Mr. Young. I wouldn't Regraded Unclassified 19 - 11 - anticipate any difficulty in working out an arrangement that would save your present organization exactly as it is. MR. PULLIAM: If you set up another organization, we would use the very members we have got in there. We have got everybody in the State who is really on his toes in this kind of a thing into this work now. MR. GRAVES: Indiana has been ahead of the pack for a long time on this F and G proposition. I have known that they have a peculiar problem, and for that reason Mr. Pulliam has always had a strong F and u organization for the last several months, but I think it can be fit right into this pattern without any-- H.M.JR: How do you feel about your June quota? MR. PULLIAM: We will make it without question. We have got pledges already for F and G Bonds for better than twelve million dollars that will be bought in June, July, and August. This Victory Sales Council already has those pledges. Now, that will be increased to around twenty million by the end of this month, so there is no question about our quota. H.M.JR: Do you know what happened Tuesday at the Allison plant? MR. PULLIAM: I know all about it. H.M.JR: What happened? MR. PULLIAM: The company union won by a vote of fifty-eight to thirty something and about three percent not voting. H.M.JR: By fifty-eight, which was fairly - - was it fairly close? MR. PULLIAM: The CIO got thirty-eight percent, Regraded Unclassified 20 - 12 - and the company union fifty-eight or fifty-nine, and I think that would leave about three or four percent not voting at all. The participation there on pay-roll allotment there is a hundred percent now, and they are bringing it up. They have got the thing organized; about five hundred workers in the plant are soliciting the employees, to bring their pay-roll allotment up to ten percent. H.M.JR: It is working all right? MR. PULLIAM: I think it is going to work very nicely. This labor situation had something to do with holding back until after it was out of the way. It hasn't affected their participation, but it has affected the drive to get it up to ten percent. H.M.JR: Those men must be getting pretty high pay. MR. PULLIAM: Very high pays and the CIO leadership is not bitter over this thing. They are going to go along with us. After the election was over I got hold of the CIO leaders, and they said they weren't going to hold back, that they would go ahead the same as though they had won the election. H.M.JR: As far as they were concerned there were no bad feelings? MR. PULLIAM: No. H.M.JR: I am trying my best in our labor relations to stay on bonds, not to get into any other angles on labor, and there are plenty of them. MR. PULLIAM: Our main difficulty has been the difficulty between AF of L and CIO, our original trouble. That is ironed out. They are working together in fine shape. H.M.JR: While we are on that labor thing, have any of these AF of L field workers hit Indiana yet, Regraded Unclassified 21 - 13 - these organizers who are working now exclusively on the AF of L-- MR. PULLIAM: The bond thing - I think there have been one or two in there in the last sixty days. H.M.JR: This would be the last week. MR. PULLIAM: No, then there hasn't been. H.M.JR: Maybe they haven't got there. MR. COLLINS: I have had one in Illinois. H.M.JR: They are supposed to be working exclusively for us. MR. DOHERTY: They have been in Massachusetts. H.M.JR: Are they - I mean, as they travel around they are supposed to confine themselves-- MR. PULLIAM: Our trouble on labor is not going to be - bringing up to ten percent - is not going to be in the organized labor plants; it is going to be in the un- organized labor plants. H.M.JR: Of course that is one of the things they keep throwing - well, we had this General Motors show before the Ways and Means Committee. They asked Walter Reuther, "All right, that is organized labor; what about unorganized labor?" He said, "Well, that is simple enough. Let them join the CIO and everything will be all right." Remember? You weren't there, were you? MR. ISBEY: No, but I heard about it. H.M.JR: That was his answer. Who comes next? MR. ISBEY: We will make our quota, Mr. Secretary, for June and July. We haven't pushed at all the F and G Bonds because we felt we were going to need them in 22 - 14 - June and July for our pay-roll savings, to catch up. We have good cooperation from the investment bankers and they have one man that has been assigned to us that is paid by them to help do the job. As far as the Federal Reserve Banks are concerned, we are getting along fine, complete cooperation, so there is no trouble there. H.M.JR: How about this plan we have drawn up? MR. ISBEY: As long as you keep up at the top - if you start getting the divisions in all these things, that is where the trouble comes. You have got to keep them together. That is fine. I say it is O.K. We can work fine. H.M.JR: Well, will many of the men on the Victory Fund, do you think, be working on this? MR. ISBEY: Right. We haven't scratched the surface in Michigan on the F and G Bonds. H.M.JR: You have got to begin to scratch. (Laughter) MR. ISBEY: We will show you the results, too, and our E Bonds, of course, are now coming strong - pay-roll savings. H.M.JR: Have they got all of your issuing agents? MR. ISBEY: Yes, Ford set up a complete department. It is a pleasure to go out there and see. They are entitled to the Treasury flag at the Rouge plant. They have got their ninety thousand men, and I would like to have you come out and-- H.M.JR: You mean - I was supposed to go tomorrow with Don Nelson, but I am not going. He invited me to go with him and Captain Lyttelton. They are going out to the Ford plant, but I thought I would come sometime on Bonds. MR. ISBEY: They asked for you, if you would present the flag - Mr. Ford-- 23 - 15 - H.M.JR: Mr. Who? MR. ISBEY: Ford. H.M.JR: Which Ford? MR. ISBEY: They have gone all-out for the Treasury program. H.M.JR: Which Ford? MR. ISBEY: Edsel, and Harry Bennett. H.M.JR: If these men haven't seen this thing, they ought to see this new ruling on issuing agents that the Comptroller General has just made, which permits these companies to deduct as expense the cost of issuing these bonds. For instance - even if Ford, for instance, wanted to hire somebody to do it - if he didn't want to do it - he could hire somebody to do it and deduct the expense and charge it to Government contracts. MR. ISBEY: Our problem is solved then. We can get them all. H.M.JR: You know about it, Mills? MR. MILLS: Yes, sir. H.M.JR: You ought to get-- MR. MILLS: Do you want it explained, Mr. Morgenthau? H.M.JR: Before they leave town; but they can charge it up as an expense. With that on now, I think-- MR. ISBEY: Fine, excellent. H.M.JR: They even asked to go 80 far as to charge publicity - for instance, could General Motors charge their publicity - they said no, but they could charge the bookkeeping and all of that as an expense and add to the contract, everything but the publicity. 24 - 16 - MR. ISBEY: Our greatest problem is solved. H.M.JR: Everything but the publicity. MR. ISBEY: That is fine. H.M.JR: So, Mills, do your little job. MR. MILLS: It is only on the cost-plus fixed-fee contracts and the manufacturers. It doesn't extend right down through all of the issuing agents, Mr. Secretary. It is the larger ones and those are the problem ones to look after. H.M.JR: But it is particularly the Detroit and Los Angeles, and San Diego - if that doesn't settle the eight airplane companies in Los Angeles and San Diego I shouldn't think anything would. Wouldn't that be helpful in southern California? MR. MILLS: Very, and in Washington with the Boeing people in their middle western-- H.M.JR: It is just on the cost-plus-- MR. SMITH: That would help Connecticut, wouldn't it? MR. MILLS: Yes, United Aircraft, probably have a bearing on them. MR. MANNING: In New Jersey, Mr. Secretary, we have set up a special committee for F and G's headed by Colonel Franklin D'Olier of the Prudential Insurance Company, and I am certain we will have no trouble with the Federal Reserve. We have a difficult job for June, but I am sure we will make it. I am positive we will make the July quota. H.M.JR: Really? MR. MANNING: Well, we have a lot of new business that will come in. Lifting the limitation is very, very helpful. Unclassified - 17 - 25 H.M.JR: But your E Bond thing is rolling nicely? MR. MANNING: E Bonds coming along very nicely and we have, as you know, two Federal Reserve Districts in New Jersey, and both members of the Victory Committees are members of my committee, Mr. Corbin, in Newark, and Mr. Archer in Camden. H.M.JR: How is Curtiss-Wright in Hackensack? MR. MANNING: Well, they have been beginning to step up their quota very nicely the last three weeks. H.M.JR: They must have an enormous number of employees. MR. MANNING: Yes, they have, twenty-thousand. They are coming along very nicely, and so is Bendix. H.M.JR: How about some of your shipyards? MR. MANNING: New York Shipbuilding - we have had some difficulty with them, but they are coming along very nicely. I think the Philadelphia Federal Reserve people will probably tell you the difficulty in trying to have them become issuing agents, but this information this morning I think would clear up that, so that we will-- H.M.JR: But this new suggestion on F and G is all right with you? MR. MANNING: Fine. MR. SMITH: I think we are going to be all right, Mr. Secretary. I think we will make our June quota; if there is any question about it - this will be a big boost for us if we get the proper man. H.M.JR: If you get what? MR. SMITH: The proper man. If the Federal Reserve and ourselves can agree, and I don't think that there is any doubt about it, because our State chairman is - 18 - 26 very, very well thought of in Boston. And I think, with the assistance of Mr. Paddock in Boston - I don't think there is any doubt.about it. H.M.JR: Are you worried about June or July? MR. SMITH: No, sir. H.M.JR: You are not? MR. SMITH: Not a bit, no, sir. MR. GRAVES: These fellows are willing to let us do all the worrying, I think. (Laughter) H.M.JR: You tell them we do plenty. MR. SMITH: I think, Mr. Morgenthau, if you could come up there it would be a big help to us on the F and G, particularly. H.M.JR: Well-- MR. SMITH: The Dawes' statement in Chicago went right through New England. H.M.JR: The Dawes' statement? MR. SMITH: He was willing to go along with you on any project which you were-- H.M.JR: Oh, that went back to that American Bank in Chicago? MR. SMITH: Chicago, yes, sir. That took all the politics out of it, and he was very emphatic, I thought. They publicized it all through New England. H.M.JR: We can get plenty of Republicans to en- dorse this thing if you want that. MR. SMITH: Will they get out and go to work? 27 - 19 - H.M.JR: Yes, I think if that would help you any - yes, we can give you some prominent Republican speakers. Well, what happened in New York? MR. FORD: Dewey spoke for me two nights ago. H.M.JR: How did that go? MR. FORD: Very well, indeed. H.M.JR: Nobody told me anything. Did it rain? MR. FORD: We had bad luck. It did not rain. We had between ten and twelve thousand people. The stadium holds about seventeen at capacity, but that audience stayed there from half past seven until eleven. MR. PATTERSON: It threatened to rain. H.M.JR: But Dewey spoke? MR. PATTERSON: Yes, I think they will report to you it was entirely satisfactory. MR. FORD: Dr.Tobias expressed himself - very pleased with it. H.M.JR: Who? I thought you said Dr. Devine. MR. FORD: No, we are saving that for the up-the-Hudson meetings. MR. SMITH: We are still using Mrs. Morgenthau's recording in the radio stations up there. H.M.JR: I am pleased to hear that. MR. SMITH: Round table discussion. H.M.JR: Didn't know there was one. But otherwise you are all right? 28 - 20 - MR. SMITH: I think so, yes. MR. PATTERSON: Mr. Secretary, speaking for New York, this memorandum is completely workable, and we just hope that the presidents of the Federal Reserve banks won't try to change it, because that might mean ambiguity of responsibility and division of responsibility. If that is the case, we would respectfully protest. We already have our F and G committees set up. We have fifteen of the partners of the largest investment houses in New York who are heading up a committee of nearly two hundred top investment bankers. They have been working for two weeks, beginning to get our county F and G Bond committees organiz ed. We can work with Allan Sproul. We like him. We trust him, and we can get along with him. We feel, sir, that we want to have as much complete freedom in New York as you care to give us. And so far as New York is concerned, if we don't make good over-all it won't be your fault. You have given us the tools and complete cooperation. We have & man by the name of Perry Hall who has been appointed as the executive director of the Victory Committee there. He hasn't appointed his committees, but we propose to talk with him and Allan Sproul, and work this thing out. H.M.JR: You think it is all right? MR. PATTERSON: I do, sir. H.M.JR: It may work out that Perry Hall would work for both? MR. PATTERSON: Yes, Perry Hall would be the executive director who would work for both. H.M.JR: You mean it might work out that way? MR. PATTERSON: No reason why he shouldn't work for both. He is satisfactory to us. 29 - 21 - H.M.JR: Hasn't he been in charge for you since January? MR. PATTERSON: No, he has never - he hasn't been in charge at all. He has been a committee member and we have had a great many committees, but Allan Sproul appointed Perry Hall as the executive director of the setup and I think we can work with Arm. H.M.JR: And how do you feel about June and July? MR. PATTERSON: I am not 80 - I wouldn't want to commit ourselves for June. It is easy to do that here, but I am not going to do it. I am in hopes that we can make our June quota if this memorandum sticks. H.M.JR: It will stick. MR. PATTERSON: We have nearly twenty-one percent of the total sales in the country allocated to New York, twenty point eight - one hundred and sixty-one million, seven hundred some thousand. We will put up the damnedest fight possible to make it. We don't want to feel it is going to be a fight because it is a good program, and we have got, we think, the best committees in New York State and we are just beginning to roll. I would say, seven of our eight cylinders are functioning, and the eighth will be in operation, we hope, without delay. Now, I repeat, with this memorandum sticking, I am in hopes, Mr. Secretary, that we can make our quota. H.M.JR: Do you want to add anything? MR. FORD: I don't think there is anything to add. I just say the reverse of what Dick said. If we can't have this F and G Bond I know we can't make our quota. That is just impossible, because it isn't possible to get the amount of money that has been allocated to us out of pay-roll sales in New York State. It just isn't there. We have got to get the majority, and I think more than we have been counting on, out of the F and G Bond sales; SO this is life and death to us, this dis- cussion, pretty much. 30 - 22 - H.M.JR: It is? MR. FORD: I think so. H.M.JR: Ted, do you want to say something? MR. GAMBLE: I would only like to say, Mr. Secretary, that I think this report tells you that these gentlemen have done some work on F and G's prior to this meeting. I think they are very understanding of this whole problem, and I think you have gathered from them the willingness to avail themselves of every possible piece of talent in these States. I think this memorandum has defined and made. it possible for them to do that and yet stay on top, which they must be able to do if it is going to work. H.M.JR: narold, have you got any after-thoughts? MR. GRAVES: I don't believe 80. 31 June 4, 1942. MEMORANDUM FOR UNDER SECRETARY BELL: As a guide to our discussions tomorrow with State Administrators and the Federal Reserve Bank people, I suggest that we submit the following arrangements and procedure for promoting the sale of F and G Bonds. This represents my understanding of, or at any rate is consistent with, the instructions given us yester- day by the Secretary. 1.-The State and local organizations of the War Savings Staff will be held primarily responsible for the sale of F and G Bonds. At the same time, however, these organizations will be expected to take advantage of the facilities which have been tendered by the Federal Reserve Banks, including, among other things, the services of members of the Victory Fund Committees as individuals, to the extent that the State Adminis- trators (or Chairmen) may consider that such services will be helpful in increasing the volume of F and G Bond sales. 2.--In instances where the State Administrators (or Chairmen) consider it practical to do so, and especially in States in which a substantial volume of F and G Bond sales is to be anticipated, the State Administrators (or Chairmen) will invite the President of the Federal Reserve Bank for the District in which the State Headquarters of the War Savings Staff is located, to serve as Chairman of a special F and G Bond Group, whose function it will be to supervise the promotion of F and G Bond sales throughout the State as a whole. This Group will perform its functions as an adjunct of the State organization of the War Regraded Unclassified 32 Mr. Bell--2. Savings Staff. The President of the Federal Reserve Bank will be expected in any such case to deputize a subordinate officer to represent him in the performance of his duties as Chairman of this Group. 3.--The Chairman of the F and G Bond Group in each State in which this arrangement is adopted, in collabora- tion with the State Administrator (or Chairman), will be charged with the responsibility of selecting qualified persons in each county or community of the State to pro- mote F and G Bond sales in such county or community. The persons so selected will constitute & special F and G Bond Group for the county or community concerned, and they will perform their duties as a part of the activities of the regularly-established War Savings Com- mittee for that county or community. The Chairman of the State F and G Bond Group will, however, be author- ized to communicate directly with the members of the F and G Bond Groups in the several counties or other local communities with reference to matters within the Group's jurisdiction. 4.--The use of the Victory Fund Committee as such is not contemplated by the foregoing, and the persons to be employed as members of, or workers under, the State and county F and G Bond Groups referred to, will be selected with regard only to their qualifications for employment in promoting the sale of F and G Bonds and without regard to whether they are or are not members of the Victory Fund Committee. 5.-The arrangements here outlined will be under- taken subject to the understanding that no administra- tive expenses will be incurred by State or local F and G Bond Groups as a charge against the Treasury Depart- ment except with the prior approval of the State Ad- ministrators (or Chairmen) of the War Savings Staff and the Executive Director, War Savings Staff, Washing- ton, D. C. Harold N. Graves Assistant to the Secretary. HNG/mff Regraded Unclassified 33 June 5, 1942 11:35 a.m. WAR BONDS Present: Mr. Graves Mr. Bell Mr. Buffington Mr. Eccles Mr. Gamble Mr. Mr. Mr. Mr. Doherty Mr. Collins Mr. Mr. Mr. Patterson Mr. Mr. Mills Bryce Moore Manning Isbey Ford Ludlow Smith Mr. Carstens Mr. Pulliam Mr. Mr. Sproul Mr. Williams Mr. Paddock Mr. Young Mr. Wagner Mr. Fleming Mrs. Klotz H.M.JR: Well now, we had this meeting, gentlemen, with the presidents of the Federal Reserve Banks, with Mr. Eccles acting as liaison. They feel that they don't want anything in writing; they don't want anything formal on it. They don't want any Washington, in other words, and I don't blame them. But this is the agreement that we have come to, that I say to you gentlemen who are chairmen of the War Bond committees in each State, "Would you, Mr. X, 34 - 2 - please go to the president of the Federal Reserve Bank of your district and say to him, 'Bill, I want to go into your office and sit down and lock the door, and I want you to help me put across this F and G quota in my State. I want you to give me all the help that : can get." If each of you State chairmen will go to wherever your president of the Federal Reserve Bank is and ask him to give you that kind of help, in the way of selling help, each of these presidents of the banks - and it has the entire approval of Mr. Eccles - has agreed that they will give you their enthusiastic help and backing. Now, the representative for the presidents of the banks is Mr. Sproul, and he can say his piece, what you are ready to do. MR. SPROUL: I think you have said it, Mr. Secretary. You asked the presidents of the Federal Reserve Banks in their capacities as fiscal agents of the Treasury and as chairmen of the Victory Fund Committees in their districts to give all the help they can to the War State Savings Bond organizations. You asked the War State Savings Bond organizations to get in touch with us and to see how that help can best be given. We sit down with them in our respective districts and work out whatever plans we can to give them all the help we can in selling F and G Bonds under their June and subsequent quota arrangements. H.M.JR: Is that the way you understand it? MR. ECCLES: That is t he way I understand it. H.M.JR: Is that agreeable to you? MR. ECCLES: Perfectly. H.M.JR: There is nothing in writing, simply verbal; no titles, no names, no nothing, but plenty of good will. 35 - 3 - Now, does any State chairman not understand this, or is any State chairman not entirely agreeable to work on this basis? MR. LUDLOW: Mr. Secretary, I both understand it, and I am agreeable to it. I still want to know whether in a State like ours where Dr. Williams has the Phila- delphia Reserve and has the Cleveland Reserve, whether I go to him for help through the whole State or only his part of the State. H.M.JR: I tell you what you do, you flip a coin. MR. LUDLOW: I would lose with him every time on that. MR. ECCLES: We have that situation in a good number of States, and I would think you would have to go - the western part of Pennsylvania would go to Cleveland and the eastern part would go to Philadelphia. H.M.JR: What I was going to say was flip a coin as to which Federal Reserve Bank chairman you see first. Now, let's take plenty of time. Any other State chairman that wants to ask a question? This all, gentlemen, instead of having anything in writing, gets to the matter of good will. These State chairmen tell me they will give you all the time, all the help at their disposal, to help put across this June quota. See? So it just gets down to human beings and the question of good will. I don't want anybody to go out of this room with any doubt in his mind as far as War Bonds are concerned. MR. PULLIAM: Mr. Secretary, may I*ask what is the specific function of the Victory Fund Committee setup of the Federal Reserve organization, as far as each State is concerned? 36 - 4 - H.M.JR: As they say on these over-the-air forums, that is a very good question. I will try to answer it. The function of the Victory Fund Committee is this, in the language we use - I think we use larger financing-- MR. GRAVES: Larger investors. H.M.JR: I have to raise, as I told you gentlemen earlier, beginning with the first of July, four and a half billion dollars in new money each month; and on the assumption and hope and belief that you gentlemen will do a billion, it leaves three and a half billion dollars that somebody has got to sell. Now, in our efforts to sell that - you may remember the Federal Reserve Banks never were equipped to sell securities, and under the SEC Act of '34, I believe, or '33, the selling of securities was separated from banks. So we face a situation where we want salesmen who know how to sell securities, regular Treasury securities. We don't think of it as blocks of ten thousand dollars or over, but usually in blocks of a million dollars or over. What we want is these trained salesmen - and they sought me out; I didn't seek them. They said, "What can we do to help?" I need all kinds of help, and they are going to help me on what I call the regular Treasury financing, which will go largely to banks and institu- tions, insurance companies, and 80 forth and so on. Does that answer your question? MR. PULLIAM: It answers it up to a point. The question has been raised frequently in the last two weeks. We have a Victory Sales Council in Indiana. The impression has gained headway very rapidly in the last few days that the investment bankers are going 37 - 5 - to receive some sort of a small token commission on the sale of Government securities other than F and G's. That question, I think, if it is possible, should be settled one way or the other. In other words, if it is possible to have you answer that - that is the question that is raised every day. H.M.JR: Well, I have had the heads of various securities organizations in here several times, and they have never asked for any compensation. They are here as representatives for these various organiza- tions. Mr. Bryce is here as a volunteer representative, and they have never asked to be compensated. So I think that is the answer. MR. BRYCE: Who is the head of your F and G's, Ed Wuensch? MR. PULLIAM: No, Mr. Peterson is the head. MR. BRYCE: You get hold of Wuensch and he will straighten you out. MR. PULLIAM: The investment people are against the commission idea in Indiana, but they are still inclined to believe, because of this New York meeting, that there is going to be something of that kind. If the answer is no-- MR. BRYCE: I was in the New York meeting, and that wasn't touched on at all. They got the wrong impression over a highball in the cocktail room, or something. It is true in the Victory Fund setup there are certain men in the Federal Reserve district that will be paid, executive managers. MR. PULLIAM: But that is not a commission. MR. BRYCE: No, but they have a few paid men, one in each district, and three or four on a voluntary basis. 38 - 6 - MR. PULLIAM: That is the way to do it. MR. BRYCE: As they organize the Victory Fund Committee and take on the job. the Secretary talked about, through the Federal Reserve Bank on a reim- bursable basis their expenses will be compensated. H.M.JR: Harold, are you satisfied? MR. GRAVES: Yes. MR. BRYCE: There is no commission involved in it whatsoever. H.M.JR: Sproul, are you satisfied? MR. SPROUL: Yes. MR. ECCLES: Yes. H.M.JR: Ted? MR. GAMBLE: Yes. H.M.JR: Now, any other questions? If there are no other questions - a number of you State chairmen are here and a number of the Federal Reserve Bank presidents are here, and I would tackle them now. I wouldn't lose any chance. They are all in a good humor and full of Washington fresh air. May I just say this. I don't underestimate the job. A lot of you people are giving your time for nothing, and this is a terribly big job. Now, in my job even if I wanted to fool anybody I couldn't fool anybody. We get out a daily statement every night; we show just what we sell. It can't be like the question of rubber shortage - I mean, you can't do that in the Treasury - I mean, they know every night just how much we have sold. As I say, even if we want to fool them we can't. Regraded Unclassified 39 - 7 - So we have got an extra tough job, and I like to continue to feel - the President feels this is one thing he hasn't had to worry about yet, that is, is he going to get the money to pay for the guns and the ships and planes; and with the help of you gentlemen and the good will everybody has expressed I feel that I can continue to tell him that he won't have to worry about the money for the guns and the ships and the planes. I appreciate your coming down here, and I am going to be like some of these State chairmen. I am going to stop worrying. (Laughter) MR. ECCLES: You should. H.M.JR: Thank you all. 40 June 5, 1942 11:53 a.m. HMJr: Hello. Operator: All right. HMJr: Hello. Ronald Ransom: First, I hope you enjoyed "Candida" Monday night as much as I did. HMJr: Yes, it was fine. R: That was a magnificent coming-in scene. Henry, I have this pretty constant question that comes up in connection with our effort to make people pay personal debts and stay out of debt. HMJr: Uh, huh. R: The question of listing the relative importance of the means of absorbing consumer income is rather easy, of course taxation is the principal and most important one. Then the question of buying War Bonds and paying personal debts HMJr: Yeah. R: ..... fall along behind that. I would like to follow your own personal preference. As far as I'm concerned, I - I would like to say in two or three talks that I've got to make to registrant groups, that the payment of personal debt at this time out of current income is serving the national purpose as is the purchasing of War Bonds. HMJr: Well, look, do you mind doing this? R: Yeah? HMJr: Just because, I - I just got through an awful tough meeting and I'm not sure whether I'm clicking. R: Yeah? HMJr: If you've got something like that, write it out R: Yes? HMJr: ..... and if you didn't mind sending it over to Ferdinand Kuhn, K-u-h-n Regraded Unclassified 41 - 2 - R: Yes. HMJr: And let - let Ferdie look at it. R: Yes. HMJr: He lives and breathes this all day long R: Yes. HMJr: ...... and I might say something to you now that was out of tune. R: All right. HMJr: So, if that isn't asking too much? R: Not at all. HMJr: Well, if you were going to make a speech or something R: Yeah? HMJr: And, ah, Ferdie will drop over and see you - ask him to come over and see you. R: Well, I'll - well, I'll do this, if it suits you, when I get this damn speech drafted, I'll send him a copy of it and ask him to take a look at it and see that it doesn't - cross up with any campaign you people have on hand. HMJr: Well, it's terribly nice of you calling me, and I appreciate it. R: Yes. One other thing - on the radio last night I heard a young girl make a suggestion that - of course, it might not have come to your attention - - she said that she had been selling War Bonds and doing well, but that she'd do better if the slogan was, "Invest in War Bonds", not, "Buy War Bonds". HMJr: I see. R: I was afraid that you might miss that one. HMJr: That's a good idea. R: Okay. HMJr: Thank-you. R: Good-bye. cc - Mr. Sullivan 42 June 5, 1942 11:58 a.m. HMJr: Hello. Operator: Senator Maybank. HMJr: Hello. Operator: Go ahead. HMJr: Hello. Senator Maybank: Hello, Mr. Secretary. HMJr: How are you, Senator? M: I'm sorry I missed your call yesterday, and this morning I've been over in Appropriation meeting. HMJr: Yeah. M: What I called you up about yesterday, I was just merely making observation 80 to speak HMJr: Please. M: Dick Russell and myself have got a little bill that we might introduce on Monday to the effect that through the Treasury of the United States, these states that are on gasoline rationing be reimbursed by the loss of state taxes. Of course, that would take a great deal of money, but what our real idea is is to - if this gasoline rationing 1s to get as serious in the Seaboard States as we re led to believe, and it's not going to be put into effect in the other parts of the country, what we really want to do 1s to protect our bond finances. Of course, any new road construction or any- thing like that is out of the ouestion. HMJr: Yeah. M: But we did believe that the Federal Government, through rationing and through the necessity of 43 - 2 - rationing, all of which we have no complaint against and want to help with, in every way we can if it's necessary on account of transpor- tation, but then at least our bonded - bonds and reimbursements be protected, because if they shouldn't be protected and something should go wrong, it would merely hurt all the other bonds in the state and would merely hurt all the sale of War Savings Stamps and everything else. That was just the general HMJr: Well, what you're raising - of course, you realize - is a very important question. M: Yeah. Well, of course, if the national gaso- line rationing goes in, why we'd just forget about the thing. HMJr: What I'd like to do is this. Do you know John Sullivan, Assistant Secretary of the Treasury? M: I think I've met him. HMJr: Now could I ask - could you and Dick Russell see him any time today and let him talk to you about this? I'd like him to talk to you. What time would you like to see him? M: Well, now, the only thought 1s, I just left Dick Russell over there. He's Chairman of this Free Conference Committee on Agriculture HMJr: Well, I mean, when M: and Appropriations, and they're having quite a HMJr: Well, when - well, when would you when would it be all right M: Well, now, any time this afternoon would suit me all right. I don't know what time would suit Mr. Russell though. HMJr: Well M: Could he call Mr. Russell up and tell him that 44 - 3 - any time would be agreeable to me? HMJr: I'll have him call up Senator Russell. M: Yeah. Any time that Senator Russell says is agreeable to him is agreeable to me, this after- noon, after two o'clock. HMJr: I'll do that. M: I slipped over here from Appropriations Com- mittee. I'm going on back over there directly, but I know we 11 be through by two. HMJr: Thank you 80 much. M: Thank you, Mr. Secretary. 45 June 5, 1942 12:01 p.m. John Sullivan: Yes, Mr. Secretary. HMJr: I talked with Senator Maybank of South Garolina. You'll have a copy of it within the next ten or fifteen minutes. S: Yes, sir. HMJr: If I understand it - I may not understand it correctly - but they want some kind of a refund to the States on what they lose in the gasoline tax through rationing. That's what I understood, you see. S: Yes. HMJr: I might not have understood it correctly. But anyway, he - I suggested that you could see him and Dick Russell, 80 he said if you would call uo Senator Russell's office, of Georgia, and say that any - that Senator Maybank said he's available any time after two o'clock, that Senator Russell is available. See? S: Yes. HMJr: And that you would go up and see the two of them wherever it's convenient for both of them. S: Yes, sir. HMJr: Can you do that? S: Why certainly, sir. HMJr: Because this 1s something which certainly both Nelson and Henderson ought to know about, and, of course, it's the most - if I understand it, it'll be the most terrific raid on the Treasury. S: Oh, there's no doubt about that. HMJr: I mean, we just couldn't stand for anything like that. S: oh, no. 46 - 2 - HMJr: But can I leave it in your hands? S: Yes, sir. And I won't have an opportunity to speak to you, probably, after you get out of Cabinet. Will you want me to acquaint Leon and Nelson with this matter? HMJr: Yes. If you please. S: I will. Now HMJr: After you've - I'd see Russell and Maybank first S: Oh, yes. HMJr: and get the story right. I may not have it right. S: Yes. Well, I won't call Russell until I get the transcript of your conversation. HMJr: That's right. S: Now, I have seen Doughton and George. HMJr: Yeah. What did they say? S: And they were opposed to giving the names out, and as a result of those conversations, I have written for your signature HMJr: Yeah. S: a letter which describes our meeting with the Joint Committee, and their consideration as to whether or not at a later time they would give out the information. HMJr: Right. S: Then I say that section 55 of the Code rigidly prescribes the committees to which the Treasury can divulge any data. HMJr: That's right. 47 - 3 - S: And that his committee is not one of those we're authorized to give the information to; but inasmuch as the Joint Committee on Internal Revenue Taxation possesses the authority to give it to them, I refer them to Doughton. HMJr: Good. S: Now, both Doughton and George agreed with that. HMJr: Good. S: And I - - shall I send this in for your signature now? HMJr: If you'd send it in right now, I could sign it. S: I'll send it right in right away. And then I'll be back from Russell and Maybank by the time you get out if you want to hear anything about it. HMJr: Well, I don't. S: But I doubt HMJr: Well, it's one of those things. They're just feeling us out. S: Right. Well, I hope you have a very good holiday. HMJr: Thank you. And, John, if you give this to Stephens, or have your girl give it to Stephens, I can sign it right now. S: I'll send it in this minute. HMJr: What a time I had yesterday! S: Well, incidentally, Mr. Doughton spoke about that this morning. HMJr: Yeah. What did he say? S: And he wanted me to tell you that he was - the quotation was, "wonderfully pleased", and in fact, he used it twice, and he wanted to tell you - (talks aside) this goes right in to Lieutenant Stephens right away - and he wanted me to tell 48 - 4 - you that he thought you handled yourself ex- tremely well. HMJr: Thank you. S: That he thought that the committee would insist that Boehne call in the offending newspaperman and really give it to him, and he thought that you should do the same thing. HMJr: (Laughe) Well, I'm not going to call in any - as far 88 I'm concerned, it's a closed book. S: Well, I drove Doc Crowther down. HMJr: Yeah. S: Crowther was waiting for a cab, and I saw him and I picked him up and drove him back down. That was this morning early. I went up to see Doughton. HMJr: Yeah. 8: And Crowther said he thought it was the most ridiculous performance yesterday, having you come up there, a busy man, wasting your time on a thing like that, that he'd seen since he'd been in Congress. HMJr: Well, Crowther was helpful, incidentally. S: Yes. I'm awfully scrry he's leaving that com- mittee. HMJr: Righto. 8: Have a good time, sir. HMJr: Thank you. S: All right. (Long-distance call from St. Louis) 49 June 5, 1942 12:13 p.m. HMJr: Hello, Mayor Becker. Mayor Becker: Yes, Mr. Secretary. How are you? HMJr: I'm fine. How are you? B: I've been trying to get hold of you. I wanted to report to you on what our plans are here on the 29th, and hope you might be able to come. On the 29th here, they're having a very large luncheon, at which we will have representatives from all over the United States at that National Display Men's Association. HMJr: Yeah. B: And in the evening we thought that it would be wonderful for you to come and attend our opera. You know we have nine thousand and ten thousand people a night at this Municipal Opera of ours. HMJr: I was there in '33. B: Well - in '33. Fine. We want you to come, and if there'd be any possible chance for you to come on the 29th, we'd like to have you at the luncheon, make a little talk, and then in the evening go to the opera. You see? HMJr: Well, Mayor B: At the opera, merely introduce you 80 that the audience would know that you're there, and you could make a talk for a minute or two, you see. HMJr: Well, it's terribly nice of you, and I feel honored that you want me; but the way it is now, I'm not making any speaking dates for the time being. B: I see. HMJr: I just can't do it. I mean, the job here in Washington has just got me swamped. 50 - 2 - B: Well, I imagine it would be. HMJr: And I haven't now for some time accepted any speaking dates. I occasionally talk on the radio, but I can do that from my desk. B: Yeah. HMJr: But I do appreciate it, and I want to thank you 80 much, and I hope some other time I'll be able to accept. B: Fine. I wanted to speak to you on your other matter, the one regarding the heroes. HMJr: Yes. B: We've got everything under way here, already lined up in good shape, and everything's set to go. HMJr: Well, that's wonderful. B: Thank you for calling me. I tried to get you, and I HMJr: Well, I was up on the Hill testifying yesterday. B: I know the jam, and I'm sorry to have to bother you personally. I know how busy you are. HMJr: No, I'm always glad, and I'm indebted to you for what you're doing to help us. B: Well, fine. Thank you. HMJr: Thank you very much. CC - Mr. Thompson 51 June 5, 1942 3:42 p.m. HMJr: Hello. Operator: Senator Glass. HMJr: Hello. Senator Glass: Mr. Secretary? HMJr: Yes, this is Henry talking. G: This 18 Carter Glass. HMJr: How are you, sir? G: I'm fairly well. Mr. Secretary HMJr: Yes, sir. G: So many years ago that I hate to mention it, I appointed Sam Brame in the Revenue Office in Richmond. HMJr: Yes. G: He'll be seventy years old the first of August. HMJr: Yes. G: He's infinitely capable HMJr: Yes. G: .....and young for his age - very young for his age - and I would like very much to have him continue. HMJr: Well, I'll ask the President to do it, and I'll recommend it. I'll be very glad to. G: Well, that's very good of you. HMJr: I unhesitatingly - I think this is the first thing you've ever asked of me, and I'll un- hesitatingly do it. 52 - 2 - G: Well, that's very good of you. Brame 1s - - he's a fine man, a fine character, fine intelligence, and has made, I think you'll find, a splendid official. HMJr: Well, that's enough for me that you say 80. G: And he's really young infinitely younger than his years would indicate. HMJr: Well, if he's as young as you are, he's all right. G: (Laughs) Well, he's much younger. HMJr: Well, he must be almost at his mother's breast. G: (Laughs) Well, thank you very much, Mr. Secretary. HMJr: All right. Good-bye. G: Good-bye. 53 June 5, 1942 3:50 p.m. GROUP Present: Mr. Bell Mr. Buffington Mr. Sullivan Mr. White Mr. Foley Mr. Blough Mr. Kuhn Mr. Gamble Mr. Haas Mr. Schwarz Mr. Paul Mr. Thompson Mrs. Klotz H.M.JR: This is just sort of a friendly-like meeting - no business. I hope to leave in about five minutes. MR. BELL: A good-by meeting. MR. WHITE: If this (indicating papers) isn't business, it goes under the name of something else. (Laughter) H.M.JR: I said friendly-like, and I will read your memorandum. You see that I have got a clean desk. I have got a satchel this big full of papers. I hope to bring them back-- MR. BELL: The same way? (Laughter) H.M.JR: We really had a good meeting this morning, after three days' sweating, on this F and G. Don't you think so, Dan? 54 - 2 - MR. BELL: Very good. H.M.JR: The boys made me sweat. That is about all I have got. The President asked me to keep a plane up there all the time so I can come down-- MR. SULLIVAN: That puts us all at ease, Mr. Secretary. (Laughter) MR. BELL: How long does it take to get down? H.M.JR: An hour and twenty minutes. MR. BELL: Stay within an hour and twenty minutes of the Treasury. (Laughter) MRS. KLOTZ: Don't go too far away. H.M.JR: I think I wouldn't be more than three hours away without checking in on the phone. I mean, the President has only asked me to do that once before. MR. SULLIVAN: Chick and I were going to Chicago next week end. MR. SCHWARZ: Friday. H.M.JR: I think what he has in mind is this battle which is evidently going on right now. MR. SULLIVAN: We were leaving Friday night. H.M.JR: I mean, with Bell here and Norman, I would keep in touch with them. I mean, so if something happens, you know, Bell, so there will always be somebody around. MR. BELL: Yes. H.M.JR: To take care of Harry White in case of emergency. (Laughter) 55 - 3 - MR. WHITE: I will be within three hours, but not much closer. H.M.JR: I guess that is about all. Got some stuff? MR. WHITE: Just two things, very quickly-- H.M.JR: You can ride over with me to the airport. MR. WHITE: All right, I will be glad to. It isn't that important, but I would be glad to. MR. BELL: This is the telegram. (The secretary signed a telegram dated June 5, 1942, addressed to the presidents of the Federal Reserve Banks.) H.M.JR: This is all right with everybody? Have you seen this? MR. BUFFINGTON: Yes, sir. MR. BELL: And the five presidents were in there, and Harold mentioned it. H.M.JR: Where is Harold? MR. BELL: Up at the committee. H.M.JR: Everybody happy on F and G's? MR. BELL: Ted, you haven't seen it. MR. GAMBLE: Mr. Graves spoke to me about it. H.M.JR: Take a look at it; and you, Ted Gamble, will see that Harold Graves, as soon as he has had his hearing, gets out of here and stays away. 56 - 4 - MR. GAMBLE: He is thoroughly booked, is leaving tomorrow evening at eleven forty-five. H.M.JR: Where is he going? MR. GAMBLE: He is going to the West Coast. H.M.JR: Is he? MR. GAMBLE: Yes. H.M.JR: Is he going to do that? MR. GAMBLE: Train trip - he relaxes on the train. MRS. KLOTZ: That is what he likes to do. H.M.JR: All right. I think it is crazy, but if that is what he wants that is what he wants. Is it? MR. GAMBLE: Yes. MRS. KLOTZ: He loves to be on the train, and I think-- MR. GAMBLE: He takes all the slow trains. H.M.JR: Is that what he does? MR. GAMBLE: He took a slow train trip, Illinois Central - took three days to get to Georgia. (Laughter) H.M.JR: All right. MR. PAUL: I wondered if there was any chance of getting you to take up this Reader's Digest thing. H.M.JR: No. I read it, and if you don't mind my saying so I think it is about as far removed from war work as-anything that I would be interested in. I wouldn't touch it, if it were me; I mean, if somebody 57 - 5 - else wants to go to bat for them, O.K. If they were doing that Disney picture, there would be some excuse. MR. PAUL: They are. H.M.JR: No. Frankly, I can't see it. I read it. I think Don Nelson would laugh at me. Would you (Bell) mind, either you or - I think it had better be you - Purcell, either once a month or once in three months, gets out a bulletin analyzing savings, and all the rest of that, you see, and it has done us a lot of harm both times. Yesterday Lauch Currie said he thinks they are only two billion dollars off in their figures. MR. HAAS: I called him up. You asked me to call him up, and I did. He said he would be very glad to submit it to the Treasury prior to releasing it in the future. H.M.JR: Oh, did I ask you to do it? MR. HAAS: You asked me, and I called him. H.M.JR: You mean from now on Purcell-- MR. HAAS: He is going to submit it to you. H.M.JR: Have you followed through with Lauch Currie? MR. HAAS: No. When Lauch left he sai a he had a memorandum he was going to send to me. It hasn't come yet. H.M.JR: And I spoke to Jesse Jones, so their bulletin, also, from now on they will give us a chance to see. Lauch Currie said he thought they were only off two billion dollars in their figures. Are you all right, young fellow? 58 - 6 - MR. BUFFINGTON: Yes, sir. MR. SULLIVAN: I tried to see Senator Russell. I talked with Senator Maybank on the phone, and I know what they want. You may forget it. H.M.JR: It is out, isn't it? MR. SULLIVAN: Sure. H.M.JR: Is that right, all they want is to have the United States Government refund what the State of South Carolina loses through gasoline rationing? MR. SULLIVAN: You are wrong. They understand that Nelson has appointed a committee, and they want somebody from either Georgia or South Carolina on the committee. H.M.JR: That is all? MRS. KLOTZ: That is not what he said. MR. SULLIVAN: I know, I had a transcript of it, but I think this is just a build-up for the other. H.M.JR: Am I not right as to the final-- MR. SULLIVAN: Yes. I mean, the purpose of the bill is the same. H.M.JR: I will call up, gentlemen, once a day. That doesn't mean you have to be here. If somebody has something really important, leave word with the operator, and they can talk to me. I will try not to fuss with you, and I will appreciate it-- MR. BELL: "If you don't fuss with me"? H.M.JR: If you don't fuss with me. And everybody take it as easy as they can this coming week. Give my regards to the flyers. 59 - 7 - MR. KUHN: I will. H.M.JR: I talked to the mayor of St. Louis. He said he was waiting to hear from you. You got B. Baruch and Fiorello all right? MR. KUHN: So far so good. H.M.JR: That is Monday night? MR. KUHN: Monday, yes, sir. They will be down here Saturday and Sunday. I will let you know what McIntyre sends back about the White House. MRS. KLOTZ: Did you sign the letter to McIntyre? H.M.JR: Oh, yes. All these things, if they are going well let them go," but if you need me, really need me, O.K., but I really am tired. I am going away particularly happy that we got this F and G thing straightened out. You haven't heard from Sam? MR. FOLEY: Not a word. Have you? H.M.JR: I don't imagine he got in to see the President. Captain Lyttelton is here, and I imagine he has got his hands full, but I think that was in pretty good shape. pein Davi m Hamsen on 6/24/42 60 BOARD OF GOVERNORS OF THE ( b YOURAS OF 150 2 FEDERAL RESERVE SYSTEM WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD June 5, 1942 Honorable Henry Morgenthau, Jr. % Robert Guex Fishkill, New York My dear Mr. Secretary: Please let me say that this note is entirely personal and unofficial. As your secretary told you, I had hoped to be able to see you for a few moments today but found your day completely occupied. I am happy, however, to take advantage of your kind suggestion that I might write you this note. The matter I wanted to talk with you about is I feel of the utmost urgency and B. matter upon which prompt action appears to be imperative. As it looks now, the Congress is going forward with legislation which will tie up the government loan stocks of wheat and corn until the prices of these com- modities reach parity. The effect of this action will be to raise the cost of feeds to a point which will make it utterly impossible for the price administration to hold the ceilings on the end products particularly at the retail level. It is easy to see how disastrous this situation will be for the whole program of price stabi- lization. The reason why I particularly wanted to see you was that I am well aware of the strong and statesmanlike stand that you have on more than one occasion taken with respect to this particular problem of the effective utilization of the stocks in the government loan pool and I know from your past utterances and record your vital interest in this important problem. ORVICTORY BUY UNITED STATES PETENEL BONDS STAMPS 61 Honorable Henry Morgenthau, Jr. Page 2. June 5, 1942 In the event that Congress ties up the stocks, as may likely have occurred by the time you get this letter, it would seem imperative (if we really mean business on price stabilization) that the President should veto the bill which carries this rider. If he does so, however, it would seem necessary at the same time to take stronger measures than have yet been taken effectively to stabilize wage rates. Without attacking the wage situation it appears quite impossible to attack the farm problem. It is always the wage argument which is used by the farm bloc to justify their position. I am informed that already in several consumers goods industries increases in wage rates now occurring or impending make it impossible to continue operation at the price ceilings fixed by the price administrator. Thus on two fronts -- the wage front and the farm front -- price stabilization is currently most seriously imperiled. What is needed is to obtain the acceptance of this program by the top people in the labor movement and I wanted to talk with you in the hope of enlisting your active support in pushing simultaneously for (1) a release of the wheat and corn stocks and (2) for effective wage stabilization. With kindest personal regards, Very sincerely yours, alim 4. Hansen Alvin H. Hansen P. S. Could I perhaps see you for a few moments upon your return to Washington? A.H.H. 62 June 5, 1942 The following received letters enclosing printed copy of report Secretary presented to Joint Committee on Internal Revenue . Taxation on May 28, on subject of Wartime Tax Avoidance. Dated June 4. Copies to NMC. The President Hon. Harry Hopkins Vice President Wallace Hon. Stephen Early Hon. Cordell Hull Hon. Henry L. Stimson Hon. Francis Biddle Hon. Harold L. Ickes Hon. Claude R. Wickard Hon. Jesse H. Jones Hon. Frances Perkins Hon. John W. McCormack Hon. Joseph W. Martin, Jr. Hon. Alben W. Barkley Hon. Sam Rayburn Col. Edwin A. Halsey Hon. Charles McNary Hon. John Taber Hon. Clarence Cannon Hon. Gerald P. Nye Hon. Carter Glass 62 June 5, 1942 The following received letters enclosing printed copy of report Secretary presented to Joint Committee on Internal Revenue Taxation on May 28, on subject of Wartime Tax Avoidance. Dated June 4. Copies to NMC. The President Hon. Harry Hopkins Vice President Wallace Hon. Stephen Early Hon. Cordell Hull Hon. Henry L. Stimson Hon. Francis Biddle Hon. Harold L. Ickes Hon. Claude R. Wickard Hon. Jesse H. Jones Hon. Frances Perkins Hon. John W. McCormack Hon. Joseph W. Martin, Jr. Hon. Alben W. Barkley Hon. Sam Rayburn Col. Edwin A. Halsey Hon. Charles McNary Hon. John Taber Hon. Clarence Cannon Hon. Gerald P. Nye Hon. Carter Glass 63 June 4, 1942 My dear Mr. President: I an sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) n. Mergenthan, one The President, The White House. Delivered by Stungis 11:10 6/5/42 64 Mills June 4, 1942 Dear Harry: I an sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) Henry Hon. Harry Hopkins, The White House. By Messenger Stayis 1/5/42 11:10 65 June 4, 1942 Dear Steve: I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) Henry Honorable Stephen Early, Secretary to The President. By Messenger Servigis 6/5/12 11:10 Address 66 June 4, 1942 Dear Frances: I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) Henry Honorable Frances Perkins, Secretary of Labor. 67 June 4, 1942 Dear Jesse: I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) Henry Honorable Jesse H. Jones, Secretary of Commerce. 68 June 4, 1942 Dear Claude: I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) Henry Honorable Claude R. Wickard, Secretary of Agriculture. i 69 June 4, 1942 Dear Harold: I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) Henry Honorable Harold L. Ickes, Secretary of the Interior. 70 June 4, 1942 Dear Francis: I an sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) Henry Honorable Francis Biddle, The Attorney General. 71 June 4, 1942 Dear John: I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) Henry Honorable John W. McCormack, House of Representatives. 72 June 4, 1942 Dear Joe: Il I am sending you herewith 8. printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) Henry Honorable Joseph W. Martin, Jr., House of Representatives. Regraded Unclassified 73 June 4, 1942 Dear Alben: I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) Henry Honorable Alben W. Barkley, United States Senate. 74 - June 4, 1942 Dear Sam: I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- termal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) Henry Honorable Sam Rayburn, Speaker of the House of Representatives. 75 June 4, 1942 Dear Colonel Halsey: I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) 1. Morgenthau, 32. Colonel Edwin A. Halsey, Secretary of the Senate. 76 June 4, 1942 Dear Charley: I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) Henry Honorable Charles MoNary, United States Senate. Regraded Unclassified 77 June 4, 1942 Dear Congressman Taber: I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) 1. Morgenthau. Jr. Honorable John Taber, House of Representatives. Regraded Unclassified 78 June 4, 1942 Dear Congressman Cannon: I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) 1. Morgenthaus 32. Honorable Clarence Cannon, House of Representatives. Regraded Unclassified 79 June 4, 1942 Dear Senator Nye: I am sending you herewith & printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) E. Morgenthau, Jr. Honorable Gerald P. Nye, United States Senate. Doaraded Unclassified 80 June 4, 1942 Dear Senator Glass: I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) B. Morgenthau, and Honorable Carter Glass, United States Senate. Regraded Unclassified 81 June 4, 1942 Dear Henry: I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) Henry Honorable Henry L. Stimson, Secretary of War. Regraded Unclassified - 82 June 4, 1942 Dear Cordell: I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) Henry Honorable Cordell Hull, Secretary of State. Regraded Unclassified 83 June 4, 1942 Dear Henry: = I am sending you herewith a printed copy of the report which I pre- sented to the Joint Committee on In- ternal Revenue Taxation, on May 28th, on the subject of Wartime Tax Avoidance. Yours sincerely, (Signed) Henry Hon. Henry A. Wallace, The Vice President. 84 WARTIME TAX AVOIDANCE A Report by Secretary Morgenthau to the Joint Committee on Internal Revenue Taxation May 28, 1942 + UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON = 1942 Statement of SECRETARY MORGENTHAU before the Joint Committee on Internal Revenue Taxation Thursday, May 28, 1942 T HE VERY HELPFUL interest in tax collection prob- lems shown by the members of the Joint Committee on Internal Revenue Taxation, under the able leadership of your Chairman, Mr. Doughton, encourages me to appear before you to discuss an administrative matter. I know that this Committee and the Congress are determined that no man and no corporation shall be permitted to make exorbitant profits out of the war effort. It is the responsibility of the Congress to draft legislation to achieve that purpose. It is our responsibility at the Treasury to use all the powers the Congress has given us to see that all taxes are fully, honestly and justly collected. It is our responsibility to see that by no form of trick or chicanery is any one taxpayer permitted to escape his just share and thus to throw unjust burdens on others. I have come before this Committee tonight to tell you of some instances of what seem to me to be particularly un- pardonable attempts to escape wartime taxation, and I should like to report what the Treasury is doing and intends to do to stop these practices. In every instance the method used by the taxpayer was to inflate expenses with the evident purpose of avoiding normal and excess profits taxes on corporation earn- ings. The devices used included the payment of excessive salaries, the distribution of unearned bonuses and the payment 453874°-42 of unreasonable sums for purported services to persons closely by two brothers and their wives. It paid dividends of $40,000 connected with the management of the companies involved. C in 1940 and $100,000 in 1941, while salaries totaling $128,000 It will be obvious to members of this Committee that these were paid in 1941 to the president, his wife and his brother. practices, if successful, would reduce the revenue of the Govern- Company E makes forgings. The stock is owned by three ment, the revenue we need so urgently for fighting and winning families. From 1938 to 1941 the salaries of employees who the war. were stockholders and relatives of stockholders increased 523 We do not intend that this shall happen. We do not intend percent. Excessive salaries for 1941 have been disallowed to that any of these practices shall succeed. The Congress has the amount of $568,000. already given power to the Treasury to deal with cases of this Company F makes equipment for airplanes. Three prin- kind, and that power is being exercised. cipal officers of this corporation took salaries of $100,000 each The instances I shall mention to you were discovered as a and the corporation claimed it had set aside over $575,000 in result of speeding up our investigation of 1941 returns of cor- bonuses. Salary and bonus payments totalling $516,000 were porations holding war contracts. Reports of the examination found to be excessive. Other disallowed deductions included of 31 returns for 1941 are now available. Let me mention $16,000 paid for watches given to employees, $14,000 for briefly seven cases illustrating the practices with which we have banquets and picnics, $4,000 for photographs taken at ban- to deal. quets and picnics, and $1,900 for tickets to football games. Company A makes an important airplane part. This cor- Other important deficiencies were found in the tax return. poration is owned by one man who hired himself as its sales Company G makes a device important to aviation. This representative. His compensation in 1941 was $1,656,000. corporation is owned almost entirely by one man, his wife and By consolidating these earnings with those of the corporation, his brother. The two men increased their salaries from $12,000 we have blocked this obvious attempt to divert profits and we and $15,000 in 1939 to $72,000 and $90,000 in 1941. The have increased the corporation's income tax by $1,117,000. royalty rate on the patent jointly held by them was increased, Company B makes steel. All stock in this corporation is held with the result that with expanded sales for war purposes, the by three families. Excessive salaries were paid to officers who royalties paid to them increased from $87,000 in 1939 to were also stockholders. The Revenue Agent has recommended $1,179,000 in 1941. disallowance of $82,000 in salaries, and the company has You will note that I have not named any of the corporations already agreed to this disallowance. or the individuals concerned. I leave it to this Committee to Company C makes vital equipment for airplane pilots. This decide whether that should be done. Personally I am inclined corporation paid $31,104 in rent in one year to the wife of the to believe it would have a very wholesome effect. president for using property which had cost her $45,412. A Assistant Secretary Sullivan and Commissioner Helvering brother of the principal stockholder, without special training are here tonight to give you further details of the results of or ability, drew a salary of $15,000 a year and a son and some of these investigations. They stand ready to come before daughter, just out of school, got $7,500 a year each. you from time to time and to report the results of further Company D makes tools and dies. This company is owned investigations now in progress. 2 3 Regraded Unclassified It should be noted that these cases all deal with returns for 1941. It is of course true that all of the contracts for war work for the purpose of determining profits. In applying the law covered by these 1941 returns were signed before the United and regulations, the Bureau of Internal Revenue has often States entered the war and that nearly all the earnings repre- disallowed expenditures which seemed to lack sound business sented in the tax-dodging devices attempted were pre-war justification and which were, in effect, distributions of profits. earnings. But I think that changes the situation very little. Today, however, the problem has assumed major importance An attempt to escape lawful taxes while we were actually at in view of the huge increases in income of a great number of war would be only a slight degree blacker than an attempt to corporations resulting from the war effort. escape taxes which would pay for arming and equipping our In presenting this problem to you, I am anxious to be as Army and Navy when we stood in imminent danger of attack. constructive as possible. It seems to me that the businessmen It may be that these instances are an isolated few and that of this country are entitled to know not only the extent of our not many more of the same kind will be found. I sincerely legal powers but also the standards that we have adopted in hope that will be the case. I am wholly confident that the applying them. Accordingly, it may be helpful if I outline the great and overwhelming proportion of American corporations following general considerations that will guide us in examin- are too patriotic even to consider such practices. ing expenses claimed in tax returns. We are taking two steps to detect and deal with the evils 1. Salaries and Bonuses Paid to Officers and Employees. I have mentioned. In the first place, we are expediting exam- Deductions claimed for greatly increased salaries and extraor- ination of the tax returns and records of all corporations, be- dinary bonuses paid to officers or employees will be dis- ginning with those who have war contracts, to determine allowed unless the taxpayer proves that the payments are, in whether excessive expenses are being claimed. Ordinarily our fact, for services actually rendered and are reasonable. investigation of returns filed for the year 1941 would not begin In determining whether the payments are reasonable, it will until July 1, 1942, and this work would continue through the fiscal year ending June 30, 1943. Under present circumstances be assumed that reasonable compensation is only as much as would ordinarily be paid for like services by like enterprises we cannot afford to wait so long before acting. By speeding under like circumstances. The factors that will be considered up our investigations we expect to check unlawful practices of this sort at an earlier stage. in determining the reasonableness of such payments are the In the second place, we are disallowing excessive expendi- duties performed by the recipient, the character and amount of responsibility, the time devoted to the enterprise, and the tures which have the effect of reducing corporate tax liabilities. We are compelling the corporations to include such amounts peculiar ability or special talent of the particular officer or in earnings, and at the same time we are requiring the recip- employee. Where the payments are to relatives or to share- ient to pay full personal income taxes on the amounts received. holders, the taxpayer must show that family considerations The disallowance of excessive expenditures does not rep- have not influenced the amount paid and that the payments are not distributions of profits in disguise. Large profits resent a new procedure. The law and regulations permit the deduction only of ordinary and necessary business expenses attributable to causes entirely unrelated to the activities of the officers or employees, which are not unusual in these abnormal 4 5 Regraded Unclassified payments. times, do not of themselves justify or warrant large salary such deductions where it is not shown that the expenditures are in fact for repairs instead of for improvements or betterments 2. Rents, Royalties and Other Payments to Shareholders. which should be capitalized. Deductibility of rents, royalties or other payments to share- 5. Expenses or Allowances Paid to Obtain Government Business, holders depends upon whether such charges are in fact fair and Including Fees Paid to Washington Representatives or for Other reasonable payments for the use of property and are not merely Professional Services. a device for distribution of profits. Any shareholder should be Whether deductions for items of this class will be allowed entitled only to a fair return on his investment in the property which he permits the corporation to use. depends upon whether they meet the test laid down in the Internal Revenue Code, that is, whether they are necessary 3. Payments to Profit Sharing or Pension Trusts. and ordinary and reasonable. If such items are considered The deductibility of payments to pension trusts is governed exorbitant or unreasonable, they will be disallowed as deduc- by section 23(p) of the Internal Revenue Code. If payments tions. Many of the factors that apply in determining the de- to such trusts are reasonable, their deduction will be allowed. ductibility of salaries and bonuses will apply also in determining If the payments are unreasonable in amount, or if the trust is the deductibility of items of this class. Particular attention not created for the exclusive benefit of employees, or if it is a will be given to deductions for payments which are against device to distribute profits to shareholders, the deductions will public policy, and all such deductions will be disallowed. be disallowed. It is also our purpose to set up a barrier to 6. Amounts Paid for Advertising. deductions of large salaries, bonuses, or insurance premiums for officers under the guise of payments to a pension trust. The test of whether expenditures for advertising are de- ductible is whether they are ordinary and necessary and bear 4. Payments for Repairs. a reasonable relation to the business activities in which the The deductibility for income tax purposes of costs of repairs enterprise is engaged. This is not intended to exclude insti- depends upon whether the expenditure is actually for repairs, tutional advertising in reasonable amounts or good will ad- or is in fact a capital expenditure which should be added to vertising calculated to influence the buying habits of the public. capital investment or charged against reserve for depreciation, If such expenditures are extravagant and out of proportion to since the costs of repairs are deductible while capital expendi- the size of the company or to the amount of its advertising tures are not. We must guard against the tendency during budget in the past, or if they are not directed to public patron- high profit years to make extensive improvements and to charge age which might reasonably be expected in the future, such of repairs. the cost of such improvements against profits under the caption payments will be disallowed as deductions. With these standards as our guideposts, we are progressing It will be our policy to scrutinize carefully the items claimed as fast as practicable with our investigation of the 1941 returns. as deductions for expenditures for repairs. We shall disallow Those who are engaged in this work must, of course, think not only of the best interests of the Government but also of the 6 7 Regraded Unclassified need of being completely fair to the taxpayers. The Com- mittee, the Congress and the country are entitled to know that the unscrupulous and selfish few are not being allowed to dis- tort their tax returns so as to escape their fair share of the costs of the war. I can assure the Committee of this: that nothing is being left undone which will expedite our work. If we find that our existing powers are not adequate to deal with the evil I have been discussing, I shall not hesitate to come before the appropriate committee to ask for any additional authority that may be needed. FORVICTORY BUY UNITED STATES WAR BONDS AND STAMPS 8 U.S. GOVERNMENT PRINTING OFFICE: 1948 85 JUN 5 1942 Dear Mr. Chairman: I wish to acknowledge receipt of your letter of May 20th, asking - to furnish your Committee the names and addresses of the companies referred to in By discussion of tax avoidance with the Joint Committee on Internal Revenue Taxation on May 28th, and also to give you the names of other companies engaging in sizilar practices. At this meeting on May 28th the question of publishing the names of the offending corporations was discussed at length and the Joint Tax Committee decided to postpons decision on this question until after the taxpayers in each case had been given the usual opportunity to file a protest to our proposed action in asserting a deficiency and there- after had a reasonable opportunity to present their explanation of the particular transmotion or practice being questioned by the Internal Revenue Bureau. After these conferences between representatives of the Internal Bevenue Bureau and the taxpayers have been concluded, the Joint Committee on Internal Revenue Taxation will then decide whether the names of these corporations should be published. Section 55 of the Internal Revenue Code rigidly prescribes the Committees to which the Treasury my divulge "any data of any character contained in or shown by any return", and your Committee is not one of those to which we are authorised to give such information. Inasmuch as the Joint Committee on Internal Revenue Taxation possesses the authority to submit relevant and useful information où- tained through income tax returns to the Senate and the House, and since the Treasury dose not have this authority, may I miggest that the request embodied in your letter of May 29th be addressed to Chairman Robert L. Doughton of the Joint Committee on Internal Revenue Taxation. Sincerely yours, (Stame4) Secretary of the Treasury. Honorable Carl Vinson, Chairman, Naval Affairs Investigating Committee, House of Representatives. Photo, file n.m.c By Messenger Brown!!!! JiSikb file to thompson Regraded Unclassified 86 JUN 5 1942 Dear Mr. Chairman: I wish to acknowledge receipt of your letter of May 29th, seking me to furnish your Committee the names and addresses of the companies referred to in my discussion of tax avoidance with the Joint Committee on Internal Revenue Taxation on May 28th, and also to give you the names of other companies engaging in similar practices. At this meeting on May 28th the question of publishing the names of the offending corporations was discussed at length and the Joint Tax Committee decided to postpone decision on this question until after the taxpayers in each case had been given the usual opportunity to file a protest to our proposed action in asserting a deficiency and there- after had a reasonable opportunity to present their explanation of the particular transaction or practice being questioned by the Internal Revenue Bureau. After these conferences between representatives of the Internal Revenue Bureau and the taxpayers have been concluded, the Joint Committee on Internal Revenue Taxation will then decide whether the names of these corporations should be published. Section 55 of the Internal Revenue Code rigidly prescribes the Committees to which the Treasury may divulge "any data of any character contained in or shown by any return", and your Committee is not one of those to which we are authorized to give such information. Inasmuch as the Joint Committee on Internal Revenue Taxation possesses the authority to submit relevant and useful information ob- tained through income tax returns to the Senate and the House, and since the Treasury does not have this authority, may I suggest that the request embodied in your letter of May 29th be addressed to Chairman Robert L. Doughton of the Joint Committee on Internal Revenue Taxation. Sincerely yours, /a/ H. Morgenthau, Jr., Secretary of the Treasury. Honorable Carl Vinson, Chairman, Naval Affairs Investigating Committee, House of Representatives. JLS:kb Regraded Unclassified EDML "5 "4. TOLAND COMMENS COUNSEL Room 887 House OFFICE BLDS. - & MAM. MBR JAMES - MOTT, - F W. ITEMS cas. N. Y. N. - a. BATES, MASS. WILLIAM E. HESS, - House of Representatives 3L S. MIL I ARTINUM s. N. H. I YEX, - = ANDERSON, CALIF, NMA JAMES WOLFENDER, PA. Nabal Affairs Investigating Committee PA. WILLIAM W. SLACKNEY, MICH. I NY. WILLIAM N. WHEAT, ELL Mashington, B.C. CALIF. WARD CALIF. MASS. BARNIER, MD. ANTHONY .. DIMOND, ALABKA newer, - SAMUEL W. KING, HAWAII a V. BOLIVAR P. a. I a. c. May 29, 1942 Honorable Henry Morgenthau, Jr. Secretary of Treasury Treasury Department Washington, D. C. Dear Mr. Morgenthau: It has come to my attention through the public press that yesterday you informed the Committee on Ways and Means of the existence of flegrant exemples of tex avoidance through various devices. It is my further understanding that your ex- emples were some 13 in number. I would appreciate very much if you would furnish the Committee the names and addresses of the companies you referred to, along with any other similar in- cidents that usve come to your attention. in order that the Committee DAY investigate further along the lines of its auties as authorized by House Resolution 162 of the present Congress. Very truly yours, barlVinson Carl Vinson Contrato Regraded Unclassified 88 TREASURY DEPARTMENT INTER-OFFICE COMMUNICATION DATE June 5, 1942 TO Secretary Morgenthau FROM Mr. White I am giving you herewith a comparative statement of the earnings and expenses of the Stabilization Fund for the months of April and May, 1942. Earnings April 1942 May 1942 Interest earned on investments $ 19,568.41 $ 20,220.69 Interest earned on Yuan 23,574.01 24,389.84 Total $ 43,142.42 $ 44,610.53 Profits on handling charges on gold 93,641.23 139,666.12 Grand Total $136,783.65 $184,276.65 Expenses Salaries $ 16,496.70 $ 20,502.61 Travel 173.16 838.77 Subsistence 756.00 39.14 Telephone and Telegraph 1,395.94 1,445.86 Stationery - 18.68 All others 295.34 457.09 Total $ 19,117.14 $ 23,302.15 Net Earnings $117,666.51 $160,974.50 The increase in earnings for May resulted mainly from a rise in the volume of gold transactions with foreign countries on which the 1/4 of 1% handling charge was collected. The various expense items fluctuate from month to month. In March they totaled $28,076.60. Regraded Unclassified 89 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE June 5. 1942. TO Secretary Margenthau FROM Mr. MR. Haas In accordance with your request, I telephoned Mr. Purcell Chairman of the Securities and Exchange Commission, and he said that he would be very clad to see that in the future no report on savings vas released until it had been submitted to the Treasury. Regraded Unclassified 90 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE June 5, 1942 TO Secretary Morgenthau FROM George Buffington GGS. You asked some time ago that the Securities Industries submit to you a report of their efforts made on the recent issue of U. S. Treasury 22% Bonds, 1962 - 1967. Herewith is a report received today from the National Committee of the Securities Industry for War Financing. The report shows under column one that the industry sold $376,532,300. Column two shows that they made approximately 90,000 calls and column three shows that approximately 6,500 of those contacted purchased the bonds. It is my opinion that the figure of $376,532,300 is somewhat optimistic, inasmuch as certain sales reported in districts like New York might have been made without the efforts of the Industry. You may want to sign the attached letter to the Committee thanking them for their efforts. Regraded Unclassified 91 THE NATIONAL COMMITTEE OF THE SECURITIES INDUSTRY FOR WAR FINANCINO FINAL REPORT of June 1, 1942 Memo of Sales of Treasury 20's 1962-67 as Reported By State and City Chairmen for Period from May 4 to 14, 1942 Received at Chicago Office May 15 to June 1, 1942 1 2 3 4 5 6 7 8 9 10 11 12 Partners Principal Firms or Total Total Committees Amount Sold Calls Sales Reporting Executives Days Salesmen Days Clerical Days Personnel Days 8 164,000 143 6 18 7 9 3 3 1. Alabama 1 - 11 12$ 2. Arizona 647,000 50 5 5 7 1 3 11 3. Arkansas 48,100 89 14 8 7 8 14 9 6 9 27 26 4. California-Northern 790,600 1,237 82 24 49 68 108 57 21 18 178 138 5. Do. -Southern 2,401,100 2,346 117 69 62 80 200 116 24 278 286 223 6. Colorado 1,401,300 926 68 25 16 518 23 32 8 +8 47 918 7. Connecticut-Northern 15,711,400 610 105 25 8. Do. -Southern 303,200 870 43 14 26 31 31 32 15 10 72 73 9. Delaware 720,800 489 22 6 9 14 30 90 18 1 57 105 10. Dist. of Columbia 2,732,000 55 17 11. Florida 164,000 112 7 12. Georgia 3,412,900 2,445 215 23 42 53 73 72 33 30 148 1558 13. Idaho 2,140,000 35 6 1 1 1 2 94 143 220 382 447 89 155 614 822 14. Illinois 29,697,300 6,453 688 15. Indiana 6,378,600 1,104 69 43 50 61 47 40 10 11 107 112 16. Iowa 1,169,500 175 37 17. Tansas 632,000 339 54 12 17 50 19 41 6 5 42 96 28 25 18. Kentucky 1,344,800 563 79 12 33 33 10 02 71 65 19. Louisiana 1,041,900 535 27 25 59 99 10 10 3 6 72 115 20. Maine 346,000* 196* 32* 21* 21. Maryland 5,910,700 770 88 31 42 10 83 588 22. Massachusetts 25,838,300 8,659 577 117 165 220 530 258 110 110 805 23. Michigan 5,679,000 4,639 325 79 71 223 166 231 30 76 257 530 6,870,100 1,482 134 65 64 123 104 83 26 282 194 235 24. Minnesota 25. Mississippi No Sales 24 26. Vissouri-Eastern 3,731,500 2,599 227 66 112 67 156 80 42 35 310 182 27. Do. -Western 584,900 820 47 27 33 48 44 42 9 13 86 103 28. Montana 500,000* 1+ 1+ 1+ 50 29. Nebraska 1,555,200 475 59 29 29 11 10 30. Novada No Report 31. New Hampshire 1,450,000 28 9 4 1 7 6 3 11 6 32. New Jersey 2,770,500 133 32 20 6 78 6 4 2 6 14 17g 33. New Mexico No Report 2,126 34. New York 183,018,300 34,144 1,917 379 803 932 1,661 842 344 352 2,808 35. North Carolina 3,164,900 1,042 80 18 35 122 32 144 15 30 82 2968 36. North Dakota No Report 135 24** 35 132 90 89 9 34 134 255 37. Ohio-Northern 7,305,500 1,762 38. Do.-Southern 14,591,300 3,905 398 39. Oklahoma 222,000 141 16 9 14 3 11 4 2 3 27 10 40. Oregon 227,500 582 11 22 33 38 43 15 10 9 86 62 57 42% 443 2641 41. Penn-Eastern 7,062,400 4,047 220 100 106 100 280 122 42, Do.-Western 3,235,500 1,011 88 55 78 87 58 12 23 164 169 28 43. Thoda Island 201,400 1,092 28 20*** 26 49 83 30 8 3$ 67 82g 44. South Carolina 30,000 100 5 10 45. South Dakota 10,000* To 1. 46. Tennessee 1,450,500 454 48 30 14,571,000 49 29 498 52 61 14 378 95 148 47. Texas 1,230 183 48. Utah 1,997,500 35 13 4 49. Vermont 1,125,000* 55+ 6+ 364 121 484 50. Virginia 658,100 634 45 25 30 120 91 51. Washington 1,300,000 70 10 1 1 13 14 52. West Virginia 514,000 56 9 3 3 1 7 6 1 11 110 55 77 167 81 133 40 48 198 348 53. Wisconsin 9,900,500 1,341 54. Wyoming 20,000 8 2 1 1 1 2 $378,552,300 90,115 6,516 1,611 2,286 3,255 4,507 3,546 1,002 1,139 7,797 7,940 . - Interim report figures from May 4 to 9 - no other report received. ** - 50 firms reported on Nos. 1, 2 à 3. ses - 32 fires reported on Nos. 1, 2 à 3. Regraded Unclassified TREASURY DEPARTMENT 92 INTER OFFICE COMMUNICATION DATE June 5, 1942 TO FROM Secretary M. Morgenthau Mr. Haas Subject: Recent Changes in Prices and Yields of Government Securities During the week ended last night, the market for Government securities fluctuated within 8. narrow range. Prices of both taxable and tax-exempt securities tended to decline, except for some of the longer term bonds. The taxable 2-1/2's of 1967-72 closed last night at 101-8/32, an improvement of 1/32 over the price a week ago. The new taxable 2'a of 1949-51, however, showed a net drop of 2/32 for the week, closing at 100-19/32. The new 1-1/2 percent notes also declined, their premium of 13/32 last night being 2/32 less than that of a week ago. A comparison with the March 19 benchmark shows no change in the general situation which has existed for several weeks. Prices of long-term securities, both taxable and tax-exempt, have improved, while prices of medium and short-term securities have declined. (See attached chart and tables). For the third consecutive week, the bill rate stood at 0.36 percent. Certificates of indebtedness improved moderately, closing last night at 0.46 percent as compared with 0.48 percent a week ago. Purchases by the Federal Open Market Account during the week totaled $56 millions, including $43 millions of bills and $8 millions of the new 1-1/2 percent notes. Sales aggregated $11 millions, resulting in a net increase of $45 millions in the portfolio. Attachments 93 Table I Price and Yield Changes of United States Securities May 28, 1942 to June 4, 1942 (Based on mean of closing bid and asked quotations) : Prices : : : Yields Security : : May 28, June 4, : : 1942 : 1942 : : May 28, : : Change June 4, : 1942 : : : : : 1942 : : Change : (Decimals are thirty-seconds) (Percent) Bills Average rate last issue - - - .36 +36 .00 Certificates 1/2% 11/1/42 - - - .48 .46 -,02 Taxable Notes 3/4% 3/15/43 100.06 100.05 -.01 .51 .55 +.04 3/4 9/15/44 99.22 99.20 -.02 .89 .92 3/4 12/15/45 +.03 99.11 99.10 -.01 .94 .95 +,01 i 3/15/46 99.20 99.17 -.03 1.10 1.13 +.03 1-1/2 12/15/46 100.15w1 100.13wi -.02 1.39wi 1.41w1 +.02 Taxable Bonde 2% 3/15/48-50 101.15 101.14 -.01 1.73 1.74 +.01 2 6/15/49-51 100.23 100.22 -,01 1.89 1.90 +.01 2 9/15/49-51 100.21 100.19 -.02 1.90 1.91 +.01 2 12/15/51-55 100.11 100.12 +.01 1.96 1.96 .00 2-1/2 3/15/52-54 104.03 104.04 +.01 2.04 2.03 -.01 2-1/4 6/15/52-55 101.15 101.14 -.01 2.09 2.09 .00 2-1/2 3/15/56-58 103.11 103.10 -.01 2.22 2.22 .00 2-1/2 6/15/62-67 - - - - - - 2-1/2 9/15/67-72 101.07 101.08 +.01 2.44 2.43 -,01 Wholly Tax-exempt Notes 2% 9/15/42 100.20 100.19 -.01 1/32* 1/32* 1-3/4 0/32* 12/15/42 100.30 100.27 -.03 .03 .15 +.12 1-1/8 6/15/43 100.26 100.26 .00 -35 1 .33 -.02 9/15/43 100.25 100.25 .00 .40 1-1/8 .39 -.01 12/15/43 101.05 101.04 -.01 .37 .39 +.02 1 3/15/44 101.00 100.31 -.01 .44 .45 +.01 3/4 6/15/44 100.17 100.16 -.01 1 .49 .50 +.01 9/15/44 101,06 101.04 -.02 .48 .50 +.02 3/4 3/15/45 100.19 100.17 -.02 .54 .56 +.02 Partially Tax-exempt Bonde 3-3/8% 6/15/43-47 102.31 102.28 ( 3-1/4 -.03 .53 .56 +,03 10/15/43-45 103.16 103.14 -.02 .70 .71 +.01 3-1/4 4/15/44-46 4 104.17 104.14 -.03 .82 ,84 +.02 12/15/44-54 107.24 2-3/4 107.22 -.02 .91 .92 +.01 9/15/45-47 105.20 105.15 -.05 1.01 1.05 +.04 2-1/2 12/15/45 105.10 105.06 -.04 -97 1.00 +.03 3-3/4 3/15/46-56 109.19 109.16 -.03 1,16 1,17 4.01 6/15/46-48 3-1/8 107.09 107.06 -.03 1.15 1.17 +,02 6/15/46-49 4-1/4 107.23 107.20 -,03 1.17 1.18 +,01 10/15/47-52 115.08 115.08 .00 1.31 1.30 -.01 2 12/15/47 104.22 104,21 -.01 1.13 1.13 .00 2-3/4 3/15/48-51 107.23 107.22 -.01 1.36 1.36 .00 2-1/2 9/15/48 107.02 107.00 -.02 1.33 1.33 .00 2 12/15/48-50 104.22 104.20 -.02 1.25 1.26 +,01 3-1/8 12/15/49-52 110.28 2-1/2 110.28 .00 1.59 1.59 .00 12/15/49-53 106.24 106.24 .00 1.55 1.55 .00 2-1/2 9/15/50-52 107.00 107.01 +.01 1.60 1.59 -.01 2-3/4 6/15/51-54 108.30 108.29 -,01 1,68 1.68 .00 3 9/15/51-55 2-1/4 110.30 110.30 .00 1,72 1.72 ,00 12/15/51-53 105.15 .00 1.63 1.63 .00 2 105.15 6/15/53-55 2-1/4 104.04 104.00 -.04 1.59 1.60 +.01 6/15/54-56 105.19 105.19 .00 1.73 1.73 .00 2-7/8 3/15/55-60 2-3/4 110.17 110.18 +.01 1.94 1.94 .00 9/15/56-59 109.28 109.30 +,02 1.96 1.95 -.01 2-3/4 6/15/58-63 110.01 110.04 +.03 2.02 2.01 -.01 2-3/4 12/15/60-65 110.17 110.17 .00 2.06 2.06 .00 Treasury Department, Division of Research and Statistics. June 4, 1942. . Excess of price over zero yield. Regraded Unclassified 94 Table II Price and Yield Changes of United States Securities March 19, 1942 to June 4, 1942 (Based on mean of closing bid and asked quotations) : : Prices : : Yields : : June 4, : Security : March 19, : : Change : March 19, June 4, - 1942 1942 : : : 1942 1942 : Change : : (Decimals are thirty-seconds) (Percent) Bills Average rate last issue - - I .20 .36 +,16 Certificates 11/1/42 - - - - .46 - 1/2% Taxable Notes 3/4% 3/15/43 100.12 100.05 -.07 .37 .55 +,18 3/4 9/15/44 99.31 99.20 -,11 .76 .92 +.16 3/4 12/15/45 99.21 99.10 -.11 .84 .95 +,11 1 3/15/46 99.29 99.17 -,12 1.02 1,13 +,11 1-1/2 12/15/46 - 100.13wi - - 1.41w1 - Taxable Bonds X 3/15/48-50 101,28 101.14 -,14 1,67 1,74 +.07 2 6/15/49-51 101.04 100.22 -,14 1.83 1.90 +.07 9/15/49-51 - 100.19 - - - 2 1.91 2 12/15/51-55 100.12 100.12 .00 1.96 1.96 .00 2-1/2 3/15/52-54 103,23 104.04 +.13 2.09 2.03 -.06 2-1/4 6/15/52-55 101.06 101.14 +,08 2,12 2.09 -.03 2-1/2 3/15/56-58 103.05 103.10 +.05 2,24 2,22 -,02 6/15/62-67 - 2-1/2 - - - - - 2-1/2 9/15/67-72 100.27 101.08 +.13 2.46 2.43 -.03 Wholly Tax-exempt Notes 1/32* -4/32* 2% 9/15/42 101.04 100.19 -.17 5/32* 1-3/4 12/15/42 101.11 100.27 -,16 2/32* .15 -5/32* 1-1/8 6/15/43 101.04 100.26 -.10 .22 .33 +,11 1 9/15/43 101.03 100.25 -,10 .26 .39 +.13 1-1/8 12/15/43 101.16 101.04 -,12 .26 .39 +.13 1 3/15/44 101.10 100.31 -.11 .34 .45 +,11 3/4 6/15/44 100.27 100.16 -,11 .37 .50 +.13 1 9/15/44 101.16 101.04 -,12 .39 .50 +,11 3/4 3/15/45 101.00 100.17 -,15 .41 .56 +.15 Partially Tax-exempt Bonds 3-3/8% 6/15/43-47 103.21 102.28 -.25 .41 .56 +,15 3-1/4 10/15/43-45 104.06 103.14 -,24 -57 .71 +.14 3-1/4 4/15/44-46 105.06 104.14 -.24 .72 .84 +,12 4 12/15/44-54 108,11 107.22 -.21 .91 .92 +.01 2-3/4 9/15/45-47 106,06 105.15 -,23 .94 1.05 +.11 .90 1,00 4.10 2-1/2 12/15/45 105.28 105.06 -,22 3-3/4 3/15/46-56 110.08 109.16 -.24 1.11 1.17 4.06 3 6/15/46-48 107.28 107.06 -.22 1.09 1.17 +,08 3-1/8 6/15/46-49 108.08 107.20 -.20 1.13 1.18 +.05 4-1/4 10/15/47-52 115.20 115.08 -,12 1.33 1.30 -.03 2 12/15/47 104.23 104,21 -.02 1.15 1.13 -,02 2-3/4 3/15/48-51 107.28 107.22 -,06 1.38 1,36 -.02 -.07 1.33 1,33 .00 2-1/2 9/15/48 107.07 107.00 2 12/15/48-50 104.21 104.20 -,01 1.28 1,26 -.02 3-1/8 12/15/49-52 110.22 110.28 +.06 1.65 1,59 -,06 2-1/2 12/15/49-53 106.16 106.24 +,08 1.60 1,55 -.05 2-1/2 9/15/50-52 106.20 107.01 +.13 1,66 1.59 -.07 2-3/4 6/15/51-54 108,18 108.29 +,11 1.74 1,68 -.06 3 9/15/51-55 110.20 110.30 +.10 1.78 1.72 -.06 2-1/4 +,18 1.70 1.63 -.07 12/15/51-53 104.29 105.15 2 6/15/53-55 103.10 104.00 +.22 1,68 1.60 -.08 2-1/4 6/15/54-56 104.28 105.19 +,23 1,80 1.73 -.07 2-7/8 3/15/55-60 110.00 110.18 +.18 2.00 1.94 -.06 2-3/4 9/15/56-59 109.10 109.30 +.20 2.01 1,95 -,06 2-3/4 6/15/58-63 109.12 110,04 +,24 2.07 2.01 -,06 2-3/4 12/15/60-65 110.00 110.17 +.17 2.10 2,06 -,04 June 4, 1942. Treasury Department, Division of Research and Statistics. - Excess of price over zero yield. Regraded Unclassified 95 6 Departmental in Washington only. Reports from Field Offices are not complete, but all of those received thus far are over 10%. 96 WAR SAVINGS BOND CAMPAIGN ALLOTMENT OF DEPARTMENTAL EMPLOYEES Percentage of Pay Roll June 2 June 3 June 4 Treasury Office of the Secretary - 8.3 10. ₹ Bureau of Accounts 8.5 9.5 9.7 Office of the Chief Clerk 7.6 8.7 9.7 Comptroller of Currency 9.3 10.3 10.5 é Bureau of Customs 8.4 8.6 9.4 Bureau of Engraving and Printing .3 1.7 2.7 Foreign Funds Control 6.1 8.7 8.6 Office of the General Counsel 1.8 3.3 5.1 Bureau of Internal Revenue 5.7 8.7 10.1 + Mint Bureau 10.1 10.2 10.2 + Division of Monetary Research 9.4 10.2 11.3 * Bureau of Narcotics 6.7 8.1 9.3 Personnel Division 8.1 10.2 10.2 * Procurement Division 3.8 7.3 8.9 Bureau of the Public Debt 1.6 8.1 8.1 Processing Tax Board of Review 10.5 10.1 10.3 é Division of Research and Statistics 6.5 8.9 9.4 Secret Service Division 7.1 9.1 11.3 4 Superintendent of the Treasury Building 8.0 9.9 10.4* Division of Tax Research 6.2 7.6 7.8 Treasurer of the United States 4.0 7.3 7.3 War Savings Staff 4.8 7.0 7.7 Total, Treasury Department 3.9 6.2 7.2 AGzae 6/5/42 9. Mr. Kuhn reported that this memo has been taken care of with the exception of the part pertaining to Mrs. Morgenthau, and she is in the country and he hasn't been able to contact her. mrs. Klotz said "forgel" - 6/5/42 98 to >RB usd June 2, 1942 FOLLOW-UP FOR THE SECRETARY: Is the attached memo to Mr. Kuhn finished? 99 May 30, 1942 Ferdinand Kuhn Secretary Morgenthau Think over the idea of letting Mrs. Morgenthau make the bond speech appeal at Madison Square Garden when the English war heroes come. Another suggestion I have is if we could work this, and you thought well of it, bring the English war heroes directly to Washington and let them be received by the President and then start them off on their tour; but above all, let them come to the White House and be received by the President. I think that would give the whole thing a wonderful send-off. Regraded Unclassified 100 THE WHITE HOUSE WASHINGTON 6/5/42 been Henry This is same of the material cm are I using, about which spoke with you last might Cadrady fam 101 TREASURY DEPARTMENT DEFENSE SAVINGS STAFF FICE OF STATE ADMINISTRATOR June 2nd, 1942. TO THE PRINCIPALS: 1. "SAVE FOR FREEDOM DAY" PROGRAM In carrying out the resolutions adopted at the meeting of principals and teachers of which we wrote you last week, we have prepared a suggested program for "SAVE FOR FREEDOM DAY", June 15th, 1942. We are enclosing herewith a copy of this suggested program and we urge upon you complete cooperation in the conduct of this program. 2. SPECIAL RADIO BROADCAST (WQXR - 1560 on your dial) In connection with the assembly on Monday afternoon, June 15th, we will have a radio broadcast over WQXR from 5:00 to 5:15 P.M. This broadcast will con- sist of addresses by Walter Reed Wolf and Frederick F. Greenman, and a playlet for children especially prepared for the occasion. In order to fit this broadcast into your program, you should commence your assembly program not later than 4:45 P.M. The radio broadcast can be fitted in between items three and four on the outline of the assembly program. In arranging for 8. radio broadcast, we were aware that a large number of schools were furnished with radio sets in connection with the defense activities. If your school does not have & radio, we suggest that you have either a teacher or a pupil bring his or her radio to school for the occasion. 3. WAR SAVINGS STAMP BOOKS You will receive before June 15th books in which War Savings Stamps can be pasted. These books are furnished by the Treasury Department and on the back of them the letters J E C representing Jewish Education Committee are printed. One of these books should be placed in the hands of every child in your school. The Savings Stamps to be pasted in these books can be purchased at any one of the thousand places provided for the sale of Savings Stamps by the Treasury Department, such as post offices, drug stores, motion picture theatres and department stores. You may, if you so choose, arrange for the sale of the Stamps at your school in such manner as you please. The children may already have books from public schools or other sources. We suggest that each child also obtain a JEC book and that the child paste some of his stamps in this book. 4. PLEDGES TO BUY WAR SAVINGS STAMPS You have or will soon receive printed pledges to be signed by the children FORVICTORY for the purchase of Mar Savings Stamps. Please have these pledges BUY signed and retain them in your school. These pledges should be signed UNITED STATES even though a child may have signed similar pledges elsewhere. The personse BONDS program, enclosed herewith, makes provision for the taking of this AND STAMPS pledge orally in unison by all of the children, and we hope that you will make this part of your assembly program. 102 -2- 5. FALL PROGRAM Between now and the Fall, representatives of principals and teachers working with us will devise fuller plans for the promotion of the sale of War Savings Stamps in the Jewish religious schools. If you care to make any sugges- tions, please send them to me. 6. PARENTS AND FRIENDS OF PUPILS Children should be encouraged to spread information concerning these activities among these parents, members of their families and their friends. We appreciate the cooperation which we have received from the schools in the conduct of our program. We desire to express our thanks for such coopera- tion. Very truly yours, Tresa. in FREDERICK F. GREENMAN, Representative U.S. Treasury Department for the Promotion of Wat Savings Stamps and Bonds. Countersigned never Ford State Administrator QUESTIONS AND ANSWERS FOR QUIZ ON FREEDOM The Questions 1. What Jewish holiday is known as the festival of freedom? 2. who was the great Jewish emancipator? 3. What Jewish holiday tells about the fight of the Jews for religious liberty? 4. What Jew helped win the American War for Independence by saving and giving his money to the Government? 5. Who was the great American emancipator? 6. How does a knowledge of the Torah help us believe in freedom?26, 1942. 7. What are the Four Freedoms 8. Which of the Four Fiscdoms are important to the Jews? 9. What did freedom have to do with the coming of millions of Jews to the and Card Party, on Tuesday afternoon, June 2nd, at 12:30 United States? are cordially invited to attend & LUNCHEON, Mah Jong 10. What saying Sand d'sc my the White at the home of Mrs. Murray J. 11. From what book of 5016 That 12. What is the Jewish whose person, poem Proceeds is inscribed to on to the Statue of Libertty? Kindergarten Fund. go the 13. What does the poem teach us? Do COME and bring all your we have arranged 14. Why have Jeys the Iternoon side for you. We are looking 15. How does Saving Statement Bordenbel ****** wish arr extend want freedom? to make Mrs. Sand happy. Looking forward to The knewors June 2nd, I am, 1. Passover 2. Moses Very sincerely Hanukkah 4. Hayim Salomón & Abricham Rose Lincoln Natuan Freedman 6. The Torch has many laws and stories which holp us to understand what freedom means and how to live as frechsdman. 7. (1) Freedom of speech; (2) freedom of religion; (3) freedom from fear; (4) freedom from want. 8. All four. 9. They came here to seek freedom. 10. Procledm liberty throughout the land, unto all the inhabitants thereof. 11. Leviticus (Chapter 25, 10). 12. Emma Lazarus. 13. That America is the land of freedom. 14. Because it has been part of our faith. 15. (Develop answers through discussion). 8 - 103 "SAVE FOR FREEDOM DAY" JUNE 15TH, 1942 Suggested Program and Activities For Jewish Schools It is suggested that "Save For Freedom Day" be observed by suitable educational activities and programs by each class, and also by the school as a whole assembled in the auditorium. Below is a list of suggested classroom activities," and an outline of an Assembly Program. Each school, of course, will want to make such changes and additions as local circumstances require. A. Classroom Activities 1. Reading and discussion of sayings about freedom - See sayings and statements in the source material appended to this outline. The teacher, of course, will select several state- ments in accordance with the ages and knowledge of the pupils in his class. 2. Stories - a. The story of Hayim Sclomon, illustrating the importance of saving and of contributing to the Government Treasury in the winning of the Revolutionary War, and therefore in the founding of the Republic of the United States. Reference: "Hayim Salomon, Son of Liberty" by Howard Fast. b. Other stories on freedom from Jewish and American sources. 3. Quiz on Freedom - Questions and answers will be found among the appended source material. 4. Poems and Songs - several appropriate selections will be included in this program. B. Assembly Program 1. Salute to the American flag by the children. 2. Star Spangled Banner. 3. Readings from tho Bible - choose one or two of the following a. Psalm 140. 104 b. Defiance of the Tyrant, Isaiah XIV:13-23 - selection to be read by an individual or by a chorus. C. In the End of Days, Isaiah II, 2-4 - This could be read effectively in responsive fashion as suggested on page 9. 4. Talks by a pupil, and by principal or teacher on the subject of "Save For Freedom" - talks ought to emphasize the importance of this war to the United States, the Jewish people, and to the whole world and the role each one of us must play toward achieving victory. (See article by Frederick F. Greenman, included here.) 5. Toward Freedom - Mass recitation. See page 10. 6. Pledge to Save - recited by children in unison. A copy of this pledge is included here. 7. Prayers. a. Prayer for the Government. A suggested prayer is included on page 9. b. General Jewish prayer, such as 11.59 3003 301° 8. America the Beautiful and Hatikvah. Note: Several items in this program will require preparation in the classroom so that all the children may know their parts, particularly the responses in the Bible Reading, the mass recitation of Toward Freedom, the pledge, and the prayer for the government. - 2 - 105 FIGHTING ON THE ECONOMIC FRONT By Frederick F, Greenman (Summary of speech delivered at the conference of principals and teachers of Jewish schools on May 21st, 1942 at the Hotel Pennsylvania, New York.) I do not know where I can go to find e. group of men and women who are more expert in the knowledge of impregnating the hearts and minds of children to do something. This has frequently been called a Total War. It is a hackneyed phrase, but very little understood. Some people think it means that the difference between this war and all other wars is that EL civilian can be killed by bombs. That seems to be the general opinion; but it is not the reality. It is a total war because it requires everybody to enter into it and because everybody can suffer from a disastrous outcome. It is frequently said that the wer is being fought on three fronts; the military front, the production front and the oconomic front. There are three functions to be performed; fighting, producing and there is the saving. These are the three functions which are being performed at the present time. Each one is EL big job. I think, personally, the biggest one is the military one. Like most democracios, we always start late. But we also have another characteristic in democracies; The seem to got extra time. My only explanation is that there is Divine Providence that gives us the extra time. We are not responsible for it. If we had not been attacked at Pearl Harbor, we would not have seen the action WE have now for at least another six months. Up to the time it happened, we shrugged our shoulders and said it cannot happen here. The military job will probably be the best job we shall do. Our men will probably perform feats, the equal of which you have never seen, because it is so challenging to the individual. From the view point of any person who knows anything about military tactics it is a tremendous achievement to bring us into the position where we may be thinking of an offensive at the present time. But none of us can do that job. It is not a question of desire on our part; for the most part, we are not young enough for the military job. So we come to the production job; it is not a front line job, it is not as spectacular as the military job, but it is just as necessary and important. At the present time we have already equaled the product on of Germany. If we have done that already, we can readily assume that within a short while, we will be heavily outproducing the Axis Powers. But none of us produces; we do no⁴, directly produce the munitions of war. Our field is the economic field and what is this economic field, what is it that we can do in it. The economic field is the field within which the sinews of war will be obtained; the money with which to do all these things. The Treasury does not have the money; the Treasury is not rich; it has just about enough to get along with. When Uncle San needs some money, he draws B. check on whom? On you and on - 3 - Regraded Unclassified 106 me, on our children; that is where he gete his money from. And we have to furnish that money. But we also have another function to perform which is equally important. This nation will probably earn in this year the stupendous sum of 110 billion dollars. Of that sum We will probably pay about 30 billion dollars in taxes; that leaves 80 billton dollars to be spent. We are told by the Price Administrator that the inventory of commodities will soon reach the 1932 lovel, which means that we will spend out of the national income an additional 50 billion dollars. He states that if we are to spend the whole of the 80 billion dollars on these commodities, we will all be competing for these commodities and the prices will rise and inflation will have to come into effect. This means that 30 billion dollars must be put into war bonds and savings stamps if we are to avoid inflation. We are not doing the job well at all. What have we relied on to do the job? A number of posters, some radio speeches and a great many places where you can buy savings stamps. That means we have provided a great many cash registers. Salesmanship is not operating when you ring up a cash register. Selling 1s done by advertising, building up good will and many other things. And so Mr. Walter Reed Wolf came along with the idea - Mr. Wolf, a man with a social mind, who is also a banker - and said, what you need is a motor, something to start the pulleys moving to the point where there will be an urge and an understanding as to why war savings stamps and bonds should be bought. Now, who are the people who can do that? The people who are connected with the religious institutions, the churches, the synagogues, the religious schools; you can reach about one-half of the population in a way in which it can be done from day to day. The average citizen can read about the Fall of Bataan or Corregidor, but it is thousands of miles away. What we need is something which will bring home to us in our everyday life a discussion of the reasons why it is so important to buy war savings stamps and bonds. Now why should we buy war savings stamps? What you are buying is freedom of the press, freedom of religion, trial by jury, the safety of one's home, freedom from intrusion by search and seizure, the right to sit in your home and not to fear when there is a knock on the door, or when the telephone rings, We are buying a way of life, our way of life; these are the things that you can teach to the children in the schools. This is an educational campaign; it is education of the highest order. Education is not worth very much if it does not reach to some practical goal. It must lead somewhere, if it is to be effective, either to & better life, better character or to some action, and that is what this education is. Whether we shall go on further to find out whether we are to register this education through the purchase of stamps and bonds is a question which we can leave for the future. The question is how do We go about our educational campaign? We feel highly honored that the Treasury Department should come to us and feel that WE can be useful in a program of this kind. We are all looking for something to do in this - 4 - Regraded Inclassifiod 107 war. We are all saying: what can you use me for? Here is something we want you to do. You are experts in the field. You know better how to to it, better than anyone else in the field. We want to undertake at once, if we can, to register in some very dramatic way in every school this idea, this impulse which can lead to the desired goal. I do not want to burden you with all the kinds or things that can be done in schools, such as essay contests, posters, slogans, song contests, honor rolls. Everyone is capable himself of bringing this message to the children in the schools. We do not want to over-organize, we do not want to turn out a tremondous amount of literature. Everyone should think out his own way of presenting his ideas. To us has been given a rare opportunity to join in this work. I hope that we take full advantage of it, get full credit for it and I am sure that everyone of us will enjoy it immensely. - 5 - 108 Judaism and Democracy (To be read and discussed in class) The Jewish Spirit, the product of our religion and experiences, is essentially modern and essentially American. Not since the Destruction of the Temple have the Jews in spirit and in ideals been so fully in harmony with the noblest aspirations of. the country in which they lived. America's fundamental law seeks to make real the brotherhood of man. That brotherhood became the Jewish fundamental law more than twenty-five hundred years ago. America's insistent demand in the twentieth century is for social justice. That also has been the Jews' striving for ages. Their affliction as well E.S. their religion has prepared the Jews for effective democracy. Persecution broadened their sympathies. It trained them in patient endurance, in self-control, and in sacrifice. It made them think as well as suffer. It deepened the passion for righteousness. Louis D. Brandeis "NO"NORM "Dyn man 0°10 "DSH nt 11"'mn "no NINE myn minn wipon n&s 3977 0140 .non 1013 пр*ток by D'NNO 09017 no 1'm' nbw THE 0°717'n 130° 85 105 SHIP by be 0'38'7'85 DTRA "33 bee 51920 11"y" by 077017 пр*ток 'pin 58704 min 40 710'n Hin nin 59937 11"y" .0°NR on 'D'H nt napini N°N ornwyn 1803 "кр"покл oyn be пртоуп no'HUR no'we 8'n 0817 путтра norman -DDWO) pTX by 0''n't by 13151 1"1" 021 18918 .oys 1013 0170 38900 by my 12 100 .n'orpions ПЭЛКА ns 1373 ip'oyn 5890' DTR 'sas 7001 ЛЬОП 1373 010'7771 11930 CHLO' news 0'710'n nk D'upni 0'700 78704 "n пр'п1 wirph by 0703 n8 710051 Day n8 313051 not ons ,""" ""n niens DAIR 1705 on .007 9013 ПЗЛКА .7 09815 - 6 - Regraded Unclassified 110 QUESTIONS AND ANSWERS FOR QUIZ ON FREEDOM The Questions 1. What Jewish holiday is known as the festival of freedom? 2. Who was the great Jewish emancipator? 3. What Jewish holiday tells about the fight of the Jews for religious liberty? 4. What Jew helped win the American War for Independence by saving and giving his money to the Government? 5. Who was the great American emancipator? 6. How does & knowledge of the Torah help us believe in freedom? 7. What are the Four Freedoms of the Atlantic Charter? 8. Which of the Four Freedoms are important to the Jews? 9. What did freedom have to do with the coming of millions of Jews to the United States? 10. What saying is inscribed on the Liberty Bell? 11. From what book of the Bible was this saying taken? 12. What is the name of the Jewish poetess whose poem is inscribed on the Statue of Liberty? 13. What does the poem teach us? 14. Why have Jens always been on the side of freedom? 15. How does buying Nar Saving Stamps and Bonds help preserve and extend freedom? The Answers 1. Passover 2. Moses 3. Hanukkah 4. Hayim Salomon 5. Abraham Lincoln 6. The Torah has many laws and stories which holp us to understand what freedom means and how to live as free men. 7. (1) Freedom of speech; (2) freedom of religion; (3) freedom from fear; (4) freedom from want. 8. All four. 9. They came here to seek freedom. 10. Proclaim liberty throughout the land, unto all the inhabitents thereof. 11. Loviticus (Chapter 25, 10). 12. Emma Lazarus. 13. That America is the land of freedom. 14. Because it has been part of our faith. 15. (Develop answers through discussion). - 8 - 111 AND IT SHALL COME TO PASS (To be read responsively as indicated) Leader: And it shall come to pass in the end of days, That the mountain of the Eternal's house shall be established as the top of the mountains, Children: And shall be exalted above the hills; And all nations shall flow unto it. Leader: And many peoples shall go and say: Children: 'Come ye, and let us go up to the mountain of the Eternal, To the house of the God of Jacob; Leader: And He will teach us of His ways, Children: And we will walk in His paths.' For out of Zion shall go forth the law. And the word of the Eternal from Jerusalam. Leader: And He shall judge between the nations, And shall decide for many peoples; Children: And they shall beat their #words into ploughshares, And their spears into pruning-hooks; Nation shall not lift up sword against nation, Neither shall they learn war any more. Isaiah, Chapter 2:2-4 A PRAYER FOR AMERICA Almighty God, bless with health, courage, vision and high purpose, the President of the United States and all leaders of our country, that they may govern wisely and justly. Grunt that America continue to be the land of freedom; that each one regardless of race and religion may have equal opportunity to live a full, complete and happy life. Imbue us with respect for law and responsibility for our fellowmen. Strengthen the bonds of friendship and understanding among all the people, that we may all work together to end ignorance and hatred, to improve health and learning, to seek beauty, truth and goodness. May our country always strive to establish world peace and justice for all. Amen. Regraded Unclassified 112 Poems for Mass Recitation and Classroom Reading TOWARD FREEDOM (To be read responsively as indicated) Leader Children At a time like this, Bow not your head. We will hold our heads high! Work! Work! We will work! Ploughman, plow! We will plow! Sower, SOW your seed! We will sow! In an evil moment Redouble your effort, We will! Redouble your toil. We will! Plant and dig! Clear and fence! Level and cast up The highway of freedom Toward a day of light. Toward freedom! toward light! The path of affliction Marks the road of rodemption; And the blood Drawn by bondsman's lash Cries out to the soul of the people: "Be aroused and labor! Labor we will! Be redeemed and redeem!" No will redeem and be redeemed! -- David Shimonowitz * * * THE OATH We swear for freedom and truth to fight Till there are no tyrants and slaves, Till the dark forces are put to flight, Or the battlefields are our graves. -- S. An-sky - 10 - 113 I LOVE THE SOIL I love the soil upon which I go. Where fat and fertile the rich saps flow. Virgin soil, so yielding and sweet. Her cooling grass is kissing my feet. Her bowels smell like an apple-press. And the soft breezes my cheeks caress. I know my blood has not sanctified This earth. For elsewhere my father died. But my son is of this soil a part. And his heart beats at one with her heart, -- Israel Jacob Schwartz (translated from the Yiddish) OUR OWN Jews of the great Republic, Clasped to her mother-broast, Nestling so warm and peaceful within that bosom blest, Turn to our tortured Europe, Hark to the myrind moan Of pinched lips, white with hunger, That stiffen as they groan, And remember in these wan creatures runs the blood that is your own. Set your lips to the Shofar, Waken a fiery blast, Shrill to the heathen nations - This slaughter shall be the last! And send our old Poace-greeting Peeling from cot to throne, Till menkind heeds the message On the Hebrew trumpet blown, And the faith of the whole world's peoples is the faith that is our own. -- Israel Zangwill - 11 - - 12 - stide cui 17490 id $5.00 taina 410 in theirs' iti. 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ITT = 10ᶜ 10 MILL STAMPS U.S. STAMP POSTAL SAVINGS PLAN for the Purchase of 0.00 582 EX2 STREET X-X- UNITED STATES DEFENSE SAVINGS BONDS X X X X & 118 Analysis of Exposure to Payrol vings Plans May 30, 1942 Number exposed Total number to payroll in the Percent country of total savings plans (estimated) exposed Part A - Summary by Number of Organizations Exposed I. Business organizations (1) Firms with 5,000 employees or more 475 479 99 (2) Firms with 500 to 4,999 employees 4,768 6,111 78 (3) Firms with 100 to 499 employees 18,169 26,998 67 (4) Subtotal - large firms 23,412 33,588 70 (5) Pirms with less than 100 employees 67,006 # * (6) Total business organizations 90,418 # # II. Governmental organizations # # * III. Grand total 90,418 # * Part B - Summary by Number of Employees Exposed I. Business organizations 7,771,558 # * (1) Firms with 5,000 employees or more 6,499,495 # # (2) Firms with 500 to 4,999 employees (3) Firms with 100 to 499 employees 4,334,401 # * 18,605,454 # # (4) Subtotal - large firms 1,864,363 # * (5) Firms with less than 100 employees (6) Total business organizations 20,469,817 30,000,000 68 II. Governmental organizations 397,981 2,100,000 19 (1) Federal Government 1,121,159 2,700,000 42 (2) State and local governments 1,519,140 4,800,000 32 (3) Total governmental organizations 21,988,957 34,800,000 63 III. Grand total June 5, 1942. Office of the Secretary of the Treasury, 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. # Data not available. Regraded Unclassified 119 Firms Employing 100 to 499 Persons Participating in Payroll Savings Plans (As reported by the Defense Savings Staff's State Administrators) I Number of firms with payroll : Total : Percent of total having payroll # savings plans # number : savings plans State : : : : of firms - : : : Apr. 18 : May 23 : May 30 : (estimated) : Apr. 18 : May 23 : May 30 149 205 209 285 52 72 73 Alabama 43 49 49 64 67 77 77 Arizona 44 47 47 142 31 33 33 Arkansa Northern California 512 572 589 589 87 97 100 Southern California 756 802 818 bg171 65 68 70 113 118 118 124 91 95 95 Colorado 277 294 300 622 45 47 48 Connecticut 21 49 49 85 25 58 58 Delaware District of Columbia 52 71 75 152 34 47 49 Florida 147 169 171 171 86 99 100 133 203 24/1 590 23 34 41 Georgia 31 31 31 39 79 79 79 Idaho Illinoi 1,300 1,464 1,491 2,252 58 65 66 415 519 541 587 71 88 92 Indiana 165 200 200# 272 61 74 74 Iowa Kansas 276 276 277 277 99 99 100 Kentucky 136 171 175 312 44 55 56 47 60 62 Louisiana 179 230 238 384 Maine 60 76 87 198 30 38 44 Maryland 177 217 219 405 44 54 54 Massachusetts 639 692 711 1,523 42 45 47 Michigan 689 779 806 1,022 67 76 79 Minnesota 376 409 413 413 91 99 100 Mississippi 59 62 62 143 41 43 43 559 569 199 71 84 86 Missouri 472 40 43 44 lake 91 98 100 Montana 103 108 110 123 84 88 89 Nebraska Nevada 14 16 16 21 67 76 76 89 100 100 145 61 69 69 New Hampshire New Jersey 463 586 636 867 53 68 73 New Mexico 33 33 33* 42 79 79 79 New York 2,553 2,624 4,240 49 60 62 2,060 72 North Carolina 282 345 358 499 57 69 North Dakota 14 19 29 48 66 66 19 Ohio 1,126 1,179 1,739 65 68 68 1,188 201 345 48 58 58 Oklahoma 166 201 255 257 271 78 94 95 Oregon 211 1,842 2,032 83 91 92 Pennsylvania 1,682 1,867 154 178 224 69 78 79 Rhode Island 175 174 E 57 64 South Caroline 71 99 112 22 23 23 91 96 100 South Dakote 21 199 199* 449 44 44 lala Tennessee 199 Texas 326 403 410 1,376 24 29 30 44 We 111 32 40 40 Utah 36 Vermont 59 60 60 63 94 95 95 281 341 348 348 81 98 100 Virginia Washington 271 323 72 82 84 234 264 51 134 140 140 272 49 51 West Virginia 680 in 50 55 Wisconsin 278 343 373 Wyoming 17 18 18 94 100 100 18 2 100 100 100 Alaska 2 2 2* 49 94 94 94 Railroads 49 49 52 57 66 67 Total 15,365 17,703 18,169 26,998 June 5, 1942. Office of the Secretary of the Treasury, Division of Research and Statistics. Date are for May 23, inasmuch as no May 30 report was received. Regraded Unclassified 120 Firms Employing 500 Persons or More Participating in Payroll 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 : : : : Apr. 18 : May 23 : May 30 : (estimated) : Apr. 18 - May 23 : May 30 41 Alabama 53 55 77 53 69 71 Arizona 9 9 9 12 75 75 75 16 16 16 22 Arkansas 73 73 73 Northern California 122 124 124 175 70 71 71 Southern California 121 126 127 162 75 78 78 Colorado 25 26 27 28 89 93 96 Connecticut 114 116 116 152 75 76 76 Delaware 15 18 18 24 63 75 75 District of Columbia 32 32 32 53 60 60 60 Plorida 28 30 30 63 44 48 48 Georgia 86 105 106 111 77 95 95 Idaho 11 11 11 11 100 100 100 Illinois 391 413 417 546 72 76 76 Indiana 88 117 121 168 52 70 72 Iowa 22 29 29+ 41 54 71 71 Kansas 23 24 24 24. 96 100 100 Kentucky 38 42 42 71 54 59 59 38 48 51 Louisiana 29 37 39 77 Maine 48 53 53 58 B3 91 91 Maryland 84 88 90 107 79 82 B4 Massachusetts 237 259 260 350 68 74 74 Michigan 265 271 272 309 86 88 88 Minnesota 79 80 80 84 94 95 95 Mississippi 26 29 30 38 68 76 79 Missouri 103 114 114 134 77 85 85 Montana 3 3 3 3 100 100 100 Nebraska 23 24 24 31 74 77 77 Nevada 4 4 4 5 80 8o 80 New Hampshire 29 31 31 31 94 100 100 New Jersey 1/12 155 158 198 72 78 80 New Mexico 5 5 5ª 5 100 100 100 New York 795 796 1,084 70 73 73 759 Bo North Carolina 103 126 128 160 64 79 North Dakota 0 o o o 0 o o Ohio 412 419 420 491 B4 85 86 Oklahoma 38 38 50 62 76 76 31 48 53 53 53 91 100 100 Oregon 551 570 570 619 89 92 92 Pennsylvania Rhode Island 61 69 69 81 75 85 85 103 82 91 91 South Carolina 84 94 94 South Dakota 5 5 5 5 100 100 100 Tennessee 50 50 50⑉ 102 49 49 49 Texas 63 74 74 12 44 52 52 B 10 10+ 16 50 63 63 Utah Vermont 12 12 12 12 100 100 100 Virginia 93 97 97 100 93 97 97 Washington 50 56 69 71 72 81 49 36 40 54 61 59 66 89 West Virginia 127 136 137 153 83 89 90 Wisconsin Wyoming 1 1 1 100 100 100 1 Alaska 3 3 30 3 100 100 100 Railroads 109 109 109 115 95 95 95 Total 4,864 5,195 5,243 6,590 74 79 80 June 5, 1942. Office of the Secretary of the Treasury, Division of Research and Statistics. # Data are for May 23, inasmuch as no May 30 report was received. Regraded Unclassified CONFIDENTIAL 121 UNITED STATES SAVINGS BONDS - SERIES E Comparison of June sales to date with sales during the same number of business days in April and May 1942 (At issue price in thousands of dollars) : June : Cumulative sales by business days Date : daily : June : sales May : April : June as : : : : :percent of May June 1942 1 $ 19,834 $ 19,834 $ 12,679 $ 12.993 156.4% 2 8,008 27,841 24,263 24,256 114.7 3 12,970 40,811 46,532 35,050 87.7 4 17,388 58,199 55,460 47,119 104.9 Office of the Secretary of the Treasury, June 5, 1942. Division of Research and Statistics. 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. CONFIDENTIAL 122 UNITED STATES SAVINGS BONDS - SERIES 7 AND G COMBINED Comparison of June sales to date with sales during the same number of business days in April and May 1942 (At issue price in thousands of dollars) : June : Cumulative sales by business days Date : daily : June : sales May : April : June as : : : : : percent of May une 1942 1 $ 9,705 $ 9,705 $ 7,302 $ 11,987 132.9% 2 7,895 17,601 15,168 21,677 116.0 3 8,634 26,235 25,516 29,097 102.8 4 13,774 40,009 33,145 35,818 120.7 Office of the Secretary of the Treasury, June 5, 1942. Division of Research and Statistics. 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. CONFIDENTIAL UNITED STATES SAVINGS BONDS - TOTAL Comparison of June sales to date with sales during the same number of business days in April and May 1942 (At issue price in thousands of dollars) : June : Cumulative sales by business days Date : daily : : June : : : May : sales : April June as : :Percent of May June 1942 1 $ 29,539 $ 29,539 $ 19,981 $ 24,980 147.8% 2 15,903 45,442 39,430 45,933 115.2 3 21,604 67,046 72,048 64,147 93.1 4 31,162 98,208 88,605 82,937 110.8 Office of the Secretary of the Treasury, June 5, 1942. Division of Research and Statistics. 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. 124 Sales of United States Savings Bonds CONFIDENTIAL From June 1 through June 4, 1942 Compared with Sales Quota for Same Per (At issue price in millions of dollars) Series 1 : Series 7 and G : Total : Actual Sales : Quota, : Sales : Actual Sales : Quota, : Sales : Actual Sales : : Quota, : Sales : June 1 : June 1 : to Date : : June 1 : June 1 : to Date : : June 1 : June 1 : to Date Date : Daily : to : to : as % of : Daily : to : to : as % of : Daily : to : to : as $ of : Date : Date : Quota : : Date : Date : Quota : : Date : Date : : Quota 1 $ 19.8 $ 19.8 $ 21.7 91.2% $ 9.7 $ 9.7 $ 12.1 80.2% $ 29.5 $ 29.5 $ 33.8 87.3% 8.0 27.8 32.0 86.9 7.9 17.6 19.7 89.3 15.9 45.4 2 51.7 87.8 46.4 3 13.0 40.8 87.9 8.6 26.2 31.9 82.1 21.6 67.0 78.3 85.6 4 17.4 58.2 63.6 91.5 13.8 40.0 42.4 94.3 31.2 98.2 106.0 92.6 5 79.6 51.0 130.6 6 93.7 57.6 151.3 8 120.0 69.6 189.6 9 132.4 77.3 209.7 10 149.6 89.5 239.1 11 170.0 100.0 270.0 12 189.0 108.6 297.6 13 205.6 115.1 320.7 15 236.5 127.2 363.7 16 251.1 134.8 385.9 17 271.3 147.1 418.4 18 295.2 157.6 452.8 19 317.4 166.2 483.6 20 336.9 172.7 509.6 22 373.0 184.8 557.8 23 390.0 192.4 582.4 24 413.5 204.6 618.1 25 441.1 215.2 656.3 26 466.8 223.7 690.5 27 489.2 230.3 719.5 29 530.6 242.4 773.0 30 550.0 250.0 800.0 Office of the Secretary of the Treasury, Division of Research and Statistics. June 5. 1942. Source: Actual sales 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 and will not necessarily add to totals. Takes into account daily trend within the week, but does not take into account the trend by weeks during the month. 125 E RTMENT OF ) JUSTA Office of the Attorney General Washington, B.C. 1 STATE * June 5, 1942 Dear Henry: Thank you so much for your letters of recent date, enclosing a report of the sales of War Bonds during the month of May, as well as a statement showing "Financing During May". Sincerely yours, Francis Biddle Honorable Henry Morgenthau Secretary of the Treasury Washington, D. C. 126 to OFFICE OF LEND-LEASE ADMINISTRATION FIVE-FIFTEEN 22d STREET NW. WASHINGTON, D.C. E. R. Stettinius, Jr. Administrator June 5, 1942 My dear Mr. Secretary, Thank you for your letter of June 3 containing a statement showing financing operations which produced cash and financing operations which involved only refunding for the month of May. I have studied this statement with much interest and I appreciate your sending it to me. Sincerely yours, E. R. Stettinius, Jr. The Honorable The Secretary of the Treasury KWS 127 ( OF 3. THE SECRETARY OF COMMERCE UNITED STATES of WASHINGTON June 5, 1942 Dear Henry: Thank you for your letters of June 2 and 3, enclosing the May report of War Bond sales, and the summary of May financing, respectively. I am glad to have them. With best wishes, Sincerely yours, June Secretary of Commerce Hon. Henry Morgenthau, Jr. Secretary of the Treasury 128 June 5, 1942. Dear Franklin: I vas very glad to hear from you and to have you raise the question in regard to Agent Gosnell, of the Secret Service. It is fine to hear that you think so highly of him. I asked Chief Wilson for a confidential report on Gosnell's salary, and also on the salaries of other agents who are on the detail to guard your children. I am sending you a copy of his response to my request. Chief Wilson's explanation of the situation seeze to se a satisfactory one, and I hope it will impress you in the same vay. I hope that you have completely regained your health and if, by any chance, you are at Hyde Park during the next week, we would love to see you, as Bob is spending his ten-days' leave on the farm. Sincerely, Henry Morgenthau, jr. Copy to omrs. m. - Filenme File nmc Lieutement Franklin D. Roosevelt, Jr., U. S. N.R., East Norvich, Long Island, New York. GEF/dbe Regraded Unclassified capy 6/5/42- FRANKLIN D. ROOSEVELT, JR. EAST NORWICH LONG ISLAND, N.Y. June 1942 Dear Mr. Morgantheau, I hate to bother you with a relatively small matter at times like these but I do not feel that I am in a position to speak to the chief of the Secret Service concerning this matter, directly. I now have five secret service agents on the detail with my children. The head of this detail is Agent Gosnell, who has been in the service for five years and has been with me for the past three years. His record is excellent and I have never had a reason to complain in any way and I hope that he will remain at his present post, especially in view of the fact that as I am away at sea so much, I feel much safer about the children, knowing that I have a reliable experienced man taking care of them. However, it is difficult for him to be completely happy because of what seems to me to be a very unfair salary difference between havend the other agents on the detail. Two men have been in the service for approx- imately nine months and are now receiving $2,900. per annum. The other two men, who have only been in the service since this past January, are receiving $2,600. per annum. Agent Gosnell, with his five years of service, still receives $2,600. per annum. I feel that he should at least receive $2,900. per annum. I know that the problems of salaries in the Secret Service is a most involved one and that similar difficulties have been encountered with the outfit in the White House. How- ever, I feel that this inequality may be remedied if brought to the attention of the proper people. I saw Bobby in Norfolk about two Jamary months ago and it certainly was great to see him in uniform. He seems to like the service and to be doing a great job. Give him my best when next you write to him. Also, I want to thank you for the wonderful books you sent me in the hospital. I am up and around again spote 6/5/49- FRANKLIN D. ROOSEVELT, JR. EAST NORWICH LONO ISLAND, N.Y. June 1942 Dear Mr. Morgantheau, I hate to bother you with a relatively small matter at times like these but I do not feel that I am in a position to speak to the chief of the Secret Service concerning this matter, directly. I now have five secret service agents on the detail with my children. The head of this detail is Agent Gosnell, who has been in the service for five years and has been with me for the past three years. His record is excellent and I have never had & reason to complain in any way and I hope that be will remain at his present post, especially in view of the fact that as I am away at sea so much, I feel much safer about the children, knowing that I have a reliable experienced man taking care of them. However, it is difficult for him to be completely happy because of what seems to me to be a very unfair salary difference between hand the other agents on the detail. Two men have been in the service for approx- imately nine months and are now receiving $2,900. per annum. The other two men, who have only been in the service since this past January, are receiving $2,600. per annum. Agent Gosnell, with his five years of service, still receives $2,600. per annum. I feel that he should at least receive $2,900. per annum. I know that the problems of salaries in the Secret Service is a most involved one and that similar difficulties have been encountered with the outfit in the White House. How- ever, I feel that this inequality may be remedied if brought to the attention of the proper people. I saw Bobby in Norfolk about two months ago and famory it certainly was great to see him in uniform. He seems to like the service and to be doing a great job. Give him my best when next you write to him. Also, I want to thank you for the wonderful books you sent me in the hospital. I am up and around again 130 FRANKLIN D. ROOSEVELT, JR. EAST NORWICH LONG INLAND, N.Y. - 2 - and expect to go back to sea very shortly. Again, I apologize for troubling you with my secret service problems, but I can only hope that you will forgive me, under the circumstances. Sincerely yours, Haullin Lieut. (jg) U. S. N. R. The Hon. Henry S. Morgenthau, Jr. The Secretary of the Treasury Department of Justice Washington, D. C. P.R. I distated this letter several weeks ago but before I could send it of I went back to the hospital with pneumoxia and a queen blood disease. However I'm obay now and am leaving for my destroyer in a couple of days. Give my best to Mr. Marganthan TOR.L. copy my m. REFER TO FILE No. 3013/42- TREASURY department WASHINGTON, D.C. OFFICE OF THE CHIEF U.S. SECRET SERVICE June 3, 1942 Memorandum for the Secretary From Chief, Secret Service A letter to you from Franklin D. Roosevelt, Jr., dated June 1, relating to the salary paid Agent Robert J. Gosnell, is returned herewith. Agent Gosnell was employed as a clerk in this Service at $1440 per year on March 25, 1937, and he was increased $860 per year, being promoted to the position of Agent at $2300 per annum on September 16, 1939. He received a pro- motion of $100 on October 1, 1941, and $200 on February 2, 1942, making his present salary $2600. He had no criminal investigative experience before becoming an agent in this Service. He has had three years' experience on a protection detail for this Service and his salary has been increased $1160 since September of 1939. His services have been satisfactory. Two of the agents on the Franklin D. Roosevelt, Jr. de- tail have been in the Secret Service for about one year and now receive $2900. They were experienced enforcement of- ficers and required no special training upon entrance into this Service; one has been engaged in law-enforcement work for eight years and the other for five years. They are qualified to handle important criminal investigations as well as to perform duties on the protection detail. The other two agents on the detail receive $2600 per year, one having been in this Service for one year and the other for six months. One of them had been with the Massachusetts State Police for over ten years and the other with a New York State Police Department about two years, and their law- enforcement experience qualifies them to perform criminal investigations as well as to perform duties on the protection detail. FORDEFENSE Agent Gosnell is trained to perform duties on a protection detail but has had slight experience in the performance of BUY criminal investigations. In view of the fact that he has UNITED STATES SAVINGS BONDS Regraded Unclassified copy to me m. REFER TO FILE No. 3013/42- TREASURY DEPARTMENT WASHINGTON, D.C. OFFICE OF THE CHIEF U.S. SECRET SERVICE June 3, 1942 Memorandum for the Secretary From Chief, Secret Service A letter to you from Franklin D. Roosevelt, Jr., dated June 1, relating to the salary paid Agent Robert J. Gosnell, is returned herewith. Agent Gosnell was employed as a clerk in this Service at $1440 per year on March 25, 1937, and he was increased $860 per year, being promoted to the position of Agent at $2300 per annum on September 16, 1939. He received a pro- motion of $100 on October 1, 1941, and $200 on February 2, 1942, making his present salary $2600. He had no criminal investigative experience before becoming an agent in this Service. He has had three years' experience on a protection detail for this Service and his salary has been increased $1160 since September of 1939. His services have been satisfactory. Two of the agents on the Franklin D. Roosevelt, Jr. de- tail have been in the Secret Service for about one year and now receive $2900. They were experienced enforcement of- ficers and required no special training upon entrance into this Service; one has been engaged in law-enforcement work for eight years and the other for five years. They are qualified to handle important criminal investigations as well as to perform duties on the protection detail. The other two agents on the detail receive $2600 per year, one having been in this Service for one year and the other for six months. One of them had been with the Massachusetts State Police for over ten years and the other with a New York State Police Department about two years, and their law- enforcement experience qualifies them to perform criminal investigations as well as to perform duties on the protection detail. FORDEFENSE Agent Gosnell is trained to perform duties on a protection detail but has had slight experience in the performance of BUY criminal investigations. In view of the fact that he has UNITED STATES SAVINGS BONDS ARD STAMPS Regraded Unclassified 132 - 2 - received three promotions, September of 1939, October 1, 1941, and February 1, 1942, it is felt that he has been given favorable consideration. The difference in the salary paid to the agents employed on the detail with him is because they came to the Secret Service as trained law-enforcement agents and are qualified at any time they are released from the protection detail for immediate assignment on important criminal cases. your 133 Supreme Court of the United States Mashington,D C. CHAMBERS OF USTICE FELIX FRANKFURTER June 5, 1942 My dear Mr. Secretary: I now know the wisdom of giving the Treasury a contingent fund from which expenditures may be made without accountability. But I am sorry also to learn that the idea of a rubber dollar did not originate with Professor Warren or even at Cornell, but is the natural offspring of the Expanso Belt. And one more though occurs to me. If at the end of administering the Treasury for an even longer period than Abraham Gallatin held office, and certainly with not less distinction, you still have too much energy left for mere retirement, I cannot think of a more prosperous employment of your talents than as the owner of the Morgenthau Apiary, of which the slogan will be:"A Honey Belt with Every Jar of Honey". And so, my dear Mr. Secretary, I remain a grousing taxpayer, but a most appreciative luncheon guest, with sentiments of esteem and affection, Faithfully yours, Facis Hon. Henry Morgenthau, Jr. 134 June 5, 1942. Dear Kades: I have been attempting to answer your fine letter of April 26 in longhand; hence, the umpardonable delay. Rather than let your letter remain unansvered any longer, however, I an now dictating a hasty note, just to let you know how much I enjoyed hearing from you, and how deeply I appreciate the high regard that you evidently have for me. You were a tower of strength in the General Counsel's office, and I want you to know that I fully appreciate all that you gave of yourself to the work there. I can assure you that you are greatly missed in the Treasury. I admire tremendously your attitude about getting into active service, and as sure that you will get a great deal of personal satisfaction out of it. I do hope that when you return to Washington on a visit, you will COMO in to have a meal with no, and tell no all about your experiences. with kindest regards, Sincerely, (Signed) 1. Morgenthan, Jh, Mr. Charles L. Kades. Apartment 15-A, File n.mc. Country Club Apartments, Columbus, Georgia. GE /dbs Regraded Unclassified 135 Dear Kades: about notes hearne perl fun you I have been attempting to answer your fine letter Rather than let your letter remain unanswered any longer, homen of April 26th in longhand; hence, the unpardonable delay. I 80% dictating BY few lines to to let you know how much I enjoyed your letter and how much I appreciate the high regard that you evidently have for me. You were a tower of strength in the General Counsel's office, and have given of yourself, and you are greatly missed are the Twenting I want you to know that I fully appreciate all that you eath I admire tremendously your attitude about getting into active service and am sure that you will get a great deal of personal satisfaction out of it. I do hope that when you return on a visit to Washington that you will come in to have 8. meal with me, and tell me all about your experiences. With kindest regards, Sincerely, + Regraded Unclassified 136 CHARLES L. KADES 6304 CLEVELAND AVENUE N.W. WASHINGTON, D.O. Dear Mr. Secretary in Sunday, april26th passed since l lett Washington for Barely a mouth has longer ago than that suppose Fort Benning, but it seems l much that, like many other things, one's associates are most appreciated when he is deprived of them Much as I Treasury, never imagined could enjoyed working with everyone in the and perhaps that is the reason miss RO many persons eo beenly why a mouth seems to have stretched into an age a lack of work at the infanting School is so packed that it possible From seven in to experience it to believe the morning until five in the afternoon every day. except Sunday, plus 2. 3 137 at least two mights of field problem also pretty in mathematics strong stuff as for me. one I think as plus preparation which an last enormous for with the following day of weak homework which required balance with the statement after could even make my checkbook done, and review for Decamination finish this course! - all this concentrated the in every l have heen very favorably keeps us all busy. course impressed with the faculty. Visiness I am taking is aailed the Combat instructors know their and Platoon Course and form 10 no a suice months affair which has knowledge to the student officers. α spare no efforts to pass on their heen telescoped into three months, have not been so favorablyimpresed in the invest matter it his design without any material modification with the way the Federal Government roblem has handled the housing f to qualify jumor officers of infantry here ct don't know where the to and train protopus of reple heavy weapons, and company Since the objective is success in battle has here bungled are worse badly. than Ed and saw responsibility ists but the Romeone conditions the are not burdened with any instruction not directly related to commat But for a person like Public Health Service has also fallen ruse for such a attuation in San Digo and there seems The little myself who couldn't take a again ping out of an engine the asseme down miserably in dealing with and and of machine given the memeral disease p ablem The is kind of complex and agine not automatic reple ands - and the Tederal Security cases here are running into thous technique of fires and mapping di agency Lendo an old lady here Regraded Unclassified 4. 5. 138 by the name Barcom Johnson - supposed to the a Phrladelphia legs light parents - not who being blames instead strict conditions enougham strikus to j ups any facing in you I fet that your courage in coming and your humanitarianism have your young daughters of day day administration which police authorities w failing hrea misfeasion of lad given me a perspective It makes me import womed from other commins up cornercialized lice sungs which want to emulate you constantly, and will always treasure The Surgeon General, and the bity b of d find myself, incomeciously or maybe testing something what othmlus, need a Sammy MA propose to do by workering Dircumstances. you a sanctimomis fillar of the chara would do under the The the lack of statesmanship in l do not want to he fulsome, the het meeting problems of a large mulite encerely feel that life one had of been the chief posternder present conditions has rewards of my privile which at have enjoyed emphasized for me the great opportunity of working for that you I that only that your leadership of heing on your staff It is and feel it so deoply about don't even like to write it However, I was imable to say goodly and high mindedness provider in reservor of insperation for there a came your and do hope you because were in I arizona when to the Treasury fortunate enough understand how grateful I am for & I come into contact with you all encouragement when feel it is more than that my knidest regards Very smicerely, to Mrs. bhuck Morgerthap Kades was your the at Freasury Please couney 139 JUN 5 1942 Dear Archier In line with our recent telephone conver- sation, I should like to take advantage of your generous offer of assistance on some of our problems. Accordingly. for our immediate purposes I should appreciate your making available to 200 as much of the time of The. Mkert and his staff AS 1 find necessary to CAFTY out the research which we are planning. It will take a 111310 time and experimentation to indicate the full extent of assistance which will be required, but in the interin would it be agreenble to you for KA to call upon Mr. Likert as freely as the needs of the situation dictate? Sincerely, (Signed) henry Monorable Archibald MacLeish, Director, Office of Taste and Figures, Washington, D. C. nmc By Messenger Brown, 1:15 Copies to Shompson GCH;EL;ek 6/5/42 Regraded Unc assified 140 THE WHITE HOUSE WASHINGTON June 5, 1942 Dear Henry: Thank you for preparing the letter to Mrs. Imhoff for me. It is a grand letter and I have sent it on to Mrs. Imhoff. Affectionately, Thank 141 JUN 3 1942 Dear Eleanort 1 have prepared the attached letter to Mrs. Inheff for your signature. I - sorry that there is as practical way we could help her with a loan. The Pepper Bill (s. 2540) referred to is the letter, which is designed to meet problems like here, was introduced May 15 and referred to the Committee on Banking and Currency. Affectionately, (Signed) Henry Mrs. Pranklin D. Receivelt, The White Neuse. n.m.c Capitals a Hompson SS agent 4:45p.m. Regraded Unclassified 142 My dear Mrs. Year letter of May 22 addo strongly to 4 deep appreciation of the difficulties may of - will face is the menths about, when the Nation's war effort met inevitably interfere more and more with normal civilian life. I advire the coverageo spirit with which you are fasing these difficulties, and I wish that I could suggest some convenient solution. I can, however, give you one or to Ideas which I hope may is come very be helpful. I wonder if the two problems sentioned in your letter - maintaining payments on your cottages, and paying your living expenses - could not be handled separately. Could the payments ea your cottages be rearranged, perhaps suspending the principal payments for a time while you mainteda the interest? Thon, with the shortage of mangever that is repidly developing. it may be possible for your husband to find a better-paying secupation during the war mergany. I would suggest that he write or call at your searest United States Employment office, at 20 Smith Street, Ukish, California, for information as possible opportunities. is you probably know, the Congress and various administrative agencies of the Government have been giving a great deal of thought to the problem of relieving distross and financial hardship arising from necessary adjustments to a full wartins offort. Only recently, a MII to create a ever Distress Pinance Corporation" vas introduced in the Semate. Vaile 1 do not know, of was, what arrangments will finally be nade, I hope and trust a way will be found to assist in relieving hardships such as yours. 1 greatly appreciate your kind verds of encouragement to the President and aynelf, and the strong spirit of patriction svidenced W your letter. Sincerely, Mrs. Helen Inheff, Box 317. Littleriver, Mendosism County, California. Regraded Unclassified 142 My dear Mrs. Inhefft Your letter of May 22 addo strongly to my deep appreciation of the difficulties many of - will face in the menths sheet, when the Nation's var effort met inevitably interfore more and more with normal siviliem life. I admire the courageous spirit with which you are feeling these difficulties, and I wish that I could suggest some convenient solution. I can, however, give you one or two 1deas which I hope may is - valid be helpful. 1 wonder if the two problems mentioned in your letter - maintaining payments en your cottages, and paying your living expenses - could not be handled separately. Gould the payments on your cottages be rearranged, perhaps suspending the principal payments for & time while you mainteda the interest? Then, with the chortage of nanyover that is repidly developing, it may be possible for your knoband to find a better-paying secupation during the war energency. I would reggest that he write or call at your searest United States Employment office, at 20 Smith Street, Ukiah, California, for information on possible opportunities. Às you probably know, the Congress and variow administrative agencies of the Deversment have been giving a great deal of thought to the problem of relieving distress and financial hardship arising free necessary adjustments to a full wartine offort. Only recently, a MII to create a "Yar Distress Finance Corporation" vas introduced in the Senate. Vaile 1 is met know, of course, what arrangements will finally be made, I hope and truet a way will be found to assist is relieving hardships sush as yours. I greatly appreciate your kind words of encouragement to the President and ayealf, and the strong spirit of patriotion evidenced W your letter. Sincerely, Mrs. Helen Inheff, Sex 317. Littleriver. Mendosise County, California. Regraded Unclassified 143 Has THE WHITE HOUSE WASHINGTON May 29, 1942 36575 Dear Henry: The emlosed letter presents a difficult problem. Can not some arrange- ment on loans be made? Affectionately, B.R. Intelerwer Calif may 2 and 1982 Ear First Lady with all your other problems could you offer an answer to this one, some lime soon? We small fay in a Country RO grand as ours. with such grand people at the head of it we really do have a problem that 1 will have to admit, do not know how to cope with. 1. just one of several have ROX small cottages on the Ocean front in memberine County, half way up the const. which helps to support no but not fully. now, there is a tire ration, soon gasoline ration. no night havel on of Eights my. husband n a unpple carning a small wage, but, not enough to support was we are shill paying on a loan, which we borowed to build cottages. now, I am not complaining Dear First Sady 1 am accepting it all in the stride, as Thousands and Thousands of others are doing But, without Tourists (which would come for a day n wo if they could) How are we people going to pay! Buisiness lax State Tax, insurance income tax. property tax. buy Wav Bonds and alamps? I am fifty seven, my husband prixty two. These other neighbors are new the same age with the sari problems where my husband ia crippled, they have sickness The good fishing from the rocks and abalona are what bring the people in. the Climate is wonderful to. people luring inland in the heat come to the coast to get out of the heat. This is not a complaint. but just a problem. we sum to be at loss to solve for ourselves. must we just close up and has what we have worked so hard for? Become some 7 we are not going make the grade. Regraded Unclassified may the good Lnd above care for you and our Dear President and keys him, and give him strength to carry his breat burden His & foreside chara and your interest in the common people have made us all ful as through we were a part of the big family And be lieve me most Sincerly mrs Helen Jmhoff Box 317 Pittleriver Calif mindocino connt 145 MEMORANDUM FOR THE SECRETARY. June 5, 1942. Mail Report. It is evident that much of the tax mail which the Treasury would ordinarily receive has been diverted directly to the House Ways and Means Committee. News- paper mention of the Committee has caused many writers to direct their complaints and suggestions to Congress, and we have been receiving copies of letters and tele- grams showing that this has been done. Just as the abstract was being written, one telegram and one letter were received, supporting the Treasury's program, and calling the Committee to account for failing to follow Treasury suggestions. A close watch will be kept on this mail, as a result of this morning's newspaper statements. In general, the mail followed the course of the pre- ceding week. Unfavorable comments on lowered income tax exemption outnumber those approving it by 12 to 1. There is greater approval for compulsory payroll deduction than heretofore, and continued suggestions of various ways to raise money. Quite a number of the latter urged a surtax on all income in excess of that reported for the previous year. Letters in favor of the Sales Tax are in the ratio of 9 as against 4 opposing it. There are scattered letters, as before, on deductions for illness, education, etc.; on taxing Labor Unions, alimony, deductions for Bonds purchased, flat levy on in- come tax returns, etc. During May the White House referred 1,428 letters, of which 816 were acknowledged in this Division. There were also 209 letters urging the passage of S-860 - Liquor Control Bill. In May of 1940 we received 548 letters from the White House; May, 1941, 838. get torbuch Regraded Unclassified 146 - 1 - General Comments Max Hirsch, Allied Central Casting Co., Long Island City, N.Y. On March 26, 1942, and on May 6, 1942, we wrote your Department - Attention, Procurement Division - requesting that our name be placed on the Bidders List for mass purchasing of our products by the Treasury Department. The reason for our writing to you on this matter, which is very small, is that we received no reply to either of our letters, which is somewhat of a surprise to us. I. Pearce Edwards, A. M. Collins Manufacturing Co., (Paper Products), Philadelphia, Pa. On the 5th of February, 1942, we made application for a rate of draw- back on shipment of photographic facing paper to Canada. In accordance with standard instructions, a draft of our entire setup was mailed to you on April 10, but to date we have heard nothing from you about it. Is there anything further we should do to speed this thing along, and if not, can you give us any idea as to when we may expect to hear from you? J. W. Caperu, Haddonfield, N.J. Some time ago I wrote you relative to what I thought to be a local banking in- justice. Much to my surprise, I received, through one of your department heads, a most courteous reply, with some suggestions. It has been said - "No one can be truly appreciated but by his equals or superior.' Living in a home - strong in the belief the Republican creed of principles were superior to the Democratic party principles, it took our honored President and the gentlemen affiliated with him to show an average American the falsity of his opinion. # May I state Mrs. Morgen- thau's recent radio broadcast was of the quality that leaves excellent impressions. Regraded Unclassified 147 - 2 - E. A. Skehan, Largo, Florida. The following is an ac- count of my experience in attempting to redeem U. S. Documentary Stamps valued at $6.10. * * # When the transfer proceedings were held, it was found that a less amount was needed, 80 I was left with $6.10 worth of stamps. Purchased the stamps on March 9, 1942; on March 16 sent stamps to the Treasury Dept. with explan- atory letter; March 23 I received 8. form from your Dept. which was filled out, sworn to and returned to Washington. On April 27, I wrote to inquire the reason for the delay; received reply from D. S. Bliss on May 5 saying that claim was allowed. On May 9 was notified by Treasury office in Newark, N. J., that they had my check, but before it would be released, I must make B. statement that there "were no outstanding Internal Revenue taxes against me, and that I had not taken credit in my income tax return for these stamps. # # As 8. Veteran (U.S.N.) of two wars -- Spanish and World War #1 -- and as a good citizen of the U. S., owning approximately $700 in Defense Bonds, I rather resent the attitude of the Treasury Dept. in this small matter. # * All told, have spent 12¢ in postage. Newark still has check. Louis Epstein, Salem, Mass. # # Inasmuch as I have been 8. resident of this country continuously for about 40 years, and in that time I have received much better treatment in this country, which adopted me 8.8 a citizen, than the treatment that I had received from my mother country where I was born, I therefore feel reluctant to accept this divi- dend check, 8.8 I certainly would not accept any dividends or interest from my foster-mother for 8. loan. I honestly and sincerely look upon these, our United States of America, 8.8 my foster-mother. It is therefore with great pleasure and gratification that I am returning this check (six months' dividend check for $6.25 on B. $500 Bond) to you to be placed where it will do the most good in the war effort. Mrs. Harry D. Matteson, Poughkeepsie, N.Y. As the mother of 8. son who has been inducted into the U. S. Army, I raise my voice to High Heaven in protest to your desire that the boys" (mine was 35 years old) be sent off with Flags and 148 - 3 - bands and tumult. How much do you think we mothers can stand? Maybe you like to see young America led off to slaughter -- I don't. It is a job to be done like building a dam or checking 8. flood or cleaning up after a tornado. It has to be done. We will take our medicine for putting the wrong men in high places, but please don't ask us to follow 8. band. # # # My son is doing his part, and so are my nephews, and he writes that a real effort is being made to place men in the field of service for which they are best fitted. Fine. But let the fanfare rest until the job is done. Then let Heaven and Earth ring out the glad tidings of victory. 149 - 4 - Favorable Comments on Taxation Fred W. Amend, Chicago, Ill. In writing to you at this time, it is my hope and desire to secure for certain of this country's taxpayers, B. consideration which, to my knowledge, they have 80 far not received. # # Probably the haunting fear of men and women approaching fifty results from a realization that for one reason or another they may become financially dependent. This might not be true amongst foreign-born, and those who have failed to make the necessary effort to earn a good living. However, those true middle-class Americans whose efforts have af- forded them 8. good living, their family a good name, and their children an education, are the hardest hit by this real worry. * # # My experience has, in all probability, been the same as most men in business. Concentrating on the job to be done, desiring some protection for the family (just in case), and insisting on good educations for the children, believing that when these were properly cared for, Mother and I could effect some really worth- while economies for 8. few years with which to take it easy for a few more. # # # Anyway, the idea of age as a factor in adjusting income taxes is something that many men and women of long years of service will greatly ap- preciate. C. P. Goodman, Portland, Oregon. # # # We are 8. queer bunch, we Americans. Try to take anything from us and you get a bust in the snoot; ask for it, and you get the shirt. % % # Twelve of us foremen at lunch one day last week, in talking about the income tax deduction plan, were for it 100% -- if the money could be collected, at least 8. percentage of it, in Washington. Lately every time you pick up 8. paper, some more new commissions were formed. Louis Scholder, N.Y.C. Continue your work to help the "little man". Your efforts for a tax program levied on the wealthier people and corporations are recognized and will be backed by the people. A Sales Tax of 5% or 10% Regraded Unclassified 150 - 5 - would not be accepted by the people. Moreover, any Sales Tax should be opposed because it is unfair and bears disproportionately on the group now affected by higher living costs. Likewise, any lowering of income tax exemptions is unfair. It is poor economy to tax those of the minimum and subsistence levels. *** J. T. Barrow, Manager, Cash Hardware & Grocery Store, Reynolds, Ga. (Encloses clipping from the Macon Telegraph, "Morgenthau Opposes Taking Any More Tax from the Little Man") You are exactly right in this instance. When you talk like this, I just can't sit still and not let you know how right you are. We need more men like you. Keep up the good work. Regraded Unclassified 151 - 6 - Unfavorable Comments on Taxation Douglas Curry, N.Y.C. The Office of the Collector, Joseph T. Higgins, addressed to me a. letter concerning the filing and paying of Social Security taxes. ### This letter, instead of being addressed in 8. courteous tone, was of such a peremptory nature that I felt constrained then to write to you that this sort of un- mannerly treatment of its citizens by their Government is hardly likely to induce a mutual spirit of good will. Although I promptly answered the letter, with satis- factory information, I have just received another letter from the same source which is also officious and arbi- trary. Both of these letters carry the implied threat of causing me suffering and uneasiness by intima ting "severe penalties". I protest that love and respect for the governing powers in one's country is not enhanced by such action on the part of officialdom. *** W. T. Anderson, Editor, The Macon Telegraph, Macon, Ga. ### This editorial ("Death Sentence for Debtors", by David Lawrence) 80 aptly presents the case of these news- papers in this city, I am taking the liberty of enclosing it to you. I think 94% tax without permitting deduction for contracted debt of sufficiently long standing to guarantee legitimacy will be 8. repetition of the case of the goose that laid the golden eggs, or the horse that was shifted from oats to sawdust by reducing the oat portion daily and increasing the sawdust -- and just when the oats were eliminated entirely, and everything was hunky-dory, the horse died. # # # R. N. Wentworth, Jersey City, N.J. It is imperative that the present proposals of the Treasury Dept. for the apportionment of the income tax be immediately abandoned. This most recent proposal is an attempt to tax the lowest income brackets - those people most un- able to bear the tax burden. A most abominable and outrageous proposition. Taxation must be, rather, re- duced in this grouping. Why should the poor bear the cost of the war - they cannot even live on a decent Regraded Unclassified 152 - 7 - standard. Further, the proposal to collect next year's income taxes by payroll deduction is preposterous - most of us would not as yet have paid this year's taxes on the installment plan. Many would have to borrow the money. # # # Elections are approaching. There is just one thing - Congress must assert itself - refuse these tax levies on the poor. Tax those who wanted the war - the RICH. # Paulsen Spence, President, Spence Engineering Company, Walden, N.Y. I wish to call your attention to the fact that one D. J. Conroy, Deputy Collector, Newark, N.J., is persecuting me regarding an alleged failure to file my income tax for 1940. (Encloses copies of correspondence exchanged with Collector's Office, and photostat of checks, cancelled by the Collector of Internal Revenue.) This Plant works 168 hours per week, exclusively in the national defense. I work approximately 126 hours per week. # * # Although my family resides in East Orange, N.J., I spend all my time either here or on the road. If I am going to take a day off and go to Newark, and waste my valuable time interviewing Deputy Collectors, who apparently have nothing better to do, I am yours to command - but the papers and members of Congress will hear about it. # # I wish to call your attention to the fact that this Plant and the writer are working for love of country and not for any financial gain. The writer has already earned this year's salary, and the Plant has more than earned the amount allowed it under the proposed excess profits tax law. # William E. Clow, Jr., Chicago, Ill. # I sat informally yesterday with the Directors of 8. corporation in which I have 8. stock interest. Various matters were discussed, and various questions of policy - but overhanging every- thing was the Treasurer's statement to the effect that depending on certain estimated earnings, the corporation would have to pay from 78% to 82% of won't its total net that earnings these this men were year discouraged - - because they are all mighty good for Federal taxes. * * I say men, but certainly this terrific tax burden was taking most of the pep out of them. * # I know all about this company. Only in the last few years have they been reap- ing a profit as a result of long, hard years of work, and 153 - 8 - it is pretty tough - and mighty discouraging - to realize that if you work hard for B. profit now - and plan and scheme toward progress - that, provided you are successful, you can only retain 20¢ on the dollar. It just doesn't make sense, even in wartimes. Tracy Diers, N.Y.C. A little over a year ago I suffered 8. rather severe and sudden mental breakdown. Prompt psychiatric assistance prevented more serious consequences. Today, as 8. result of the psychothera- peutic treatments I have been having, I am once again working and looking forward to 8. complete cure in the future. # # # My salary at present is $24 per week. My living expenses consume a good portion of this, and the remainder pays my doctor bill, which runs from $3 to $6 per week. If I pay my entire income tax, it will be im- possible for me to continue these necessary treatments which really are an absolute necessity, not 8. luxury. This means that my only alternative would be the clinic, which has already refused my case because I am working. * I do not wish to become a state charge, but if there is an interruption of these treatments, there will always be the danger of this sort of thing happening. # # Will you please advise me if it will be possible for me to make some sort of deduction in my income tax? Even partial payment will help me to go ahead. # I explained this to Mr. Higgins, but I received the impression from his answer that he does not fully realize the seriousness of this situation. Mrs. Robert Henderson, Rutherford, N.J. # # # Lowering exemptions, increasing tax rates and/or a withholding tax will result in placing an additional burden of new taxes on the group which is now carrying B. major portion of present taxes, i.e., "the middle class worker", office workers, teachers, prefessional and other people who are not in defense industries, and are not protected by Labor Unions. + # # The present surtax is entirely too heavy on the salaried middle class, and should be reduced, not in- creased. By imposing & Sales Tax (however objectionable to some officials and the Unions) the persons who purchase the scarce goods now on the market would share in the war Regraded Unclassified 154 - 9 - costs of this nation, regardless of which group they are in, and the burden on the salaried groups could be lightened, as it should be, in all fairness. It should be borne in mind by the Treasury Department, and the Administration, that the real income of this country is produced by the people in what the War Production Board mistakenly refers to as : "the nonessential in- dustries". The people whose income is produced in private enterprise are the ones who are really paying the cost of the war. The defense workers are paid out of the public treasury, (by reason of working on Govern- ment contracts), and only a very small portion of these workers' earnings are paid into the Treasury in taxes. * # # 155 - 10 - Favorable Comments on Bonds Jesse A. Lodge, El Monte, Calif. I better tell you something about myself 80 you won't think I am a horse thief. # A naturalized citizen, Lockport, N. Y., 1919. Second to no man in love for my Adopted Country; Air Raid Warden in my block - finger printed, photographed and all. I was out patrolling during the blackout last night. Also awful stingy -- they say, but mostly on things for my own use; too long between haircuts, shave myself, wear patchy shoes and clothing, roll my own cigarettes -- always with the thought in mind that I'll be able to pay my own way when I get old. It was December 8, 1941, that I first was glad that I had been born in another Country and had taken the Oath to Old Glory. I got to the bank before opening time, prepared to put down 8. good-sized bet on the winner against the Japanese. Well Sir, the man ahead of me had B. thick chunk of currency and checks for deposit, so he closed the book, took out a wallet stuf- fed almost to the breaking point, selected B. fiver and said, "Give me a. 25₫ Defense Stamp". I had $1,500 in my hand for Unk - was I glad I had been both stingy and born elsewhere so I could appreciate what I had. I got a letter from you thanking me for that money. It was me that was thanking you for 8. chance to do it. Thomas G. Pollard, Chairman Third Congressional District for Sale of War Stamps and Bonds, Tyler, Texas. The visit of Miss Dorothy Lamour to Longview and Tyler, Texas, was very well received, and people were inspired to make additional Bond purchases over the monthly amount hereto- fore subscribed. In the city of Tyler alone, $234,500 in Bonds actually purchased and paid for was accomplished. In the event you expect to continue sending movie stars over the United States to sell Bonds, may I respectfully suggest that an experienced Public Relations man represent the U. S. Treasury Department? You will understand my hesitancy in making this suggestion, and it is only made in order that we may go forward in the sale of War Bonds and Stamps. 156 - 11 - Honorable Nat Patton, House of Representatives, Washington, D. C. # There are 8. number of small towns in my District, towns I am sure that have not received 8. copy of this fine news letter, (The Minute Man), and if you will send me 100 copies of this news letter, I will place them in the hands of influential men in those towns. My office is lined up 100% behind this war program, and I want to do all I can to 00-70 operate with you in every way. John Saraka, Recording Secretary, United Mine Workers of America, Wilkes-Barre, Pa. The membership of our Local Union, Dorrance Colliery, authorized me to com- municate with you and notify you that the officials of the Lehigh Valley Coal Company, Dorrance Colliery, re- fuse to deduct, every two weeks, from our pay envelopes for War Bonds. They claim it is too much trouble. Our members would like to have them deduct every payday from their earnings in order to buy more Bonds. Therefore, on behalf of our membership and our boys that are over there fighting for our rights, look into this matter and make the Lehigh Valley officials deduct from our earnings according to our pledges, 80 that we can keep on buying more War Bonds, and also have them take it out every two weeks instead of every month. # # I. G. Thompson, Dallas, Texas. This will acknowledge receipt of U. S. Government Check #315,133 for $50, cover- ing six month's interest on four $1,000 U. S. Savings Bonds, Series G, for which please accept my best thanks. I have $20,000 worth of these Bonds, and inasmuch as you are so prompt in paying the interest when it is due, I expect to buy another $5,000 sometime this month. *** I received a letter from 8 Bond Agency in New York a few days ago, soliciting my subscription to their service, in which they mention they would give me 8. list of ten stocks that had splendid possibilities for dividends. I wrote to them that there was only one investment in which I was interested, and that was War Bonds. I also told them that after the war is over, we would have plenty of time to buy stocks and bonds, but until it was over, the first and highest duty of every citizen was to U. S. War Bonds; that the Government needed the money and subordinate every kind of investment to the purchase of they needed it in a big way, and unless we won the war, no kind of investment would be worth the paper it was written on. # # # Regraded Unclassified 157 - 12 - Unfavorable Comments on Bonds Mrs. F. W. Fischer, Tyler, Texas. Stirred as deeply as I am by the travesty upon true patriotism, your program is proving to be, in regard to sponsoring these tours of the movie people, I feel that I should tell you how I, and every one I have heard speak on the subject, feel regarding this matter. % # # Very few people, proportionately, who really have the means with which to buy large amounts of Bonds, were present at the meeting held here last night. I did not mean to go, but my husband consented to speak as B. veteran of the last war, and asked me to accompany him on the platform. We had bought $20,000 worth of Bonds early in the spring -- $5,000 for each member of our family -- and, of course, had intended to invest further. However, as I expressed myself to my husband, and as he agreed with me, it was rather galling to us to be seemingly influenced by a moving picture actress to support our country when its very existence is at stake. * Miss Lamour is not fitted mentally or by background for this work; she does not have an orator's voice, which should be the first requisite for such work; neither does she know anything to say. She did not even bother to change her attire, but appeared in the soiled dress she travelled in. Vance B. Duncan, R. R. #1, South Bend, Ind. You have been quoted in the papers as saying the buying of War Bonds was on a voluntary basis. Quite a few of the employees buy only for cash, but the corporation has 8. drive on to buy Bonds on the installment plan, and they are using pressure. Speaking for myself, I will not sign for over $1.00 per week. That will take nineteen weeks or about three $25 Bonds per year. By paying cash, I believe I would be able to buy one every five weeks, which would be about ten to the year - some difference. The President, in his last talk, condemned installment buying. I also think you have. Who gets the gravy from this procedure? *** Regraded Unclassified 158 - 13 - M. L. Freedman, Milton Music Co., Norfolk, Va. *** We are sold on the idea of buying Bonds, but now that you have sold us on that idea, will you PLEASE make it less difficult for us to buy them? I saw one woman stand in line to buy 8. Bond, and after waiting 8. con- siderable length of time, she finally arrived at the window and was handed a slip to fill out. Then she could start at the end of the line once more! This has happened thousands of times, and is not my idea of the way you would conduct 8. private business. # I guar- antee you that when customers come into my store, we make it as easy as possible for them to make their pur- chases, and it seems that Uncle Sam is more than willing to do as much if his employees will just use that little bit of common sense so valuable in these times. # The above incident, of course, occurred at the Post Office here in Norfolk. A. F. Heck, Amsterdam, N.Y. While in the local Post Office today, a farmer and his wife stepped up to the Bond window and laying down B. handful of crumpled bills, asked the clerk for two Bonds. The clerk shoved out B. blank and said, "You'll have to fill this out". The old couple were of Polish birth, and it could be readily seen that they did not understand the blank. The old fellow pushed the blank back and said, "You mak'em out". The clerk said, "We can't help you, you will have to take it with you and ask some one to help you out". The couple stood speech- less, looking at the pile of bills. The clerk then asked another clerk if it wasn't correct that he couldn't help them out and his reply was, "Nope, can't do it". The couple gathered up their bills and slowly left the building. I watched them leave and go into Montgomery Ward's store. *** This couple were from a nearby farm. It has been raining all day here and they took the afternoon off. No doubt this was 8. special trip into the city for them. And by the way, it didn't take a flock of movie stars to drum up this sale either. ***. Regraded Unclassified 159 JUN 5 1942 My dear Mr. Perkins: I - enclosing five copies of the report on our experts to come selected countries for the period ending May 20, 1942. Sincerely yours, (Signed) 1. Morgeathaug in Secretary of the Treasury Mr. Mile Perkins, Executive Director, Board of Warfare, Room 3710, Department of Commerce Building, Washington, D. c. Enclosures. By Messenger Dinentiss HDWsmeh Copies the White 6/3/42 Ret. to Secije office Regraded Unclassified 160 JUN 5 1942 My dear Colenel Donovems I - enclosing copy of report on our exports to some selected countries for the period ending May 20, 1942. Sincerely yours, (Signed) 1. Morgeathame and Secretary of the Treasury Colonel William do Donovan, Coordinator of Information, old National Institute of Health Building, 25th and E Streets, N. W., Washington, D. c. Enclesure. n.m.c. By Messenger Discon 1:55 HDWsmeh Copiesto w Lite 6/3/42 Ret. to Secip office Regraded Unclassified 161 JUN 5 1942 My dear Mr. Secretary: I - enclosing copy of report on our exports to come selected countries for the period ending May 20, 1942. Sincerely yours, (Signed) 1. Mergenthau. Jr. Secretary of the Treasury The Nonorable, The Secretary of State, Washington, D. c. Enclosure. n.m.c. By Messenger Dipon 1:55 HDWsmeh 6/3/42 Copies to n hist Ret to Secip office Regraded Unclassified 162 JUN 5 1942 My dear Mr. President: I - enclesing report en our experts to some selected countries for the period ending May 20, 1942. Faithfully, (Signed) 1. Morgenthau, Jr. Secretary of the Treasury The President, The White House. Enclosure. nm C. capico to white HDW:meh 6/3/42 By Messenger Winneliss Ret to decip office Regraded Unclassified SECRET 163 June 2, 1942 Exports to Russia, Free Chima, Burma and other blocked countries, as reported to the Treasury department during the ten-day period ending May 20, 1942 1. Exports to Russia Exports to Russia as reported during the ten-day period ending May 20, 1942 amounted to about $18,000,000 as compared with approximately $67,000,000 during the similar period in April. Motor trucks and dried 988 products were the principal items. Military equipment exported included 9 medium bombers, 22 light tanks and 2 medium tanks. (See Appendix C.) 2. Exports to Free China and Burna Exports to Free China during the ten-day period ending May 20, 1942 amounted to about $1,900,000, of which military equipment accounted for more than half. (See Appendix D.) Exports to Burne amounted to $5,000. (See Appendix E.) 3. Exports to France Exports to France during the period under review amounted to $20,000. 4. Exports to other blocked countries Exports to other blocked countries are given' in Appendix A. Most important were exports to Switzerland and Portugal amount- ing to $112,000 and $124,000, respectively. ISF/efs 6/2/42 Regraded Unclassified STRICTLY CONFIDENTIAL SUMMARY OF UNITED STATES 164 DOMESTIC EXPORTS TO SELECTED COUNTRIES AS REPORTED To THE TREASURY DEPARTMENT FROM EXPORT DECLARATIONS RECEIVED DURING THE PERIOD INDICATED 1/ July 28, 1941 to May 20, 1942. (In thousands of dollars) July 28 to Period ended Period ended Total April 30 May 10 6/ May 20 Domestic Exports 5. % R. $448,689 $28,652 $17,977 8495,318 red China 73,693 296 1,872 75,861 true 2/ 12,196 - 5 12,201 ganes 3/ 36 - 20 56 pain 2,849 5/ 5/ 2,649 altserland 10,006 5/ 112 10,118 Leden 17,646 85 5/ 17,731 Tortugal 8,795 5/ 124 8,919 rench North Africa w 6,283 - - 6,283 reasury Department, Division of Monetary Research June 1, 1942. Many of the export declarations are received with a lag of neveral days or more. Therefore this compilation does not accurately represent the actual shiment of a particular period. The longer the period covered, the closer will these figures come to Department of Connerce revised figures. From September 11, 1941 to date - it is presuned that a large percentage of aterial listed here, consigned to Farms, 10 destined for Free China, Includes both Compied and Unoccupied France. no breakdown is obtainable from Department of Comerce. Includes liorooco, Algeria, and Tunisia. Less than 5500. Due to changes in reporting procedure by the Department of Commerce, this report is incomplete for the period indicated. Tirl 6/1/42 Regraded Unclassified SECRET APPENDIX 3 Exports from the U. 8. to Free Chima, Durma md U. S. 8. R. as reported to the Treasury Department test July 28, 1942 - May 20, 1942 (Thousends of Dellars) 1/ Exports to Exports to Exports to Pree China Burna 3/ U.S.S.R. July 28 e Aug. 2 395 4,523 Aug. 4 - Aug. 2 - 551 Ang. 11 - Aug. 16 309 986 Aug. 18 - Aug. 23 2 2,735 Aug. 25 - Aug. 30 1 1,023 Sept. 2 - Sept. 6 204 4,280 Sept. 8 - Sept.13 2,281 5,217 Sept.15 - Sept.20 3,822 752 Sept. 22- Sept .27 110 2,333 Sept.29 - Oct. 4 1,225 Cet. 6 - Oct. 11 5,312 1,157 6,845 Ost. 13 - Oct. 18 5 35 Oct. 20 - Oct. 25 269 403 Oct. 27 - Nov. i 4,772 58 Nov. 3 - Nov. 8 1,672 342 Nov. 10 - Nov. 15 2,851 88 Nov. 17 - Nov. 22 1,228 1,021 Nov. 24 - Nov. 29 3,259 1,364 Doe. 1 - Des. 6 791 65 Des. 8 - Dec. 13 2,337 18 Des. 15 - Dec. 20 8 Des. 22 - Des. 27 1 196 1,829 Des. 29 - Jan. 3 35 2 Jm. 5 - Jam. 10 92 1,073 Jan. 12 - Jam. 17 1,695 447 5,874 Jam. 19 - Jem. 24 - - Jam. 26 - Jam. 31 6,938 923 Feb. 1 - Feb. 10 w 4,889 1,054 13,315 Pob. 10 - Feb. 20 4,853 583 26,174 Pob. 20 - Feb. 28 5/ 2,921 - 28,119 Mar. 1 - Mar. 10 2,879 25 32,502 Mar. 10 - Mar. 20 8,058 NW ID 28,556 Mar. 20 - Mar. 31 6/ 2 2 42,435 Apr. 1 - Apr. 10 4,836 447 Apr. 11 - Apr. 20 5.335 639 66,906 Apr. 21 - Apr. 30 2,827 - 50,958 May 1 . May 10 1/ 296 - 28,632 May 11 - May 20 1,872 5 18,000 Total $78,464 $11,088 0495,832 1. These figures are in part taken from copies of shipping manifests. 2. Figures for experts to Free China during these weeks include exports to Rangoen which are presumed to be destined for Free China. Regraded Unclassified SECRET 166 Page 2 Appendix B 3. It is presumed that a large persentage of exports to Burna are destined for Free China. 4. Beginning with February 1 figures will be given for 10-day period instead of week except where otherwise indicated. 5. 8-day period. 6. 11-day period. 7. Due to changes in reporting procedure by the Department of Commerce this report is incomplete for the period indicated. Treasury Department, Division of Monetary Research June 2, 1942 ISF/efs 6/2/42 Regraded Unclassified SECRET 167 APPENDIX c Principal Exports from U. 3. to U. s. s. R. as reported to the Treasury Department during the ten-day period ending May 20, 1942 Unit of Quantity Value Quantity (Thouse de of dollars) TOTAL EXPORTS $ 18,000 Principal Items: Moter trucks No. 2,306 3,530 Dried 088 products lb. 2,194,409 2,278 Landplenes 1,409 Medium bombers (2 engines) No. 9 Observation plane parts foressembly - - Ammunition 1,007 75 m. high explosives No. 61,614 32 - high explosives No. 50,395 37 m. armor piercing No. 34,000 75 m. armor piereing No. 8,590 30 caliber No. 500,000 Sanaage, canned lb. 2,800,115 952 Pork, eanned lb. 2,199,952 715 Aireraft engine parts and accessories - - 688 Military tanks 684 Light tanks No. 22 Medium tanks No. 2 Lard lb. 4,408,323 675 reasury Department, Division of Monotary Research June 2, 1942 SF/efe 1/2/42 Regraded Unclassified SECRET 168 APPENDIX D Principal Exports from V. S. to Free China as reported to the Treasury Department during the ten-day period ending May 20, 1942 (Thousands of Dellars) TOTAL EXPORTS $ 1,872 Principal Items: Military equipment 1,069 Printed matter 623 writing paper Auto replacement parts Radio transmitters, tubes and parts 17 Relief supplies 17 Lathes 16 Treasury Department, Division of Monetary Research June 2, 1942 ISP/efs 6/2/42 Regraded Unclassified SECRET 169 APPENDIX B Principal Exports from U. S. to Burna as reported to the Treasury Department during the ten-day period ending May 20, 1942 (Thousands of Dollars) TOTAL EXPORTS #5 Principal Items: Relief supplies . drugs and biologies Relief supplies - Surgical and hospital NW Treasury Department, Division of Monetary Research June 2, 1942 ISP/efs 6/2/42 Regraded Unclassified Treasury Department 170 Division of Monetary Research Date June 3 1942 To: Miss Chauncey From: Mr. White The tables for transmittal to the Secretary of State, the Coordinator of Information and Mr. Perkins differ from those being sent to the President in that certain military figures are not broken down. SECRET 171 June 2, 1942 Exports to Russia, Free China, Burma and other blocked countries, as reported to the Treasury department during the ten-day period ending May 20, 1942 1. Exports to Russia Exports to Russia as reported during the ten-day period ending May 20, 1942 amounted to about $18,000,000 as compared with approximately $67,000,000 during the similar period in April. Military equipment accounted for approximately one- fourth of the total. (See Appendix C.) 2. Exports to Free China and Burma Exports to Free China during the ten-day period ending May 20, 1942 amounted to about $1,900,000, of which military equipment accounted for more than half. (See Appendix D.) Exports to Burma amounted to $5,000. (See Appendix E.) 3. Exports to France Exports to France during the period under review amounted to $20,000. 4. Exports to other blocked countries Exports to other blocked countries are given in Appendix A. Most important were exports to Switzerland and Par tugal mount- ing to $112,000 and $124,000, respectively. ISF/efe 6/2/42 Regraded Unclassified STRICTLY CONFIDENTIAL 172 SUIMARY OF UNITED STATES DOMESTIC EXPORTS TO SELECTED COUNTRIES AS REPORTED TO THE TREASURY DEPARTMENT FROM EXPORT DECLARATIONS RECEIVED DURING THE PERIOD INDICATED y July 28, 1941 to Pay 20, 1942. (In thousands of dollars) July 28 to Period ended Period ended Total wril 30 May 10 6/ May 20 Domestic Exports S. & R. $448,689 $28,652 $17,977 $495,318 free China 73,693 296 1,872 75,861 urna 2/ 12,196 - 5 12,201 rance 3/ 36 - 20 56 rain 2,849 5/ 5/ 2,849 'tserland 10,006 5/ 112 10,118 weden 17,646 85 51 17,731 fortugal 8,795 5/ 124 8,919 rench liarth Africa w 6,283 - - 6,283 Treasury Department, Division of Monetary Research June 1, 1942. Many of the export declarations are received with a lag of several days or more. Therefore this compilation does not accurately represent the actual shipment of a particular period. The longer the period covered, the closer will these figures come to Department of Commerce revised figures. Prom September 11, 1941 to date - - it is presumed that a large percentage of raterial listed here, consigned to Burna, is destined for Free China. Includes both Occupied and Unoccupied France - no breakdown is obtainable from repartment of Commerce. Includes Horocco, Algeria, and Tunisia. V Less than 3500. Due to changes in reporting procedure by the Department of Comeroe, this report is incomplete for the period indicated. Mirl 6/1/42 Regraded Unclassified SECRET 173 APPENDIX D Exports from the U. S. to Free China, Burns md U.S.S.R. as reported to the Treasury Department July 28, 1941 - May 20, 1942 (Thousands of Dollars) Exports to Exports to Exports to Free China Burma 31 U.S.S.R. July 28 - Aug. 2 395 4,323 Aug. 4 - Aug. 2 - 552 Aug. 11 - Aug. 16 309 986 Aug. 18 - Aug. 23 2 2,735 Aug. 25 - Aug. 30 1 1,023 Sept. 2 - Sept. 6 204 4,280 Sept. 8 - Sept.13 2,281 5,217 Sept.15 - Sept.20 3,822 752 Sept.22 - Sept.27 110 449 2,333 Sept.29 - Oct. 4 1,225 684 323 Oct. 4 - Oct. 11 5,312 1,157 6,845 Oct. 13 - Oct. 18 5 35 1,924 Oct. 20 - Det. 25 269 403 5,623 Oct. 27 - Nov. 1 4,772 58 4.484 Nov. 3 . Nov. 8 1,672 342 4.552 Nov. 19 - Nov. 15 2,851 88 2,677 Nov. 17 - Nov. 22 1,228 1,021 3,581 Nov. 24 - Nov. 29 3,239 1,364 2,436 Dec. 1 - Dec. 6 791 6& 3,609 Dec. 8 - Dec. 13 2,337 18 12,040 Dec. 15 - Dec. 20 111 8 4,580 Dec. 22 - Dec. 27 1 196 1,829 Dec. 29 - Jan. 3 35 2 3.993 Jan. 5 - Jm. 10 91 1,073 8,247 Jan. 12 - Jan. 17 1,695 447 5,874 Jan. 19 - Jan. 24 - - 3,885 Jan. 26 - Jan, 31 6,958 923 9,608 Feb. 1 - Feb. 10 4,889 1,054 13,315 Feb. 10 - Feb. 20 4.853 583 26,174 Feb. 20 - Feb. 28 5/ 2,921 - 28,119 Mar. 1 - Mar. 10 2,879 23 32,509 Mar. 10 - Mar. 20 8,058 2 NV 28,556 Mar. 20 - War. 31 2 42,435 Apr. 1 - Apr. 10 4,836 447 51,698 Apr. 11 - Apr. 20 5,335 639 66,906 Apr. 21 - Apr. 30 2,827 - 50,958 Kuy 1 - May 10 1/ 296 - 28,652 May 11 - May 20 1,872 5 18,000 Total $78,464 $11,088 $495,832 1. These figures are in part taken from copies of shipping manifests. 2. Figures for exports to Free China during the se weeks include exports to Rangoon which are presumed to be destined for Pree China. Regraded Unclassified SECRET 174 Appendix B Page 2 3. It is presused that charge percentage of exports to Burma are destined for Free China. 4. Beginning with February 1 figures will be given for 10-day period instead of week except where otherwise indicated. 5. 8-day period. 6. 11-day period. 7. Due to changes in reporting procedure by the Department of Cormerce this report is incomplete for the period indicated. Treasury Department, Division of Monetary Research June 2, 1942 6/2/42 Regraded Unclassified SECRET 175 APPENDIX C Principal Exports from U. S. to U.S.S.R. as reported to the Treasury Depar trent during the ten-day period ending May 20, 1942 (Thouse da of Dollars) TOTAL EXPORTS $ 18,000 Principal Items: Military equipment 4,390 Motor trucks 3,530 Dried 088 products 2,278 Sausage, canned 952 Pork, canned 715 Lard 673 Casing and oil-line pipe 547 Beans 480 Sole leather 390 Steel sheets, black 359 Copper wire, insulated 341 Treasury Department, Division of Monetary Research June 2, 1942 ISF/efs 6/2/42 Regraded Unclassified SECRET 176 APPRNDIX D Principal Exports from U. S. to Free Chima as reported to the Treasury Department during the ten-day period ending May 20, 1942 (Thousands of Dollars) TOTAL EXPORTS $ 1,872 Principal Items: Nilitary equipment 1,069 Printed matter 623 Writing paper 37 Auto replacement parts 26 Radio transmitters, tubes and parts 17 Relief supplies 17 Lathes 16 Treatury Department, Division of Wonstary Research June 2, 1942 6/2/42 Regraded Unclassified SECRET 177 APPENDIX E Principal Exports from U. 8. to Burma as reported to the Treasury Department during the ten-day period ending May 20, 1942 (Thousands of Dollars) TOTAL EXPORTS #5 Principal Items: Relief supplies - drugs and biologies Relief supplies - surgical and hospital NW Treasury Department, Division of Monetary Research June 2, 1942 ISF/efe 6/2/42 Regraded Unclassified 178 THEASURY DEPARTMENT OFFICE OF THE SECRETARY June 5. 1942 CONFIDENTIAL Received this date from the Federal Reserve Bank of New York, for the confi- dential information of the Secretary of the Treasury, compilation for the week ended May 27. 1942, showing dollar dis- bursements out of the British Empire and French accounts at the Federal Reserve Bank of Nov York, and the means by which these expenditures were financed. A emk-6/4/42 Regraded Unclassified 179 C 0 P Y FEDERAL RESERVE BANK OF NEW YORK June 4, 1942 CONFIDENTIAL Dear Mr. Secretary: Attention: Mr. H. D. White I am enclosing our compilation for the week ended May 27, 1942, showing dollar disburse- ments out of the British Empire and French accounts at this bank and the means by which these expendi- tures were financed. Faithfully yours, /s/ L. W. Knoke L.W. Knoke, Vice President. The Honorable Henry Morgenthau, Jr., Secretary of the Treasury, Washington, D. C. Enclosure Copy:vw:6-5-42 Regraded Unclassified AMALYSIS OF BRITISH AND FRENCH ACCOUNTS (In Millions of Dollars Wook Ended May 27, 1942 D (BRITISE GOVERNMENT) DEBITS CREDITS DEBITS CREDITS Proopeds of Net Incr. Byt Incr. Gov't Sales of (+) or dov't Total Expendi- Other Total Securities Other Decr.(-) (-) Total Expendi- Other Total of Gold Other I PERIOD Debits tures(a) Debite Credite Debite tares (d) Debite Credits Sales Credits in Gold (000) (b) Credita(s): in Balance First year of war (8/29/39-8/28/40)* 1,7932 605.6 1,187.6 1,828.2 1,356.1 52.0 420.1 * 35.0 866.3(e) 06.6(e) 449.7 1,095.3(a) 900.2 195.1(e) +229.0 War period through 2,792.3 1,425.6 1,356.7 2,793.1 2,109.5 108.0 575.6 + 10.8 878.3 421.4 456.9 1,098.4 900.2 198.2 +220.1 December, 1940 Second year of war (8/29/40-8/27/43)** 2,203.0 1,792.2 410.8 2,189.8 1,193.7 274.0 722.1 - 13.2 38.9 4.8 34.1 8.8 - 8.8 - 30.1 1941 Aug, 28 - Oct. 1 140.9 105.9 35.0 176,2 20.1 2.0 154.1 + 35.3 0.3 - 0,3 0.5 - 0.5 4 0.2 Oct. 2 - Oct. 29 109.0 77.3 31.7 150,9 0,8 150.1 + 41.9 0,3 0.3 0.3 0.3 - - - - Oct. 30 - Dec. 3 156,1 111.6 44.5 134,6 - 1.0 133.6 - 21,5 16,1 16.1 0.4 - - 0.4 - 15.7 Dec, 4- Dec. 31 88,4 69.6 18,8 51,5 51.5 - 36.9 0,8 - 0,8 0,4 - 0,4 - 0.4 - - 1942 Jan. 1- Jan. 28 102.3 73.2 29.1 69.3 - 0.5 68.8 - 33.0 0,2 - 0.2 0.4 - 0.4 + 0.2 Jan. 29 - Feb. 25 87.2 63.8 23.4 57.2 - 1.0 56.2 - 30,0 - - - 0.3 - 0.3 + 0.3 + 0.3 Feb. 26. Apr. 1 121.4 86.4 35.0 171.4 - - 171.4 + 50.0 0.1 - 0.1 0.4 - 24 Apr. 2 - Apr. 29 98.1 64.2 33.9 70.6 - 0.5 70.1 - 27.5 0,2 - 0,2 0.4 - 0.4 + 0.2 WEEK ENDED: 7.1 78.2 - 78.2 + 47.2 - I - 0.1 - 0.1 + 0.1 May 6 31.0 23.9 - 19.8 15.9 3.9 14.6 - 14.6 - 5.2 - - - - - I . - 13 13.0 3.4 26.1 - - 26.1 + 9.7 - - - 0.1 - 0.1 + 0.1 20 16.4 28.6 - 28.6(f) + 8.1 - - - - # I - 22 20.5 15.8 4.7 1 Transfers from British Purchasing Commission to Average Weekly Expenditures Since Outbreak of War Bank of Canada for French Account France (through June 19, 1940) $19.6 million England (through June 19, 1940) 27.6 million Week ended May 27, 1942 - million Cumulation from July 6, 1940 162.7 million *For monthly breakdown see tabulations prior to April 23, 1941. England (since June 19, 1940) 37.9 million **For monthly breakdown see tabulations prior to October 6, 1941. (See attached sheet for other footnotes) Regraded Unclassified (a) Includes payments for account of British Purchasing Commission, British Air Ministry, British Supply bard, State Supply Timber Control, and Ministry of Shipping. (b) Estimated figures based on transfers from the New York Agency of the Bank of Nontreal, which apparently represent the proceeds of official British sales of American securities, including those effected through direct negotiation. In addition to the official selling, substantial liquidation of securities for private British account occurred, particularly during the early months of the war, although the receipt of the proceeds at this Bank cannot be identified with any accuracy. According to data supplied by the British Treasury and released by Secretary Morgenthau, total official and private British liquidation of our securities through December, 1940 amounted to $334 million. (e) Includes about $85 million received during October, 1939 from the accounts of British authorised banks with New York banks, presumably reflecting the requisitioning of private dollar balances. Other large transfers from such accounts since October, 1939 apparently represent the acquisition of proceeds of exports from the sterling area and other currently accruing dollar receipts. (d) Includes payments for account of French Air Commission and French Purchasing Commission. (e) Adjusted to eliminate the effect of $20 million paid out on June 26, 1940 and returned the following day. (f) Includes: 38.0 million transferred from account of Commonwealth Bank of Australia here. 5.7 - received from Defense Supplies Corp. representing final payment on 56 cargoes of Australian wool. 5.2 " received for credit of U. S. Army. 3.9 . presumably representing proceeds of wool exports to the United States, Regraded Unclassified ANALYSIS OF CANADIAN AND AUSTRALIAN ACCOUNTS Strictly (In Willions of Dollars) Nesk Ended, MAY 27, 1942 Government) DEBITS 1.99 FUITS Transfers Transfers from Official Transfers 3 Proceeds British A/C Net Incr. 3 Official of (+) or Official of Total British Other Total Gold For Own For French Other Decr. (-) Total British Other Total Gold Other PERIOD Debite A/C Debite Credits Sales A/C A/C Credite in Balance Debite A/C Debite Credits Sales Credits in First year of var (8/29/39-8/28/40)* 323.0 16.6 306.4 504.7 412.7 20.9 38.7 32.4 +181,7 31.2 3.9 27.3 36.1 30.0 6.1 + 49 War period through December, 1940 477-2 16,6 460.6 707.4 534,8 20,9 110,7 41,0 +230.2 57.9 14,5 7'E" 62.4 50.1 12.3 + 4.5 Second year of war (6/29/40-8/27/41)** 460.4 - 460.4 462,0 246.2 3.4 123,9 88.5 + 1.6 72,2 16,7 55.5 81,2 62.9 18.3 + 9.0 Aug. 28 Oct. 1 23.1 - 23.1 52.2 21.2 - - 31.0 + 29.1 10.7 0.5 10.2 2.8 2.1 0.7 - 2.9 1941 Oct, 2- Oct. 29 37.4 - 37.4 19,7 11.9 - - 7,8 - 17.7 8,2 5.5 2,7 B.O 5.9 2.1 . 0.2 Octs 30 - Dec. 3 52.8 0.1 52.7 32,5 19.3 - - 13,2 - 20.3 10.3 6.9 3.4 11,6 9,0 2.6 + 1,3 47.7 47.7 22.2 17.3 - - Dasa 4- Dec. 31 - 4,9 - 25.5 3,9 1,8 2,1 2,8 0,2 2.6 - 1.1 1942 Jan. 1 - Jan. 28 39.5 - 39.5 33.0 27.0 - - 6,0 - 6.5 4.5 - 4.5 10,8 - 10,8 + 6.3 34.1 34.1 35.7 12,4 - - Jan. 29 - Feb. 25 - 23,3 + 1.6 8.4 5.3 3.1 1,6 - 1.6 - 6.6 Fab. 26- Apr. 1 46.5 - 46.5 99.3 20,5 7.7 - 71.1 + 52,8 7.8 1,3 6.5 3.6 - 3.6 - L2 Apr. 2- Apr. 29 37.4 37.4 35.9 14.2 - - - 21.7 - 1.5 10.9 8.0 2.9 16,8 - 16,8 * 5.9 BEEK ENDED: 5.9 10.3 3.5 - - 6.8 5.9 + 4.6 1.2 May 6 0.5 1.2 - 0,3 I 0,3 - 1.6 12.4 12.6 5.4 I - 7.2 +0.2 12.4 0.3 - 13 0.3 2.1 - - 2.1 + 1.8 6.5 10.6 10.6 6.6 0.1 - - 4.0 0.5 - 0.5 20 10.4 - E 10,4 + 9.9 - 13.8 13.1 6.5 - - 6.6(a) - 0,7 27 13.8 8.3 8.0 0.3 0.9 - 0,9 - 7.6 Weekly Average of Total Debite Since Outbreak million of Mar a For monthly breakdown see tabulationsprior to April 23, 1941. Through May 27, 1942 $ 8.0 -- For monthly breakdown see tabulations prior to October 8, 1941. (a) Includes $3.7 million representing U. S. Government checks deposited by Mar Supplies, Ltd. Regraded Unclassified 183 BRITISH AIR COMMISSION 1785 MASSACHUSETTS AVENUE WASHINGTON, D.C. TELEPHONE HOBART 9000 LEASE QUOTE EFERENCE NO. With the compliments of British Air Commission who enclose Statement No. 35 - Aircraft Despatched - for week ended June 2, 1942. The Honourable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. C. June 5, 1942. 184 MOST SECRET FLIGHT DEL'D DESTINATION ASSEMBLY POINT BY SEA BY AIR FOR USE IN CAN SSMA Canada Canada 9 17 Crane IA INSOLIDATED U.K. Canada en route 3 24 D DEING U.K. U.K. 2 oston III PRTISS ITTIHAWK IA Australia Sydney 14 2A Middle East Port Sudan 18 DCKHKED New Zealand New Zealand 8 JDSON IIIA 5 29A AC 151 U.K. Canada on route ANN MARTIN Basrah 7 ALTIMORE Russia 8. Africa Capatown 4 ORTH AMERICAN U.K. 36 USTANG U.K. 25B U.K. Canada en boute 4 "ARMAN 33 If 27 Ganada Canada ULTER ENGEANCE Karachi 9 India 98 12 42 TOTALS BRITISH AIR COMMISSION June 5th, 1942. Regraded Unclassified 185 BRITISH AIR COMMISSION 1785 MASSACHUSETTS AVENUE WASHINGTON, D.C. TELEPHONE HOBART 9000 LEASE QUOTE REFERENCE NO With the compliments of British Air Commission who enclose weekly Statement No. 54, covering Aircraft Flight Delivery as at June 2, 1942. The Honourable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. C. June 5, 1942. Regraded Unclassified 186 CONFIDENTIALS REPORT JUNE 3, 1942 LOCATIONS or OCEANIC FLIGHT DELIVERY AIRCRAFT - WERK IX NEFORT ID. 56 (Covering Norements through June 2. 1942) 1. LINERATOR II off Contract I-VII (A) Never taken by A.L.Y. 55 delivered to U.K. 5 delivered to M.E. (1 creabed in Africa) 2 in Iseland: as 3 at Nontreal 65 (B) Taken and Returned or Levt by A.A.I. 14 delivered to U.K. 3 in Ferry Service (delivered to Montreal) 3 at Nontreal 1 at Detroit 3 to be returned 6 retaires by A.A.F. " kept by A.A.F. 74 2a HUDSON Y (LONG RAMOR ) off Contract A-1749 173 delivered to U.K. 39 delivered to Debert 1 at Gander 4 at Mentreal ( for Debert ) 2 under repair 6 creshed (2 in U.S., 4 after export) 225 3a HJDSON III (LONG HANKIE) off Contract 1-68 211 delivered to U.K. 4 at Montreal 1 at Detroit 20 for U.S.A.A.F. Familiarisation Program (including 1 known crash) 9 erashed (after export) 245 be VERTURAS (A) LONG RANGE off Contract 1-346 44 delivered to U.K. 8 is Iceland , st Goose 6 at Gander 14 - route Gander 4 at Penfield Ridge 9 at Montreal 156 at Detreit (including 45 for West Palm Beach - 15 returned from Montreal, and 30 to go to Montreal) 3 - route Detroit 14 at West Palm Beach 1 en reute West Palm Beach 1 at Wright Field 4 crashed (after export) (m) NEWT BANGE 8 at Markroal 4 at Detroit 1 - route Detroit 2 at West Palm Beach 2 et Long Beach (10 shipped to U.K. by See 27 Total reported any from plant) (c) LONG BANCE atf Contract A-1748 23 at Detroit 1 - route Detroit 31 U.S. SECRET - JUNE 3. 1943 REPORT LOCATIONS OF OCEANIC FLIGHT DELIVERY AIRCRAFT - PRPORT NO. " 5. CATALINAS (A) off Contracts A-2587, F-210. 1-371. AUB-58. GAX-76 105 delivered to U.K. 9 delivered to Singapore 27 delivered to Australia 8 at Dartmouth 2 in Beranda 2 crashed (after export) 153 (B) PBY 5-A's off Beg Reg. 10772 10 delivered to U.K. 2 at Montreal 12 6. LODESTARS (A) 0-59'm off L/L Contract AC-53. BSO Reg. 1049 7 departed Ittend. or West Palm Beach 3 taken by A.A.T. 10 (B) 0-60's off L/L Contract A0-53. BSC Reg. 1069 11 departed Miemi or West Palm Beach 1 at Miami 3 at West Palm Beach 15 (c) Reassigned 0-60 (ATTY Release) 1 en route Nest Palm Beach 7. LEND-LEASE HUDSON (A) HUDSON III-A off Contract AO-5 116 delivered to Debert 4 at Montreal 2 at Ottams 13 at Montreal for Debert 3 at Detroit for Debart 5 under repair 2 at Long Beach (transition training) 32 for China 20 diverted to U.S. Navy 153 taken by A.A.F. 6 crashed (5 in U.S., 1 after export) 856 (6) shipped: 49 to Australia; 12 to New Zealand 417 Total off Contract (m) HUDSON III-A off Contract AC-151 152 delivered to U.K. 18 at Gander 3 en route Gander 9 at Montreal 13 at Detroit 1 en route Detroit 3 at Long Beach 2 for China 9 crashed (3 in U.S., 6 after export) 210 (82 shipped (1 crashed (on acceptance flight) 298 (c) SUDSON VIA off Contrast AC-472 3 st Miami 24 at Nashville 1 en route Mashville 45 at Detroit 1 on route Detroit 3 U.S. SECRET - BRITISH MOST SECRET Regraded Unclassified 100 Page 3 THE DONFIDENTIAL REPORT LOCATIONS OF OCEANIC FATURE DELIVERY AIRCRAFT - WESKLY REPORT NO. as (Covering Novements through June & 1942) & 0-53's off BEC Beg. 1050 10 departed Miemi L B-17 Fa (Ayny Release) 10 delivered to U.E. (modified) 2 at Montreal (sodified) 4 at Detroit (nodified) 2 at Wright Field (medified) 31 at Chayenne (modification center) 12 taken back by A.A.F. T9 10. 3-26 D'a (Army Release) 9 delivered to U.S. (unsodified) 3 delivered to U.K. (modified) 1 in Iceland (unnodified) 1 at Gender (modified) 1 at Montreal (unsodified) 8 at Montreal (medified) 13 at LeGuardia Field (mod. center) 13 on route IsQuardia Field 2 creshed (umodified) (1 en route mod. center, 1 after export) 1 creabed (modified) (after export) 52 11. B-25 I's (Army Release) 3 delivered to U.K. (modified) 7 at Montreal (modified) 12 et Detroit (modified) 1 at St. Paul (modification center) 23 12. 3-25 C's (Avay Release) 40 at Detroit (modified) 2 - route Detroit (modified) 44 at Kansas City (modification center) 1 at St. Panil (modification center) 3 - route Kansas City 29 taken back by A.A.F. 126 13. B-26 A (Avey Release) 2 at Detroit (modified) 65 at Omaha (medification center) 2 - route Omaha 2 ereshed (1 en route mod.center; 1 at md. center) 71 U.S. SECRET - BRITISH MOST SECRET Regraded Unclassified 189 1. 1942 DEPARTIAL REPORT NO. 0-55 LOCATIONS OF OCEANIC ELIGHT DELIVERY AIRCRAFT - WEEKLY REPORT K. 9 (Covering Novements through June 2. 1942) 2 2 3 A 5 6 7 8 9 10 11 18 13 TOTAL TED KINGDOM $ 173 211 44 115 152 10 12 3 789 5 DOLE EAST 5 27 27 TRALIA 9 9 IGAPORE 2 8 1 11 aland , Ferry Service 3 , 3 000 1 26 ader 1 6 18 route Gander 14 3 17 rtsouth 8 - 6 4 4 17 2 26 2 9 7 E street 4 I field Ridge bert 116 19 39 2 2 - irmida 2 2 parted Mismi or W.Palm B. 18 10 28 and 1 8 et Pain Beach 16 3 19 route W.Palm Beach 1 2 1 40 2 304 troit 1 1 183 61 4 12 12 2 2 16 route Detroit 24 24 ashville route Mashville 1 1 2 3 right Fiald 3 be returned by A.A.F. 3 31 13 1 52 65 162 dification centers 13 3 2 18 route mod.centers 7 mg Beach 2 5 ader repair 2 5 3. or China 34 20 diverted to U.S. Havy 20 20 .... 7am. Pro. 20 200 aken by A.A.F. 44 , 153 12 29 47 staken by A.A.F. 6 reshed 9 4 2 15 3 2 4 6 TOTAL 245 325 165 26 645 30 w at 23 185 71 2103 199 225 Dolumns 1. Liberator II off Gentract 7-677 2. Budson 1 (Long Range) off Centract 1-1748 3. Budsen III (Long Range) off Contract A-68 4. 5. Venture off Centrests Contrasts L-2587, F-210, 1-37, AUB-58, GAM-78; and BSC Release Req. 10772 0-60 4-344 at A-1749 7. 6. Hudsen Lodestars(S): III-A off L/L Centrasts MD-5 and 40-151 and Hudson VI-A Flying Bosts off 1 0-60) off L/L Contrast 10-53 and 1 reassigned off Any L/L Contrast s. 0-53 eff NO Req. 1050 9. B-17 E (Amy release) 10. Dias D (Aray Belease 11. B-25 1 (Army Release 12. B-25 0 (Any Release 13. 2-26 A (Army Release) AIRPRAME DIVISION PLANNING & PRODUCTION DEPARTMENT 1111 AIR 00 U.S. SECRET - BRITISH MOST SECRET Regraded Unclassified June 3. 1942