Volume 558, August 7 – August 13, 1942

.DIARY Book 558 August 7 - 13, 1942 - A - Book Page Airplanes Aircraft flight delivery as at August 4, 1942 - British Air Commission report - 8/7/42 558 58 Shipments to British Forces - Hoflich report - 8/7/42, 8/12/42 65,178 Aircraft despatched, week ending August 4, 1942 - British Air Commission report . 8/10/42 117 - C - Canada Contracts for munitions during July - 8/13/42 263 China Japanese financial measures in occupied areas outside China - White memorandum - 8/7/42 70 Correspondence Mrs. Forbush's mail report - 8/7/42 48 Coy, Wayne See Financing, Government: War Savings Bonds If Morgenthau, Henry, Jr. Cuba See Gold - E - Economic Stabilization Authority See Inflation Explosives Treasury obliged to disapprove Ickes' request for trained investigators in connection with proper issuance of licenses - 8/7/42 44 - F - Financing, Government May 5 offering (2)% Registered Bond of 1962-67) reopened August 3; Bell reports on sales - 8/7/42.. 30 a) Report by Federal Reserve Districts - 8/8/42.. 83 b) Subscription report - 8/14/42: See Book 559, page 1 c) Closing of subscription books - - 8/14/42: Book 559, page 2 d) Subscription and allotment figures - - 8/15/42: Book 559, page 80 e) Number of subscribers, etc. - Heffelfinger advises that statistics appear in Treasury Bulletin only: Book 561, pages 99, 100, etc. Government securities recent changes in prices and yields: Haas memorandum - 8/7/42 31 - 1- (Continued) Book Page Financing, Government (Continued) Special bond offering, without interest, redeemable at par, suggested by White; HMJr says "not now" - 8/7/42 558 35 Vandenberg, Arthur H. (Senator, Michigan): Call for comprehensive fiscal program discussed at conference by Bell, Gaston, Kuhn, and Blough - 8/11/42 124 Refunding of Treasury obligations maturing during next three months - Bell memorandum - 8/13/42 207 War Savings Bonds: Film Industry: $3 billion drive - 8/7/42 36 a) List of actors and actresses: See Book 560, page 86 Roanoke, Virginia, visit by HMJr: Woodrum expresses pleasure - 8/8/42, 84,144 a) For speech, see Book 559 Voluntary vs. compulsory savings - Wayne Coy memorandum to FDR (August 6, 1942) 89 Retail Advisory Committee thanked for cooperation - 8/10/42. 96 Foreign Funds Control Under general supervision of Paul - Treasury Order No. 46 - 8/7/42 25 Motion Picture Industry: Willkie reports on negotiations with British - 8/11/42 123 Members of White's staff comment on industry - 8/14/42. 220 $2 million released by British Treasury on account of RKO - British Supply Council letter - 8/15/42: Book 559, page 214 a) Balance of $3.5 million must await settlement of negotiations with entire industry - 8/24/42: Book 561, page 234 Frankfurter, Felix Congratulates Treasury on Paul appointment - 8/7/42 26 - G - Gold Cuba: Three purchases of $5 million each discussed by Treasury and Cuban Embassy - 8/12/42 151 - I - India Conference; present: HMJr, White, and Mahindra (Indian Supply Mission) - 8/7/42 28 - I - (Continued) Book Page Inflation Economic Stabilization Authority: Draft of Executive Order as submitted by Rosenman - 8/12/42 558 172 First draft prepared by Treasury - 8/13/42 185 Bel1-Gaston-HMJr conversation after Bell and Gaston had talked to FDR - 8/13/42 190,204 Bell-Gaston-Paul-White-Bernstein conference after redrafting (see pages 15 and 27) - 8/14/42: See Book 559, page 3 a) HMJr dictates message for FDR thanking him for "protecting Treasury": Book 559, pages 10 and 25 Talk with Rosenman reported to HMJr by Bell: Book 559, page 32 HMJr's talk with Rosenman reported to Gaston - 8/15/42: Book 559, page 70 Tax section as drafted for Rosenman - 8/18/42: Book 559, page 187 Discussed at 9:30 meeting - - 8/21/42: Book 560, page 44 Paul formula for higher-bracket salary increase limitations - 8/21/42: Book 560, page 56 FDR overrules Rosenman and supports HMJr - conference; present: HMJr, Paul, B. Bernstein, Gaston, and Kuhn - 8/22/42: Book 560, pages 135 and 137 a) Paul's suggestion for over-all program: Book 560, page 139 International Relief Authority See Post-War Planning - J - Japan See China - L - Latin America Cuba: See Gold Lend-Lease United Kingdom: Federal Reserve Bank of New York statement showing dollar disbursements, week ending July 29, 1942 - 8/10/42 111 Report for week ending August 8, 1942 - 8/11/42 153 - X - Book Page Military Reports British operations - - 8/7/42, etc 558 79,91,92, 119,156,183, 270,272,275 Royal Air Force Activity, July 1942 - 8/7/42 80 Office of War Information report - 8/7/42 82 U.S.S.R.: Ambassador Maisky (Great Britain) off-the- record statement on Second Front - Hoflich report - 8/10/42 120 "War Worker Motivations" - Office of War Information report - 8/12/42 184 "Max Werner on Nazi Strategy" - Hoflich report - 8/13/42 274 Military Intelligence Division report . - 8/13/42 275 "The War This Week, August 6-13, 1942" - Office of Strategic Services report - 8/13/42 277 Morgenthau, Henry, Jr. Wayne Coy cites HMJr as "one of best cooperators in the Government" - 8/12/42 157 Motion Picture Industry See Financing, Government: War Savings Bonds n Foreign Funds Control - N - Narcotics Opium: Derivatives now limited to four companies; inclusion of others discussed at 9:30 meeting - 8/7/42 10 - 0 - Oliphant, Malcolm HMJr's recommendation to Commanding Officer, Minter Field, Lerdo, California - 8/13/42 268 Opium See Narcotics - P - Paul, Randolph Treasury congratulated by Frankfurter and Shafroth on Paul's appointment as General Counsel - 8/7/42, 8/11/42 26,146 Post-War Planning International Relief Authority: Meeting in Acheson's office (State Department) - 8/11/42 127 a) Draft 2. 129 (See also Book 559, page 45) - P - (Continued) Book Page Price Control See Inflation Processing Tax Board of Review Proposed Executive Order not entirely satisfactory to Paul and Cairns - 8/7/42 558 5 Procurement Division Warehousing coordination throughout United States planned by Mack - 8/8/42 86 - R - Relief and Rehabilitation Administration See Post-War Planning Retail Advisory Committee See Financing, Government: War Savings Bonds Revenue Revision Ruml, Beardsley: Suggests that he discuss plan with HMJr - - 8/7/42 42 Roosevelt, Eleanor Community Chest solicitation in plants operating under War Department contracts - correspondence - 8/12/42 164 Rosenman, Samuel - - Judge See Inflation Ruml, Beardsley See Revenue Revision - S - Shafroth, Morrison Congratulates Treasury on appointment of Paul - - 8/11/42 146 Shipping Situation in July 1942 - Hoflich report - 8/12/42 182 Stabilisation Fund Report for June and July, 1942 - 8/10/42 100 - U - U.S.S.R. See Military Reports - V - Vandenberg, Arthur H. (Senator, Michigan) See Financing, Government - W - War Savings Bonds See Financing, Government Willkie, Wendell L. See Foreign Funds Control: Motion Picture Industry Woodrum, Clifton H. (Congressman, Virginia) See Financing, Government: War Savings Bonds August 7, 1942 9:30 a.m. GROUP Present: Mr. Bell Mr. Buffington Mr. Gaston Mr. Graves Mr. Sullivan Mr. Paul Mr. Blough Mr. Thompson Mr. Haas Mr. Viner Mr. Schwarz Mr. Gamble Mr. White Mr. Kuhn Mrs. Klotz H.M.JR: One of the things I wanted to bring the people up to date on who will be here while I am away is this: I wrote a letter to Nelson on this withholding tax. Have you got the last paragraph? MR. SULLIVAN: Yes, sir, I have. H.M.JR: Would you mind reading it? I mean, just tell them briefly what it is. MR. SULLIVAN: The letter contains estimates that were made as to the amount of office equipment and business machinery that would be required by the Government to administer the withholding tax and required by industry to account for it on their own books. That estimate was made, and it came out that they would need a total of fifty-four thousand additional pieces of equipment for both Government and industry. The last paragraph reads as follows: 2 - 2 - - "The Revenue Act of 1942, which contains the provisions for a withholding tax has already passed the House and is now in hearings before the Senate Finance Committee. Will you please advise me whether in the event that Congress enacts this plan into law you can guarantee that the above equipment will be available to industry and to the Government in time so that the plan can go into operation on January 1,1943." H.M.JR: Now, I just want you people to know that because we haven't heard, and Sullivan is going to be away next week. And then I think that, John, this memorandum of Cann's should be circulated amongst those people here who are interested in this withholding tax. MR. SULLIVAN: Yes, that is the other question on the employees, you mean? H.M.JR: No, I got one, July 28, from Cann - Norman Cann. MR. SULLIVAN: Yes, sir. H.M.JR: That would be circulated amongst the people. Pretty nearly everybody is interested in this. It is like joint returns last year. I mean, a number of people were interested. This year they are not. But if you would circulate that. What I am trying to do is - and then this thing, which I haven't read and won t read before I leave, from John Sullivan - there is no date on it, that is funny. It came in yesterday. "The Bureau of Internal Revenue reports 460 complete inquiries on the effect of collection of part of the regular income tax at source" - wasn't that given to me yesterday? MR. SULLIVAN: Yes, sir. H.M.JR: In other words, John is available today, and I think that you ought to furnish the people with every- thing that you have furnished me. MR. SULLIVAN: I have already arranged for copies of that for Roy and Randolph. Harold has a copy of that. Regraded Unclassified 3 - 3 - H.M.JR: I don't want you to feel that just putting it on my desk means that I have got time to study this before I go, because I haven't. I want to circulate it SO that everybody who is interested in this - and Paul who goes up on the Hill. So anything that you furnish me or anything that I have done this last week in connection with that - I don't think there is anything but what I have mentioned here, is there, except my letter to Nelson? MR. SULLIVAN: That is all. H.M.JR: And this thing-- MR. SULLIVAN: I have kept Roy up to date on all of this, but I will get copies for everybody else. H.M.JR: You know who is interested. Pretty nearly everybody in this room is interested. MR. SULLIVAN: Yes, sir. H.M.JR: Now, George, this memorandum from you to me on the Department of Commerce estimate of consumer savings in the first two quarters of '42-- MR. HAAS: Yes, sir. H.M.JR: Well now, if you haven't already done that - I mean, you are on this committee with White and Blough. They ought to get a copy of that. MR. HAAS: That is right. I will give them a copy of the complete report, with some other material. H.M.JR: And, Harry, this preliminary report on expenditure rationing, who has got copies of that? MR. WHITE: Copies have been distributed, I think, to everyone who I thought might be interested. There are many other copies available. I was going to ask what you would like the next step to be. I presume Regraded Unclassified 4 - 4 - that there will be comments and suggestions which can be quickly incorporated in that draft and will probably be ready for you when you come back, if we get the comments and suggestions. H.M.JR: That will be very nice. Well, I made you chairman of the committee as far back as March 16, so will you stimulate it a little bit? MR. WHITE: All right, I will get whatever there is available. Then we will incorporate it in the re- port, and that is all we do, I gather, that is, until you take the next step. H.M.JR: That is right, until I have gotten over my indigestion - mental indigestion. Viner, you are in on this expenditure rationing, aren't you? MR. VINER: Yes, I have it. I haven't read the new one yet, but I will read it carefully. H.M.JR: And make comments? MR. VINER: Yes. H.M.JR: Right. Are you in on this withholding tax? MR. VINER: I don't think SO. MR. PAUL: We have discussed the general idea. MR. VINER: Yes, but I thought-- H.M.JR: This stuff that I am talking about that is coming in-- MR. BLOUGH: I don't think he has had access to the field study. 5 - 5 - H.M.JR: Will you? Now, at least that takes the responsibility off me for a week. Mr. Gaston? MR. GASTON: I haven't anything this morning. MR. SULLIVAN: The Executive Order on the Processing Tax Board of Review, which has been approved-- H.M.JR: A little louder. MR. SULLIVAN: The Executive Order abolishing the Processing Tax Board of Review, which has been approved by Larry Bernard, caused some doubts in the minds of Randolph and Huntington Cairns. H.M.JR: Because they are going to be in Washington. (Laughter) MR. SULLIVAN: No, no, I don't think so. I went through it and then I called Larry over at the Coast Guard and talked with him, and I think there is enough doubt. I know Randolph feels that this can be done in the tax bill legislatively, and I think that is the way to do it. H.M.JR: You are not kidding me on Friday morning, are you? MR. SULLIVAN: No, and I wasn't kidding you yester- day morning, but this has been approved by the General Counsel's office. Now, they turn thumbs down on it. H.M.JR: Now comes what? MR. SULLIVAN: Now they turn thumbs down on it, and say that it can't be done under the War Powers Act because that power is specifically limited to matters that promote the conduct of the war. H.M.JR: Well, John, why did you tell me yesterday that it would be done tonight? 6 - 6 - MR. SULLIVAN: It had been approved. H.M.JR: By whom? MR. SULLIVAN: Larry Bernard, acting for Ed. H.M.JR: And now who changed his mind? MR. SULLIVAN: Huntington Cairns and Randolph. H.M.JR: That is the trouble, you see. MR. SULLIVAN: I don't think it is trouble. I am inclined to believe, Mr. Secretary, that if we had gone ahead we might have gotten into trouble. H.M.JR: Were you relying entirely on-- MR. SULLIVAN: Entirely. H.M.JR: Now, we have got-- MR. SULLIVAN: No, I think these fellows are right. H.M.JR: Well, you know perfectly well you will never get it through Congress. MR. SULLIVAN: No, I don't know that at all, sir. H.M.JR: Want to bet on it? MR. SULLIVAN: I will bet on it a-- H.M.JR: A package of my kind of cigarettes. I am betting a package of Spuds, and you are betting a package of Old Golds. MR. VINER: Plungers. H.M.JR: I say that if they put it in the tax bill, this thing of abolishing this - what do you call this? 7 MR. SULLIVAN: Processing Tax Board of Review. H.M.JR: That they won't get it through this session of Congress. MR. SULLIVAN: Now, of course, they may put it through at the end of July 1, 1943. H.M.JR: No, no. If you are worried now about your bet-- MR. SULLIVAN: I am not worried, only I like to have these things clear. H.M.JR: I say, if they pass it to abolish it - I don't care what the date is, I am saying they won't put it through. All right? MR. SULLIVAN: Sure. MR. THOMPSON: The chairman of the Board antici- pated something is going to happen on it. He cut his estimate fifty percent for next year. MR. SULLIVAN: They out the Board from six to three. H.M.JR: What other good news have you got? MR. SULLIVAN: That is all, sir. H.M.JR: If this isn't going through, there is no need of your leaving town. (Laughter) MR. SULLIVAN: I already arranged for that. I was leaving this afternoon, and because of this I postponed it. I am not going up until eight in the morning. H.M.JR: Because Frank Knox is having dinner tonight with Admiral King. You have got to get up a little earlier, boy. Regraded Unclassified 8 - 8 - MR. SULLIVAN: You didn't think I was trying to catch you on something like that, did you? H.M.JR: Are you going down there? MR. SULLIVAN: I am going up with him, yes. H.M.JR: Good. I am glad you are going. I am serious now. I am glad you are going. MR. SULLIVAN: Thank you, sir. H.M.JR: What else? MR. SULLIVAN: That is all, sir. H.M.JR: Randolph? MR. PAUL: We have a joint declaration here which is supposed to put on notice all people who buy from - it is a declaration, a warning that all people - to neutral governments - that the United Nations reserve the right to declare invalid all transfers of property of any description situated in occupied territory. It has been prepared by the State Department, and Mr. White and Mr. Bernstein and I talked it over. We think we ought to approve it. H.M.JR: Just what will it do, again? MR. PAUL: It puts neutral governments on notice that all transfers of property in occupied territory may be declared invalid; that is, suppose somebody buys something in Holland or something like that, he may not get good title or title that is recognized. Regraded Unclassified 9 - 9 - H.M.JR: It is a tightening up process, is it? Do I sign something? MR. PAUL: No, we will just advise the State Department. They have prepared it. Then we have something that might come up while you are away. It has to do with the bonds of certain Philippine corporations. There isn't enough money left in this country to continue interest payments on those bonds, and also the Associated Gas and Electric is a guarantor of the bonds of this Manila subsidiary. Unless something is done, there will be a turmoil about enforcing - there will be suits in all the courts and so forth, and so on, to enforce these obligations; for instance, against Associated Gas and Electric as guarantor. What we think we ought to do is extend the freezing to such an extent that we have practically a moratorium on Philippine indebtedness in the United States. This hasn't come up yet definitely, but I am afraid it might come up while you are away. I talked it over with Bernstein, and there doesn't seem to be any doubt of our power to do it. H.M.JR: I think it would be, inasmuch as - did the islands come under Interior? MR. PAUL: Interior and SEC have both agreed that it ought to be done. H.M.JR: Well, that is all right. MR. BELL: How about the Philippine Government bonds? Are they included? MR. PAUL: I don't know. Regraded Unclassified 10 - 10 - MR. BELL: They have got plenty of money. They ought to pay theirs. MR. PAUL: I don't know. I will have to take that up with H.M.JR: Do you see any objection? MR. BELL: No, not for the type of case he is stating, but I should think the Philippine Govern- ment would want to pay the interest on their own bonds. MR. PAUL: We expected to get in touch with Quezon, but I just wanted to get a clearance on it in case it came up while you were away. H.M.JR: Supposing I leave it with you and Bell. MR. BELL: The Philippines have got a hundred and fifty millions in the Treasury that they could use to pay the interest on their bonds. H.M.JR: I will leave it with the two of you. While I think of it, Herbert, in your capacity as coordinator of certain Treasury agencies, I would like to see you at eleven-fifteen, John L. Sullivan of New Hampshire at eleven-fifteen, Mr. Elmer Irey and Sullivan at eleven-fifteen. Can you arrange it? MR. GASTON: Yes, I will. If I might, one thing that I should have mentioned before, you know of this system whereby the manufacture of opium derivatives from the raw opium has been limited to four companies. Only four companies have been allowed to import. Well, now, a very respectable manufacturing house, Penick Company, has taken a Navy contract for codeine, and are attempting to use this as an instrument for chiseling in on the manufacture from opium. They have rather gotten us into a corner because the legal control is only over the import of opium. They have a manufacturing Regraded Unclassified 11 - 11 - permit and they have served formal notice - made a formal request to the three principal importing houses for crude opium with which to supply this codeine. The three houses consulted Harry, and he advised them not to supply the raw opium since these people didn't have licenses to manufacture it. But, as a matter of fact, they do have licenses to manufacture it. Cairns tells me that we will have to correct that information, and it looks as if we would have to do one of two things: Either let this Penick firm chisel in and have the opium to manufacture the codeine, or get an executive order under which we-would control it and withhold the opium from them. H.M.JR: Are you sure that codeine has opium in it? MR. GASTON: Oh, yes, codeine is an opium deriva- tive. They have a priority order from WPB or from the Navy which covers codeine or any materials necessary to the manufacture. Well, of course, they could buy plenty of codeine from Merck and Company, from Mallinckrodt or from New York Quinine, but that is not what they are after. H.M.JR: If they are respectable why shouldn't they? MR. GASTON: Well, it just raises again this old policy under which the attempt was always to limit the manufacture to a very few houses, principally to three houses. That has been up over and over again, and Oliphant reviewed it and finally reluctantly came to the conclusion that it was all right. But here they have - these people now have us in the legal position, apparently, where they can force us to let them have the opium. Anybody else who got into a similar posi- tion who had made a low bid on a contract and got a Navy priority could probably use that in the same way. Regraded Unclassified 12 - 12 - Now, it would probably increase the difficulties of enforcement to a certain extent, but I have always been a little bit uneasy about this policy under which we limited the manufacture to those four houses. Harry has always thought that that was a very great advantage and convenience in enforcement. H.M.JR: Well, look, talk it over with Paul and the two of you decide it. MR. GASTON: Well, I wanted - Harry is coming back tomorrow. He was away today. All right, I will get Paul and Huntington in. H.M.JR: Were you through? MR. PAUL: Yes, I wanted to see you just a minute about something very confidential. H.M.JR: All right. Who is behind you? Oh, little Gamble. He is so small at that distance. What have you got, Ted? MR. GAMBLE: I have nothing - just one thing, the motion picture people would like you to see Charles Laughton and Greer Garson, Edward Arnold, Abbott and Costello, and possibly one or two other people the week of August 31, just as a sort of promotion stunt, incidental to their September drive. MRS. KLOTZ: She is marvelous. MR. GAMBLE: Does that sound as though it would be-- H.M.JR: What date? MR. GAMBLE: August 31. H.M.JR: That is Monday? Regraded Unclassified 13 - 13 - MR. GAMBLE: Yes. Their drive starts on Septem- ber first. They would like to have this come, some of the War Activities Committee - sort of a kick-off. H.M.JR: She was in "Mrs. Miniver," wasn't she? MRS. KLOTZ: Yes. MR. GAMBLE: The industry is sending all of these, representing the Hollywood Victory Committee. H.M.JR: What are they going to do after that? MR. GAMBLE: Starting on September first they are going to visit three hundred cities and all the members of this Hollywood Victory Committee, eighty or ninety stars, agreed to give up their time in the month of September in the interest of the war bond program. H.M.JR: I think it is too bad Ferdie can't get in on it any more. (Laughter) MR. KUHN: I didn't know I wasn't in on it. (Laughter) MR. BELL: One of the changes while you were on leave. H.M.JR: What I would like to know is who meets them at the station in the morning? MR. GAMBLE: That is Mr. Graves' depar tment. (Laughter) That is all I have, sir. H.M.JR: Well, if Mr. Kuhn approves - Mrs. Klotz approves. MR. PAUL: That might be taken for granted. Regraded Unclassified 14 - 14 - H.M.JR: Let me know who meets them at the station. I am just curious. What else? MR. GAMBLE: That is all I have this morning. H.M.JR: Who is coming? MR. GAMBLE: Charles Laughton, Edward Arnold, Greer Garson, Abbott and Costello, and one or two other per- sons. The only reason for ascertaining now if you will see them is if they know that you are going to meet them, it will be a very impressive party. H.M.JR: All right. That is your favorite, isn't it - Abbott and Costello? MR. GASTON: I don't know, I have never seen them. MR. SULLIVAN: When are we going to get the Marx Brothers into this? (Laughter) H.M.JR: All right. MR. KUHN: I would like you to see a draft of that statement to the bankers this morning. It is in the typewriter now. I haven't shown the new draft to anyone. Perhaps I had better do that before I bring it in to you. MR. PAUL: I would like to see one point I dis- cussed with Peter Odegard. H.M.JR: I can see you at eleven-thirty. MR. KUHN: Eleven-thirty, yes sir. You want clippings sent to you up in the Adirondacks? MRS. KLOTZ: No. Regraded Unclassified 15 - 15 - H.M.JR: I get the Times and Tribune up there. MR. KUHN: You do? H.M.JR: Yes. I think that is enough. Right? MRS. KLOTZ: Yes. H.M.JR: That is enough. MR. KUHN: That is all. H.M.JR: Blough? MR. BLOUGH: Nothing today. H.M.JR: Viner? MR. VINER: No. H.M.JR: Haas? MR. HAAS: I have nothing. H.M.JR: Schwarz? MR. SCHWARZ: No. H.M.JR: If somebody doesn't hear Schwarz' song pretty soon - has anybody heard it? MR. SULLIVAN: It is good. MR. SCHWARZ: I just didn't want you to say you didn't have a chance at it. H.M.JR: Do you sing it or play it? (Laughter) MR. WHITE: Can you sing it now? (Laughter) 16 - 16 - H.M.JR: I mean, how does one hear it? I can't play the piano. MR. SCHWARZ: I will get a record. H.M.JR: Have you got a record? MR. SCHWARZ: I will get one. H.M.JR: There is a song in New York-- MR. WHITE: Can you dance, too? (Laughter) MR. SCHWARZ: Sure, can you? I will get a record, Mr. Secretary. Kate Smith is going to sing it. H.M.JR: Harry is going to die. (Laughter) What else? MR. SCHWARZ: That is all. H.M.JR: I know if somebody doesn't relieve him of that song-- MR. SCHWARZ: I got relieved last night. H.M.JR: Did you? To whom? MR. SCHWARZ: The Navy band. H.M.JR: Any other news? MR. SCHWARZ: Thanks, no. H.M.JR: I hope it is better than Howard Dietz's, anyway. MR. SCHWARZ: It is. (Laughter) 17 - 17 - MR. WHITE: The first step in success is to have confidence. MR. SCHWARZ: I waited a long time and I got it. H.M.JR: White, have you got a song? MR. WHITE: If I had I would have sung it before. (Laughter) You asked for this this morning. H.M.JR: I thought the song - we might have it in black and white, you see? MR. WHITE: I see. MR. SCHWARZ: Technicolor. H.M.JR: Did you get it, Schwarz? I said we would like it in black and white. MR. WHITE: He is giving me the lyrics, now. (Laughter) You might be mildly interested in the fact that the directors of the China Defense Supplies, Incorporated have been changed, and Dave Corcoran and Larry Morris have been dropped, or resigned, I don't know which. They are not on the Board of Directors now. There is another group. H.M.JR: Who goes on in place of them? MR. WHITE: A William S. Youngman is president and director; Donald Harding is assistant treasurer; Gullander, assistant treasurer; Whiting Willauer is secretary; and Sze is a director, and Ho is another director. Regraded Unclassified 18 - 18 - H.M.JR: Any significance? MR. WHITE: I don't know. H.M.JR: Sammy Klaus isn't busy. He can find out for you. Have you seen Sammy, incidentally, Randolph? for MR. PAUL: Yes. H.M.JR: Did you satisfy him? MR. PAUL: In fact, we are sending him up to New York on a project this week. H.M.JR: Good. Anything else? MR. WHITE: There is a brief matter. It may be that there may be a directive given by the Foreign Funds to force the Swedish Government to sell a cer- tain amount of silver. (Lt. Comdr. Stephens entered the conference.) H.M.JR: Well now, you will have to talk with me about lunch. Cabinet is at noon today. MR. WHITE: The thing has been cooking for several months and the Swedish Government is raising objections. The State Department has approved it, but there are objections, and so on. It is coming to a head. It may possibly be that we ought to sell unless they do it voluntarily. It has been in the vault for over a year. H.M.JR: What else? MR. WHITE: That is all. Regraded Unclassified 19 - 19 - H.M.JR: Harold, I will see you a little later. I have got - as a matter of fact, if you don't mind waiting, then,I would like to see you right after Paul gets through. Mr. Bell? MR. BELL: That committee that was suggested yesterday at the State Department, is there anything to be done on that, or just let it go until we hear-- H.M.JR: Well, the Under Secretary of War was to have let me know yesterday, and he didn't. I would just as leave sit back and wai t until we do hear from him. MR. BELL: I picked up the colonel last night on the way home that first brought the message over, and he asked if anything had happened on the thing. I told him the first thing was yesterday, and he said they were quite worried down the line to think nothing was being done about it because they considered the cable rather urgent when they got it - he and General Carter. H.M.JR: You might tell Hall what the decision was. MR. BELL: Who? H.M.JR: Hall, in the Bureau of Engraving. MR. BELL: I did. I told him there would be nothing doing, he could forget it. H.M.JR: No, no, but the way I decided we would do it, you see. MR. BELL: That is all right. That can be done very quickly. H.M.JR: They can get them ready? Regraded Unclassified 20 - 20 - MR. BELL: It will have to be a separate operation. Now they put the numbers and the seals on together. They can do two operations. H.M.JR: They could? MR. BELL: Yes. H.M.JR: And can be ready? MR. BELL: We can have some within twenty-four hours. H.M.JR: What else? MR. BELL: We have been discussing, you know, the new type of nickel to save metal, and we have had a lot of difficulty with the people who run slot machines, particularly those that are run by electric contact. We haven't been able to get anything out of them, and it may be that we will have to move pretty fast because the coins are getting short. I assume it is all right for us to go ahead. H.M.JR: Yes. MR. BELL: Is there anything on the proposed press release that I gave you, the rate on discount of American currency in foreign countries? H.M.JR: I wouldn't do that now. MR. BELL: Do you want that to go over? H.M.JR: Yes, definitely. I just haven't gotten to it. I do want - please make a note of this: Give me at quarter of twelve, in my hands, something on this financing, both on the tap issue and the other, to take over to the White House. 21 - 21 - MR. BELL: All right. You gave me some time ago this question of the JDC communicating with-- H.M.JR: Shanghai. MR. BELL: Shanghai. They came in and we went over the problem with them rather carefully, and then they went to see Welles. I think they are pretty well satisfied with what we are up against in establishing a precedent, and it appeared that they had a job to do in coming down and presenting it. Their board of directors has given them a task, and they were satis- fied with the hearing. Now, Welles was having the report studied that came from abroad some time ago, to see whether or not this could be handled through the International Red Cross. I called him day before yesterday, and he said he hadn't yet determined the question and he would let me know. So it is still hanging fire a little, but I think the people are pretty well satis- fied. H.M.JR: Well, I wish you would call Welles again Monday. Would you? Call him twice a week until you get something on it. MR. BELL: All right. On the Byrd report, that was my fault. You remember we were going to take it up one morning, and then this memorandum from the President came in and the financing, so I just laid it aside. The report has been published. It has gotten very good publicity. I talked to the Budget about it, and they said they had had no opportunity to comment on it any more than we did. There is a paragraph in it which he tried, I think, to be fair. He says, "The Committee does not claim sole credit for these reductions. Some of the agencies themselves have cooperated in bringing them about. The Budget Bureau has worked 22 - 22 - diligently in reducing non-essential expenditures and in paring down budget recommendations. Many members of Congress as individuals and as members of the Committee have made invaluable contributions, and of course Congress has been the final authority." That is in place of what he had in it, handing a compliment to McKellar. H.M.JR: This is the formal report? MR. BELL: This is the formal report. He has now sent you copies of the final report as printed. H.M.JR: All right. MR. BELL: That is all I have. H.M.JR: It. is really Wayne Coy's job over there, if they are going to answer it. MR. BELL: Yes, it was, but they felt that in view of this and the fact that Byrd brought it out right after the Tydings report, which blasted the Budget Bureau, that he really did the President and the Budget Bureau a favor because it took some of the curse off of the Tydings report. That is all. MR. THOMPSON: I wonder if you want to fix a time for Mr. Paul's swearing in. The President has signed it. H.M.JR: He has? MR. THOMPSON: Yes. H.M.JR: Well, I think, if this is agreeable to Mr. Paul - Cabinet is at twelve and the President Unclassified 23 - 23 - said it would last thirty minutes, so why don't we, if it is agreeable to you - how about quarter of one? MR. PAUL: May as well have the ordeal over. H.M.JR: Quarter of one? MR. PAUL: Yes. MR. SCHWARZ: Are you going to have pictures, Mr. Secretary? H.M.JR: Sure. That is all right with you? MR. PAUL: Sure. H.M.JR: All right, it will be quarter of one in that room in there. MR. VINER: Any charge for admission? (Laughter) H.M.JR: Yes. MR. PAUL: For relief - it is for relief. H.M.JR: It will cost you a dollar War Savings Stamp. (Laughter) I sat next at dinner last night to Mrs. Jesse Jones, who makes these bouquets of War Savings Stamps, and for one hour she told me about it. I kept trying to interrupt her all the time and tell her that I had a little to do with War Savings Stamps, but she wasn't interested and for one hour she kept telling me how she and two Texas girls discovered these things and made these bouquets, and everything else. I just couldn't get a word in anywhere, but it did help pass the time to listen to her talk about her War Savings Stamps; she makes these all the time herself and was very much interested in it. 24 - 24 - Now, this thing, Randolph, is a very rare privilege which I am bestowing on you. I will read it to you. A delegate assigned to any other officer in the Department shall be subject to the general supervision of Randolph E. Paul as Acting Secretary of the Treasury." This gives you the unique privilege of being able to stay here on Saturdays and act as Acting Secretary. MR. PAUL: It confirms the privilege I have ar eady had for several months. H.M.JR: I just wanted you to know that this enables you to be here on Saturday as Acting Secretary. Who wanted to see me, Paul? MR. PAUL: Just a second. H.M.JR: And then Graves. 25 THE SECRETARY OF THE TREASURY WASHINGTON August 7, 1942. TREASURY DEPARTMENT ORDER NO. 46: By virtue of and pursuant to the authority vested in me, I hereby direct that all authority, duties and functions relating to foreign funds control which here- tofore have been delegated or assigned to any other officer or office of the Department shall continue to be exercised and performed by such officer or office subject to the general supervision of Randolph E. Paul as Acting Secretary of the Treasury. Secretary of the Treasury. File in Diary Regraded Unclassified .... New Micford 27 low 11,P9C Supreme Court of the United States Mashington. B.C. 4 Aug vr Diar Henry - I 908 Let are Congratules Pauli appoint meat He will take burdences off, your doulder address of pu Hing Here Acteo my bort & IT 26 August 7, 1942. Dear Felix: It was very good of you to send me a note of congratulation upon Randolph Paul's appointment. I an glad to know that you approve of it, and I shall take pleasure in letting him know of your letter. with kind regards, Sincerely, (Signed) Henry Justice Felix Frankfurter, New Milford, Connecticut. File in Dia Regraded Unclassified 28 Conference in Secretary Morgenthau's Office Friday, August 7, 1942 11:05 a.m. Present: Secretary Morgenthan Mr. K. C. Mahindra, Indian Supply Mission H. D. White The interview was apparently arranged at the request of Mr. Mahindra who is, Mr. White gathered, in charge of purchasing supplies here for India. Mr. Mahindra stated that be had been here less than a month. The Secretary asked whether Mr. Mahindra would mind if he would ask him some questions about India, purely to help him understand what is going on. The Secretary said he knew very little about India and that Mr. Mahindra need not answer the questions if he felt the slightest hesitation to do so. Mr. Mahindra replied that he was not a diplomat, he was a businessman and therefore could speak freely and unofficially. The Secretary asked Mr. Mahindra whether Ghandi had not made action impossible on the part of the British Government by saying that if India were granted independence Ghandi would try to make peace with Japan. Mr. Mahindra said he was not a follower either of Nehru or Ghandi and if he had been, he would not have been selected to come to Washington. Mahindra said he did not agree with their views but he was a businessman and had always kept away from politics. He said Ghandi's creed was that non-violence was the only successful way to meet violence. He felt Ghandi was completely out of touch with current events, leading a rather isolate existence, reading and communicating little with current events on the outside. He said, however, he did not think that Nehru would make peace with Japan. Mahindra said he did not know what the situation was now, but when he had left India a month ago he did not regard Nehru's position or that of most Indians as being in favor of peace with Japan. With the exception of one Indian leader, who had a small though very vocal following, who had fled to Germany, that the Indians were opposed to peace with Japan. The Indian people have no confidence in Great Britain's promises which were similar to promises made to them by British representatives in the last war. Ghandi was even known as the recruiting sergeant in his eagerness to cooperate with the British after those promises were made. But the years 1918, 1920 and 1921 was a period of severest oppressive measures against the Indians and they have not forgotten that. Regraded Unclassified 29 - 2 - He said the Indians do not feel that the British can offer them adequate protection. An attack by Japan would merely be a continuation of the Burma, Singapore episodes. He was of the opinion that, had the Japanese gone into India immediately after Burma during May, they could have walked right through India without significant opposition. He thought there were less than 100 planes in India at that time. The Secretary asked how he would explain Japan's failure to take advantage of the situation. He replied that he did not know. He explained, in response to a question by the Secretary, that the Indians last Spring were afraid of invasion and many people were converting currency into gold. When the situation later eased, some of the gold which had been bought was sold. The Secretary asked Mahindra what sort of goods the Indians were buying and Mahindra said everything they could possibly get. The Secretary asked him how it was being paid for and he said that formerly they had ample credits in England which they were using, but more recently the goods coming to them were coming under Lend-Lease. In closing Mr. Mahindra said he hoped recent current developments in India had not created any change in policy with respect to shipment of goods. The Secretary replied he was not informed of any change. Regraded Unclassified 30 THE UNDER SECRETARY OF THE TREASURY WASHINGTON August 7, 1942 AUGUST FINANCING On August three the Treasury reopened the 2-1/2% registered bond of 1962-67 which was originally offered on May 5, 1942. Up to the close of business last night we had received subscriptions totaling $862 million, com- pared with $882 million received for the offering in May during the two weeks that the books were open. It is con- templated leaving the books open several days longer, and there is a possibility that we will get at least a billion dollars. On August sixth the Treasury offered $1-1/2 billion of certificates of indebtedness bearing interest at the rate of 7/8% per annum with a maturity of August 1, 1943. Sub- scriptions up to the close of business last night totaled $877 million. The books on this offering will close tonight and indications are that it will be well over-subscribed, One bank in New York subscribed to $150 million, another to $130 million, and another to $100 million. Reports from ORDEFENSE the country indicate that corporations are also much interested BUY in this certificate for the investment of their short-term UNITED STATES NAVINGS BONDS funds. swb TREASURY DEPARTMENT 31 INTER OFFICE COMMUNICATION DATEAugust 7, 1942 TO Secretary Morgenthau FROM Mr. Haas Subject: Recent Changes in Prices and Yields of Government Securities During the week ended last night, prices of practi- cally all Government securities lost ground. Declines were heaviest on Monday and Tuesday, following the an- nouncement of the offering of an additional amount of the 2-1/2's of 1962-67. Beginning Monday, outstanding bonds of this issue have been quoted at 100 bid, with no asked quotations available. Among other taxable 1s- sues, representative declines during the week were 2/32 for the 1-1/2 percent notes of December 1946 and 3/32 for the 2-1/2 percent bonds of 1967-72. The taxable 2's of December 1949-51 (offered in July) were unchanged at 100-4/32. The offering yesterday of $1.5 billions of 7/8 per- cent certificates of indebtedness due August 1, 1943, was accompanied by a slight decline in the prices of the two outstanding issues, but their closing prices last night still reflected some improvement from a week ago. The average rate on the weekly offering of bills was 0.372 percent, up fractionally from the previous week. With the exception of the 2-1/2's of 1967-72, prices of all taxable bonds and notes outstanding on March 19 are now below their levels of that date. Prices of short- and medium-term tax-exempt securities have also declined, while longer-term partially tax- exempt bonds represent the only sector of the market in an improved position relative to the March 19 bench- mark. Purchases by the Federal Open Market Account during the week were unusually heavy, amounting to $281 millions, and consisted of $165 millions of bills, $84 millions of certificates, and $32 millions of taxable notes and bonds. Sales totaled $27 millions of tax-exempt issues and bill maturities aggregated #29 millions, 80 that the net in- crease in the portfolio was $225 millions. Regraded Unclassified Table I 32 Price and Yield Changes of United States Securities July 30, 1942 to August 6, 1942 (Based on mean of closing bid and asked quotations) : : Prices Yields Security July 30, 1942 Aug. 6, 1942 Change July 30, 1942 Aug. 1942 Change (Decimals are thirty-seconds) (Percent) TAXABLE SECURITIES ills Average rate last issue - - - -37 +37 .00 ertificates 1/2% 11/1/42 100.024 100.028 +.004 .41 .38 -.03 5/8 2/1/43 100.015 100.016 +.001 .59 +59 .00 axable Notes 3/4% 3/15/43 100.04 100.03 -.01 -55 .59 6.04 3/4 9/15/44 99.21 99.19 -.02 .91 .95 +.04 3/4 12/15/45 99.06 99.05 -.01 1,00 1.01 +,01 1 3/15/46 99.09 99.07 -.02 1,20 1,22 4.02 1-1/2 12/15/46 100.04 100.02 -.02 1.47 1.49 4.02 axable Bonds 2% 3/15/48-50 101.02 101.00 -.02 1.80 1.81 +.01 2 6/15/49-51 100.09 100.07 -.02 1.96 1.97 +.01 2 9/15/49-51 100.06 100.05 -.01 1.97 1.98 4.01 2 12/15/49-51 100.04 100.04 .00 1.98 1.98 .00 2 12/15/51-55 100.01 100.01 .00 2.00 2.00 .00 2-1/2 3/15/52-54 103.26 103.21 -.05 2.06 2,08 +.02 2-1/4 6/15/52-55 101.04 101.02 -.02 2.12 2.13 +.01 2-1/2 3/15/56-58 103.03 102.31 -.04 2.24 2.25 4.01 2-1/2 6/15/62-67 100.08 100.00bid -.08 2.48 2.50 4,02 2-1/2 9/15/67-72 101.02 100.31 -.03 2.44 2.45 +,01 TAX-EXEMPT SECURITIES holly Tax-exempt Notes 2% 9/15/42 100.08 100.07 -.01 .00 0/32* 0/32* 1-3/4 12/15/42 100.18 100.16 -.02 .25 .34 +.09 1-1/8 6/15/43 100.20 100.18 -.02 .41 .47 +.06 1 9/15/43 100.21 100.19 -.02 .41 .46 +.05 1-1/8 12/15/43 100.29 100.27 -.02 .46 .50 4.04 1 3/15/44 100.26 100.24 -.02 .50 .53 4.03 3/4 6/15/44 100.14 100.13 -.01 .52 .53 4.01 1 9/15/44 101.01 101.00 -.01 .51 .52 4.01 3/4 3/15/45 100.16 100.15 -.01 .56 .57 4.01 artially Tax-exempt Bonds 3-3/8% 6/15/43-47 102.14 102.08 -.06 .58 .73 +.15 3-1/4 10/15/43-45 102.31 102.25 -.06 .78 .89 +.11 3-1/4 4/15/44-46 104.03 103.27 -.08 .83 .95 4.12 12/15/44-54 107.04 106.30 -.06 .96 1.01 4.05 2-3/4 9/15/45-57 105.12 105.08 -.04 1.00 1.03 4.03 2-1/2 12/15/45 105.01 104.30 -.03 .98 1.00 4.02 3-3/4 3/15/46-56 109.00 108.28 -.04 1.20 1.23 4.03 3 6/15/46-48 106.30 106.28 -.02 1.16 1.17 3-1/8 4.01 6/15/46-49 107.12 107.10 -.02 1.17 1.18 4-1/4 4.01 10/15/47-52 115.00 114.26 -.06 1.26 2 12/15/47 1.29 4.03 104.13 104.11 -.02 1.15 2-3/4 1,16 +,01 3/15/48-51 107.14 107.09 -.05 1.37 1,40 +.03 2-1/2 9/15/48 106.26 106.23 -.03 1.34 2 12/15/48-50 1.35 +,01 104.13 104.09 -.04 1.28 3-1/8 12/15/49-52 1,30 +.02 110.16 110.16 .00 1.61 2-1/2 1,61 12/15/49-53 .00 106,15 106.11 -.04 1.57 2-1/2 9/15/50-52 1.58 +.01 106.26 106.21 -.05 1.60 2-3/4 6/15/51-54 1.62 +.02 108.20 108.14 -.06 1.70 1.72 4.02 3 9/15/51-55 110.18 110.15 -.03 1.74 2-1/4 12/15/51-53 1.75 105.00 -.03 1.66 +.01 105.03 2 6/15/53-55 1.67 103.15 +.01 2-1/4 103.10 -.05 1.65 6/15/54-56 1.67 105.13 -.06 1.74 +,02 105.07 2-7/8 3/15/55-60 1.76 110.11 2-3/4 110.03 -.08 1.95 +.02 9/15/56-59 109.18 1.97 2-3/4 109.12 -.06 1.97 +.02 6/15/58-63 109.26 1.98 2-3/4 12/15/60-65 109.18 -.08 2.02 4.01 2.04 110.11 110.03 -.08 2.07 4.02 2.09 4.02 Treasury Department, Division of Research and Statistics. Decimals in prices of certificates are cents. August 6, 1942. Excess of price over zero yield. Regraded Unclassified Table II 33 Price and Yield Changes of United States Securities March 19, 1942 to August 6, 1942 (Based on mean of closing bid and asked quotations) : Prices : : Yields Security March 19, 1942 Aug. 6, 1942 I Change March 19, 1942 Aug. 6, 1942 Change (Decimals are thirty-seoonds) (Percent) TAXABLE SECURITIES Bills Average rate last issue I, - - .20 .37 +.17 Certificates 1/2% 11/1/42 - 100,028 - - .38 9 5/8 2/1/43 - 100,016 - - .59 - Taxable Notes 3/4% 3/15/43 100.12 100.03 -.09 .37 .59 +.22 3/4 9/15/44 99.31 99.19 -.12 .76 .95 +.19 3/4 12/15/45 99.21 99.05 -.16 .84 1,01 +,17 1 3/15/46 99.29 99.07 -.22 1,02 1,22 4.20 1-1/2 12/15/46 - 100.02 - - 1,49 - Taxable Bonds 2% 3/15/48-50 101.28 101.00 -.28 1.67 1,81 +.14 2 6/15/49-51 101.04 100.07 -.29 1.83 1.97 +.14 2 9/15/49-51 - 100.05 - - 1.98 - 2 12/15/49-51 - 100.04 - - 1.98 - 2 12/15/51-55 100.12 100.01 -.11 1,96 2,00 +.04 2-1/2 3/15/52-54 103.23 103.21 -.02 2.09 2.08 -,01 2-1/4 6/15/52-55 101,06 101.02 -.04 2,12 2,13 +,01 2-1/2 3/15/56-58 103.05 102.31 -.06 2.24 2.25 +.01 2-1/2 6/15/62-67 - 100,00b1d - 2,50 - 2-1/2 9/15/67-72 100.27 100.31 +,04 2.46 2.45 -.01 TAX-EXEMPT SECURITIES Wholly Tax-exempt Notes 2% 9/15/42 101.04 100.07 -.29 5/32* 0/32* -5/32* 1-3/4 12/15/42 101.11 100.16 -,27 2/32* .34 -6/32* 1-1/8 6/15/43 101.04 100.18 -.18 .22 .47 +.25 1 9/15/43 101.03 100.19 -.16 .26 .46 +.20 1-1/8 12/15/43 101.16 100.27 -.21 .26 .50 +,24 1 3/15/44 101.10 100.24 -,18 .34 .53 +.19 3/4 6/15/44 100.27 100.13 -.14 .37 .53 +.16 1 9/15/44 101.16 101.00 -.16 .39 .52 +.13 3/4 3/15/45 101.00 100.15 -.17 .41 .57 +,16 Partially Tax-exempt Bonds 3-3/8% 6/15/43-47 103.21 102.08 -1.13 .41 .73 +.32 3-1/4 10/15/43-45 104.06 102.25 -1.13 .57 .89 +.32 3-1/4 4/15/44-46 105.06 103.27 -1.11 .72 4 .95 +.23 12/15/44-54 108,11 106.30 -1.13 .91 1,01 +.10 2-3/4 9/15/45-47 106.06 105.08 -.30 .94 1.03 +.09 2-1/2 12/15/45 105.28 104.30 -.30 .90 1.00 +.10 3-3/4 3/15/46-56 110.08 108,28 -1.12 1.11 1.23 +.12 3 6/15/46-48 107.28 106.28 -1.00 1.09 1,17 +.08 3-1/8 6/15/46-49 108.08 107.10 -.30 1.13 1,18 4-1/4 +,05 10/15/47-52 115.20 114.26 -.26 1.33 1,29 -,04 2 12/15/47 104.23 104.11 -.12 1.15 1,16 2-3/4 +.01 3/15/48-51 107.28 107.09 -.19 1,38 1.40 +.02 2-1/2 9/15/48 107.07 106.23 -.16 1.33 1.35 2 12/15/48-50 +.02 104.21 104.09 -.12 1,28 1,30 3-1/8 12/15/49-52 +.02 110.22 110.16 -.06 1.65 1.61 2-1/2 12/15/49-53 106.11 -.05 1.60 -.04 106.16 2-1/2 1.58 9/15/50-52 106.20 106.21 +.01 1,66 -.02 2-3/4 1,62 6/15/51-54 108.18 108.14 -.04 1.74 -.04 1.72 -.02 3 9/15/51-55 110.20 110.15 -.05 1.78 2-1/4 12/15/51-53 104.29 105.00 +.03 1.70 1.75 -.03 2 6/15/53-55 1,67 103.10 103.10 .00 1.68 -,03 2-1/4 6/15/54-56 1,67 104.28 105.07 +.11 1.80 -.01 2-7/8 3/15/55-60 110.00 1.76 110.03 2.00 -.04 +.03 2-3/4 9/15/56-59 109.10 109.12 2.01 1.97 +,02 -.03 2-3/4 6/15/58-63 109.12 +.06 2.07 1.98 109.18 -.03 2-3/4 12/15/60-65 110.00 2.04 110.03 +.03 2.10 -.03 2.09 -.01 Treasury Department, Division of Research and Statistics. 1 Decimals in prices of certificates are cents. August 6, 1942. Excess of price over zero yield. Regraded Unclassified Treasury Department 34 Division of Monetary Research Date Aug. 28, 1942 19 To: Miss Chauncey The Secretary said "Not now". H.D.W. MR: WHITE Branch 2058 - Room 2141 35 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE August 7,1942 TO Secretary Morgenthau FROM H. D. White I would like to recommend that consideration be given to the proposal that the Treasury add to its security offerings a special bond without interest redeemable at par with certain redemption privileges. It should be announced that such securities are being made available to the public because of the expressed desire of many people to make, without profit, a financial contribution to the war effort. The issue might be given an appropriate name so that it would be publicly distinguishable from interest-bearing securities. This bond issue would give the people an opportunity to express their patriotism on a somewhat higher moral level than buying government bonds with a 2-1/2 to 3 percent interest return. a) It would satisfy and develop a demand for bonds that was based entirely on patriotic motives. b) The fact that a growing number of persons would wish to help the Government through investment in non-interest- bearing bonds would make it more difficult for many of the remainder to demand interest on their bonds. The comparison would be an invidious one and persons would no longer be able to boast of buying Government bonds at 2-1/2 to 3 percent interest when they could have made a more sincere contribution to their country's future welfare. c) It would provide the means whereby some of the foreign funds now frozen might be put to work without cost to the government and without gain to the foreign owner. d) If we ever need to adopt a forced saving program on a vast scale, it would provide a precedent for a non- interest-bearing security. Having once established the instrument on a voluntary basis, its wider application would present fewer difficulties. 36 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE August 7, 1942. To Secretary Morgenthau FROM Harold Graves I am sure that you will be interested in looking at the attached. I suggest that you note especially the item which I have marked on page 3. B y a Bond to Honor Every Mother's Son in Service! Story on Page 2 SHOWMEN AT WAR Published by War Activities Committee, Motion Picture Industry September, 1942 FILM INDUSTRY TO LEAD BILLION DOLLAR DRIVE! Hollywood Sending Army Treasury Enlists Entire Industry Of Stars to 300 Cities As Spearhead for September For September Rallies! Bond and Stamp Campaign! D URING our September drive, more than 300 cities will be able to stage huge, million-dollar bond rollies with one or more Hollywood screen stare appearing in person! The stars, the producers, T HE motion picture industry faces the greatest chal- the Hollywood Victory Committee, the Screen Actors' lenge in its history! The Treasury Department has Guild and all other studio groups are going ell-out to aid personally in our Salute-To-Our Heroes month! named our entire industry to act as the spearhead in its In September, there'll be "Stare Over America!" The Hollywood Victory Com- September offensive to sell $1,000,000,000 in War Stamps mittes is arranging to have at least assen stars many of them top-dight personalities appear- War Heroes and Bonds! leg at railies in seven cities every day during September. Forty to sixty stars will be In Person! Just as the retailers of America enlisted to lead the July Treasury busy suiling bonds during the drive, so in our industry expected to provide the leadership and Inspira- month Traveling expenses of the dars, the advance agents and Through the cooperation tion for the September campaign. the publicity men accompanying of the guvernment, is la stare, will be paid from the can- hoped to have, during "Salute To Our Heroad At a meeting (July 17) of the War Activities Committee all payment buiget of the War Ac- tivilies Committee In addition, month, special rellias In many communities with branches of the industry voted unanimously for the all-out campaign. the producers and distributors will fown the asricts of the pub- mal war heroes In person as inspiration for bond- At that meeting 8,451 thentres were represented by owners or by lelty mes to the committee. Bouter for the star-tocrs are buying. now being prepared. will your The Treasury Depart- officers of exhibitor organizations. More theatres were represented city be Included? mest, with the belp of the Naturally, every city and town Amy and Navy, will try than at any other industry meeting in years! as net be covered. We know that to make available in Sep- acreen stars can sell bonds: they tember many of these he- The industry accepts the challenge! already have sold hundreds of room-brave men decorated millions of dollars' worth! We for their desda of valor and Every studio, every ex- want to - our September boto- back from the Emigt lines to help in the was effort at change and every theatre burdment of state to the best ad- THE BOND BETWEEN US vantage where we are assurad home. with every executive, actor BUY of the greated bond-asiling They can't visit every- esita, where, Much depende on and worker must unite to MAH A SALUTE FROM HOME 10 These rellies should average the local enthusissm shown provide enough force to put EVERY MOTHER'S SOM IN SERVICE $1,000,000 each! We want defmite la promise free see citize that they month as to where these the drive over the top! will stage million-dallar rellies! gallant fighters will be We are to be the shock If we get son $1,000,000 piedges, MEL The committee hopes there "haro reilles" will add, troops, the bridgehead, the we'll raid Hollywood for more stare! No primp of Americans la at lemat, another $50,000,000 commandos of the govern- more enger to help than ner own to the month's totall Think big. plan big for big ment's all-out September acreen players. Those star-rallier should mst results. Let us know how campaign. Every exhibitor be exclusively a local theatre your city would its . hero- demonstrative. Yes exhibities In-person rally into the in in the front line. This isn't are the lenders and must supply plane for the month. the other fellow's campaign; the pep-but every War Savings There can be no set "tors" of heroes. The small- It's yours! 05 Committee in your community should unite with you in these ability of heroes is, of Through cooperation of demonstrations. Get them to course, strictly subject to getter at once: make tentative military requirementa. the Hollywood Victory Com- These government pietal cards may be obtained, gratis, through plans; contact your Treasury mittee, there will be sume your narmet National Screen Accessories exchange. Suff To Help Department State Administrator. All regulate for stare esual am The entire War Savings 300 movie-star bond rallies through him. Be La to contact the Staff of the Treasury De- in 800 cities! Scores of stars lee!" In addition to the movie nity helps put over our partment will aid in our Ballywood Virtory Committee September nampaign, Sp+ have enlisted for bond-sell- star rallies, It in hoped that movie-month. through the Motion Picture Divi- clal Instructions from give, War Sevings Staff, at the ing tours! A campaign fund there will be at lesat 2,000 Get started at once; pre- Treasury Dept in Washington. Washington have gone out to all State Administrators has been set up by the War other railles and demonstra- pare for an entire month However, also and your plans and thru them to local for & star rally direct to the War Activities Committee! Al- tions during the month to of high-preasure bond and Activities Committee, 1501 Bread- Treasury representatives. These field men will help ready thousands of circuit- sell $ bund in mlute to every stamp promotion, That bil- way, N. T. c. We want to know in exch seas, what you are doing. We want to theatres and Independents man in service] lion dellar quota isn't a help you all 11 can. We'd the to have, thru their executive No community is too small push-over! announce - long list of MILLION DOLLAR CITIES as quickly M heads, piedged all-out sup- or too large to fit into the possible. SORRYI WATCH TRADE port! plans of this campaign. Hollywood has been generously supplying state for bond drive PAPERSI The general title of the Remember that you, M a At the last moment, this large had to be re- by many industries and organisa- September drive will be: theatre-man, are a leader in dine-com, in September, - will More details of the earn- vised to include the Sep- have the assissive - of the paign ATH developing hrat- "Salate To Our Beroen" this drive, You are the tember drive details. stare greatest bond salemes in by: Watch the trade papers month. The alogan will be: spark-plag to see to it that Hence, much material the world - for war own billion- for last minute details, eur dollar drivel gestions and instructions. "Bay a Boad To Honor every other bond and stamp on the June-July activi- Get ming! Every Mother's Bon in Serv- committee in your commu- ties had to be omitted. 5,000 Theatres To Be Mado Official Bond Issuing Agents! assified EVERY THEATRE CAN JOIN 5,000 THEATRES SOON TO BE MADE OFFICIAL WAR BOND ISSUING AGENTS! "SALUTE TO OUR HEROES™ Treasury Will Stock Theatres THEATRES EXPLOIT IMMEDIATE BOND DELIVERY With Bonds on Consignment Heart-Appeal Is Keynote Plan Ahead! ACCESSORIES FOR SEPTEMBER DRIVE us - working book est - the details a priva. of the Treasury is a the when nation picture theatres, Inc 1 - to mail, Of September Drive Set Events youlded as hand lessing ONE SHEET 5/ la the This with maile them a Mill WHITE Immediate delivery M the purchase BE not your city happens to be one TRAMP de the and For 30 Days! putations 4. all chatacles toward of these to be visited by movie stare or War will to the or lm time then benes up any of the uther special "attractions" dur- month wouldn't under the If WARI that BURGEE the lag the gread billinn-della September drive, year 1 If fall 85 make the community and your thestre has a vital part to like 1 simi BUY II afficial invoice work WATCH YOUR play in the You are in INT for the Reptember érim. if been - Tv make If - for every thestre in men city, lurge ar E STEP! MM unergless Ant Res - 1 small, 5,000 vests If IM emplo, Best-res sr land-rom, to suin. don't take part, the compaign committee has infogtal a personal importable theme ent plan for theires, The tas expanded or no- - Buy sinds tirei, Sta - Der me tem WAR - Chede tracted la mult the sheaths less any situation can get The by - loving and into at carry mi BONDS! - the official - of underend - I i and - The September drive-lis to M br heart- - will Make - you have - - York a as its The plan LISE be will muse bonds for 1 HONOR at port an 1 of by - for Persão 15.000 THEATRES the 1 sppealing is the and instires of every man, ent YOUR HEROES! de wild them, I - (alore) - and cluld left N/C Lane cran in may theatre demind 1 WRITING Mark in I - I be - sale for White is the - 1 publicity ride SALUTE TO MONTH Place, 1 - eral title if the drive. Enter - - . that - less- I E sale, while ! Issuin for "MUY A BOND TO HONOR EVERY MOTHER'S SON iwin salm 2 la - tou = egrata for par The line of Activities Committes has - for - the who IN SERVICE the show - in M. make bod VALANCE for the blank I For - 1 $ I - hands. (Inet) (fficial best- etale Idea la la purchase file for the 12:31 September New The Thanks 4 the elgs. DEAFE FOR to requestion of the verious - - - first to - - phrses. If and E MI - and mail the mind minda after TOUR 1 of latter and minis landing (m). They , me du, terro in las- and We ! la regist to the Get II of Texters of prices MARQUEE - the dayler leise - their sales 44 1 I level PUSH STAMP ( Provemer Story Fee Livel ITem) line - Treasury Department the name -- in - - neil. per week la DUM work! - - SALES, TOO! FILM INDUSTRY TAKES LEAD tribute la - MAIL la air- of E - in in 1 delog the 3 To get marily publicity before - $3.75 - - Terk the - 1 1 aid 1 less War film the il which to Grough - - I Thery mas in la herris list of - Transury Pue the relative Endap sprais, Their estes - While the hel - a the IN BILLION DOLLAR BOND DRIVE! And the bed I I at - have - below far les USHERS' Place your I are, (Ades available the 1 $75,000 - - per Seginder the & - who Londe, la Date with the II fuged recomber - Aghie la ta tay I the - months Have lost I 1 diring serviy in dires Chare will - - - of I SASHES - limit - by of Use that satisfying - personal - as the # bay - i The important I Chairman Treasury de int 1 and will to pay. Get u 1 enformation for Contact State a in mistres word MM stamps. ofter them De September in less at lagi signature On Was 16t Wer far grate the à Vietar II - - - --- in error - givernment will a belletin Carrying - the - ap- P makes de thing BB. la singlify displays. la Informed issued a the agent You attend . to the Mar Invings 1 here of bet- - thought, - is Islany ente credit la is the them advise E, every - the disfied and and - I la ? ha un 4 Work - - has to and tal in Hopital e THANK by darteg Dep. - and lest F - printe - be - a We am everytudy cideut - - in quelity of Emban partel la WARNING! BE SURE la as E . art eus TM ] 1 A Tradeury Department with MA. Jun - the . - . la Fairral Re- are the plan at 114 and starty drive May Dur- printed to had every other is. I importation in The YOU KEEP THIS CLEAR! a will be of kg = i I - - part a In a la the - A stan. will for p all- will. Laring may - 1 ! net: have just 5 for the probably has i like in The Med. - & extended to other diestres. - - for - the le - I J temple Sur employee Certificate of - the - and the here. i Name Em when drive, - - imbo is Take the - - of By - with of handle - veticle. du A the lurget. - the - to the is # I la - 1 I is like During - - brand of altra timetres in the card - - F - Be en i imples, - will vali - put - 6 le Prace - insures to make the Sire Alliver" 1 line which themp in - t every - is emilet Marts, HOW SKOURAS BOOSTED SALES theatre yisters, from the the - in PLAN MANY BALLIES I every - stage M. in of I . the card quility laging . your - who - - - One all and I the the is the biding their The C. - - et from We where method of resided and - - End I dato 1 make and - the - Not and - B. le tain - of the 5 - the - dest bettle - trunt If 1 hage by are (Seal en - an vp I Date 7 . mile fag 15 di there any billing is the I the thestre all the varid Som at Every wed - have sales. - will - working la a and teal elber Gallery because - doing Ban New the - E - aller 1 la emis you state is lanes York - City 1 when the drive be be : a put auf I 7 - I lasse FREED de MPHE large 21 the buys of ship. Marial, viher New York theatree have - your that I - that - a - - eite Tun - " 1 willing nill. ] is salute of mother's followed mil. - 1 - fully - True hereing, I is - the Rachem tenta lerality Of Heroes the a drive Dende with Yes Wait La I el of email - surrel- 3 viderwise tast la as 8 don't Line " na I all neight after the time bun and 5 of - chair De - gilf- I nie in their New - is a 1 hard though they relle may la lake 16 lim't destro is from wide deive to 42 You - souly the I the Timp 1 allow I - et E femilies - ratina working for for Crequent land Unio - dud - the lines to Ung credit las the I sale - the - - 1 be Its audiesces. reding hity They most the neu to of - 9 As - the first I - the I i - In sie y - - t - - - and planned therefore, @ to the De E In I turning - - I relaing at benes, para Hraft - war item - a - the vit The mig Trishe at I of - - of bags 17 Line 42 important publica, the partient in all I . stare - Form G-B - trailer, its de the L for se parants to armi- - - 190. Entha 1 de . NAME BOSTON KEEPS DRIVE É - - and master than fruit F friends tring year that - in la - - - . deir - false jumped of de ALIVE WITH STUNTS valid will 18 Try to 1 wid theye "Javior wis Auxy the Mario line. - age the -0 10 Hold Was in - I drive = have part LETTY GET GODW! - or I Crew a War Shamp is This 1 I Mathery Checkres her the # chase in the É Commission 5 I have 1 de Value- the Help City, the prote - the Commition a have I a naista, briden la arria It will - A $250 learn" with almost elista I Re the - cambo - - simily - the in to is public have millere to stagent by the - - - 41 the 19 Watsh for oglin - wine tipe No - - im I ay - City steps," ene also deld arge - a buy hands the like is the Through day 1 is upo - - - - cards. as where week I - y a the the - and 1 - is mui per State If been 1 F. it the - as Inc. " feare I widd you is Gastes all randa vers first - affrem I being Chairman of the - sum back Tales treato the last work of achool / shapes V : (as - Artivities from Idea. with 5 the Medical 71 Details the foral Committee, repos 11 Labor Day Hills girls for los, Almind Remained At the - - time the 1 the County wild help - em each to 1 the dentile - - - m. marky No and you : Important were Invisted THE el the chairmen. Ala of tends is that I - Ewey - will 4 - - 1 will - videry (Add State 7 of I - the to Administration gainty obtained will (The thembret ****, ] 1 N ? I title The à the I - Minito I The rells, Aunter bus developed that a) em, - their È - of Transary 1 - I 1 and the Department or ANGE TOUR Lomn 12 that Plan the - à - of have IVA are - Sevings have Ward sur Wer Five - me is 20 Esta these - short plans = the I If and - pare. Enery Control pervice 1 plates lapether? that, the keep - . equipal to A merying - f - see 13 Per - interest, One 3 clage I form - and gratishic r deposit / Make I days - Any - relates. I - through I repirt - ⑉ glad. , Does Mr. Morgenthan Mean You? month a 7 et 2 Be I is & & binda and will to 2 Mit three - pervice Les Isks erer Cheatren is an atc. that - the and fet ] MY profes- beling day - night 1 - and alarm should - I drive - Ins Washington the astim element intestry's which ein la the the interity September " whole, drive and Remainery the of the and Treasury have and This giving la - . a ? I I Be 1 Goad for before, 48 theirme e variety no / September drive will aid greatly to all I - mar marings. The veint and unity na F month lens giv- the - - if the Information mays la le the mich nation's approval more by the Treasm 1 titles is - hand 21 If Chostree in - city their drive Alive pes. find for 14 Per have made affilal of I Mundit take miss Agents bands, that fact Be min "Main To Back reverble the - - to el - an and will impire I proving If per theatment SAP - taing (ta - : Our - Have - the sale who of last - - AM meined the may take of Mr. - drive, advistment - hirpe as - materiest to pa. livern. will - if 1 1 - - - the mimrita in - 1 - as this frust: indials kend and a Mas 1 paral Iss F No the Drive* enda a the is a wills - social una Our F industry enter 1 drins, Pape Tes más - 1 - I et the lewal September, Regraded Unclassified PARADES! RALLIES! BOMBS BLONDES! BANNERS' Spectacular premieres, from coast-to-coast, opened theatre campa June! S/O In September, there must be more and greater demonstrations! SHOWMEN LAUNCH WAR BOND AND STAMP ORIVE! NEW YORK! DAYTON! Exige " to El - and = Fax & - 1 - BROADWAY! never - for and ALL THEATRES ADING. PA.! 1 DAY/BUS SELL WAR BONDS is all - THEATERS - BROOKLYN! ere ST. LOUIS! and are resoling 118 n in The - The Cheatres by 7 READING BONDS BOOTHS THEATRES LSTAMPS The the As. la of with try. IN in the sale PORTLAND! Every vignt. . YOU CAN NOW BUY in of of Ins to la and is the - El - 1 STAMPS at 7 parada in 2 L & BONDS = - YOUR FAVORITE THEATRE ALMETTO3 V. " - less ALBANY! New by in 1 PHILADELPHIA! One of spota the la Phile Wish the a the dates In the is the are with mily is is WASHINGTON! was right - COLUMBIA! Dews of that . glast van suid in 15 Photo I of the in Smith Carelina, the la is and the hundreds of instructions fee in are & the in the and valor carried . r This, added Armining transf of the stampe the first la the This F Lively This the and of I in of in F in in in of are finate that E) the - have Humireda Regraded Und Und SMALL TOWNS BIG THINGS! WEST COACT SHOWMEN ACTIVE IN DRIVE TO THESE BOXOFFICES MARCH MOVIE-MI&LIONS! UNCLE SAM'S Las Your to NW . part of DON'T FORGET! Dal Dropsing Unde cast CURB SERVICE and yuar Income of marchair and per monthly skin - x valve for area, / for time duration are the 5 - with July Chest e certifies which i 1 - 1 Alles, the Charles the a di Keep YEar pattero too's future The name of - Pile, the what - - that given to bilding eb attran- tends and sive War and Bried - has what - serv- - allerge Previsity the logo - beoth will 1 Danif in They wid 412, - Dary sales. 3a many the planto- 1 F È to F . of stamp burths be 1 beys who the - - and in 1 Was that The difficult to nil and / the / yes have is - - make e adertion in m - limited lives Thesire, from this I y 3. Brick Bry Lesy's theatries is New York The that the City also IN to Theatmen net the Late 1 5 hands and from at at the terring spon? and made the The MP ---- day. 1 from Res (Pep. the OUR good! form- in theatres, with I A [ fattag the hand that - AUCTION IN WORCESTER! - lacing pain. to ---- buy stamps the thes. 4gmt, can 1 while 2. relled et deliver - - with Public III. i trade Great - metoriate will in r mains to buy for the thestme drive NOT N. - The bende r lieu Test is this city, in - F A Centre - by the The Made planty of statize M - - was [As 0'llane aire, pets II) i other reped interested the shall 1 Rre BOND RECORD OFFERED is the 2 our Bennett The Legalie the - and - I the tim with the --- SELF i Thestre, - the Long, is y diviribut- key ta the elsed sur the med Boad 1 in HERO RALLY SELLS $10,000 Beninds. that stide of the del I - De provides lar The for P I I I with of and and tablet - pur- I sand = dates, and Jumped F wild IN SMALL TOWN THEATRE! - side certine Dow of a um 1993 the dap the la every self - Crimitery the in h Untied what - I day, 1 5 - - of : Stange - Virtiry 1 truto To and I [ la than - 4. the A ship and the The in revent war [ the Ind by , E. Plan the there, of also the this of Our appeal belitad the 1 - Millan the the A with the venta the Ver for 1942: fromas but State of clubs, their displate . the the America der Bed is the stating berthe - this War - seale the The - end et - of elt 327 SEATS!- we Suiden and Mass. Nary - mille also expiral building The and are expire and Be - - la $10,441.501 - constres. la Lord's simily Right making The evater Y attraction. - But what aus 7 sein No - The Today 1 No. two girl who if except Wegt Ins - - of Milk - if lene I F in F the lives of and is 1 I That's The if TM the theatre when originally nie rame relly, your mas into Selling from HOUSTON! Deep le the beart of Trans = thereings, givis $1,000,000.00 Nebs The Birdi Can Yeu Beat This? the Heart! the tack a CELEBRATION - surve the kind of This - of to the Com and Employer fries that die minut the È BONDY know with Drs the places away THEY - esg and Indiand, is bonds Ta Our Are and rally - the Brige: secting? 1 From of to nales, De ONESPIR 8 these - Capital Chief all the United the about TOBACCO AUCTIONEER sales, Pleum VICTORY WELL 2 - shot SELLS $26,000 WORTHI (ale of I er and down the For East that vesil a Theires 1 - the is F the mark for stamp sales, STAMP - B back B. K Dersentes, The Invoice al atom Inly When Billy Gibert, N. Car, 1 T to 1 E bunds - - in Carl tim 2,000 14. & . Bond of committes at this aperial both , the ou Plans for War 1 The site that plper - kind Thesters, N. the sets % On this 5 Sivile Nissa Thesing - stamp July be staged 1 1 1 I are prod of past M a E key land, leb - faily Winston BUT # de 2) the Bids W.R. the the la The and OVIES STATE HERE The the public - made AKI UNING and the Ribert - getten $10, MORALE Any - - A ---- the TODAY place the - these TARE Klingler! us YESR line et Visa Dye SLUGS and SPOTS FOR YOUR ADS to la et Table Their Bet Mark TAB - of 11kmg 7 , a I BUY A WAR SALUTE BONDS AT THIS THEATRE GUIDE TO SHOWS ! Rem TO The YOUR HEROES - uy WAR SAVINGS F. Mrs. 1 quis the Regend Thesters Ellosbeth, ITAMPS BONDS of wames and WAR BOND SALUTE AM WAR BONDS This type of I tite to the from of theatre. the of top the diaglay is ON SALE HERE TO i HERE OUR HEBOES AS SALUTE PERCES EACUTE 10 DUE É the of - The - Buy WAR MOM Blood Thester, Jeshistows, Is. than - array colors. TO YOUR BONDS FOR fis. HERDES) NN y The i - The daily CAN 1 Field SALUTE no our and elage : RENGES - SUY MONTH Olles - that - thes an THIS EVERY THE the alter - be Fresh are MOTHER'S SON in service las is = how AND the For di the STAMPS STANP 4a P garts is a I IL BENDS! These THIS is H WAR BONDS - prive a 1 BAR temic the - NONE - - they = FO 45 . MUSTE # DUE YOUR NEBD - SERVICE su I have " MONTH corre for 24 I shet if are file The - BUY A WAR - ROND WAS - - your be M. Reg Brey, HERE! BONDS WAR BOND - 128 DUM ind STAMPS " THIS THEATME BGYS Ork, Mad. Trela - AS . SALUTE - - MERSEST Lest 1 thief Informated Page These through Regraded Una Planse issified We and I PAE tough These Think N.T. valueges JUNE SALES HIT $18,000,000; JULY RESULTS UP} Haused on incomplete repurts to the War Activities Committee, the Males of Incode And MAKE THESE MEADLINES COME TRUE/ stamps in theatres were estimated by Campaign Director Fabian to have reached above $18,000,000 for the first month, June. Unfortunately, hundreds of theatren selling bonds and stamps failed may far lu was their monthly report. To date, less than 6,200 theatren have reported a total of nearly $6,000,000 in Issul and stamp sales. Scattered reports on July sales to date indicate that an increased sale for the Does) in to be expected - probably 25 per cent higher than June. AR OVER The possibilities still have not been seratched. This is proven by these thestre that have gone after sales actively in true showmanship style. They have sold ten Limes what the less active theatres have done. RUSH IN YOUR REPORT ON SALES FOR JULY! WISCONSIN RAPIDS! The headlines - this war stamp display created by Herbert Gracfe for Wisconsin Rapids" Theatrea, Wiscomsin, may be wishful thinking, but they're selling servities, The large "V" is watlined in red, white and blue mest. The booth la manned by "Job's Deughters," . Masonic group. An excellent lobby Idea for your September drive, 85 000000 MOVIEGOEAS MODILIZED TO BUY WRR BGAOS STAMPS in THERTRES! COAST-TO-COAST! This huge map la standing In & promi- cent apot near Secretary Morgen- than's office in Washington. On it are being thumbtacked photos, elippings, printed matter, etc., visualizing what theatres overywhere are doing. Maybe you can find on it something you sent in Keep your campaign reports coming is to War Activities Committee. DANCE * C'ailen Chicagol BUY A STAMP and DANCE! BUY A STARF Tonight Independence Day Jamboree - Inaugurating WAR STAMP-A-DANCE STOMP Bring your wile, the 9 p.m. to sister, sweetheart BUY Benton Court adjoining Chicago Theater or date and midnight PHILHARRIS & Iris ORCH. Chicago Theater Orch. DANCE! ADMIN CHICAGO! The Loop dis- triet didn't miss the usua] fireerackers and Fourth of July din, because Bill (B. & K.) Hollander's War Stamp-A-Dance Stemp fornished young and old new kind of excitement. With Bur the permission of the city fathers, en entire block was reped off for TAKE this Stamp Stomp. Purchase of a 10e War Stamp was required for THE AXIS-PT each dance. New York's famous 52nd Street (Night Club Alley) was the acene of a similar block GUBR TICKETS party staged during July by the TO LOEWS Retailer's committee. Because of mild weather condi- tions, this la the perfect stunt to atir up excitement for your Sep- JERSEY CITY! Punching popular the distations full of boles le . tember drive, It's novel, and (Theatre, Jersey City, N.J. Manager pastime George with Dumond, patrons personally, of Lorw's natural for extra newspaper pub- licity. You'll need many stunta to (built this over-grown punchboard Some of the punchas contain keep the DEW drive on high, so lucky pelleta which are good for 4 guest admission ticket. earmark this one M e "must" ATLANTA! Net since the wirld With the Wind" has the heart of down premiere of "Gorg town Atlanta (Five pointa) - - much excitament Giant rella CONFIDENTIAL 38 UNITED STATES SAVINGS BONDS - SERIES F AND G COMBINED Comparison of August sales to date with sales during the same number of business days in July and June 1942 (At issue price in thousands of dollars) : August : Cumulative sales by business days Date : daily : August : sales July : June : August as : : : : :percent of July August 1942 1 $ 12,222 $ 12,222 12,597 $ 9,705 97.0% 3 16,587 28,810 21,986 17,601 131.0 4 12,448 41,258 32,441 26,235 127.2 5 12,847 54,105 49,175 40,009 110.0 6 17,447 71,552 62,561 49,353 114.4 Office of the Secretary of the Treasury, August 7. 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. Regraded Unclassified CONFIDENTIAL 39 UNITED STATES SAVINGS BONDS - SERIES E Comparison of August sales to date with sales during the same number of business days in July and June 1942 (At issue price in thousands of dollars) : August : Cumulative sales by business days Date : daily : : : : : sales : August : July : June August as :percent of July August 1942 1 $ 14,044 $ 14,044 $ 15,821 $ 19,834 88.8% 3 22,178 36,222 30,701 27,841 118.0 4 14,575 50.797 47,523 40,811 106.9 5 12,988 63,785 77,320 58,199 82.5 6 23,004 86,789 95,044 82,988 91.3 Office of the Secretary of the Treasury, August 7, 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 40 UNITED STATES SAVINGS BONDS - TOTAL Comparison of August sales to date with sales during the same number of business days in July and June 1942 (At issue price in thousands of dollars) : August : Cumulative sales by business days Date : daily : August : July : June : August as : sales : : : :percent of July August 1942 1 $ 26,267 $ 26,267 $ 28,418 $ 29,539 92.4% 3 38,765 65,032 52,687 45,442 123.4 4 27,023 92,055 79,964 67,046 115.1 5 25,835 117,890 126,495 98,208 93.2 6 40,450 158,341 157,605 132,341 100.5 Office of the Secretary of the Treasury, August 7, 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. Regraded Unclassified Sales of United States saving 110nds August 1 through August 6, 1942 Compared with sales quota for same period CONFIDENTIAL (At issue price in millions of dollars) : Series E I Series Pr and G : Total : Actual sales # Quota, : Sales : Actual sales : Quota, : Sales I Actual sales I Quota, : Sales Date : : August 1 I August 1 # to date : : August 1 : August 1 : to date : I August 1 : August 1: to date : Daily : to : to : as % of 1 Daily = to # to : as x of # Daily # to : to : as $ of : : date : date : quota : : date : date I quota : : date : date : quota 1 $ 14.0 $ 14.0 $ 16.0 87.5% $ 12.2 $12.2 $ 7.7 158.4% $ 26.3 $ 26.3 $ 23.7 111.0% 3 22.0 36.2 47.3 76.5 16.6 28.8 21.5 134.0 38.8 65.0 68.8 94.5 11 14.6 50.8 61.0 83.3 12.4 41.3 29.6 139.5 27.0 92.1 90.6 101.7 5 13.0 63.8 84.0 76.0 12.8 54.1 45.4 119.2 25.8 117.9 129.4 91.1 6 23.0 86.8 107.3 80.9 17.4 71.6 58.7 122.0 40.5 158.3 166.0 95.4 7 134.4 68.8 203.2 8 154.1 76.3 230.4 10 190.6 87.9 278.5 11 205.1 94.1 299.2 12 227.1 105.1 332.2 13 247.9 114.0 361.9 14 271.0 120.9 391.9 15 287.7 126.4 414.1 17 319.2 135.8 455.0 18 332.2 141.3 473.5 19 353.0 151.9 504.9 20 373.6 161.0 534.6 21 397.4 168.3 565.7 22 415.1 174.3 589.4 24 449.0 184.8 633.8 25 462.9 191.0 653.9 26 484.5 203.0 687.5 27 505.0 213.2 718.2 28 527.8 221.4 749.2 29 544.2 228.1 772.3 31 575.0 240.0 815.0 Office of the Secretary of the Treasury, Division of Research and Statistics. August 7. 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. Note: Quota takes into account both the daily trend during the week and the monthly trend during the month. 42 August 9, 1942. int. in Dear Your letter reached the Secretary just as he was preparing to leave the of- fice for a brief mention. Be will not be back in Washington until August 19, and suggests, therefore, that if you have not already done so, you might vish to talk over the income tax plan, of which you speak, with Mr. madelph Feal. with approciation of your courtesy in vriting as you did, Sincerely yours, (Signed) H. S. Klotz & s. Klets, Private Secretary. Mr. Beardaley Dunl, 182 Vest 34th Street, New York, New Yerk, File in Diary Regraded Unclassified 43 C j J 151 WEST 34TH STREET J-J-L01 - 'Paul My dear Mr. Secretary: I do not want to omit to do anything I properly can to advance the cause of the Pay As You Go income tax plan. I know that you have plenty of other sources of information and comment, but if it would be at all helpful, I would greatly appreciate an oppor- tunity to discuss the plan with you. Very sincerely yours, Beardsley Ruml Honorable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. C. 44 AUG 7 1942 w dear Mr. Secretary: Reference is made to your letter of August 3, 1942, in which you ask the assistance of the Treasury Department in organ- ising a program of action by which unreliable and hostile persons may be prevented from obtaining licenses for the possession, die- tribution and use of explosives under the Federal Explosives Act of December 26, 1941. You request the loan to the Bureau of Mines, for a period of six months of ten or twelve trained investigators to help organize and direct a program of investigation in con- nection with this matter. I regret to advise you that it has been found impossible to comply with your request. A large number of our best qualified investigators have been commissioned in, or have otherwise joined, the armed services and we are experiencing difficulty in main- taining sufficient properly qualified personnel to take care of our own minimum requirements. I would have liked very much to have been able to comply with your request, but non of the type which we would have considered it necessary to assign to your project simply cannot be spared at this time. I appreciate very such your kind references to the work of our investigative organisations and the compliment implied in your request. It is possible that this department may be able to help you to - extent by making available the facilities of our Training Division, Treasury Enforcement Agencies. This organisation could give advice on procedure in investigations of this manner, prepara- tion of forms, and similar incidental matters. If your department wishes to avail itself of the help of this organisation, and you will 80 advise, I shall be pleased to issue appropriate instruc- tions. Sincerely yours, (Signed) H. Morgenthau, Jr. Secretary of the Treasury. Hon. Harold L. Ickes, Secretary of the Interior. Delivered by Mess. Harmon 1th 8/7/42 at 3:20. ner File in Diary Regraded Unclassified Darton 45 OHIO THE SECRETARY OF THE INTERIOR WASHINGTON AUG - 3 1942 My dear Mr. Secretary: I am writing to ask the assistance of your Department in organ- izing a program of action by which unreliable and hostile persons may be prevented from obtaining licenses for the possession, distribution and use of explosives under the Federal Explosives Act of December 26, 1941 (50 Stat. 863). In my letter to you of March 24 I outlined the responsibilities which that act imposes upon this Department. The difficulty of this task, as I there stated, arises from the fact that licenses must be issued by local licensing agents all over the country and must be issued expeditiously in order not to delay industrial activity. I asked then whether it would be possible for your Depart- ment to aid the Bureau of Mines, which administers the act, and the local licensing agents in detecting disloyal applicants and licensees by such means as examining lists of applicants and licensees. In response to this letter the Coordinator of Treasury Agency Services arranged a conference with representatives of the Bureau of Mines and the Solicitor's Office of this Department, at which it was determined that the information available to your Department was not such as to be useful in the particular ways proposed. At the same time, the readiness of your Department to assist in any other feasible ways was made clear. Since this conference consultation with other Federal agencies has made it clear that it will be necessary for this Department to undertake on its own account a program of investigation of applicants and licensees. This means that a staff of investigators must be organized who will be capable of directing and undertaking personal investigations and who will serve in addition to, and in cooperation with, the engineers of the Bureau of Mines assigned to the investiga- tion of the technical aspects of the handling and use of explosives and of compliance with the terms of the act. The question I wish to put before you is whether your Department can lend to the Bureau of Mines for a period of six months, 10 or 12 trained investigators to help vrganize and direct an investigation program. Such a group should include employees who have engaged in Doaradod 46 investigative and enforcement work requiring cooperation with local police agencies, since such cooperation will be essential in carrying out a national explosives control campaign; if possible the group should also include one or more persons acquainted with the activities of enemy agents. This Department will be able to recompense your Department for the services of such employees. Authority for such detail is contained in section 15 of the act, which provides that: The head of any executive department or independent establishment of the Federal Government may cooperate with the Director [of the Bureau of Mines in the administration and enforcement of this Act and may assign employees to operate under the direction of the Director." Expert Government investigators are essential in view of the size and complexity of the problem. At present there are 4,500 licensing agents, all of whom should themselves be checked, and over 120,000 licensees, with additional thousands of applicants anticipated. Trained investigators must determine how to restrict and to cover this field and must establish workable procedures which can be carried on by such a staff as they may assemble. The work of the investigators detailed would probably be begun in Washington and culminate with at least one investigator serving at each of the eight regional offices of the Health and Safety Service of the Bureau of Mines, which offices super- vise the mine safety engineers, coal mine inspectors and the explosives investigator assigned to each State. I appreciate the additional demands on the facilities of your Department made by the war. I make this urgent request only because sabotage through the use of explosives must be prevented by every possible means, and because the experience and record of your investi- gative staff in dealing with smuggling, narcotics, counterfeiting and other forms of law evasion are such as compel me to conclude that the help of men from your Department is essential in organizing a national effort to bar access to explosives by potential saboteurs. I and representatives of the Department will be glad to discuss the details of this program with you and members of your Department. Sincerely yours, Horold T.Sches Secretary of the Interior. Hon. Henry Morgenthau, Jr., Secretary of the Treasury. 2 Regraded Unclassified mex Investigative Personnel of Treasury Enforcement Agencies Agency Quota On roll Military service Vacancies Alcohol Tax Unit 1,340 1,183 100 157 Customs Agency 12 Service 179 178 21 1 Investigative Staff, Foreign Funds Control 96 96 6 - Intelligence Unit 302 287 31 15 ireau of Narcotics 227 217 34 10 lecret Service Division 295 259 78 36 18 277 - 18 TOTAL 2,439 2,000 270 019 2238 20/ 48 MEMORANDUM FOR THE SECRETARY. August 7, 1942. Mail Report The past week would seem to have set a low for the year 1942, which still is well above the mail receipt of the same time during previous years. This holds true for the July mail, both Treasury and referred, as is indicated by the following figures on letters referred from the White House during the month: 1942-735; 1941-517; 1937-350. Our fan mail has been full of suggestions for financ- ing the war effort. Soft drinks, candy, cigarettes and cigars, in the order named, have been most frequently sug- gested for additional taxation, while other proposals for revenue include transaction taxes, excise taxes on personal luxuries, tax on Labor Unions, increase in postage rate, tax on fines collected by state and local governments, and the substitution of the 10¢ War Stamp for the 3¢ postage stamp. There have been 4 letters urging excess profits tax on individual incomes, and a number of letters urging higher income taxes all along the line. Several business houses have opposed higher corporation taxes, and there have also been several announcing that they are closing up shop be- cause of current conditions, particularly taxes. The ratio of those in favor of the Sales Tax to those opposed is 5-2. Comments on the car use stamp have decreased. Thanksgiving and Christmas are already mentioned in connection with sales promotion on Bonds and Stamps. There are many requests for non-interest bearing Bonds, and a number asking that Bonds be accepted as collateral for loans or be made transferable. 3 letters in favor of compulsory payroll deductions for Bond purchases are balanced by 2 objecting to this. General complaints have slightly in- creased with 15 concerning delays in handling, and 8 on failure to receive interest. Toward the end of the week letters commending the work of the committee on non-essential spending began to come in. There still are many letters violently critical of Government spending, usually giving instances of local extravagance. There also has been a wave of letters suggesting that the Treasury counterfeit the currency of the Axis nations and drop the "fake" money by plane. Gabrille E. Fachesh Regraded Unclassified 49 - 1 - GENERAL COMMENTS Ed. Miller, Worthington, Minn. Herewith enclosed draft in the sum of $536.40, which amount of money was received by a group of local C. St. P. M. & 0. Railway employees from the sale of 79,320 pounds of scrap metal collected in this community. This money is being sent to you to buy bombs, with the special request that such bombs be delivered to Adolph Hitler by Air Mail, with the personal regards of all those who helped contribute to the "scrap pile". Please acknowledge receipt of this draft, as we will be listening for the explosion of the bombs. 0. E. M. Keller, President, The Small Business Men's Association, Toledo, Ohio. The contents of your second report, just made, surely comes to us as 8. ray of sunshine - not only for what has been accomplished, but for the hope that it gives us that the good work of your Committee will proceed and be more and more effective. Small business is probably called upon to make greater sacrifices than other portions of our structure, and it certainly makes these sacrifices easier to take, and makes for unity, when we find that there are those in the Government that are aiming to have the Government follow the same line of sacrifices, and furthermore, that they are succeeding. *** L. Richard Guylay, Citizens Public Expenditure Survey, Albany, New York. The report of the Joint Committeeon Reduction of Nonessential Expenditures, listing the econo- mies in Federal spending since the first of the year, is truly astonishing. Every dollar that has been saved will help to make the eventual load on the American people that much lighter. You are to be congratulated for your part in making these economies possible. Lionel Wachs, Oakland, Calif. # # # (Enclosing clipping re Canadian forced savings plan.) Please be assured that this thought is only offered to you in a spirit of constructive suggestion, as I am a great admirer of the Regraded Unclassified 50 - 2 - splendid manner in which you handle our finances. Extend- ing to you my warmest personal regards, I am, Sincerely yours, Lionel Wachs. Sam Ishkanian, New York Hotel, Washington, D. C. I would like to help the Government in the rubber campaign. Unfortunately I am not a car owner and I do not have any kind of rubber equipment. I feel strongly that each citizen should help in every way he can to help the Govern- ment to buy all the available rubber in the world. I wish to do my share to provide the funds for the purchase of rubber and I am therefore enclosing a check for $100 for that purpose. # ## Thomas M. Galey, Owensboro, Ky. Believe me, I am one who is alarmed because of the panicky thinking in Washington. What's the matter with you fellows anyway? # # # Now, you had better not tamper with anything so dangerously vital as the petroleum supply. Do you know that we are in the gravest danger of a critical shortage in the event the War is prolonged? # # # And yet you, damn-it, you trifle about 8. measly little eighty million dollars by insisting on extracting from the trembling oil industry 8. denial of depletion allowance. By so doing, you are adding to and abetting the certain shortage which has been engendered by the crude oil price restrictions of the Henderson group. I tell you, Mr. Morgenthau, it's time to call 8. halt -- it's time to think about the salvation of this country in terms of petroleum supply, the bulwark of our war effort. Petroleum is our very life blood N o W. And you fellows who haven't the vision to understand critical situations outside your immediate problems, had better listen, AND LISTEN WELL. Letter written by John T. Parkerson, Manager, Washington Bureau of Press Wireless, National Press Building, Washington, D. C., sent to Stephen Early, and referred by him to the Treasury. # # As 8. newspaperman of many years' experience, I returned to the States on June 1 from Berne, Switzerland, where I had been in charge of Press Wireless operations 51 - 3 - during the trying months of the Nazi invasion of Western Europe and the Balkans, and later their assault on Russia. Owing to the uncertainty of conditions in European neutral countries, I felt that as an American, the only assurance I had for the protection of my savings was to maintain them in the currency of my own country. Exchanges fluctuated from day to day, and there were times when we felt that an invasion of Switzerland was only a matter of hours. I real- ized that if such an event should happen, the only possible means I might have of leaving the country with my family would be by having a supply of American dollars in my possession. Accordingly, I kept my savings in dollars, purchasing them in every single instance from such inter- nationally reputable financial institutions as Credit Suisse and Union Bank of Berne at varying rates, which they cur- rently gave to any and all of their customers. When I left Berne I advised the American Consul that I had an accumula- tion of personal savings in dollars which I desired to bring to the states with me. He had received no definite instructions from the Treasury Department, but said he did not think I would have any difficulty if I declared my money to the authorities on my arrival in New York, and explained the source thereof. # # I said I had come by my money in good faith and proposed to take it back with me; that it was the only money in which I felt that an American, living abroad, could have any confidence whatever, and that I would rely upon my own Government to give me 8. square deal. He agreed that such was the right attitude to take. When I arrived in New York I went to the Customs officials, counted out my money, turned it over to them, and took their receipt for same, which I now hold. I have conformed in every known manner to the Treasury regulations in the hope of obtaining the release of this money, but in vain and without even the courtesy of an explanation as to what I might expect. # I know of no law under the Constitution which entitles the Government to confiscate the personal belongings of citizens who have always done what they could to serve their country and its best interests, and who are above suspicion. Had I returned to America without a fixed employment, I might have been seriously embarrassed for a livelihood, because my own Government has seen fit to deprive me of the just fruits of my labors over 8. period of years in the service of American interests abroad. I submit that this is an injustice which calls for attention. As one who feels that he has 8. just grievance, I beg you to accept my statement for the record. 52 - 4 - Favorable Comments on Bonds Ernest A. Rostel, Information, Estes Park, Colorado. *** I should like to call your attention to the accomplish- ment of a group of tunnel workers now drilling 8. 13-mile irrigation tunnel through the Rockies in Rocky Mountain National Park. A short time ago these drillers, 120 in the group, not only signed up 10% of their wages, but added another 10% to make up 20% of their monthly pay check. We think that this accomplishment is 8. record worthy of your recognition. Recently Governor Ralph Carr of Colorado cited the entire group, including the con- tractor, S. S. Magoffin, as "Heroes of the Week" for the State of Colorado -- as probably the largest single 100% group in the nation to pledge 20% of their pay for Bond purchases. In addition, one of the drillers, Stanley Fell, started off the July retail store Bond campaign by purchasing $400 worth of Bonds. The $400 had been saved up for a trip, but Fell believed his country -- our country-- needed the money more for guns and ammunition. ### J. C. Lamkin, Postmaster, Yazoo City, Miss. Last month I sold Mr. J. A. Bardwell, Sr., his 201st one thousand dollar bond. Mr. Bardwell has been buying these for his grandchildren for several years. (Maturity value of pur- chases, $201,000). Mr. Bardwell is 85 years of age. Each time that he comes to buy these bonds he always says, "I want to send Mr. Morgenthau some more money so that he can keep up his good fight". The last time Mr. Bardwell was in my office, he made the remark that you probably would never know he was trying to help you, 80 I thought that I would call the matter to your attention so that you could write him a letter one of these days. I know that the letter would bring joy to the old man. Regraded Unclassified 53 - 5 - Unfavorable Comments on Bonds W. E. MoNatt, Downey, Calif. Re: Aleutians. I have been a consistent buyer of Bonds, but as I see our supplies and men sent to Ireland, Egypt and Australia to help dear ole bloomin' 'england", and our own shores unprotected, I feel I have enough. # # # Apparently we are incapable of pro- tecting our own shores as the Japs, despite heroic deeds, so reported, but our forces continue to increase in number. # # # If you think the morate on the West Coast is of any particular moment, you have another guess coming. My par- ticular feeling is that 80 much of our equipment and so many of our men have been sent out of the country that the West Coast is practically undefended. Until something is done about the Aleutians, I'm not buying any more Bonds to send equipment to England and her possessions. O. C. C. Opsal, Chicago, Ill. On July 25 Miss Katharine Foss of this city went to the National Boulevard Bank, Chicago, to make a deposit in her Savings Account, and, incidentally, withdrew $150 in cash to buy eight War Bonds of the value of $18.75 each. She was referred to a Vice President, a Mr. Donovan, of this bank. He protested and was averse to sell her Bonds of this denomination, using various excuses, among which was that the Government was holding back on the issuance of same and for these various reasons the bank could not sell Bonds of this denomination. This was a rather startling pronouncement to Miss Foss and myself, in view of the great and mighty effort that is being made every day and all over the country. We are most con- fused as to this situation and would like to have the real true facts from you. Miss Foss and I were most resentful to the attitude taken. Also, for the past few months, three of us have regularly been buying War Stamps at the Lincoln Park Station, Post Office Dept., in Chicago, through de- positing pennies for such purpose, and in every case, we are met with growlings, surly looks, and inept statements from the Post Office attendant. These clerks' attitude towards "pennies for the Government and its War effort" certainly does not make us feel any too good in our efforts to do good. *** 54 - 6 - Emil Marohn, Chicago, Ill. I am employed at the New York, Chicago, and St. Louis R. R., Chicago Division. We all in Chicago pledged 100% for buying War Savings Bonds. My first Bond of $25 was paid June 15 at the sum of $18.75. July 30 I received this Bond, dated July 29, from the Federal Reserve Bank of Cleveland. I'm losing 11 months' interest on this. On June 30 I paid another Bond of $50, and on July 15, & $25 Bond. I'm sorry to say that I have received nothing from these last two. Before this campaign, I bought my Bonds at the Post Office without any loss or trouble. I'm willing and will do all I can to help our country to win this war. Sigmund Schlesinger, Allied Purchasing Corp., N.Y.C. One of the safeguards our Government promises purchasers of War Bonds is that in the event of their being misplaced, stolen, etc., the owner is insured against loss. I have had an experience which is contrary to this. Several months ago, a $50 face value Bond was stolen from me, and my efforts by letter, copy of which is attached, to arrange for a re- placement of it have been fruitless. (The following comments are from the letter written by Mr. Schlesinger to the Chief of the Division of Loans and Currency, Treasury Dept., Merchandise Mart, Chicago, Illinois.) The writer has lost a $50 maturity value War Bond, purchased by the above company for his account on April 30, at the Manufacturers Trust Company, 530 Seventh Avenue, N.Y.C., through the Federal Reserve Bank of N.Y.C. Unfortunately, neither the Manufacturers Trust Company, nor the Federal Reserve has kept 8. record of the serial numbers of the Bonds sold to employees of the above company on this date, and so it is impossible to file the Application for Relief on Account of Loss, etc., to replace this Bond. ### 55 - 7 - Favorable Comments on Taxation Lewis L. Clarke, N.Y.C. *** In my opinion the Washington perspective on the desire for greater revenue is somewhat warped. I have yet to come in contact with any one in the financial world who is not of the firm opinion that the Government would be able to get greater revenue if the capital gains tax was abolished, for it would bring cap- ital out into the open, in going into enterprise and doing things in a constructive way, with the thought in mind that if there should be substantial profits, these profits would be used in further development in enterprise, and in the final analysis, all such enterprises would have earn- ings. These earnings would be taxed, and in the longrun, greater revenue for the Government. # # # I am merely an humble citizen who has been in the business world for some years, but I cannot help passing on these few lines, as I feel I am bending a constructive effort on lines of your desire for greater revenue, and my desire to lend 8. helping hand. 56 - 8 - Unfavorable Comments on Taxes C. S. O'Loughlin, South Orange, N.J. Thanks for assuming that I am governed by thoughtfulness in sending in my kick by mail. I am thinking of "me" for when I come to pay taxes, buy Bonds, give to the Red Cross, or any other charity or church, pay interest on what I owe, and then REDUCE MY BACK INDEBTEDNESS, I wonder how in the world it can be that I eat, or my wife or any one dependent upon me. The indebtedness accumulated in the dark ages of the depression can be only cleaned off gradually, but let me ask the U. S. Government, representing me, how I can do that trick. How can I pay old bills and then be taxed for the paying so much that that, plus the interest, takes the wherewithal out of me by which to live. # # # This income of mine comes principally from real estate, and that is plentifully milked before the net gets to me, then my bureaucratic governing father does the same trick, and lo and behold, after he gets through, the debt holder or my creditor won't exercise any more mercy than my paternal Government. # # # Won't you try to have put in the tax bill some relief when old debts are paid and I don't mean those incurred just for the purpose of escaping taxes! R. N. Moorehead, Fresno, Calif. I wish to tell you my experience with one of your tax anticipation bonds. I thought it was a good idea, so the first week in Sept. I bought one for $50. I am a wage worker and I figured my tax would be about that much. At tax paying time in March, I proudly went up with my bond to pay my taxes. The Collector would not accept it - said he could not use it. Told me to take it back where I bought it (the bank). I tried to deposit it in my Postal Savings, but "no". I tried to buy 8. War Bond, but it was not legal tender; then the man at the window told me to take it back where I bought it. I did! The man in the bank acted dumb. Finally I made him understand I wished the cash. He told me, "Come back in a few days". He gave me the cash but charged me 23₫. On the back-of the bond it said they would draw interest. *** 57 - 9 - Copy of letter written by L. M. Teed, Amarillo, Texas, to the Collector of Internal Revenue, Dallas, Texas. I am in receipt of your form 21-A, threatening dire consequences if the fourth installment of my income tax is not paid at once. I note you state a notice was sent me on June 15. If such a notice was sent, the Post Office still has it somewhere, and judging by the way some of my mail is handled, I don't suppose I will ever get it. May I remind you that inasmuch as the Government was supposedly short of funds last March, I made a special effort and paid half of my tax then, and intended to pay the rest of it as soon as possible. You already have my payment in June of another quarter of the tax. ### However, to avoid any controversy, I am enclosing the $19.75 and will expect 8. receipt in full from you. I might state right here that there will be no more half tax pay- ments. Future taxes will be paid by the quarter and only when they are due. In view of your attitude in this matter, it would not appear that early payments are appreciated. 18" 58 BRITISH AIR COMMISSION 1785 MASSACHUSETTS AVENUE WASHINGTON, D.C. TELEPHONE HOBART 9000 PLEASE QUOTE REFERENCE NO. With the compliments of British Air Commission who enclose weekly Statement No. 63, covering Aircraft Flight Delivery as at August 4b 1942. The Honourable Henry Morgenthau, Jr. Secretary of the Treasury WASHINGTON, D. C. August 7, 1942. U. S. SECRET 59 CONFIDENTIAL REPORT KA NO. D-55 BRITISH LOCATIONS OF OCEANIC FLIGHT DELIVERY AIRCRAF -- MOST OR SECRET (Covering Movements through August 4, 1942) la B-17C -- Boeing Contract A-5077 20 DELIVERED TO U.K. 2. LIBERATOR TYPES off B.A.C. Contracts (A) B-24 -- Consolidated Contract A-5068 6 DELIVERED TO U.K. (assigned to ferry service) (B) LIBERATOR I -- Consolidated Contract F-677 19 DELIVERED TO U.K. 2 1 under repair 20 (c) LIBERATOR II -- Consolidated Contract F-677 (a) Never taken by U.S.A.A.F. 56 DELIVERED TO U.K. 5 DELIVERED TO M.E. (1 crashed in Africa) 1 in Ferry Service (delivered to Montreal) 3 at Montreal 65 (b) Taken by U.S.A.A.F. and Returned or Kept 14 DELIVERED TO U.K. 4 in Ferry Service (delivered to Montreal) 3 at Montreal 1 at Detroit 2 on special duty 6 retaken by U.S.A.A.F. 44 kept by U.S.A.A.F. 74 3. HUDSON y (LONG RANGE) -- Lockheed Contract A-1749 174 DELIVERED TO U.K. 42 DELIVERED TO DEBERT 1 at North Bay 1 at Montreal 2 under repair 5 crashed (2 in U.S.; 3 after export) 225* *Excluding one crash written off by contract amendment SUPPLEMENTARY (not included in table at end of repoide SHORT RANGE HUDSON y off A-1749 168 DELIVERED TO U.K. (by sea) 6 DELIVERED TO NEW ZEALAND (by sea) 1 flight delivered to Canada (at Debert for training) 1 returned from Canada for repair 6 lost at sea 182* *Excluding one crash written off by contract amendment. has HUDSON III off B.A.C. Contracts (A) Lockheed Contract A-67 (LONG RANGE) 46 DELIVERED TO U.K. 6 crashed (after export) 50* *Including "Gift Plane" SUPPLEMENTARY (not included in table at end of report) SHORT RANGE HUDSON III off A-67 29 DELIVERED TO U.K. (by sea) 1 Resident at Lockheed plant 30 Page 1. Regraded Unclassified CONFIDENTIAL REPORT U. S. EA NO. D-55 SECRET 60 LOCATIONS OF OCEANIC FLIGHT DELIVERY AIRCRAFT (Covering Movements through Augustsh4 MOST SECRET As HUDSON III off B.A.C. Contracts - Cont. (B) Lockheed Contract A-68 (LONG RANGE) 211 DELIVERED TO U.K. 3 at Montreal 1 Detroit 20 for U.S.A.A.F. Familiarisation Program (including 20 crashed (after export) 1 known crash) 245⑉ *Excluding two crashed written off by contract amendment. (not included in table at end of report) 30 (LONG RANGE) DELIVERED TO NEW REALAND (by sea) 71 (SHORT RANGE) DELIVERED TO U.K. (by sea) 5. VENTURAS (A) Off Vega Contract A-344 (a) LONG RANGE 98 DELIVERED TO U.K. 2 in Iceland 1 at Gander 2 en route Gander 32 DELIVERED TO PENNFIELD RIDGE 17 at Montreal 45 departed Miami 17 at Detroit (including 12 for West Palm Beach) 1 en route Detroit 28 at Miami or West Palm Beach 5 en route Miami or West Palm Beach 1 on special duty (Wright Field) 8 taken by U.S.A.A.F. 10 crashed (1 in U.S.; 9 after export) 268 (b) SHORT RANGE 6 DELIVERED TO PENNFIELD RIDGE 8 at Montreal 2 at West Palm Beach 1 en route Detroit 1 at Long Beach 18 SUPPLEMENTARY (not included in table at end of report) 10 (SHORT RANGE) DELIVERED TO U.K. (by sea) (B) off Vega Contract A-1748 (LONG RANGE) 23 DELIVERED TO U.K. 2 in Iceland 1 at Gander 5 DELIVERED TO PENNFIELD RIDGE 2 at Montreal 1 at Detroit 196 taken by U.S.A.A.F. 230 6, FLYING BOATS (A) Off B.A.C. Contracts (a) A-2587 7 DELIVERED TO U.K. (b) F-210 38 DELIVERED TO U.K. 1 DELIVERED TO AUSTRALIA 1 DELIVERED TO SINGAPORE 40 (c) A-37 42 DELIVERED TO U.K. 8 DELIVERED TO SINGAPORE 8 at Dartmouth 1 at Bermuda 59 Page 2. August 5, 1942. Regraded Unclassified CONFIDENTIAL REPORT U.S. REA NO, D-55 SECRET 60 LOCATIONS OF OCEANIC FLIGHT DELIVERY AIRCRAFT -- (Covering Movements through MOST SECRET he HUDSON III off B.A.C. Contracts - Cont. (B) Lockheed Contract A-68 (LONG RANGE) 211 DELIVERED TO U.K. 3 at Montreal 1 at Detroit 20 for U.S.A.A.F. Familiarisation Program (including 10 crashed (after export) 1 known crash) 2450 *Excluding two crashed written off by contract amendment. (not included in table at end of report) 30 (LONG RANGE) DELIVERED TO NEW ITALAND (by sea) 71 (SHORT RANGE) DELIVERED TO U.K. (by sea) 5. VENTURAS (A) off Vega Contract A-344 (a) LONG RANGE 98 DELIVERED TO U.K. 2 in Iceland 1 at Gander 2 en route Gander 32 DELIVERED TO PENNFIELD RIDGE 17 at Montreal 45 departed Miami 17 at Detroit (including 12 for West Palm Beach) 1 en route Detroit 28 at Miami or West Palm Beach 5 en route Miami or West Palm Beach 1 on special duty (Wright Field) 8 taken by U.S.A.A.F. 10 crashed (1 in U.S.; 9 after export) 268 (b) HORT RANGE 6 DELIVERED TO PENNFIELD RIDGE 8 at Montreal 2 at West Palm Beach 1 en route Detroit 1 at Long Beach 18 SUPPLEMENTARY (not included in table at end of report) 10 (SHORT RANGE) DELIVERED TO U.K. (by sea) (B) orr Vega Contract A-1748 (LONG RANGE) 23 DELIVERED TO U.K. 2 in Iceland 1 at Gander 5 DELIVERED TO PENNFIELD RIDGE 2 at Montreal 1 at Detroit 196 taken by U.S.A.A.F. 230 6, FLYING BOATS (A) off B.A.C. Contracts (a) A-2587 7 DELIVERED TO U.K. (b) F-210 38 DELIVERED TO U.K. 1 DELIVERED TO AUSTRALIA 1 DELIVERED TO SINGAPORE 40 (e) A-37 42 DELIVERED TO U.K. 8 DELIVERED TO SINGAPORE 8 at Dartmouth 1 at Bermuda 59 Page 2. August 5, 1942, Regraded Unclassified CONFIDENTIAL REPORT 61 MA NO. 55 U.S. SECRET LOCATIONS OF OCEANIC FLIGHT DELIVERY AIRCRAFT - (Covering Movements through August UNITSA MOST SECRET 6, 1,500.00 DOATS - Contd. (A) NKA Contracts - Cant. (d) A 17 DELIVERED TO AUSTRALIA 1 DELIVERED TO U.K. (e) CAN - 78 17 DELIVERED TO U.K. 9 DELIVERED TO AUSTRALIA 1 in Bermada 2 crashed (after export) 29 (not included in table at end of report) 7 DELIVERED TO CANADA (B) off Land-Lease Contracts B.S.C. Requisitions (a) PBX-5-A -- Reg. 10772 10 DELIVERED TO U.K. 2 at Montreal (b) PBX-5-B - BSC Reg. 7952 7 DELIVERED TO U.K. 2 at Gender 2 at Montreal 1 in Bermuda 43 at Elisabeth City 55 - 7. LODESTARS (A) C-59 - L/L Contract AC-53. BSC Beg. 10A9 7 Departed Miami or West Palm Beach 3 taken by U.S.A.A.F. 10 (B) C-60 -- WE Contract AC-53. BSC Reg. 1049 15 departed Miami or West Palm Beach 4 3 Reassigned C-60's (Army Release) and 8 L-18's off AC-1039, BSC Req. 3235, previously included hereon, are dropped from this report, since they were diverted from the British. & HUDSONS OFF LMND-LEASE CONTRACTS (A) Hudson III - 1 off AC-5 129 DELIVERED TO DEBERT 1 at North Bay 2 at Mentreal , at Montreal for Debert 2 at Ottawa 1 at Detroit for Debert 5 under repair 2 at Long Beach 32 for China 20 diverted to U.S. Navy 153 taken by U.S.A.A.F. 6 crashed (5 in U.S., 1 after export) 356 SUPPLEMENTARY (not included in table at end of report) 49 DELIVERED TO AUSTRALIA (by sea) 12 DELIVERED TO NEW EEALAND (by sea) 61 Page 3. August 5, 1942. Regraded Unclassified CONFIDENTIAL REPORT 62 LOCATIONS OF OCEANIC FLIGHT DELIVERY AIRCRAFT - SECRET REZA NO. D-55 U. S. 63 (Cevering Movements through August 4, 8, HUDSONS OFF LEND-LEASE CONTRACTS - BRITISH Cont. MOST SECRET (B) - off 183 DELIVERED TO U.K. 2 at Gander 1 at North Bay 5 at Montreal 1 at Detroit 1 at Nashville (transition) 2 at Long Beach 2 for China 16 crashed (3 in U.S.1 11 after export) 211 TUPPLETEWARY (not included in table at end of report) 45 DELIVERED TO AUSTRALIA (by sea) 42 DELIVERED TO NEW ZEALAND (by sea) 1 crashed (on acceptance flight) 88 (c) HUDSON VI off AC-471 30 DELIVERED TO U.K. 1 en route Gander 4 at North Bay 4 at Montreal 39 departed Miami 8 at Miami (for training) 5 at Miami or West Palm Beach 1 at Detroit 1 taken by U.S.A.A.F. 1 crashed (after export) 94 UPPLEMENTARY (not included in table at end of report) 4 experted to New Realand (by sea) (D) HUDSON VI off AC-908 11 DELIVERED TO U.K. 6 at Montreal 21 departed Miami 16 at Mismi or West Pala Beach 1 en route Miami or West Palm Beach 6 at Detroit 1 en route Detroit 2 at Nashville 12 at Long Beach 30 taken by U.S.A.A.F. 1 crashed (after export) 110 9. DOUGLAS TRANSPORTS off BSC Requisitions (A) G-53 off BSC Reg. 1050 11 departed Miami (B) C-47 off AC-167. BSC Reg. 2489 1 departed West Palm Beach 10. B-17F (Army Release) 37 DELIVERED TO U.K. (modified) 4 at Montreal (modified) 1 at Houlton, Ms. (modified) 1 at Detroit (modified) 2 on special duty (modified) 12 taken back by U.S.A.A.F. (in April) 4 taken back by U.S.A.A.F. (in June) 61 Page 4. August 5, 1942 Regraded Unclassified 63 CONFIDENTIAL REPORT U.S. DA 0, SECRET LOCATIONS OF OCEANIC FLIGHT DELIVERY AIRCRAFT - (Covering Movements through August 163 4051 SECRET 11. B-24D (Army Release) 10 DELIVERED TO U.K. (unmodified) 36 DELIVERED TO U.K. (modified) 4 in temperary South Atlantic Ferry Service (modified) 2 at Gander (medified) 10 st Montreal (9 medified; 1 unmodified) 13 at LaGuardia Field (modification center) 2 on route LaGuardia Field 2 taken back by U.S.A.A.V. (in June) 2 erashed (ummedified) (1 en route modification center; 1 after export) 1 crashed (medified) (after export) 82 12. B-24B (Army Release) 3 DELIVERED TO U.K. (modified) 15 at Montreal (modified) 5 at Detroit (medified) 23 13. B-35C (Army Release) 84 DELIVERED TO U.K. (modified) 1 at Gander (modified) 1 en route U.K. from Montreal (modified) 2 at North Bay (medified) 10 at Detroit (modified) 37 taken back by U.S.A.A.F. (June) 29 taken back by U.S.A.A.F. (April) 164 14. B-26A (Army Release) 4 at Montreal (modified) 19 departed Miami (modified) 1 at Betroit (medified) 18 at Missi or West Palm Beach (modified) 2 a reute Miami or West Palm Beach (modified) 24 at Mashville (modified) 3 crashed (2 on route Omaha; 1 at Omaha) V AIRFRAMES DIVISION, PLANNING & PRODUCTION DEPT., BRITISH AIR COMMISSION, WASHINGTON, D.C. Page 5. August 5, 1942. Regraded Unclassified 80. D-55 LOCATIONS OCEANIC PRIGHT DELIVERY IRCRAFT August 5, 1942 WERKEY REPORT D. 63 (Covering Hovements through August 4, 1942) 64 2 2 3 4 5 6 7 8 9 10 11 12 13 14 Pl'g L/L Doug. A.R. A.R. A.R. A.R. A.R. POSITION B-170 Lib, Bud.V Mad.III Vent, Boats L'star Had, Trans, B-17E B-24D B-258 B-25C B-26A TOTAL UNITED KINGDOM 20 MOST SECRET 95 174 257 122 122 227 37 46 3 as 1187 MIDDLE HAST 5 5 Regraded Unclassified AUSTRALIA SECRET 27 27 SINIAPORE 9 9 DEBERT 42 129 172 Dt route U.E. from Nontreal 1 1 PRESFIELD RIDGE 43 43 FINKY SERVICE 5 4 9 Iseland or Greenland 4 4 Gander or Geose 2 2 2 4 1 12 X route Gender or Goose 2 1 3 North Bay 1 6 2 9 Montreal 6 1 3 27 4 20 4 8. 15 4 92 BRITISH Ottema 2 we U. S. Dartmouth 8 6 Barneda 3 1 Departed Rical or N. Palm B. 45 22 60 12 19 158 Miami or West Palm Beech 30 29 18 F In voute Mini or W.Palm B. 5 1 2 8 Houlton, No. 1 1 Detroit 1 1 38 9 1 5 10 1 us b reste Detreit 2 1 3 Hasbville 3 24 27 On special daty 2 1 2 5 Elimabeth City 43 43 Hodification Centers 13 13 In roste Modification Centers 2 2 Long Beach 1 16 17 Under repair 1 2 5 8 Por China 34 34 Diverted to U.S. Havy 20 20 U.S.A.A.F. Familiarisation 20 20 Taken or Retaken by U.S.A.A.P. 50 204 2 184 16 2 66 525 Crashed 5 14 20 2 22 3 ) 59 20 165 225 295 516 220 25# 771 12 61 82 23 164 n 2650* 11 Indesters Ameluded 65 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE August 7,1942 TO Secretary Morgenthau Mr. Hoflich FROM Subject: Shipment of Planes to British Forces 1. Ninety-three planes of all types, including 47 combat planes, were sent from the United States to British forces during the week ending July 28, 1942. For the third consecutive week these shipments were substan- tially below the weekly average of 117 planes during the first six months of this year. 2. Only eight planes were sent to the British Isles during the week. Thirty-six went to the Middle East. 3. For the second week in succession, no pursuit or fighter planes were shipped to the British forces. 4. The first shipment of a naval scout observation plane, the Vought Sikorsky 0S2U, was sent to the United Kingdom. This is a closed, two-seated, convertible mono- plane. Only two were shipped. - 2 - 66 Table A - Shipments by Area Week Total Shipped Total Shipped Ending in 1942 since July 28,1942 to date Jan. 1, 1941 To the United Kingdom Light and medium bombers 4 530 1,691 Heavy bombers o 130 234 Naval patrol bombers 2 10 112 Pursuit 0 849 1,160 Army Cooperation 2 73 104 Trainers 0 0 24 Total to the United Kingdom OR 1,592 3,325 To the Middle East Light and medium bombers 32 400 730 Heavy bombers 0 o 5 Naval patrol bombers o 6 6 Pursuit o 344 1,192 Army Cooperation 4 18 18 Trainers 0 8 150 Total to the Middle East 36 776 2,101 To the Canadian Forces Light and medium bombers 3 52 220 Heavy bombers 0 1 1 Naval patrol bombers 0 23 31 Pursuit o 30 72 Trainers 46 550 1,791 Total to Canadian Forces 49 656 2,115 To the British Pacific Forces Light and medium bombers 0 145 245 Naval patrol bombers 0 0 27 Pursuit 0 200 363 Trainers o 0 105 Total to Pacific Forces 0 345 740 To the British Indian Forces Light and medium bombers o 38 38 Pursuit 0 40 40 Total to Indian Forces o 78 78 Totals Light and medium bombers 39 1,165 2,924 Heavy bombers 0 131 240 Naval patrol bombers Pursuit 0 on 2 39 176 1,463 2,827 Army Cooperation 6 91 122 Trainers 46 558 2,070 Grand Total 93 3,447 8,359 - 3 - 67 Table B - Shipments by Types Week Total Shipped Total Shipped Ending in 1942 since July 28,1942 to date Jan. 1, 1941 Bell Airacobra o 315 469 Boeing B-17 0 0 41 61 Boston III O 15 39 Brewster Buffalo 0 o 168 Cessna Crane I-A (AT-17) 24 89 89 T-50 o 86 700 Consolidated Catalina 2 39 176 Liberator O 90 179 Curtiss Kittyhawk o 575 957 Tomahawk 0 0 544 Douglas Boston I,II and III 0 0 492 Fairchild 24 R-9 4 79 101 PT-26 Cornell 22 33 33 Glenn Martin B-26A (Marauder) 2 18 18 Baltimore 15 272 340 Maryland O O 150 Grumman Martlet II o 47 88 Lockheed A-29A (AC-151) o 1 1 Hudson 5 457 1,427 Lightning 0 3 3 Ventura I 0 12 12 Ventura Bomber 16 243 243 North American B-25 o 106 106 Harvard II O 53 950 Mustang O 518 598 Northrop Vengeance 1 6 6 Pitcairn Autogiro o 0 5 Stearman PT-27 0 297 298 Vought-Sikorsky Chesapeake 0 O 50 0S2U 2 2 2 Vultee-Stinson 0-49 o 10 14 Vultee-Vengeance o 40 40 Grand Total - All Types 93 3,447 8,359 Light and Naval Week medium Heavy patrol Army Ended bombers Bombers bombers Pursuit Cooperation Trainers Total Weekly average of shipments in 1941 35 2 3 27 1 29 97 Weekly average of shipments in first 6 months of 1942 36 4 1 55 3 18 117 July 7, 1942 77 17 o 17 0 30 141 July 14, 1942 42 11 3 24 0 1 81 July 21, 1942 66 OR 3 o 2 4 83 July 28, 1942 39 0 2 0 6 46 93 Total shipments since. January 1, 1941 to date # 2,924 240 176 2,827 122 2,070 8,359 # Total includes planes shipped in 1942 prior to March 17 which are not included in the weekly totals up to that date. 68 Regraded Uncl 69 AUG 7 1942 I I á h apr 1 a s $ - I I of 1948, relative to the purchase of 698,000 fine trug - of are W the Decretary of the Treasury free the Covernment of the Union of Secialist Repullice, against which a alvance of $60,000,000 - male - Jennary r 1942. 2 tabe pleasure to enclosing for your information - capico of the cosey report of the United States Assey effice at - Test giving as enslysis of the said which - reserved w the Federal Reserve Bank of New York and - deposited W entir of your Occuranced 68 July 87. 1948 for the asseme) of the Secretary of the freesury. the will observe from the enclosed report that the chipment, after metting and upon massy. was determined be - toin fine tway - of our and to have a value of $1,097,748.60. After the defaction of the anount of $2,1 representing the sekting charge of 854.30 plus the 1/4 healthing change of 04,749.37. the net value of the gold - this - of one has been syplica w 2 111 1 r s a I 1 I r 1 $ 1 I % a I a 1 I 3. 1948. Sincerely yours, (Signed) D. W. BELL Acting 8 Brown an I Bis Recellency Litvinsit. of the Union of Sevies Secialist Beyublics. I Initialed: M n m KIS no WET Regraded Unclassified Treasury Department 70 Division of Monetary Research Date Aug. 7, 1942 To: Mrs. McHugh The Secretary may be interested in seeing this. MR. WHITE Branch 2058 - Room 2141 71 TREASURY DEPARTMENT Regraded Uncla INTER OFFICE COMMUNICATION DATEAUGUST 7,1942 TO Secretary Morgenthau FROM Mr. White Subjects Japanese financial measures in occupied areas outside China. 1. I think that you might be interested in the enclosed memorandum prepared in my Division on Japanese financial measures in occupied areas outside China. 2. Among the more interesting and significant points made by the memorandum are: (a) The Japanese policy on currency is to attempt to drive out the local currency and to substitute in its place military script which the armies take with them when they invade any area. This military script differs according to the area invaded since the Japanese aim to make this military script as similar as possible to the local currency being eliminated. It is interesting to note that whereas in China Japanese military script was similar to the Japanese yen, in their more recent invasions the Japanese have used military script simi- lar to the local currency. (b) The Japanese do not allow Japanese currency, 1.0. yen, to be used in the occupied areas. (c) The Japanese military authorities, with the assistance of Japanese financial experts, are dealing with broad problems of fiscal administration, including price control. (d) The Japanese have taken considerable pains to reorganise the Bank of Japen to enable it to undertake successfully its new functions as the central bank of all the areas occupied. Moreover, they have organized a new bank -- the Southern Regions Development Bank - to operate in the newly occupied areas. (e) The military authorities on the spot are allowed a certain amount of latitude and discretion but the fundamental decisions are made in Tokyo. 72 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE July 28, 1942 TO Mr. White FROM Mr. Friedman Subjects Japanese financial measures in occupied areas outside China. Measures taken by the Japanese Government regarding the financial administration of the areas Japan has occupied since December 7th in general have followed a similar pattern, although necessary modifications have been made to adapt the techniques used to the particular area involved. The information given below on the major characteristics of Japanese policy and the practices in the different areas, including Thailand, cannot be considered definitive or even reliable since for the most part it is based on Japanese sources. Any information, however, regarding Japanese experience may be useful in helping us to work out similar problems. PART I Major Characteristics of Japanese Policy A. The major characteristics of Japanese policy on the financial adminis- tration of the occupied territories have beens (1) The reorganization of the Bank of Japan to enable it to become the central bank for all the occupied areas; (2) The opening of a new bank - the Southern Regions Development Bank - to operate in the newly occupied areas; (3) The attempt to drive local currency out of circulation within & few months after occupation; (4) The use of military script similar to the domestic currency being eliminated, instead of script similar to the Japanese yen as in Occupied China; (5) In one case, the Japanese authorities are refusing to accept their own paper currency in return for goods or services; (6) The prohibition of banking transactions within the period immediately after invasion; 73 - 2 - Division of Monetary Research (7) At prohibition against the use of Japanese money in the occupied areas; (8) Provision for capital transactions within the expanded yen-bloc area; (9) The providing, if necessary, of financial aid to the local area to effect desired financial changes; (10) The opening of new branches of already existing Japanese banks and the elimination of foreign banks; (11) The local military administration is given considerable amount of discretion but the important and basic decisions are made in Tokyo; (12) The Japanese military authorities have concerned themselves with the problem of fiscal administration, including price control. They seem to operate on the principle that the least disturbance possible is best and attempt to make use of local inhabitants. B. The reorganization of the Bank of Japan was decided on in January, 1942 with the aim of its becoming the central bank of the yen-bloc. This necessitated changes in its organization in order that it could be more capable of carrying out foreign exchange transactions within the yen- bloc. Hitherto, the main function of the Bank of Japan had been to issue bank notes, In discussions in the Diet, it was pointed out that the central banks of other occupied areas, including Thailand, were to utilise the Bank of Japan as the clearing house and balances resulting from trade with the yen-bloc area were to be paid for in Japanese yen, even if the contract was made out in & foreign currency. It was recognised that this might necessitate the adjustment of currency relations and revision of exchange rates within the yen sphere. C. The establishment of a new bank to operate in the newly occupied areas and to deal with such problems as the reorganization of industrial enterprises, the support of currency, etc. was provided for in a bill introduced in the Diet in January, 1942. The capital of 100 million yen was to be raised by the Japanese Government. In addition, this bank was to be authorized to issue debt certificates up to a billion yen, which certificates were to be dealt in in the occupied areas in order to allow local capital markets to participate in the financing Regraded Unclassified 74 - 3 - Division of Monetary Research of the bank. In the latter part of March, the bank - the Southern Regions Development Bank - was established and later it was announced that it would open branches in the different main centers of the occupied areas. It also was announced that one of the main tasks of the new bank would be to issue military notes. The local military authorities were to supervise the branches of the bank and to fix the amount of expenditures and credit in accordance with principles decided upon by the central office, The Bank, for the most part, would provide long-term credit while local Japanese banks would handle short-term credit and deposit business. The Bank would also have sole control of capital transactions among the newly occupied areas and would provide the means of payment and capital by the use of military notes. Moreover, it seems that the Bank would also accept some deposits and would handle the exchange of military notes into the local currency of the various territories. D. In China, the Japanese military script was denominated in yen. In the newly occupied South Sea territories, military script is being issued in the local currency unit. In the earliest months after December 7th, the Japanese Government took the position that the local currencies as far as possible would be maintained and that the issuance of military yen would be limited to the greatest possible extent. It was even stated that the planned Southern Regions Development Bank would not have the right to issue bank notes. However, this was not carried out in practice and it was decided that the Southern Regions Development Bank would issue military script and that it would be at par with the local currency. This meant that for some time, the Japanese military notes were in circulation side by side with domestic notes. For example, in the Philippines, for a time, the Philippine peso and American dollar and Japanese military script were all in circulation. Measures have been taken, however, in most areas to drive the old currencies out of circulation and it would seen that it is the intention of the Japanese authorities to maintain in circulation only the Thailand baht and the Indo-Chinese piaster in addition to the Japanese military script. Some indications of what the Japanese were prepared to do is indicated by Japanese statistics on note circulation in Southeast Asias Netherlands East Indies guilders 260 million Philippines pesos 160 million Malaya and British Borneo straits settlement dollars 162 million Burma rupees 127 million E. Remittances between Japan and the occupied areas were prohibited in the early days of the Japanese occupation, but, in July, Tokyo announced that military authorities were permitting remittances to be made to Japan. 75 - 4 Division of Monetary Regraded Unclass Research F. The Yokohama Specie Bank and the Bank of Taiwan, at the request of the Japanese Government, have opened branches in the various centers of the Japanese occupied areas, thus helping to extend Japanese financial control over these areas. G. Because of the practice of Japanese civilians going to the occupied areas to take with them Japanese money and to use it instead of the prescribed military notes, Tokyo has made special provision for prohibiting the use of Japanesc"money in the newly 8 cupied areas. Travelers going to the occupied lands have been instructed to exchange their currency for military notes at the Bank of Japan or one of its agencies before leaving Japan. PART II Newly Occupied Countries A. Philippines In the Philippines, the Japanese have taken financial measures covering many phases of Philippine life. (1) During the first stage of occupation, the Japanese recognized as legal both the Japanese military script and the ordinary Philippine peso. Moreover, the Japanese military authorities announced that U.S. dollars would be accepted at the official rate of 2 pesos = 1 U.S. dollar. In May, about four months after occupation, the Japanese military authorities declared the domestic Philippine peso to be illegal, making legal only Japanese military script. At the end of June, Tokyo reported that by this time the Philippines "understood" the new regulations and that the circulation of the old Philippine pesos had ceased. (2) During the first stage of the invasion, it would seem that the Japanese ordered the closure of banking institutions. After some weeks - in some cases as much as three or four months - the banks were allowed to reopen, On reopening, the banks, of course, found themselves being regulated by the Japanese military authorities and the puppet authorities. Thus, with- drawals of deposits made previous to the closure of the banks still are restricted. A Philippine branch of the Southern Regions Development Bank was reported to be opening for business on July 1. 76 Regraded Unclas - 5 - Division of Monetary Research (3) The Japanese had to cope with problems of fiscal administration. They are reported to have conducted a charity lottery to increase the revenues of the puppet Government, as well as to assist welfare facilities. They have made no changes in existing taxes on real estate, while asking for assistance of the puppet Govern- ment regarding such matters as the reconstruction of district finances. Ostensibly to stimulate reconstruction activities on the part of natives, they have extended special reconstruction loans while, supposedly beginning July 1, they plan to distribute rice on the basis of the village allotment system practiced in Japan, with village officials to be responsible for the distribution. (This also indicates the manner in which the Japanese have been using natives in their financial administration.) B. Malaya Japanese policy in Malaya has been similar to that in the Philippines. (1) Military script was used to displace the outstanding Straits Settlement dollars and for a few months both currencies were legal tender. By the end of May, or only about three months after the occupation of Malaya, Tokyo was announcing that almost all of the outstanding Settlement dollars had been absorbed. (2) The Yokohama Specie Bank and the Bank of Taiwan went into operation immediately after the occupation of Malaya and Singapore and on July 1 the Southern Regions Development Bank opened a branch in Singapore. (3) The military authorities have run lotteries as a means of raising funds. Moreover, as of July 1, the sale of tobacco, matches and salt has become a monopoly of the Japanese military administration, At the same time, prices were fixed officially for certain daily necessities. C. Netherlands East Indies The Japanese military authorities in the Netherlands East Indies followed the pattern in use in the Philippines and Malaya. In the period in- mediately following the occupation in March, (1) the only currencies allowed in circulation were military script and the guilder; 77 - 6 - Division of Monetary Research (2) banking transactions were stopped; (3) prohibition was placed against disposal of real estate, securities and bank deposits, etc. without the authority of the Japanese military administration; (4) all commercial and industrial enterprises were obliged to inform the Japanese authorities of all stocks on hand and stocks of certain goods, such as quinine, could not be disposed of without the consent of the Japanese military administration; (5) salaries and prices, including rents, were frozen as of January 31, 1942; (6) imports and exports of goods were prohibited; (7) all employees were requested to return immediately to their places of employment while representatives of transportation enterprises were requested to report personally at Japanese military offices. In the following months the Japanese eased up on these restrictions and began to make more use of local inhabitants, At the beginning of May, it was reported that the Japanese banks were active and by June 20, the other banks in Java were reported to have resumed operations. D. Burma Very little information is available regarding Burma, Recent reports, however, indicate that in Burma the Japanese have made some innovations. They are collecting taxes in the form of labor instead of money, and also have decreed that they, the Japanese authorities, do not have to accept their own paper currency in return for goods or work. This is reported to have caused considerable hardship because the Japanese have flooded Burma with military script, and have driven Burmese currency almost entirely out of circulation, Burmese money left in the country pre- sumably has gone into hiding. Regraded Unclassified 78 - 7 - - Division of Monetary Research PART III Thailand The case of Thailand is considerably different from those of the ordinary Japanese occupied areas in that Thailand still maintains its own sovereignty. However, the Japanese have taken measures to include Thailand in the yen-bloc and some of the most important measures along these lines may be of interest here. (1) In April, a new bank of Thailand was created to control all Thailand banks, to issue bank notes and to have general control of currency. (2) Formerly, the Thailand baht had been issued by the Thailand Treasury and had been backed in part by British securities and balances at British banks. Instead of this, the Japanese in June, 1942 extended a 200 million yen credit to Thailand through the Bank of Japan to be used as a special reserve for currency. In accordance with this arrangement, the Thailand Foreign Minister on June 16 announced that all previous relationship between the baht and the pound and the U.S. dollar had been cancelled and in its place Thailand had become part of the yen-bloc exchange. (3) The rate of the baht as against the yen has been set at 1 to 1. Before the war the exchange rate was baht 100 = yen 159.25. The new rate, therefore, represents a consider- able devaluation of Thailand currency. 79 COPY NO. 13 BRITISH MOST SECRET U.S. SECRET OPTEL No. 270 Information received up to 7 A.M., 7th August, 1942, 1. NAVAL Last night our light forces made two attacks on a large escorted enemy vessel proceeding up channel from BOULOGNE. During the first, one of our motor torpedo boats was sunk, all crew rescued and another damaged. There are no details of the second attack. A naval mine-sweeper shot down an enemy aircraft off PORT SAID on the 5th. 2. MILITARY RUSSIA. Russian attacks are in progress in the RZHEV area. The Germans in an eastward advance between the Rivers DON and SAL have reached the area of KOTELNIKOVSKI thus threatening STALINGPAD from the South. The spearhead of the German southward advance 1s now wring mustwards across the River KUBAN north of ARMAVIR. 3. AIR OPERATIONS WESTERN FROM?. 6th. Our fighters successfully attacked barges and gun positions in the low countries. Deaufightor of coantal command destroyed a German sea plano off the SCILLY ISLANDS and damaged another. 6th/7th. 231 aircraft were despatched - DUISBURG 216, HAVRE 5, Intruders 9, sea mining 1. Preliminary reports state that six bombers are missing from DUISBURG where weather conditions were variable, scattered fires were seen. About 16 enemy aircraft flew over EAST ANGLIA and three over the EDINBURGH district, night fighters probably destroyed one. EGYPT. 5th. Two further attacks were made on the concentration of mechanical transport in central sector reported yesterday and other mechanical transport was bombed in the southern sector. 4. HOME SECURITY 6th. TRURO. In the late evening the Royal Cornwall Infirmary was hit by a bomb and evacuated. 10 persons were killed. 6th/7th. A few bombs were dropped in EDINBURGH and at ST. ANDREWS where seven persons were killed. At CAMBRIDGE some fires were started but all were 300.1 under control or put out. CORRECTION to OPTEL No. 268, para 2. Should read: "4th/5th. Aircraft were despatched - ESSEN area 38, sea mining 45, "Intruders" 13, and convoy off the FRISIAN ISLANDS 5. 3 bombers missing." Regraded Unclassified 80 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATEAugust 7,1942 TO Secretary Morgenthau FROM Mr. Hoflich Subject: R.A.F. Activity in July, 1942 1. During July the R.A.F. made nine large-scale night raids on the continent, each involving 200 to 400 planes. Duisberg, one of the greatest inland ports in Europe and a center of many war plants, was the chief target, being bombed four times during the month. The two largest raids were on Hamburg. Saarbrucken, Wilhelmshaven and Bremen were the other objectives of the large-scale night raids. Bombs dropped averaged about two tons per plane, and inclu- ded a large number of the two ton "blook busters". 2. British losses on these night raids ran from 4 to 5 percent of the participating planes, with three exceptions. The air attack on Wilhelmshaven by 285 R.A.F. planes during the night of July OR resulted in a loss of only five planes or slightly less than 2 percent. After the attack on Ham- burg during the night of July 28 by 240 planes (actually only 40 percent of these reached Hamburg, due to bad weather) intelligence reports from England revealed that 36 planes (33 bombers and 3 fighters) were missing. These losses amounted to 15 percent of the 240 planes seal out. The British attributed these high losses to the unfavorable weather and the fact that Hamburg 1s one of the most heavily defended targets in Germany. The July 26 raid on Hamburg, described below, was the third exception. 3. The July 26 night raid on Hamburg, in which 404 aircraft participated, constituted the largest air attack yet made on Germany, with the exception of the three earlier 1,000 bomber raids. About 680 tons of bombs were dropped, including 164,000 incendiaries. Losses amounted to 30 bombers, over 7 percent of the planes participating. (British Operations Reports) Regraded Unclassified - 2 - 81 Losses during Total losses in the July war to Aug. 1, 1942 I. Losses R.A.F. bomber losses in raids over Western Europe 189 2,143 Attacks during Total number of attacks July in war to Aug. 1, 1942 I. Analysis of Objectives Ports, docks, shipping 33 1,666 Industrial plants 19 974 Airdromes and seaplane bases 17 954 011 refineries, synthetic plants and tank farms 1 361 Total of above 70 3,955 Attacks during Total number of attacks July in war to Aug. 1, 1942 I. Leading Cities Attacked A. Germany Cologne (industrial center) 0 102 Bremen (port) 1 98 Hamburg (port) 2 91 Emden (port) 0 76 Wilhelmshaven (port) 2 63 Kiel (port) O 59 Mannheim (industrial center) o 58 Duisberg (port) 4 52 Essen (industrial center) 0 51 Berlin (industrial center) 0 50 Gelsenkirchen (synthetic oil) 0 43 Hanover (synthetic oil) 1 43 Total of above (12 cities) 10 786 B. Occupied Areas Boulogne (port) 1 123 Brest (port) o 107 Ostend (port) 0 104 Calais (port) 0 83 Flushing (port) 1 65 Lorient (port) O 53 Paris (industrial center) 0 5 Trondheim (naval base) 0 2 Total of above (8 cities) 2 542 C. Italy Naples (port) 0 24 Turin (industrial center) 0 14 Total 0 38 82 8.7.42 NTELLIGENCE REPORT 35 & V X OF COMPANYING AND OFFICE o war INFORMATION BUREAUO INTELLIGENC COPY No 2 Henry Morgenthau Jr Regraded Unclassified Such recommendations and suggestions as may appear in this report have not been cleared in advance with the Director of the Office of War Information and do not necessarily reflect his views or those of the Office of War Information. Recommendations and suggestions, if they do appear, are only submitted by individuals in the Bureau of Intelligence who have assembled the data and they are offered for the consideration of appropriate authorities. The Bureau of Intelligence of the Office of War Information uses a variety of procedures and tech- niques to obtain its data on the attitudes of people and on what is brought to their attention. These pro- cedures and techniques have been found reliable after extensive experimentation over a period of years. Regraded Unclassified CONTENTS NEWS EMPHASIS page 1 EDITORIAL ATTITUDES page 2 Reflection page 2 Domestic Affairs page 3 India page 4 POPULAR REACTIONS Appraisal of the News page 5 Confidence in Government Informa- tion page 6 Second Front page 6 Cargo Planes page 8 Advance Ordering of Fuel page 9 DEVELOPING SITUATIONS page 9 Opinion Toward the United Nations page 9 White Attitudes Toward Negroes .... page 11 Rank and File Unrest page 12 Farm Labor Shortage page 14 Traveling Salesmen page 15 Italian-Americans page 16 Enemy Radio in the American Press page 17 ENEMY PROPAGANDA page 18 Second Front page 18 Olive Branch for Russia page 20 AUTHORITATIVE STATEMENTS page 21 Production page 21 Oil page 21 Sugar page 22 Finance and Taxation page 22 Foreign Relations page 22 India page 22 United Nations page 23 Regraded Unclassified 3 - the the the and and Inis NEWS EMPHASIS The battle for the Caucasus dominated news pages and radio broadcasts throughout the week. Headlines extracted - what hope they could from its ebb and flow; but, in the main, they conveyed to the American public starkly enough the grim tale of Nazi gains. Editors generally employed communiques from both Russian and German sources - most of them giving preferred position to the Soviet version. Considerable prominence was also accorded feature stories, such as that by Leland Stowe, depicting the desperateness of the United Nations situ- ation. Speculative reports of second front possibilities continued to re- ceive marked attention. The trial of the Nazi saboteurs zoomed into sudden prominence with the Supreme Court's hearing of their habeas corpus plea. News stories dramatized the court session and gave conspicuous attention to conclusion of the proceedings by the military commission. There has been much ad- vance heralding of the verdict which the President is to announce. News of the fighting fronts, apart from the battle for the Caucasus, was led by the RAF raids on Germany. Toward the end of the week, consider- able interest was displayed in American and Australian attacks on Japanese bases in New Guinea. The situation in the Aleutians and fighting in China continued to receive secondary attention. The Libyan campaign was relegated to subordinate status. At the end of the week, conditions in India as- sumeu great importance. There was continued interest in various phases of the economic situ- ation on the home front. The Government's statement calling for a 48-hour Regraded Unclassified - 2 - maximum work week was treated as a major development. The rubber tangle, the meat shortage in Eastern cities and the fuel oil situation continued to evoke warm interest. EDITORIAL ATTITUDES Reflection Editorial commentators have engaged in some sober second thoughts on ideas which they propounded with great vigor a week or 10 days ago. They no longer seem quite so certain that a second front must be opened immediately or that cargo planes should supplant steam- ships overnight. Reflection on the second front issue was inaugurated by Walter Lipp- mann. "It is an interesting question", he observed, "whether current de- bate about the second front gives information to the enemy.... The risks of speculating about future war plans are, therefore, very considerable." Mr. Lippmann approved "speeches and editorials urging the government to help the Russians and the Chinese, and to reinforce the Middle East, and to bomb Germany, and to open another front somewhere." His colleagues con- tinue very vigorously and in great volume to press for these generalized forms of offensive action. They have become somewhat more cautious, however, in specifying the particular mode and locale of the attacks for which they hope. The prompt action of administration officials in giving a hearing to Henry J. Kaiser's plan for building giant flying boats appears to have al- layed editorial fears that the project would be written off without con- sideration. The comments respecting it continue to be hopeful, even en- thusiastic, but they are now more patient, temperate and realistic. Regraded Unclassified - 3 - The press was united in opposition to Senator Lee's bill to take the decision in this matter out of the hands of present war production officials; their leadership appeared to enjoy full confidence. The Baltimore Sun's comment was typical: "Decisions in such matters are for military and pro- duction experts, not for amateur strategists in Senatorial seats. We must keep the professionals on their toes, but we cannot submerge their studies and strategy under senatorial impulses." The pressure for a united command remains considerable. Indeed, iso- lationist attacks on civilian determination of military strategy have been reinforced significantly by the strongly interventionist New York Times. The Times declares: "Both Mr. Churchill and Mr. Roosevelt, it becomes in- creasingly clear, have tried to plan and direct too much of the strategy of the war themselves.... The Admiral Leahy appointment, under the con- ditions announced, does not change this situation. What is needed is not another 'adviser', another man to do 'leg work' and 'index' work, but a com- mander with the power of making all but the most crucial decisions on his own responsibility." Domestic Affairs A variety of issues made the general subject of labor a leading editorial topic during the week. Almost all commentators approved the Government's plea for limiting the work week to 48 hours. Many of them, however, seized the opportunity to renew their demands for suspension of the 40-hour week provision of the Wage and Hour Law. A good deal of editorial comment was devoted to indignant insistence that James Petrillo, head of the musicians' union, be curbed. The refusal to permit members of his union to make recordings was commonly described Regraded - 4 - as tyrannical and frequently employed as a flail with which to whip labor leaders in general. The War Labor Board came in for a continuing share of editorial ire over its decision in the Remington Rand case. And the Pontiac strike was grasped by a number of commentators as a further occasion for berating labor. The Supreme Court's hearing of the habeas corpus plea on behalf of the Nazi saboteurs met with warm editorial approval. The New York Herald- Tribune, for example, called it "a stirring demonstration of a democracy's faith in its own laws and convictions." The action taken by the court was anticipated and applauded. Comment concerning the cost of living decreased somewhat in volume during the week, although there was no sign that dissatisfaction with Gov- ernment policy in this field had abated. Similarly, the irritation over the rubber and gasoline situations remained apparently unchanged. An over- whelming majority of commentators condemed the Gillette Bill for the es- tablishment of a separate rubber agency as a farm bloc device to create a larger market for grain. But they are insistent upon a thorough inves- tigation of the problem and effective action toward its solution. India The developing crisis in India became a leading editorial topic toward the end of the week. There is great uneasiness over the decision of the Congress Party to conduct a non-violent rebellion against British rule. In general, comment was hostile to Gandhi and sympathetic toward the British. The Chicago Sun urged that the United States intervene directly in the In- dian impasse, but other papers seem to consider it a United Nations problem Regraded - 5 - in which this country should do no more than furnish leadership. POPULAR REACTIONS SH Appreisal of the News The Bureau of Intelligence asked a small national sample of the American public, "What do you think was the biggest news of the past week?" About one-third of those interviewed named the fight- ing on the Russian front, which, as reported above, was actually the dominant subject on news pages and in radio broadcasts. Approximately one-tenth of the sample mentioned the trial of the Nazi saboteurs, which was accorded second place by news editors. Other news topics received scattered mention as having been of prime importance. Among these were fighting in the Pacific, the possibility of a second front, the bombing of German cities and a variety of domestic sub- jects. One-third of the whole sample had no opinion as to the week's out- standing event. The Bureau also asked these people, "Do you think the war news, as a wnole this past week, has been generally favorable for our side or gener- ally unfavorable?" The distribution of responses to this question was as follows: FAVORABLE 21% 50 - 50 15% UNFAVORABLE 53% DON' T KNOW 11% - 6 - Most of those who considered the Russian fighting of prime importance during the week regarded the news in general as unfavorable. And converse- ly, among all of those who considered the news unfavorable, approximately half selected the battle of the Caucasus as of first importance; among all of those who considered the news in general favorable, only one-fifth gave first place to the Russian fighting. It should be noted that in response to questions such as these, people almost always answer with the most recent news in mind; they are more clearly aware of the latest headlines and broadcast bulletins than of those of pre- ceding days which may have faded from their memories. The interviewing on these questions was conducted on July 31, a day on which almost all morning newspapers gave top position to the Russian front and second place to the saboteur trial. Confidence in Government Information Interviewing of the same small sample indicates that a considerable majority of the American public retains satisfaction with Government poli- cies in the handling of war news. Nevertheless, now, as in the past, a sizeable minority believes that the Government is withholding information which it ought to give to the American public. The sample was asked this question: "Do you think the Government is giving the public as much information as it should about the fighting in this war?" Sixty-five per cent answered yes; 26 per cent answered no; nine per cent said they didn't know. Second Front Editorial insistence on a second front to relieve the Russians is strongly reflected in public opinion. A decided majority of the sample Regraded Unclassifie - 7 - interviewed by the Bureau on July 31 answered affirmatively to the question, "Do you think that in the next two or three months the allies should try to land troops somewhere in Europe to attack Germany?" The division of opin- ion was as follows: YES = 62% NO 16% DON' T. KNOW 22% These people were then asked "If the allies do try this attack on Ger- many in the next two or three months, do you think their chances of success are very good, about 50-50, or that it is more likely to fail than to suc- ceed?" Here are the results: VERY GOOD 46% 50 - 50 27% LIKELY TO FAIL 13% DON'T KNOW 14% As was to be expected, those believing that the chances of success are "very good" were most inclined to believe that the attempt should be made; 85 per cent of them advocated an invasion effort. In addition, 61 per cent of those believing that there is a "50-50" chance of success said that the invasion should be tried. And even among those predicting that an invasion - 8 - would fail, 20 per cent thought that the effort was worth making anyway. Conversely, those who believed that we should try a second front were most prone to think that it would be successful; 62 per cent in this group considered the chances very good, while an additional 26 per cent looked upon the venture as a 50-50 gamble. Among those opposed to making an invasion attempt, there were 16 per cent who believed that it would succeed if tried; and an additional 27 per cent of those opposing the effort thought that it would have a 50-50 possibility of success. Half of this group were of the opinion that an invasion in the next two or three months would be doamed to failure. Cargo Planes Press and radio interest in the Kaiser plan for mass production of large cargo planes has apparently made a considerable impression on the public mind. Two-thirds of the sample interviewed said that they had heard about the plan; one-third had not heard of it. The sample was then asked "Do you think it is practical to build air- planes instead of ships to carry troops and supplies overseas?" The an- swers, which follow, indicate that the scheme is one which appeals strongly to the popular imagination. YES 74% NO 12% DON'T KNOW 14% It is significant that the plan was approved by some of those who knew nothing about it. Of those who had heard of the Kaiser project, 81 per cent Regraded Unclas - 9 - thought that it would prove practical. In addition, it was considered practical by 59 per cent of those who had not previously heard of it. Advance Ordering of Fuel The effort to induce early ordering of coal and fuel oil for next win- ter is evidently meeting with some measure of success. Almost half of a national cross section of home owners recently questioned had already placed their orders. Another 20 per cent planned to put in their orders before the end of summer. In some cases, of course, "ordering" may mean only making some sort of arrangement with a supplier. Necessarily this is the case with respect to fuel oil. Even when allowance is made for this, the response seems encouraging. DEVELOPING SITUATIONS Opinion toward the United Nations In an effort to descern trends in American attitudes MONDAY toward our allies and the problem of post-war interna- tional relations, the Bureau of Intelligence in July interviewed a nation- wide cross-section of adults. Certain changes of opinion had developed since mid-May, when the Bureau last conducted interviews on the same subject. American appreciation of the importance of our allies increased slight- ly. There was also some disposition to be more lenient in exacting payment for Lend Lease shipments. And there were indications that any fear that our principal allies might desert us for E. negotiated peace with Hitler is dim- inishing. On the other hand, there is a steady suspicion of Russia's post-war cooperativeness and a continuing skepticism of British war efforts - in Regraded Unclassified. - 10 - contrast to the belief that the Russians are doing their utmost to win. In the interval between May and July, there was a widespread Govern- ment campaign to publicize the United Nations concept. This campaign cul- minated in the celebration of June 14 (Flag Day) as United Nations Day. Only one-fourth of the persons interviewed had heard about United Nations Days one-fifth lived in communities where the celebration was observed. Identical questions asked in May and July give little indication that pub- licity regarding the United Nations concept appreciably changed people's attitudes toward our allies or increased their knowledge of them. Only about one-third of the American public has any knowledge of the Four Freedoms as such; no more than two per cent were able to identify all four of them correctly. Nevertheless, there is an overwhelming public ap- proval of the principles which they embody. Four-fifths of the sample interviewed thought the United States should join in some sort of world organization when the present war is over. Many think the United Nations may become the nucleus of such an organization and there are indications that people would welcome participation by other nations, including the Axis. Nearly one-half of those interviewed expressed a belief that the United States should have joined the League of Nations after the last war. Nearly all of these people believe that the United Nations should continue their collaboration in the post-war period. In addition, more than three-fourths of those believing that we should not have joined the League of Nations are now ready to forsake isolationism, at least to the extent of continued association with our present allies. - 11 - These findings constitute a summary of a Special Intelligence Report, Trends in Opinion toward the United Nations and the Post-War Organization. Copies of the complete report are available to authorized individuals upon request to the Bureau of Intelligence. White Attitudes toward Negroes A majority of white Americans are unaware that there is any such thing as a "Negro problem." Six whites in ten believe that in general Negroes are pretty well satisfied with existing conditions. This was one of the most surprising findings of a nationwide survey recently completed by the Bureau of Intelligence. In part, this opinion appears to stem from unrealistic notions of the amount of discrimination which exists. Among those interviewed, more than one-half with an opinion on the question believed that Negroes have as good a chance as whites to get jobs in war plants. Almost as many felt that Negroes have as good a chance as whites to get ahead in the armed forces. Most whites also thought that Negroes are generally better off than they were before the war. Disparaging attitudes toward Negroes contributed to the belief that they are content with their lot. Large numbers of people evidently felt that Negroes need little to keep them happy. Others, who put a low appraisal on Negroes' character and capabilities, took the position that they are get- ting just about all that they deserve. On all questions, as might be anticipated, marked regional differences were evident. But while Southerners were most inclined to feel that Negroes have no just cause for complaint, large numbers of people in all parts of the country were unsympathetic, not only toward their aspirations, but even Regraded Unclassified - 12 - toward their present rights. Even in the Northeast and in the West, more than half of all respondents felt that white and Negro children should attend separate schools. Whites appraised the hopes and demands of Negroes with considerable accuracy. They recognized, for example, that what Negroes are most con- cerned about is improvement in their economic situation. But relatively few whites were willing to make concessions in this area. They were will- ing, however, to provide better housing facilities for Negroes. These are some of the significant findings discussed in "White Atti- tudes Toward Negroes", a special report of the Bureau of Intelligence, dated August 5. Copies of the complete report are available to authorized individuals upon request to the Bureau. Rank and File Unrest In Detroit and some other industrial centers a number of straws in the wind suggest that many rank and file members of labor unions are growing dis- satisfied and restive. In part, this feeling stems from a belief that the War Labor Board is slow in settling labor disputes and that many firms are deliberately taking advantage of the situation. Workers maintain that these firms are questioning W.L.B.'s jurisdiction and resorting to various legalistic devices with the deliberate intent of stalling off Board decisions on important issues. Workers believe that they are entitled to prompt arbitration of their claims in re- turn for having renounced their most fundamental bargaining weapon, the right to strike. It is up to the W.L.B., they feel, to make whatever arrangements are necessary to clear cases speedily. Production interruptions which are now occurring in some plants as a result of material shortages add to workers' bitterness. Rightly or wrongly, Uncla - 13 - they feel that many of these shortages were avoidable, and blame manage- ment for their occurrence. Workers are also resentful over the failure of Congress to do any- thing about the President's proposal to limit incomes to $25,000 a year. They feel that some of the concessions they have made, such as the surrender of double pay for Sundays and holidays, and time-and-a-half for work on Saturdays, have simply gone to swell industry's already huge profits. They are sharply critical of the OPA and of Leon Henderson, whom they regard as the spearhead of the attack on wages. Workers are willing to accept wage stabilization, though not wage freezing, but they insist that prices and profits be stabilized simultaneously. Elements within the United Automobile Workers charge that the failure of other unions to follow the U.A.W.'s lead in relinquishing overtime for Sundays and time-and-a-half for Saturdays, has placed the U.A.W. in a disadvantageous position. A resolution has been introduced in the U.A.W. convention, now in session in Chicago, to rescind the voluntary waiver of double pay unless it is universally applied throughout industry within the next thirty days. Many delegates propose to go further and put teeth in the resolution by abolishing the "no strike" agreement. The final action of the U.A.W. convention on these proposals will provide a clue to the prevalence of rank and file discontent. The dangerous possibility exists that if labor dissatisfaction is not reduced, workers will turn to more radical methods and more radical leaders. They may resort to unauthorized strikes, for example, as a way of getting immediate attention paid to their claims. Or they may turn to leaders who emphasize labor's rights, rather than the necessity of making sacrifices for the sake of the war effort. The very threat of this may force their present leaders to take a more extreme stand on many issues. Regraded Unclassified - 14 - Farm Labor Shortage A nationwide farm labor shortage looms on the 1943 horison, and it may be aggravated by a serious simultaneous shortage of farm machinery. The resentment local labor shortages have caused wherever they have occurred indicates the need for prompt attention to the situation. So far most farmers have been able to get the machinery they needed. When they have not, they have managed to get along by patching up, by exchanging equipment with neighbors, and by buying used machinery. Next year the shortage of new machinery may be more acute and harder to get around. Except in certain areas, farmers have also been able to get all the help they needed, although they have sometimes had to look a little harder to find it. When the war began, there were many people in rural areas who were either unemployed or underemployed. The existence of a more than adequate supply of farm labor was a boon to most farm owners: it insured them a dependable supply of cheap help. Some farm operators unquestionably encouraged the accumulation of more farm workers than were needed in partic- ular areas, in order to be able to get their crops out rapidly and inexpen- sively and to be in a position to take advantage of market conditions. The war-stimulated demand for manpower in industry and the armed forces has almost completely soaked up the surplus supply of labor in rural America. There is no immediate cause for alarm, but the situation is dai ly tightening, and farmers are deeply disturbed about it. After being questioned about such subjects as rationing, farm machinery, repairs and transportation, a group of farmers interviewed in June was asked what other things they thought the Government ought to be investigating. More than one third mentioned the problem of farm labor. Even in areas Regraded Unclassified - 15 - where labor shortages have not been experienced, many farm people com- plained of the failure of draft boards to give sufficient consideration to the needs of farmers. If the problem is neglected or mishandled, the present high morale of farm people is almost certain to suffer. The Food for Freedom program may also be upset, both because farmers are unable to produce as much and because they may be tempted to make ill-advised shifts into crops which require relatively little labor. Traveling Salesmen Traveling salesmen in the eastern states are protesting their present gasoline rationing classification, which permits them only 470 miles of occupational driving a month, or 5,640 miles a year. There are approximately 500,000 traveling salesmen in the states in which gasoline is now rationed. Beyond any question, an overwhelming majority of them are seriously inconvenienced by rationing. They now travel an average of 15,000 miles a year; a survey shows that more than four out of five of them cannot cover their territory satisfactorily by train or bus. While well aware of these facts, Joel Dean, Chief of the fuel ration- ing division of the OPA, has ruled that it is simply not possible under present conditions to permit traveling salesmen an unlimited amount of gasoline. Such a step, he points out, would require an additional 1,300 tank cars. Traveling salesmen do not represent a particularly powerful group. Many of them will be forced from the road in the near future in any case Regraded Unclassified - 16 - because of the impending unavailability of the goods they sell, Their protest is important primarily because it is symptomatic of the kind of complaint which is likely to arise from now on as more and more small businessmen are hit by wartime controls. The Government cannot, of course, permit the claims of protesting groups to impede the war effort. But it can do a great deal to minimize both the number and intensity of complaints by pursuing a skillful infor- mational policy. The protests of traveling salesmen are based in part upon the erroneous belief that adequate supplies of gasoline and tires are available, or can be made available, to meet their needs, A fuller awareness of the facts would unquestionably helputsurialge atlsimi lidel infor- somewhat better about their situationyeling salesmen are based in part the erroneous belief that adequate supplies of gasoline and tires Italian Americans svallable, or can be made available, to meet their needs. A fuller Anti-fascist Italian-Americans are disheartened by the Federal awareness of the facts would unquestionably help to make them feel Government's apparent friendliness toward Italian leaders they deeply somewhat better about their situation. mistrust. They were shocked by the presence of representatives of the Justice and Treasury Departments at a recent New York City Defense Bond Rally held under the sponsorship of Generoso Popsened by the Federal Many pro-democratic Italian Americans feel that this great a mistake as would be a Defense Bond Rally assong under the sponsorship of Frits Kuhn. They do not rest their Pope merely on his pre-Peari Harber espousal of Fascism, or their convic- tion that a leader like Pope maintains his position by exploiting his norant fellow countrymen. They maintain that Pope 18 still covertly pro- fascist. There appears to be no question that he has harbored fascists on the staffs of his newspapers; Harbor some of his writers of Fasciam have been on arrested their by Regraded Unclassified - 17 - the F.B.I. Veiled divisionist statements continue to appear in his papers. A recent attack on anti-fascists caused particular bitterness among Italian-Americans with sincere democratic sympathies. Government recognition of men like Pope as leaders of Italian- Americans carries with it the implication of an official endorsement. The endorsement is employed by such men to strengthen their hold upon alien elements. More effective cooperation with the Federal Government could be secured through the encouragement of alien leadership genuinely sympathetic with democratic purposes. The impression that the Government is not interested in advancing the leadership of anti-fascist Italians has been fostered by its failure to release loyal Italian-Americans from classification as enemy aliens. The protest against keeping all Italian aliens in this category has now been sponsored by Luigi Scala of Providence, a man believed to be fascist in his sympathies by Americans of Italian origin. It is through the championship of such causes that men like Scala and Pope bolster their power and prestige. They will claim credit for any benefits which may come to the Italian-American colony through a change of Federal policy. By recognizing instead the leadership of men who have demonstrated their opposition to Fascism, the Government can more effectively secure the loyalty of aliens who are real adherents of the democratic cause. Enemy Radio in the American Press The Germans have consistently been more successful than their Axis partners in making use of American newspapers as vehicles for their pro- paganda. This success has been accentuated by the recent shift of attention from the Pacific to the European sector of the war. Regraded Unclassified - 18 - The relative extent to which American newspapers have drawn upon Axis sources for their news is shown in the following chart: ITEMS CREDITED TO ENEMY SOURCES in 16 metropolitan newspapers, March 4 to July 21,1942 ITEMS 250 200 BERLIN 150 TOKYO 100 ROME 50 o 4-10 11-17 10-24 25-31 1-7 0-14 15-21 22-28 29-5 6-12 13-19 March 20-26 27-2 3-9 10-16 17-23 24-30 W 0-14 15-88 April MAP June July Jape take Jara Bataan falls Tokyo boabing Mitler Mussolini meeting Corregidor falls I delare da Crime Next drive in Libya Datah Marbor reid Totruk falls Matroh falls 1 and a I àlla Foreshilovgred falls ENEMY PROPAGANDA Second Front The possibility of a second front appears to be very much in the minds of German propagandists. Their dominant theme to the United States in dealing with the subject is complete Carman readiness for an invasion. But, characteristically working all lines, the Nazis attempt to depict a second front as unnecessary, as well as hopeless. Regraded Unclassified - 19 - To bolster the impression of readiness for an allied invasion effort, the German navy is described as "prepared day and night". Hundreds of new air fields are said to have been constructed "behind the coastal wall of Western Europe". The Atlantic coast is described in general as "a gigantic fortress studded with the best arms available". Dr. Goebbels attempts to discount the value of a second front for the Russians by claiming that the Nazis have enough troops in the West to meet any invasion, and that no troops will be withdrawn from the East now. In dealing with the conflict in Russia, Nazi propagandists have shown a pronounced tendency to soft-pedal their successes; they appear to be trying to reduce British and American popular pressure for a second front. Indeed, Nazi commentators accuse British officials of over- pessimistic reports intended to foster second front sentiment in England. The Berlin radio described German soldiers as fully prepared for another winter campaign in Russia - an outlook echoed in Italy by Virginio Gayda. Claims of great successes on the Russian front are left to the radio and press of Germany's satellites. The German press also follows a policy of caution in reporting the Russian campaign. Nazi-dominated Europe is being psychologically prepared for a second front. The dominant idea in the campaign is Nazi invincibility. The Swedish newspaper, Dagens Nyheter, reports that the recent parade of the S.S. in Paris took three hours to pass a single point. Many photo- graphs of defense works have been appearing in the daily and periodical press. In a Das Reich article, Dr. Goebbels assures the German people that Regraded Unclassified - 18 - The relative extent to which American newspapers have drawn upon Axis sources for their news is shown in the following chart: ITEMS CREDITED TO ENEMY SOURCES in 16 metropolitan newspapers, March 4 to July 21,1942 ITEMS 250 200 BERLIN 150 TOKYO 100 ROME 50 o 4-30 11-17 18-24 25-31 1-7 8-14 15-01 22-28 29-5 6-12 March 13-19 20-26 27-2 3-9 10-16 17-23 24-30 1-9 6-64 15-dl April May June Mir I Lite I betain falls Tokyo bonking Mitler Messolini meeting Corregidor falls Masi drive in Crima drive in Litys Dateh Harbor raid Japa land in Alextians Tobruk falls Matrob falls I àlla I à ENEMY PROPAGANDA Second Front The possibility of a second front appears to be very much in the minds of German propagandists. Their dominant theme to the United States in dealing with the subject is complete Carman readiness for an invasion. But, characteristically working all lines, the Nasis attempt to depict a second front as unnecessary, as well as hopeless. Regraded Unclassified - 19 - To bolster the impression of readiness for an allied invasion effort, the German navy is described as "prepared day and night". Hundreds of new air fields are said to have been constructed "behind the coastal wall of Western Europe". The Atlantic coast is described in general as "a gigantic fortress studded with the best arms available". Dr. Goebbels attempts to discount the value of a second front for the Russians by claiming that the Nazis have enough troops in the West to meet any invasion, and that no troops will be withdrawn from the East now. In dealing with the conflict in Russia, Nazi propagandists have shown a pronounced tendency to soft-pedal their successes; they appear to be trying to reduce British and American popular pressure for & second front. Indeed, Nazi commentators accuse British officials of over- pessimistic reports intended to foster second front sentiment in England. The Berlin radio described German soldiers as fully prepared for another winter campaign in Russia - an outlook echoed in Italy by Virginio Gayda. Claims of great successes on the Russian front are left to the radio and press of Germany's satellites. The German press also follows a policy of caution in reporting the Russian campaign. Nazi-dominated Europe is being psychologically prepared for a second front. The dominant idea in the campaign is Nazi invincibility. The Swedish newspaper, Dagens Nyheter, reports that the recent parade of the S.S. in Paris took three hours to pass a single point. Many photo- graphs of defense works have been appearing in the daily and periodical press. In a Das Reich article, Dr. Goebbels assures the German people that Regraded Unclassified - 20 a second front attempt is docmed to disaster. The British and Americans will not come "with puny forces", says Goebbels. "Possibly they may gain one or two illusory successes to be offered up as an ingratiating present to their Bolshevik allies ..... Then slowly but surely our war machine will come into play and one day we shall see the British march- ing on Berlin not as conquerors but as prisoners of war." Nazi propaganda intended for European consumption appears to have the two-fold purpose of allaying traditional German fear of a second front and of dampening the ardor of the conquered peoples who are await- ing a United Nations invasion as a signal for revolt. Recently enacted Nazi measures, such as the one applicable to Frenchmen providing the death sentence for all immediate relatives of those resisting Nazi domination, contribute to the Nazi goal of terrorizing the conquered peoples into inaction in order to keep them from coming to the aid of a United Nations invasion force. Olive Branch for Russia Ever since the appearance of the Voelkischer Beobachter article of July 20, 1942 describing Great Britain and not Bolshevism as the primary enemy of Germany there have been a number of peace feelers directed to Russia via German as well as satellite sources. The French radios have been and continue to be most active in this campaign. This week the Antilles radio (Vichy) broadcast a report attributed to the Swedish paper Social Demokraten, that the Nazia after the capture of Stalingrad will offer a separate peace to Moscow. Refusal of this offer will mean a Japanese attack on Siberia, according to the Vichy broadcast. The official Vichy radio broadcasts a report said to have originated in Regraded Unclassified - 21 - the Swiss paper Gazette De Lausanne, that Russia is about to make an "about face", and that Russian demands for a second front are a "pretext for giving up the fight". The Japanese-dominated Manchurian station, Radio Harbin, also has been taking an active part in the peace offensive against the Soviet Union. Placing a more official stamp on this peace offensive the Deutsche Zeitung in den Niederlanden of July 29 states that "leading personalities in Berlin consider a separate peace with Russia as very desirable". The Nazis may believe that Russian setbacks have made her susceptible to peace offers. Or they may hope to discourage American and British offen- sive plans by portraying Russia in a weak and untrustworthy light. AUTHORITATIVE STATEMENTS Production The subjects of ships, steel for ships, and cargo planes to replace ships, continued to gyrate and to give off a spray of contradictions, recriminations and "we-will-study" statements. The key point of confusion seems to be the figure given as the official shipbuilding goal. For 1943, W.P.B. says the goal is 10 million tons, and that there is steel enough. W.S.A. says the goal is 15 million tons and there is not steel enough. On the cargo plane proposition, Mr. Kaiser had his say before the "Truman Committee" on July 29, and Robert Patterson and Donald Nelson promised full and serious consideration of the plan. Oil Further warnings on the fuel oil supply in the Northeast have been Regraded Unclassified - 22 - issued by the White House and by Secretary Ickes. Sugar An O.P.A. release of July 29 warns that the supply situation is worse again due to Caribbean shipping difficulties. This should relieve the pressure caused by rumors of glutted warehouses. At the same time it may produce confusion when considered in the light of Navy statements on convoy success in the Caribbean. Finance and Taxation The anti-inflation front has become comparatively quiet, with the exception of a fluid situation on the tax bill in Senate Committee, and some sporadic comment on wages by W.L.B. and others; meanwhile a study by Mr. Rosenman is awaited, and should precipitate a new drive. Foreign Relations Mr. Lauchlin Currie made a strong statement in Chungking on July 30, saying in part, that the U. S. Government looks "upon all the Axis powers as a single power and all the United Nations as a single opposing power" and that "victory or defeat of one of the United Nations anywhere in the world today is a victory or defeat for all the United Nations." Mr. Archibald MacLeish in London, also on July 30, spoke to similar effect, and included a trenchant attack upon isolationists. India The statement of Gandhi on August 2, warning that India's "hidden discontent may burst forth into welcome for the Japanese...", together with the statement of the Indian Government on August 4, branding Gandhi and the All-India Congress as appeasers, marked the growing crisis in the Indian situation. Regraded Unclassified - 23 - United Nations The outstanding statement of the week was Stalin's order to the Red Army, July 30, calling for a defensive stand. The Moscow radio is calling for a second front. (on August 2, in particular.) Air Marshall Harris spoke on the British radio in German on July 28, promising "to scourge the Third Reich from end to end..." 8/7/42 83 TREASURY DEPARTMENT Washington FOR RELEASE, MORNING NEWSPAPERS, Press Service Saturday, August 8, 1942. No. 32-74 8/7/42 Secretary of the Treasury Morgenthau announced last night that reports from the Federal Reserve Banks indicate that subscriptions for the additional issue of 2-1/2 percent Treasury Bonds of 1962-67 aggregated6964,778,800, through August 7, divided among the several Federal Reserve Dis- tricts and the Treasury as follows: Federal Reserve Total Subscriptions District Received & Allotted Boston $ 65,180,300 New York 612,138,200 Philadelphia 42,864,700 Cleveland 20,848,500 Richmond 12,419,000 Atlanta 3,936,800 Chicago 40,103,200 St. Louis 3,633,000 Minneapolis 13,200,000 Kansas City 6,937,300 Dellas 10,610,200 San Francisco 16,787,700 Treasury 350,600 Government Investment Accounts 115,769,300 TOTAL $964,778,800 -o0o- 84 CLIFTON A. WOODRUM THE COMMITTEE ON APPROPRIATIONS em DIRT. VIRGINIA ROAMOKE, VA. DIANE TAYLOR Congress of the United States SECRETARY House of Representatives Mashington, D.C. Roanoke, Virginia, August 8, 1942. Mr. Henry Morgenthau, Jr., Washington, D.C. My dear Henry: I want to tell you how delighted I an that you are com- ing to Roanoke on the 24th of August in connection with the War Bonds Campaign. I an highly honored' that my constituents are to have the pleasure of entertaining you for a little while, and we are going to give you a warm reception. I also want to direct your attention to "Woodrum Field," the Roanoke Airport, where you are scheduled to land. We think it is one of the finest. Looking forward with great pleasure to your visit, I am Sincerely, your friend, CLIFTON Cliff WOODRUM 85 1 F INC. # By door Mr. Voctorms Year letter of August 8 reached here just after the Secretary had Left Varifington. I - forwarding the letter to Me as 1 - 1 and 1 TIM 2 and E Me fortherning visit to Beensite. I 1 (Signed) H. S. Klotz of si Private Secretary. Namerable Glifton 4. Woodrum, Bounshe, Virginia. GEF/dbs Regraded Unclassified 86 TREASURY DEPARTMENT PROCUREMENT DIVISION OFFICE OF THE DIRECTOR WASHINGTON August 8, 1942 MEMORANDUM TO THE SECRETARY: We have been doing some preliminary planning to co- ordinate stores. governmental warehousing, exclusive of military At the present time, throughout the United States warehouses of various Government agencies are being oper- ated independently of each other and frequently are loca- ted within the same city or area. An Executive Order pro- posed by the Bureau of Budget now pending approval by the President provides in part that the Procurement Division shall take over warehousing for Government agencies, which includes facilities, personnel, and funds. A very substan- tial part of the field warehousing is now carried on by the various agencies of the Department of Agriculture. I have talked with Mr. Samuel A. Snyder, Chief, Divi- sion of Purchase, Sales and Traffic, Department of Agri- culture, with the thought in mind of bringing him into the Procurement Division as Assistant to the Director, Grade 14, salary $6,500, to do the planning and supervise the opera- tion of coordinating all federal warehousing in the field service where there is a common need for warehousing. After several talks with Mr. Snyder, he has indicated his willing- ness to join us; and I feel very pleased about it because we need men of his type in our organization. In my opinion, Mr. Snyder is the best qualified procurement man in any of the Government agencies we are buying for now. For many years he has been constantly in touch with the field agencies of the Department of Agriculture on procurement matters. He is es- sentially a field man, knows field problems and field person- nel, and I think he is well suited to take over the responsi- bility of coordinating all field warehousing and then carrying on the operation after the planning has been completed. The planning and coordination is a detailed job which will prob- RYICTORY BUY Regraded Unclassified 87 - 2 - ably keep Mr. Snyder in the field more or less continually for the next year or two; and when the job is completed, there should be a substantial savings as well as much more efficient operation than the present system of each agency operating its own warehousing without regard to the other. I will keep you informed as the program develops. Clifton'E. Mack Director of Procurement 88 THE WHITE HOUSE WASHINGTON August 8, 1942. 2 MEMORANDUM FOR THE SECRETARY OF THE TREASURY or HON. RANDOLPH PAUL Will you talk with Wayne Coy about this? F. D. R. МУЗНӀЙСТОЙ MHILE ROBEE 89 EXECUTIVE OFFICE OF THE PRESIDENT BUREAU OF THE BUDGET WASHINGTON, D. c. AUG 6 1942 MEMORANDUM FOR THE PRESIDENT: In your message to Congress setting forth a program to stabilize the cost of living, you indicated that you wanted to give the voluntary saving plan a trial but would recommend compulsory saving if this proved necessary. In view of the development of war expenditures and experience with the voluntary saving plan, there is a growing unanimity of opinion, both in and out of Congress, that adoption of compulsory saving will soon become necessary, probably by early next year. I had been of the opinion that the pending tax bill should be disposed of before this question was reopened. A recent development in the Senate Finance Committee's delibera- tions on the tax bill suggests, however, the desirability of an early announcement of your intentions. The Committee is seriously consider- ing granting a deduction from the income tax for repayment of debt, for life insurance premiums, and perhaps for purchases of war bonds. While allowances for these purposes would be perfectly proper if made against compulsory savings as in Canada, the case is otherwise with respect to deductions from the income tax. Tax deductions of this character would militate against the principle of equality of sacri- fice during wartime outlined in your message. A man who pays off his debts, carries life insurance, or acquires a war bond betters his financial condition. This does not justify a reduction of his tax bill. In cases of unusual hardship postponement of tax payment, rather than cancellation of tax liabilities, appears to be the appro- priate relief measure. There is the danger that a temporary emergency may induce Congress to enact a provision which may permanently damage the in- come tax structure. Granting deductions from the income tax as relief for debtors and for similar purposes would also greatly complicate the operation of the plan for collection of a part of the income tax at the source, if indeed it did not result in rejection of the whole proposal. Since I an wholly in accord with the view of the Secretary of the Treasury that early development of machinery for collection at the source is an essential part of the program to stabilize the cost 90 - 2 - Regraded Unclass of living, I believe that it is important that this threat to col- lection at the source be removed. (For technical reasons, it would be easier to grant deductions for debt relief and the like from com- pulsory savings withheld at the source than from the income tax.) The Treasury is apparently willing to oppose the movement for deductions for debt repayments and insurance premiums purely from the tax standpoint. The Senate Finance Committee is likely to re- ject these arguments, unless a positive assurance is given that such deductions will be permitted in another way. In view of your announced position with respect to voluntary saving, and their own responsibility to give the voluntary plan a fair trial, the Treasury representatives do not seem to feel free to meet the demand for relief for debtors by suggesting that such offsets be considered in connection with compul- sory saving. The Senate Committee might be willing to accept a promise of allowances from possible compulsory savings and drop the relief measures now being considered. I suggest, therefore, that you authorize the Secretary of the Treasury to announce that the question of compulsory saving is under consideration and that you have requested him to study the advisability of allowing appropriate relief in the form of offsets to compulsory saving for repayment of old debts, for insurance premiums, and perhaps for other purposes. loggue Coy Acting Director 91 COPY NO 13 BRITISH MOST SECRET. U.S. SECRET. OPTEL No. 271. Information received up to 7 a.m. 8th Aug, 1942. 1. NAVAL. Air reconnaissance of the ANDAMAN ISLANDS on the 7th showed one aircraft carrier (converted merchant ship) and one other warship in Port Cornwallis. 2. MILITARY. Russia. In the RZHEV area, continued Russian attacks had met with some success. The Germans have made further progress in their advance towards Stalingrad from South of the Don, North of ARMAVIR the Germans are advancing westwards across the river KUBAN with the probable intention of moving on MAIKOP. 3. AIR OPERATIONS. Western Front. 6th/7th. Duisburg. About 415 tons of H.E. and incendiaries were dropped, including 60 four thousand-lb. bombs. Some large fires were seen near the centre of the town. 7th/8th. Two enemy aircraft bombed ABERDEEN and 12 others operated over Lincolnshire, Derbyshire and Nottinghamshire. One was destroyed by a Beaufighter. Egypt. 5th/6th. Our bombers attacked shipping at TOBRUK and naval aircraft bombed barges in MERSA MATRUH harbour. One bomber is missing. Both objectives were again attacked on the 6th, 4. HOME SECURITY. 7th. BODMIN. Two bombs damaged the gasworks. 6 persons were killed. 7th/8th. ABERDEEN. Damage was caused in the harbour area and 4 persons were killed. Regraded Unclassified 92 COPY NO. 13 BRITISH MOST SECRET U.S. SECRET OPTEL No. 272 Information received up to 7 A.M., 9th August, 1942. 1. MILITARY RUSSIA. The Germans have made further progress in their advance to- wards STALINGRAD from South of DON and are now less than fifty miles from the town. They are advancing into CAUCASUS in two columns, one thrusting Southwards is ap- proaching the Caucasian Foothills, the other moving Westwards has reached a point 50 miles Northeast of MAIKOP. The German claim to have taken TIKHOTETSK is con- firmed. 2. AIR OPERATIONS WESTERN FRONT. 8th. 11 enemy aircraft flew over widely scattered areas in cloud and rain conditions. R.A.F. Fighters damaged a bomber and Spitfires of the U.S. Army Air Corps damaged a Fighter. 8th/9th. Ten Lancasters laid sea mines, all returned safely. At dusk a Beaufighter destroyed a Heinkel off KENT. Five enemy raiders operated singly over YORKSHIRE. EGYPT. 6th/7th and 7th. Air activity increased on both sides. During the attack on TOBRUK on 6th Liberators claimed to have set fire to a large ship estimated 10,000 tons. 7th. Hudsons destroyed a Lighter off SIDI BARRANI, damaged another and sank a tank landing craft. Fighter Bombers attacked onemy M.T. in the Central sector and & Camp in the Coastal sector. On 6th and 6th/7th the enemy bombed our aerodrome at BURGELARA but damage was slight. During this period an M.E. 109 was shot down and three damaged. We lost four Fighters and one Bomber-Transport. MALTA. 8th. Spitfires destroyed 3 M.E.109's and damaged a fourth. One Spitfire is missing. 4. HOME SECURITY 8th. In the evening enemy aircraft operating singly dropped bombs in widely separated localities. A Naval Hospital was hit at TYNEMOUTH. 8th/9th. Bombs dropped at LEEDS caused some dislocation of utility services. Regraded Unclassified 93 August 10, 1942. Dear Henry: I an glad that you sent me the telegram you received from the employees of Younker Brothers in Des Moines. This is just another example, but an especially fine one, of the spirit that Iowa has been showing in the War Bend campaign. Thank you very much for sending it to m. Sincerely, 8/10 Sent to Secretary for signature at Malone. The Honorable The Vice President, Washington, D. C. FK:eg Postal Telegraph 94 VICE PRESIDENT'S OFFICE August 5, 1942 Hon. Henry Morgenthau Henry: You will be interested in this telegram. This is the largest de- partment store in DesMoines. Haw H.A.W. Kulu 3 5 él , i o CEIVED AT I OR RACIOBRAM UNLESS OTHERWISE (ATED BY SYMBOL - THE PREAMILE 95 ACE GLACE THE APPREM OF THE MESSAGE, you DI outle (12) - SELECTED . TARMFFS OPERAND AT ENCH Dr. FILEWITH LEPHONE YOUR TELEGRAMS POSTAL TELEGRAPH REGULATORY AUTHORIZED 18L LB434W 111/99=D DESMOINESIOWA 4 1212P RECEIVED HON HENRY A WALLACE= 1942 AUG NOE PRESIDENT PM 5 5°427 VICE PRESIDENT (WASHINGTON DC(SU)= INAL AUDIT IN THE "RETAILERS FOR VICTORY CAMPAIGN.AT YOUNKERS REVEALS THAT 1150 EMPLOYEES ATTACKED OUR STORE QUOTA OF $25,000.00 WITH SUCH VIM AND VIGOR THAT WE EVEN EXCEEDED THE DESMOINES AND POLK COUNTY QUOTA OF $274,000.00 WE SOLD $224,356.00 IN BONDS AND $59,544.00 IN STAMPS MAKING A GRAND TOTAL OF $283,900.00 CASH VALUE OR $344,852.00 MATURITY VALUE. THE CAMPAIGN WAS ONE OF THE MOST ENJOYABLE AND NSPIRING IN OUR 86 YEARS OF BUSINESS. WE WANT YOU AS VICE PRESIDENT TO KNOW THAT WE IOWANS FURTHER PLEDGE OUR CONTINUOUS SUPPORT IN THE ALL OUT EFFORT OF WINNING THIS WAR= EMPLOYEES OF YOUNKER BROTHERS INC. 00 $25,000.00 $274,000.00 $224,256.00 $59,544.00 $283,900.00 344,852.00 86 Regraded Unclassified 96 August 10, 1942. Dear Major Namm: I have just seen the text of the resolution in which the Retail Advisory Committee calls upon all retailers to continue their efforts to sell War Bonds and Stamps. Will you convey to your members my sincere appreciation of this splendid resolution? I hope it will be possible for the Committee, through its various associations, to express the thanks of the Treasury Department for the fine job that was done in July by all trade and retail groups. Sincerely, (Signed) H. Morgenthau, Jr. 8/10 Sent to Secretary for signature at Malone. the Major Benjamin H. Namm, Chairman, Retail Advisory Committee, 420 Lexington Avenue, New York, New York. FK:eg 97 August 4, 1942 Mr. Slean. Mr. Graves. Mr. Mahan. Attached is a copy of the resolution adopted yesterday by the Retail Advisory Committee together with a suggested letter for the Secretary's signature. This letter will be used along with the resolution to keep retailers in action during August. It is important that we secure the letter as the boys were a little "hurt" because they were not included in the press release reporting July sales. Only payroll savings and Fk 0 were mentioned, I believe, I didn't ... the release. MEMBERS the present war in which W are engaged is taking billions of dollars for its proper presecution: and WORKBAS from present indications this var will continue for a con- siderable period of time until victory is achieved; and MEMBAS the retailers of the United States have net. and exceeded a quota not up for them by the United States Treasury, during the month of July under the title of "Retailers for Victory"; and VERBAS the combined efforts of the retailers of the mation have had a definite and beneficial effect upon the morale of all the people due to the promotion and publicity put behind this effort; and VIDERBAS such retail organization has been perfected in this "Retailers for Victory* drive, because of the whole-hearted and efficient cooperation of store owners, corporation executives, retail employees every© where, the pross of the nation, the radio stations, and periodicals in every field of publication, TRIBUFORE II IT RESOLVED that the Retailers' Advisory Committee to the U. 1. Preasury Servings Staff hereby calls upon all retailers everythere to continue with their efficient offorts to sell var starge and bonds and consime to nesist in every WAY possible the financing of this tremendous conflist in which VS nov find curselves engaged; XI IT FURTHER RESOLVED that the Retailers' Advisory Committee to the 1. 8. Treasury Savings Staff hereby dedicates each and every member to further and more intense activity, to greater cooperation with merchants everythere in the area of the sale of U. S. Var Stamps and Bonds; and 32 IT FURTHER REVOLVED that a copy of this resolution be sent to Secretary of the Treasury of the United States, to all trade associations Regraded Unclassified 99 the segvines, rulls stattens, ⑉ - that the Retuilems' Markaway 1 Information 1 I I $ I I 1 votailare for the offerts and - accomplishmobe M of stange and bends during the "Retailaus the Victory* - Regraded Unclassified 100 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE August 10, 1942 TO Secretary Morgenthau FROM Mr. White This 1s a comparative statement of the earnings and expenses of the Stabilization Fund for the months of June and July, 1942. Earnings June 1942 July 1942 Interest earned on investments $ 19,514.93 $ 20,110.20 Interest earned on Yuan 23,605.23 24,360.81 Total $ 43,120.16 $ 44,471.01 Profits on handling charges on gold 36,940.30 63,213.78 Grand Total $ 80,060.46 $107,684.79 Expenses Salaries $ 23,670.23 $ 16,853.65 Travel 539.55 83.53 Subsistence 1,766.75 96.00 Telephone and Telegraph 2,239.54 1,699.92 Stationery 35.00 141.84 All others 1,462.96 104.51 Total $ 29,714.03 $ 18,979.45 Net Earnings $ 50,346.43 $ 88,705.34 The rise in earnings for July resulted mainly from an increase in the value of gold transactions with foreign countries. The month to month fluctuation in salaries and other expenses 18 largely due to the uneven arrival of vouchers, principally from the Federal Reserve Bank of New York. Salary expenses in the first seven months of 1942 averaged about $19,800. BOARD OF ECONOMIC WARFARE White has White 193 = (+) WASHINGTON, D.C. OFFICE OF THE EXECUTIVE DIRECTOR August 10, 1942 The Honorable The Secretary of the Treasury Dear Mr. Secretary: Reports on the subject matter for the next meeting of the Board of Economic Warfare have not, as yet, been completed. The next meeting of the Board, therefore, will be held on Thursday, August 20, instead of on Thursday, August 13. Mil Sincerely Parien yours, Executive Director DELYSINEWJ laws vne II Wi 8 22 Ot: THEVENBA OFFICE Photostat to Dr. Whe 8/12/42 - 102 BRITISH EMBASSY, SAFE HAND WASHINGTON, D.C., MOST SECRET AND PERSONAL 10th August, 1942. My dear Mr. Secretary, You asked me some time ago whether I had any information with regard to certain transfers of funds through the Argentine. I regret that so far I have not been able to obtain any evidence of these movements, although careful inquiries have been made. I am informed that a particular rumour which may have given rise to re- ports of this nature has been checked, but has been found to be baseless. If I am able to obtain any more information, I will at once let you know. Yours sincerely, R.J. stoppord The Hon. Henry Morgenthau, Jr., United States Treasury, Washington, D.C. 103 THE UNDER SECRETARY OF THE TREASURY WASHINGTON August 10, 1942 TO THE SECRETARY: At a conference last week in your office with Dean Acheson, Mr. Armour, our Ambassador to Argentina, and Merle Cochran, you raised the question about uncensored German mail going to South America on Pan- American Air Lines. Mr. Acheson called me today to say that he had thoroughly investigated and found that that is no longer the case. He says that there were possibly three plane trips in which the mail was not censored, but this was due to the fact that, because of bad weather, the planes did not land at the place where the censoring WaS performed. A new arrangement has been made under which these planes land at Puerto Rico and the censoring is performed there. There are some Italian passenger planes that go down the coast, but they do not carry any mail. DWB DEFENSE BUY UNITED STATES SWINGS BONDS OUSTUMPS Seey 104 C 0 P I V4 5 GOVT 1942 AUG 10 AM 7 31 1 DENVER COLO 407A AUG 10 1942 UNDER SECRETARY OF THE TREASURY WASHINGTON DC CARGO NOW IN DENVER MINT FAILOR. 729A AUG to 1942 (Received by F.D. from E.D.B. at 9:05 a.m., 8/10/42) Copy:1c:8/11/42 sery 105 Angree's 1A, sgre Files E. Netwich m. 3. #. sall se to Mo office and stated that the Beaston subscriber had informed the incretary of a shipment of GOLA volued of 83,765,090 which use due to arrive at none, Alasha about the and of july. m. Boll du seid that the Secretary had agreed to ⑉ that this oblgaset - temperarted from Same, Alaska to the United States Hint où Benrer. to instructed se to propore a Letter be the Secretary of Ver giving the details of this oblyment of goid and to request time the Ver Regartment handle the transportation the None to Deiver. I inquired of - Doll se he - when the ONLY would contro et Dowror. u. Dell replied that be 414 net but that a Stat - - belog cast to Sune to take charge of the gold. Mr. Dell called as to Me office and asked se to propare 8 Letter of instructions for - Feiler of the mas Service - we going to - to take charge of the seld chipment. 1,000.00 1 delivered so m. Soller the Letter of instructions nontioned above M apout guite - time providing Mo with miscolleneous information as to the siso of the benes, the gald emtente and possible eight artee is consection with the chignent. I delivered to - Grangico at the Incoice a doos't of a letter the Inselan interender we to sand to the Decretary to connection with this shipment. 10. Oreagize cold that this letter vould reach the Treasury temorrow. Be inguired if the chipment use Insured and $ replice that $ ass not lease. Mr. Grenyto said that he world speak to the Ambernador about terming the chignest. I called a. Creapte and informed his that the letter which the Emerica we to east to the Secretary had not yes been reseived. - mid he would check this matter with the Automation ml that be bed not yet with the intersator about insuring the chipacat but that he was sheetly. Mr. informed DO that the would not eign the Letter instructions be the Secretary as he had cabled to Bussie relative to instructions Loss insurance. Regraded Unclassified 106 I agabe be - 2 about net reselving the Instan letter be code to sention the matter to Ma to the noralag. 1 - m. 3. Derasteta 6 our of the Letter and he cold he would speak to M. Vidto. m. 2. Investoia informed as that be had openses to B. this and that Mr. White said the matter of the letter would be below - Mentay serving. In reply be m. Groupho's injury as to the - of the an the - to take charge of the gold at I X sold Ma 10 use Emarth N. Failer. 1 reported this inquiry to Mr. 3. Bernetela the enggested w and developments. 5,05,00 Mr. Groupice informed me that the oblyment was valued as $5,600,000 and was to be insured from the point of chipment to the Dearer Stat. I asked Mr. Grogge what sert of insurance - unted and he replied Consrol Insurence. In reply w my question of where the chipment originated, Mr. drespice caid that is English 10 to "Providence", north of I informed Mr. D. V. Ball and Mr. 2. Betastela d this convercation with B. droughs. Later a. Ball instructed me to wite a letter to the Ver Department is the norming an the inspensed mm), and at w suggestion a telegram to Hr. Failer, giving the nov memb, - also included is this letter. 2,450.0. I called Mr. Groupho who confirmed that the value of the chipment - $5,600,000. 18:00 masm I delivered be Mr. Brougho at the Seriet Babacay a draft of a letter which the Inssion - to write to the Secretary requesting that incurance be plesed - the chipment. I explained to a. dreapto that is order to obtain law- - 10 veald be measury to divalge the podat of chipment, the - of the chip, the contrate of the chipment and the doctination, and Br. Grougho said that this veuld be all right. Mr. Oreagico also requested that be be alvised of the cost of the temp- - with and without the prestes instated in the insurance. 5:00 p.m. Mr. Lang of the Federal Receive Bank of New Yerk, the and been requested to carrass the insurance makes, stated that Mr. the of May tip a - had die- cassed this insurance with the 4 Ladgest underwriters is New York and saly 1 of then showed my interest is placing insurance, while the other 3 thought that this use more a military operation then a consercial operation. Br. - sold that possibly $500,000 and maybe $1,000,000 at the most in insurance could be obtained - the skipment from the by of Providence to Beaver. Er. - also está that mybe $1,000,000 and $2,000,000 at the neet in insurance night be obtained on the trip from None to Dearer. be said that 19 this insurance - to cover buring transit a sente that we not met meh, 10 would be assecsary for the underwriters to get together to check - rates, If my insurance were written. Mr. - also said that be had yet to ⑉ 16 more underwriters tich would probably take a days. Regraded Unclassified - 3 - 107 I entimed to m. 2. V. Ball the difficulty in obtaining insurance and reggested that is the the - right take delivery of the gold of Ilease and thes fame the chiques why the Leases is Shipment we from - be the - Mat. B. Dill cold that be wall disease this natter with the Securitory. Mr. Both agreed with m enggestion that I disease with the - of Providence to Inc. I Information 1 19. = B and 1 I a I ! a If 9:15 a.m. I colled at the Brithe Insurance Corporation ml aptio vith B. fealihes, Deputy Administrator is Charge of Fioral Affaire, Mr. - and B. Carterville to ⑉ if the corporation valid - the Insurance from the by of Provi- dense be Jene. All three of these gentlarm agreed that this chipose - - - sistent with the policy of the corporation which is to promote under besue conserce of the United States. they also nontioned that the for Insurance Corporation bet dismosed with the Lead-Lease people the quotter of insuring Lend-Lease disgnote be pussia and that the intere people had said the corporation - art to w - This request for insurance ⑉ Lond-Lence had been reselved informally from the Insolens. in view of refusing be Lasure Lond-Lease chigments the three girliness mot are not think 10 vould be visa be wite insurance overlag this Bussion - shipment. m. Scaliben stated that if for reasues of Mgh policy 19 - - for the corporation to issure this chipment from the Bay of Providence to Indo, that upon instructions from the President, the carporation would be and be comply with the request. 11:00 a.m. Mr. Lang called al cold that M. - falt that if given that 3 please were to transport the gaid that insurance - to $2,000,500 to $1,900,000 on sooh plane sight be obtained on the trip free Name to Decrear. Mr. Lang end I die- cassed the pessibility of plestag this insurance and Letting the M the premium - as much insurance # use obtained - to record the unlassred parties of the chipment under the Lesses is Shipment set" if delivery of the gald was taken at Date. 11:10 a.m. Eise Molia informed - that Br. B. V. Ball seld her be tell as that the Secretary cald to take delivery of the one où I 1.00 m.m. I discussed with Mr. Bell m comporation with the Wartins Insurance Corporation people and how they full about plastag income # this skipment. I also nextioned that if delivery were taben at the - only have the Incoice MY for as wash Insurance obtained and place the balance what Numberment Leeses is thigness Ast*. Mr. Bell 414 net agree to this M be take delivery of the gold 10 should be insured visity under Leesee in shipment Mr. 5:10 p.m. I called es m. Grougho of the Bussion Belony and delivered to his - letter of August 5 stating that the Secretary of the Presenty reald take delivery of the sale at Boxe and that 10 would to insured for the Secretary's assess - the *Governent Lecess in Shipment 1000. $ emploined to Mr. Groupho the insurance situation at the fast that W telding delivery as Name the gold be transported from there be Salarado for the Bearetery's I and therefore the gaid mid be placed under "Severnment Leases is Skipment that my Lecess betwom these the pointe verid be payable to the terretary and that W handling the Regraded Unclassified a 108 1 this - there would be as fammers to be paid W the Insolan Gerem- Regraded Unclassified I I s á 1 Incount B - Media 1 I e my á Failer stating that he - still withing for the one to crvive. Mr. droughs called M today and eaid that the ass not quite understand how the Secretary of the treasury could tabe delivery of the gold at - call insure 10 and that there would be as provides n the income to be paid by the Government. Mr. Grangico mið that be universated the native thoroughly - vasted to check with as again to esefire - conversation of Angust 6, 5:20 p.s. (Saturday) Mr. Grangico celled M at w home and said that the chipment would crrive at None today. to also nentioned that the ship on which the gold - being treasported had been changed from the as SMOGHT to the - THP. I called Mr. 3. V. Dell - informed like of w correraction with m. Creegine and Mr. Bell agreed to contact the - Department est and a message be mr. Failer st Name as fellows: THE instead of 3:10 p.m. I total to lesate either m. Housed or Mr. Fronts of the time Service 1 could not. I called Mrs. Rese and informed her that this chigaret night crrive at Dearer over the weebend and the said that she know that certain employees of the Dearer Nint had been designated to stand w melting this chipmens. the cald that she vsuld call the New Hiab end tell then the abignent eight carive teneeror. Mrs. Rose called no back ab has onl said that she had phoned the New Mint and talked to the shief clerk she seid that Me receiving people vary standing w to take is the shipment. 5:00 p.m. I called Mr. D. V. Bell and told his that Ere. Ress had called the Destror Mint and that everything - is realiness to reseive the skipmt. 2:30 am. Mr. Bell informed as that m. Failer had called from Member, Alberta at 4,30 p.a. August , (Sunday) and caid the the shipment would certive at Bearer at 2,00 p.a. a the meaning of injury 10. B. Doll said that he had phoned the chief clerk of the Benver Stat and told his the appreciaste time of crrivel. Under 9:18 am. Mr. Batchelder delivered to m a telegram addressed to the/Secretary of the Treasury from Mr. Failer which rest 4up any at number Nint°. 9:15 a.m. I submitted so Mr. 1. 1. Derastela the copy of the tolegram to the Dearer Eist instructing the - in which 10 use to this gald. Mr. 2. H. Demisis said that he would strise M. thite of the arrivel of the gold as Denver. 2:30 a.m. I called Mr. Howard and told his that I had received a telegram from 109 - $ - ( de 1 I X e 1 ! I á - I á I s I I " Failer stating that the chipment had accived at the Denver miss. Mr. Somed cald advise the Benrer there - to be as publicity about this chipment. Treasury Telegraph Department. the telagram of instructions to the nearer Mint was delivered to the 2:58 a.m. Denver. I called m. Greegico net adviced Min of the arrival of the one at (I A 2/w Regraded Unclassified keey 110 Stabilization Pant AUG 10 1942 Welted States Mins, Demor, Colorado. there will shertiy be depeaited with you own valued ab approximately $5,600,000 for the account of the Secretary of the freasury of the Welted States w was of the Government of the Valce of Seviet Sectalist Reyalities. Eyen receipt of the man, you are hereby authorised end instructed to noit and determine its volue. After determination of the value you - to- ther authorized and instructed to yorderse the are où the free yotes of 095 yes fine twog case, without abtracting the of X husting durge, to propers the deposit certificate asseriday, to Loons - desk for the not value of the gold (Lees the usual Mat charges) to - unine of the leaver breach of the Federal Receive has of Kansas City to assess of the Federal Reserve Bank of New York for credit to the *Escretary of the from Special Account". Flores instruct the Bearer breath of the Dedoral Incerve Seals of city to transfer this ements w telegraph to the Feberal Reserve of New Tark for credit to the "Secretary of the Treasury, Special Please have the Benrer branch of the Federal Hoserve Bank of Sanana carry Indiato is its telegram to the Federal Restrve Back of See York the entiture of the musber of fine cusses, the total dellar value, the I of the regular 1/0 of 15 headling charge, the - of the Nate charges which have been delacted, and the date of the crrival of the goid at the - Mint. Please propare 10 copice of Mail Form has in the usual - inserting in the progred queses at the feet of the report the total value of the only, the metting charge, the handling charge, the total charges and the met value w the 4014, with the headling and other charges deducted. these forms are to be formation to the incretary of the treasury, attention Fresk Motrish, Been m3, Pressury Depart- mat, Washington, D. 6. You will observe from these instructions that you are not to dolust the 1/4 of 15 handling darge, the properation of shows was - alove directions. You are also authorised and instructed to umap to the transportation of the above-nentions gald from the airport in Secret to the States Mat, if this should be and w charge the costs thereof w the Preseurer of the United States as a treasfer of funds. Initialed: FD JED BB EMB (Signed) D. W. BELL Acting Secretary of the Treasury. Regraded Unclassified 111 FOE Miss charnoey I I OFFICE OF ⑉ I August 10. 1942 CONFIBINTIAL Received this date from the Federal Reserve Bank of New York, for the confidential inform- tien of the Secretary of the Treasury, compila- ties for the week ended July 29, 1942, showing dollar disbursements out of the British Empire and French accounts at the Federal Reserve Bank of Nev York and the means by which these expendi- tures were financed. A lap-8/10/42 Regraded Unclassified 112 COPY FEDERAL RESERVE BANK OF XBV YORK August 6, 1942 CONFIDENTIAL Dear Mr. Secretary: Attention: Mr. H. D. White I an enclosing our compilation for the week ended July 29, 1942, showing dollar disbursements out of the British Empire and French accounts at this bank and the means by which these expenditures were financed. Faithfully yours, (Signed) Robert G. Rouse, Vice President. The Honorable Henry Morgenthau, Jr., Secretary of the Treasury, Washington, D. C. Enclosure COPY:lap-8/10/42 Regraded Unclassified FEDERAL RESERVE BANK OF NEW York August 6, 1942 CONFIDENTIAL Dear Mr. Secretary: Attention: Mr. H. D. White I am enclosing our compilation for the week ended July 29, 1942, showing dollar disbursements out of the British Empire and French accounts at this bank and the means by which these expenditures were financed. Faithfully yours, Plats Rouss Robert G. Rouse, Vice President. The Honorable Henry Morgenthau, Jr., Secretary of the Treasury, Washington, D. C. Enclosure Regraded Unclassified AND FRENCH ACCOUNTS William Dollars (ERITISH GOVERNMENT) BANK OF DEBITS CREDITS DEBITS CREDITS Unclass Gov't Proceeds of Net Incr. Sales of Total Expendi- Other (+) or Gov't Proceeds Net Incr. Total Other Total (+) or Securities Decr.(-) (-) Expendi- Other Total of Gold Other PERIOD Debits tures(a) Debits Credits Decr. (-) Gold (Official) (b) Credita(c)in Balance Debits tures (d) Debits Credits Sales Credits in Balance First year of war (8/29/39-8/28/40) 1,793.2 605.6 1,187.6 1,828.2 1,356.1 52.0 420.1 + 35.0 866.3(e) 416.6(e) 449.7 1,095.3(e) 900.2 195.1(e) +229.0 Mar period through December, 1940 2,792.3 1,425.6 1,356.7 2,793.1 2,109.5 106.0 575.6 - 10.8 878.3 421.4 456.9 1,098.4 900.2 198.2 +220.1 Second year of war (8/29/40-8/27/41)* 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 Ang, 28 Oct. 1 140.9 105.9 35.0 176.2 20.1 2.0 154.1 e 35.3 0.3 - 0.3 0,5 1 0.5 + 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 1 0,4 69.6 - 15.7 Dec. 4- Dec. 31 88.4 18,8 51.5 - - - 36,9 0.8 I 51.5 - 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 Feb. 26 - Apr. I 121.4 86.4 35.0 171.4 - - 171.4 + 50.0 O.1 - 0.1 0.4 - Apr. :- - 24 6.1 +4.2 33.9 70.6 - 0.5 7.,1 - 27,5 0.2 0.4 = 0.3 - - 0.6 - 2.4 + 0,2 ARE. 30 - June 3 204.0 81.4 22,6 165.7 - - 165.7 - 61.7 - 1 - C.3 1 C.3 2.3 June 4- July 1 15.0 72,6 17.3 113.6 - - 113.6 + 23.7 - - - C,3 I 0,3 - 0,3 July 2- July 29 66.1 45.2 20.2 84.4 - - 84.4 + 18.3 0.1 - 0.1 0.3 - 0.3 + 0.2 WEEK ENDED: July a 22.8 19.5 3.3 13.1 I - 13.1 - 9.7 - - - 0.1 - 0.1 + 0.1 15 18.3 11.6 6,7 29.2 - - 29.2 + 10.9 - I - 0.1 - 0.1 : 0.1 22 10.2 5.6 4.6 31.2 - - 31.2 + 21.0 0.1 - 0.1 0.1 - 0.1 - 29 14.8 9,2 5,6 10.9 - - 10,9(r) - 3.9 - - - - - - - Average Weekly Expenditures Since Outbreak of War Transfers from British Purchasing Commission to France (through June 19, 1940) $19.6 million Bank of Canada for French Account England (through June 19, 1940) 27.6 million Week ended July 29, 1942 - million England (since June 19, 1940) 36.3 million Cumulation from July 6, 1940 $ 162.7 million For monthly breakdown see tabulations prior to April 23, 1941. ##For monthly breakdown see tabulations prior to October 8, 1941. (See attached sheet for other footnotes) (a) Includes payments for account of British Purchasing Commission, British Air Ministry, British Supply Board, Ministry of Supply Timber Control, and Ministry of Shipping. Regraded assified (b) Estimated figures based on transfers from the New York Agency of the Bahk of Montreal, 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. (c) Includes about 885 million received during October, 1939 from the accounts of British authorized banks with New York banks, presumably reflecting the requisitioning of private dollar balances. Other large transfers from such accounts since October, 1939 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 3.0 million transferred from account of Commonwealth Bank of Australia here; $1.4 million received for credit of U. S. State Department; 20.3 million for credit of U. S. Army, ABALYSTS OF CANADIAN AND AUSTRALIAN ACCOUNTS Strictly (In Millions of Dollars) July 29, 1948 BANK CANADA (and Canadian Covernment) DEBITS AND BANK OF AUSTRALIA E Australian Gove CREDITS DEBITS CREDITS Transfers Transfers from Official Transfers to Proceeds British A/C Net Incr. to Proceeds Net Incr. Official of (+) or Official of (=) or Total British Other Total Gold For Own For French Other Decr. (-) egrade Total British Other Total Gold Other Decr. (-) PERIOD Debits A/C Debits Credits Sales A/C A/C Credits in Balance Debite A/C Debits Credits Sales Credits in Balance First year of war (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 + 4.9 War period through December, 1940 477.2 16,6 (60.6 707.4 534.8 20.9 110,7 41,0 +230,2 57.9 14,5 43.4 62,4 50,1 12.3 - 4.5 Second year of war (8/29/40-3/27/41)** 460.4 - 460.4 462,0 246.2 3.4 123,9 88.5 + 1,6 72,2 16,7 55.5 61,2 62.9 16.3 + 9.0 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 8.0 5.9 2.1 + 0.2 Oct. 30 - Dec. 3 2.8 0.1 52,7 32,5 19.3 - - 13.2 - 20.3 10.3 6.9 3.4 11,6 9,0 2,6 - 13 Dec. 4- Dec. 31 47.7 - 47.7 22.2 17.3 - - 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 I - 6,0 - 6.5 4.5 - 4.5 10,8 - 10,8 - 6.3 Jan. 29 Feb. 25 34.1 - 34.1 35.7 12-4 - # 23.3 - 1,6 8.4 5.3 3.1 1,6 - 1,6 . 6.8 Feb. 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 - - Apr. 2- nate 29 37.4 - 37.4 35.9 14.2 - - 21.7 - 1.5 10.0 E.O. 2.9 16.8 - :6.E - 2.9 npr 30 - June 3 54.2 M 54.2 47.9 15.7 - 32.2 - 6.3 13.2 9.5 3.2 14.6 - CLL : 4 June 4- July 1 47.2 - 47,2 22-9 1477 - - 58.2 + 25,7 2.5 0.5 2,0 3.0 - 3,0 - O., July = = July 29 40.8 - 40.8 37.7 9.0 - - 28.7 - 3.1 19.1 15.0 4.1 19.5 - 19,5 - 0.4 WEEK ENDED: July B 7.9 7.9 7.7 0.2 - - 7.5 - 0.2 - 1.1 - 1.1 15.7 . 15.7 - 14.6 15 9,8 9.8 r 13.9 Il 3,5 - - 10.4 + 4.1 - 14.5 12.0 3.5 2.6 - 2,6 - 11.9 22 11.3 13.3 + 7.5 F 3.3 - - 4.0-Γ - 6.0 - I I - 0.9 - 0.9 . 0.9 29 9.8 9.8 8.8 2.0 I 6.8(g) - 1.01b) 3,5 30 . 0.5 0.0 . 0.3 . 3.2 Weekly Average of Total Debits Since Outbreak of Mar Through July 29, 1.42 8.1 million r - Revised + For monthly breakdown see tabulationsprior to April 23, 1941. ** For monthly breakdown see tabulations prior to October 8, 1941. (a) Includes US.6 million reprosenting proceeds of U. - Government checks deposited b) ar Supplies, Ltl. (b) Since this represents the not change in all dollar funds held here by the undian Government, it does not reflect the receipt of ,6.8 million resenting the proceed of naturine measu - Wills. 117 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. 45 - Aircraft Despatched - for week ended August 4th, 1942. The Honourable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. C. August 10, 1942. 118 DST SECRET August 8, 1942. STATEMENT NO. 45 AIRCRAFT DESPATCHED FROM THE UNITED STATES were ENDED AUGUST 4th 1942 FLIGHT DELIVERED TIPE Sanao ASSI The POINT BY SKA BLAIR FOR USE CARD Genera 1.7.17 Crane IA Canada Canada 8 Consolidated P.B.Y.-5.B. U.K. Canada en route 4 Curtiss Kittyhawk Middle East Middle East 20 Douglas D.B. 7B.Boston III U.K. U.K. 1 Glenn Martin B.26A Marauder Middle East Middle East 5 Lookheed A.28 Hudson VI Middle East Middle East 3 . . VIA . 18 # # 3 Ventura Canada Canada 5 . U.E. Canada en route 3 . South Africa South Africa 6 12A U.K. U.K. 1 Fairchild 24 R.9 U.K. U.K. 13 North American N.A.73 Mustang U.K. U.K. 7 Northrop Vengeance India Bombay 6 Vought Sikorsky 0.8.2.5. U.K. U.K. 13 . South Africa South Africa 12 TOTALS 73 24 13 British Air Commission August 8, 1942. 73 Regraded Unclassified 119 COPY NO. 13 BRITISH MOST SECRET U.S. SECRET OPTEL No. 273 1. If Information received up until 7 A.M., 10th August, 1942. 1. NAVAL A British ship reported yesterday that she W&B being attacked by a raider 920 miles Southwest of ASCENSION ISLAND. No further details received. 2. AIR OPERATIONS WESTERN FRONT. 9th. A Mosquito bombed the docks at FRANKFURT. 7 offensive operations involving 17 Squadrons of the U.S.A. Air Corps were carried out over Northern FRANCE and against shipping off the Belgian Coast, one Spitfire is missing. A JU 88 was destroyed by typhoons off the East coast 9th to 10th. 256 aircraft were despatched as follows - OSNABRUCK 192, HAVRE 18, aerodromes 22, sea mining off the Dutch coast 14, shipping off BORKUM 10. Visibility over OSNABRUCK was good. 8 aircraft are missing. 37 enemy aircraft flew over this country, 2 were destroyed and one damaged by night fighters and another destroyed by A.A. EGYPT. 7th to 8th. Our bombers attacked the harbours at TOBRUK, BARDIA and MERSA MATRUH. At TOBRUK bombs fell among ships and at MERSA MATRUH an F-boat (tank landing craft) was hit. On the 8th, & second F-boat was hit off BARDIA. 3. HOME SECURITY 9th to 10th. Flares were dropped over many towns in LANCASHIRE and on the Northeast coast slight damage reported, chiefly to crops and farm buildings. At PETERBOROUGH, incendiary bombs caused some damage to the roofs of the Cathedral, the Bishop's Palace and the Town Hall. 4. The Germans are undertaking important alterations at LA PALLICE. A new lock is under construction, shelters for 4 more U-boats are being built and booms are being laid to protect the entrances to the roadsends. 120 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE August 10,1942 TO Secretary Morgenthau Mr. Hoflich FROM Subject: Second Front - Ambassador Maisky's "Off-the-Record" Statement. The following are highlights of & recent statement by Soviet Ambassador Maisky to a private gathering of 300 members of the British Parliament and "off the record" to 21 leading British newspaper editors: 1. The military power of the Soviet Union probably has reached its peak and will be lower in 1943 than it is today. Losses in killed, wounded and captured are estimated at five million. 2. Russia has lost about half of its steel and pig iron production and three-quarters of its aluminum output. 3. The loss of the Ukraine and the threatened loss of the Kuban granary will result in a serious food problem next year. 4. The German capture of an extensive railway network on the southern front has increased the mobility of the German forces and reduced that of the Russians. 5. The Russian forces have been forced to withdraw steadily as the only alternative to encirclement and anni- hilstion. Only in this way have the Russians retained their fighting power and cohesion. 6. The answer to these rapidly mounting difficulties is an Allied second front this year. Every Allied division landed on the Continent this year would be worth two or three next year. If a second front is postponed until 1943, the increased strength of the Anglo-Saxon powers will be counterbalanced by the weakened condition of the Soviet Union. By next year the Nazis may be able to transfer large forces to Western Europe. (Office of Strategic Services, "The War This Week", July 30- August 6, 1942) 8/10/42 121 TREASURY DEPARTMENT Washington FOR RELEASE, MORNING NEWSPAPERS, Press Service Tuesday, August 11, 1942 No. 32-77 8/10/42 Secretary of the Treasury Norgenthau announced last night that reports from the Federal Reserve Banks indicate that sub- scriptions for the additional issue of 2-1/2 percent Treasury Bonds of 1962-67 aggregated $1,026,595,400, through August 10, divided among the several Federal Reserve Districts and the Treasury 88 follows: Federal Reserve Total Subscriptions District Received & Allotted Boston $ 68,821,900 New York 654,620,300 Philadelphia 48,171,800 Cleveland 22,541,300 Richmond 14,407,700 Atlanta 4,498,000 Chicago 42,905,400 St. Louis 3,926,400 Minneapolis 14,397,000 Kansas City 7,307,100 Dallas 10,910,600 San Francisco 17,935,400 Treasury 383,200 Government Investment 115,769,300 Accounts TOTAL $1,026,595,400 -o0o- 8/11/R 122 TREASURY DEPARTMENT Washington FOR IMMEDIATE RELEASE Tuesday, August 11, 1942 Press Service No. 32-78 Secretary of the Treasury Morgenthau today announced the subscription figures and the basis of allotment for the cash offering of 7/8 percent Treasury Certificates of In- debtedness of Series B-1943. Reports received from the Federal Reserve Banks show that subscriptions aggregate $3,273,000,000. Subscriptions in amounts up to and including $25,000, totaling about $71,000,000, were allotted in full. Subscriptions in amounts over $25,000 were allotted 48 percent, on a straight percent- age basis, but not less than $25,000 on any one subscription, with adjustments, where necessary, to the $1,000 denomina- tion. Details as to subscriptions and allotments will be an- nounced when final reports are received from the Federal Reserve Banks. -o00- 123 August 11, 1942. MEMORANDUM FOR THE FILES: Mr. Willkie telephoned me yesterday afternoon. He said he just wished to keep the informed as to the developments in their negotiations with the British. They had had a satisfactory meeting and the British had stated that they were going to ask to have special representatives to conduct further negotiations sent from London. He expected that they would arrive shortly at which time the discussions would be resumed. H. D. White 124 August 11, 1942 MEMORANDUM FOR THE SECRETARY: Messrs. Bell, Gaston, Kuhn and Blough had a conference at 9:15 this morning in Mr. Bell's office, at which we discussed your suggestion that someone have a conference with Senator Vandenberg in order to obtain a more definite statement as to the meaning of his call on the Administration to submit a "comprehensive" fiscal program for financing the war effort. For your information there is at- tached hereto a copy of the account of Senator Vandenberg's call in the New York Tribune of August 10. It was thought in many respects undesir- able to make a formal call upon Senator Vandenberg, the consensus of opinion being that he might make political capital out of such a call by announcing in the press that the Under Secretary and others in the Treasury were consulting him. As a compromise measure, it was suggested that I interview Senator Vandenberg more or less informally before the Senate finance hearings. I therefore left for the Senate hearing room and was able to run into Senator Vandenberg very casually just before the hearings began at 10 o'clock. I told the Senator that I was interested in knowing what he meant by his call for a "compre- hensive" financing plan about which he spoke to me the day before, that I had been reading the news- paper account since that time and wondered what particularly the Senator had in mind. He told me the following: (1) His opinion is that we will have to resort not only to a sales tax but also to com- pulsive savings of a drastic character. On this 125 - 2 - point he doesn't think that compulsory savings would be passed by Congress immediately but that it would be part of a broad financing effort for which the public mind should be prepared at this time. (2) The Senator thinks there is a great misconception in the public mind in that it is generally thought that the war will be financed by an eight billion dollar tax bill and the President's demagogical $25,000 limitation proposal. (The Senator said he did not blame the President for making this proposal; "We all have to be demagogues at times, tr he said.) This ap- proach to the problem neglects the thirty billion dollar commercial bank financing necessity which he thought is not being faced at all. He thought, in other words, that the Treasury had no plan for this important end of the picture. (3) The Senator thinks it will take some time to work out these problems and that much public education is necessary. He thinks the Treasury is dawdling with the problem and will have to face it suddenly some time, say a few months from now when the public will be totally unprepared. On this point he said that the public will not accept a sudden unsupported pronouncement of change or development of policy by the Secretary but that any such new program should be supported by the greatest fiscal ex- perts in the country. This is the background of his demand for a committee to be appointed by the President to study the problem. The committee would serve as a sort of prestige factor in the equation. I asked the Senator whether he had any particular persons in mind for such a committee and he replied that he did not. Regraded Unclassified 126 - 3 - In the course of my conversation with the Senator he observed that we were being too political in advance of elections. Throughout the conversation he exhibited a very friendly attitude toward you personally. bep Attachment The New York Tribune August 10 1942 Plan to Finance War Demanded By Vandenberg Wants Best Fiscal Minds of Land Put to Work on Comprehensive Program From the Hereld Tribuse Bureen WASHINGTON, Aug. 9,-As the Senate Finance Committee prepared to embark on what its members hope will be the last week of public hearings on the House-approved $6,271,000,000 revenue bill, Senator Arthur H. Vandenberg, Republican, of Michigan, called today on the Administration to submit a "com- préhensive" fiscal program for fin- ancing the war effort. A member of the Finance Com- mittee, Benator Vandenberg pointed out that Congress is devoting at least nine months to trying to raise from $6,000,000,000 to $8,000,000,000 in taxes, as one segment of & finan- cial program of $50,000,000,000. At the same time the Treasury proposes to take the entire year on & volun- tary bond sales campaign to raise $12,000,000,000, representing another segment. At the result, as far as Congress and the public have been informed, Senator Vandenberg concluded, the Treasury will be required to borrow some $30,000,000,000 from the banks, & procedure. which, he said, was certainly potentially inflationary. "President Roosevelt," said Ben- ator Vandenberg, "should put the best fiscal minds of the country to work immediately on a plan of was financing that will combine taxation with government borrowing in A comprehensive program." Stient on Sales-Tax Showdown At the name time the Michigan Benstor, who is an outspoken advo- caté of the sales tax as a means of raising new revenue to the level of the Treasury recommendation of $8,700,000,000, would not comment on the final showdown in the Finance Committee on this contro- versial levy. To date the hearings of the committee have indicated that & majority of the membership finally will oppose the sales tax and probably report & bill not greatly in excess of the $6,000,000,000 plus provided in the House measure and derived mainly from drastic In- creases in the income tax on both individuals and corporations. The committee enters its third week of hearings with Congress still awaiting President Roosevelt's promised revision of his anti-infia- tion program, plans for which are said to be under study by Justice Gamuel Rosemman, of the New York Supreme Court- In announcing today the quotas for bond sales for August, the Treasury Department disclosed that the total had been fixed at only $815,000,000. although no change had betti made in the goal to ob- tain $12,000,000,000 from this source this year. "The $815,000,000 total." said a Treasury statement, "Is in keeping with the goal since the seasonal variations in income distribution prevants the establishment of Pant- form national monthly quota of $1,000,000,000." The August quota, for New York City was announced at $100,336,000. Regraded Unclassifie 127 August 11, 1942 Conference in the State Department Tuesday, August 11, 1942 4:00 P.M. The meeting was held in Mr. Acheson's office to consider the latest draft setting up an International Relief Authority. The committee members were in agreement on this latest draft, as appended, with the exception of some minor changes to be in- corporated in the final draft. Mr. Acheson stated that he would like to present that final draft to Secretary Hull then possibly to the President. Mr. Stone of the Board of Economic Warfare, said that his chief would probably want some time to consider the matter before any such action was taken. Mr. White stated that the Secretary of the Treasury had not yet examined the draft and that he hoped it was clear to Mr. Acheson that the Treasury Department had not yet approved of the draft. HOW Inclassifiod 128 DEPARTMENT OF STATE ASSISTANT SECRETARY August 10, 1942 For discussion in Mr. Acheson's office, Tuesday, August 11, at 4:00 p.m. Ang11,1942 pe 129 STRICTLY CONFIDENTIAL August 10, 1942 Relief and Rehabilitation Administration Draft No. 2 or authorities The Governments ^ whose duly-authorized representatives have subscribed hereto, Having subscribed to a common program of purposes and principles embodied in the Declaration of January 1, 1942, known as the United Nations Declaration and the Joint Declaration of the President of the United States of America and the Prime Minister of the United Kingdom of Great Britain and Northern Ireland dated August 14, 1941, known as the Atlantic Charter, Being determined that immediately upon the liberation of any area by their armed forces the population thereof shall receive aid and relief from their sufferings, food, clothing and shelter, aid in the prevention of postilence and in the recovery of the health of the people, and that preparation and arrangements shall be made for the return of prisoners and exiles to their homes, for the resumption of agricultural end industrial production and the restoration of Regraded Unclassified 129 -2- of essential services, to the end that peoples once freed may be preserved and restored to health and strength for the tasks and opportunities of building anew, Have agreed as follows: pl Regraded Unclassified 130 Artigle l I There is hereby established the United Nations Relief and Rehabilitation Administration, 1. The Administration shall have power to acquire, hold and convey property, to enter into contracts and undertake obligations, to designate or create agencies and to review the activities of agencies so created, to manage undertakings and in general to perform any legal act appropriate to its objects and purposes. 2. The purposes and functions of the Administration shall be as follows: (a) To plan, coordinate, administer or arrange for the administration of measures for the relief of victims of war in any arca under the control of any of the United Nations through the provision of food, fuel, clothing and other basic necessities, housing facilities, medical and other essential services; and to facilitate in areas receiving relief the production and trans- portation of these articles and the furnishing of these Regraded Unclassified 130-A 4- these services 80 far as necessary to the adequate provision of relief. (b) To formulate and recommend measures for indi- vidual or joint action by any or all of the member gov- ernments for the coordination of purchasing, the charter- ing of ships and other procurement activities in the period following the cessation of hostilities, with a view. to integrating the plans and activities of the Administration with the total movement of supplies, and for the purpose of achieving an equitable distribution of available supplies. The Administration may admin- ister such coordination measures as the member govern- ments may authorize. (c) To formulate and recommend for individual or joint action by the United Nations measures with respect to such related matters, arising out of its experience in planning and performing the work of relief and re- habilitation, as may be proposed by any of the member governments and approved by unanimous vote of the Policy Committee. Regraded Unclassified 131 -5- Article II Membership The members of the United Nations Relief and or auth onties Rehabilitation Administration shall be the governments or anth onties signatory hereto and such other governments as may upon < application for membership be admitted thereto by action of the Council or the Policy Committee thereof. Regraded Unclassified 131-A -6- Article III The Council or authority 1, Each member government shall name one representative, and such alternates as may be necessary, upon the Council of the United Nations Relief and Rehabilitation Adminis- tration, which shall be the policy-making body of the Administration. The Council shall, for each of its ses- sions, select one of its members to preside at the session. 2. The Council shall be convened in normal session not less than twice a year by the Policy Committee. It may be convened in special session whenever the Policy Com- mittee shall deem necessary, and shall be convened within thirty days after request therefor by a majority of the membors of the Council. 3. The Policy Committee of the Council shall consist of the representatives of China, the Union of Soviet Socialist Republics, the United Kingdom, and the United States of America, with the Director General presiding. Botween 808- sions of the Council it shall exercise all the powers and functions thereof. It shall invite the participation of the representative of any member government at those of its meetings Regraded Unclassified 132 -7- meetings at which action of special interest to such government is discussed. 4. The Council may establish such standing com- mittees as it considers desirable to advise it, and, in intervals between sessions of the Council, to advise the Policy Committee. The members of such committees shall be appointed by the Policy Committee, with the approval of the Council if it be in session, and other- wise subject to its ratification, from members of the Council or alternates nominated for the purpose. Among these committees, the Council chally may establish regional committees to advise it on the making of plans and formulation of policy for the relief and re- habilitation of Europe, the Far East and of any other areas where such committees may be found desirable. The regional committees shall normally meet within the area and shall include members of the Council, or their or ath outres alternates, representing the member governments direct- ly concerned with the problems of relief and rehabili- tation in that area. The Regional Committee on European Rolief Regraded Unclassified 132. -8- Relief when so constituted shall take over and carry on the work of the Inter-Allied Committee on European Post War Relief established in London on September 24, 1941. For such technical standing committees as may be established, in respect of particular problems such as nutrition, health, agriculture, transport, materials and supplies, repatriation and finance, the members may be members of the Council or alternates nominated because of special competence in their respective fields of work. Should a regional committee 80 de- sire, sub-committees of these technical standing com- mittees shall be established to advise the regional committees. 5. The travel and other expenses of members of the Council and its committees shall be borne by the governments whom they represent Regraded Unclassified 133 -9- Article IV The Director General 1. The executive authority of the United Nations Rolief and Rehabilitation Administration shall be in the Director General, who shall be appointed by the Council on the nomination of the Policy Committee. 2. The Director General shall have full power and authority for carrying out relief. operations contemplated by Article I, section 2(a), within the limits of available resources and the broad policies determined by the Council or its Policy Committee. Immodiately upon taking office he shall in conjunction with the military and other appropriate authorities of the United Nations prepare plans for the emergency relief of the civilian population upon the occupation of any area by the armed forces of any Y Locampred of the United Nations, arrange for the procurement and assembly of the necessary supplies and create or select the emergency organization required for this purpose. In arranging for the procurement, transportation, and distribution of supplies and services, he and his reprosentatives Regraded Unclassified 133A -10- representatives shall consult and collaborate with the appropriate authorities of the United Nations and shall, wherever practicable, use the facilities made available by such authorities. Foreign voluntary re- lief agencies may not engage in activity in any area receiving relief from the Administration without the consent and unless subject to the regulation of the Diroctor General. 3. The Director General shall also be responsible for the organization and direction of the functions contemplated by Article I, sections 2(b) and 2(c). 4. The Director General shall appoint such Deputy Directors, other officers, expert personnel, and staff, at his headquartors or olsowhere, including the staff of field missions and secretarial and other necessary staff for the Council and its committees, and may delogate to them such of his powers as he may decm appropriate. Reports of 5 Ament General to council postpound until after was. Regraded Unclassified 134 -11- Article V Supplies and Resources 1. Each member government pledges its full support to the Administration, within the limits of its available resources and subject to the requirements of its con- stitutional procedure, through contributions of funds, materials, equipment, supplies and services, for use in its own, adjacent or other areas in noed, in order to accomplish the purposes of Article I, section 2(a). All such contributions received by the Administration shall be accounted for. 2. The supplies and resources made available by the member governments shall be kept in review in relation to prospective requirements by the Director General, who shall initiate action with the member governments with a view to assuring additional supplies and resources as may be required. 3. All purchases by any of the momber governments, made outside their own territories during the war for post-war relief or rehabilitation purposes, shall be made Regraded 134-A -12- made only after consultation with the Director General, and shall, so far as practicable, be carried out through the appropriate United Nations agency. 135 -13- Article VI Administrative Expenses The general administrative expenses shall be borne by the member governments in proportion to be determined by the Council. The governmental authority of any territory receiving aid from the Relief and Rehabilitation Administration shall in addition place at the disposal of the Administration any sums required in the currency of that territory for local expenditure in the administration or distribution of such aid. Regraded Unclassified 135-A -14- Article VII Amendment The provisions of this agreement may be amended by unanimous vote of the Policy Committee and two-thirds vote of the Council. 136 STRICTLY CONFIDENTIAL August 13, 1942 Relief and Rehabilitation Administration Draft No. 2 The Governments whose duly-authorized representatives have subscribed hereto, Having subscribed to a common program of purposes and principles embodied in the Declaration of January 1, 1942, known as the United Nations Declaration and the Joint Declaration of the President of the United States of America and the Prime Minister of the United Kingdom of Great Britain and Northern Ireland dated August 14, 1941, known as the Atlantic Charter, Being determined that immediately upon the liberation of any area by their armed forces the population thereof shall receive aid and relief from their sufferings, food, clothing and shelter, aid in the prevention of pestilence and in the recovery of the health of the people, and that preparation and arrangements shall be made for the return of prisoners and exiles to their homes, for the resumption of agricultural and industrial production and the restoration of Unclassified 136-A -2- of essential services, to the end that peoples once freed may be preserved and restored to health and strength for the tasks and opportunities of building anew, Have agreed as follows: Regraded Unclassified 137 -3- Article I There is hereby established the United Nations Relief and Rehabilitation Administration. 1. The Administration shall have power to acquire, hold and convey property, to enter into contracts and undertake obligations, to designate or create agencies and to review the activities of agencies so created, to manage undertakings and in general to perform any legal act appropriate to its objects and purposes. 2. The purposes and functions of the Administration shall be as follows: (a) To plan, coordinate, administer or arrange for the administration of measures for the relief of victims of war in any area under the control of any of the United Nations through the provision of food, fuel, clothing and other basic necessities, housing facilities, medical and other essential services; and to facilitate in areas receiving relief the production and trans- portation of these articles and the furnishing of these Regraded Unclassified 137-A -4- these services BO far as necessary to the adequate provision of relief. (b) To formulate and recommend measures for indi- vidual or joint action by any or all of the member gov- ernments for the coordination of purchasing, the charter- ing of ships and other procurement activities in the period following the cessation of hostilities, with a view to integrating the plans and activities of the Administration with the total movement of supplies, and for the purpose of achieving an equitable distribution of available supplies. The Administration may admin- ister such coordination measures as the member govern- ments authorize. (c) To formulate and recommend for individual or joint action by the United Nations measures with respect to such related matters, arising out of its experience in planning and performing the work of relief and re- habilitation, as may be proposed by any of the member governments and approved by unanimous vote of the Policy Committee. Regraded Unclassified 138 -5- Article II Membership The members of the United Nations Relief and Rehabilitation Administration shall be the governments or authorities signatory hereto and such other governments or authorities as may upon application for membership be admitted thereto by action of the Council or the Policy Committee thereof. Regraded Unclassified 138-A -6- Article III The Council 1. Each member government shall name one representa- tive, and such alternates as may be necessary, upon the Council of the United Nations Relief and Rehabilitation Administration, which shall be the policy-making body of the Administration. The Council shall, for each of its ses- sions, select one of its members to preside at the session, 2. The Council shall be convened in normal session not less than twice a year by the Policy Committee. It may be convened in special session whenever the Policy Com- mittee shall deem necessary, and shall be convened within thirty days after request therefor by a majority of the members of the Council, 3. The Policy Committee of the Council shall consist of the representatives of China, the Union of Soviet Socialist Republics, the United Kingdom, and the United States of America, with the Director General presiding. Between ses- sions of the Council it shall exercise all the powers and functions thereof. It shall invite the participation of the representative of any member government at those of its meetings Regraded Unclassified 139 -7- meetings at which action of special interest to such government is discussed. 4, The Council may establish such standing com- mittees as it considers desirable to advise it, and, in intervals between sessions of the Council, to advise the Policy Committee. The members of such committees shall be appointed by the Policy Committee, with the approval of the Council if it be in session, and other- wise subject to its ratification, from members of the Council or alternates nominated for the purpose. Among these committees, the Council may establish regional committees to advise it on the making of plans and formulation of policy for the relief and re- habilitation of Europe, the Far East and of any other areas where such committees may be found desirable. The regional committees shall normally meet within the area and shall include members of the Council, or their alternates, representing the member governments directly concerned with the problems of relief and rehabilita- tion in that area, The Regional Committee on European Relief Regraded Unclassified 139-A -8- Relief when 80 constituted shall take over and carry on the work of the Inter-Allied Committee on European Post War Relief established in London on September 24, 1941. For such technical standing committees as may be established, in respect of particular problems such as nutrition, health, agriculture, transport, materials and supplies, repatriation and finance, the members may be members of the Council or alternates nominated because of special competence in their respective fields of work. Should a regional committee so desire, sub- committees of these technical standing committees shall be established to advise the regional committees. 5. The travel and other expenses of members of the Council and its committees shall be borne by the governments which they represent. Regraded Unclassified 140 -9- Article IV The Director General 1. The executive authority of the United Nations Relief and Rehabilitation Administration shall be in the Director General, who shall be appointed by the Council on the nomination of the Policy Committee. 2. The Director General shall have full power and authority for carrying out relief operations contemplated by Article I, section 2(a), within the limits of available resources and the broad policies determined by the Council or its Policy Committee. Immediately upon taking office he shall in conjunction with the military and other appropriate authorities of the United Nations prepare plans for the emergency relief of the civilian population in any area occupied by the armed forces of any of the United Nations, arrange for the procurement and assembly of the necessary supplies and create or select the emergency organization required for this purpose. In arranging for the procurement, transportation, and distribution of supplies and services, he and his representatives Regraded Unclassified 140-A -10- representatives shall consult and collaborate with the appropriate authorities of the United Nations and shall, wherever practicable, use the facilities made available by such authorities. Foreign voluntary re- lief agencies may not engage in activity in any area receiving relief from the Administration without the consent and unless subject to the regulation of the Director General. 3. The Director General shall also be responsible for the organization and direction of the functions contemplated by Article I, sections 2(b) and 2(c). 4. The Director General shall appoint such Deputy Directors, other officers, expert personnel, and staff, at his headquarters or elsewhere, including the staff of field missions and secretarial and other necessary staff for the Council and its committees, and may delegate to them such of his powers as he may deem appropriate. 5. The Director General shall make periodic reports to the Council covering the progress of the Administration' B activities, These reports shall be made public except for such Regraded Unclassified 141 -11- such portions as the Director General may consider it necessary, in the interest of the United Nations, to keep confidential until the end of the war. Regraded Unclassified 141-A -12- Article V Supplies and Resources 1, Each member government pledges its full support to the Administration, within the limits of its available resources and subject to the requirements of its con- stitutional procedure, through contributions of funds, materials, equipment, supplies and services, for use in its own, adjacent or other areas in need, in order to accomplish the purposes of Article I, section 2(a). All such contributions received by the Administration shall be accounted for. 2. The supplies and resources made available by the member governments shall be kept in review in relation to prospective requirements by the Director General, who shall initiate action with the member governments with a view to assuring additional supplies and resources as may be required. 3. All purchases by any of the member governments, made outside their own territories during the war for relief or rehabilitation purposes, shall be made only after Regraded Unclassified 142 -13- after consultation with the Director General, and shall, so far as practicable, be carried out through the appropriate United Nations agency. Regraded Unclassified 142-A -14- Article VI Administrative Expenses The general administrative expenses shall be borne by the member governments in proportion to be determined by the Council. The governmental authority of any territory receiving aid from the Relief and Rehabilitation Administration shall in addition place at the disposal of the Administration any sums required in the currency of that territory for local expenditure in the adminis- tration or distribution of such aid. 143 -15- Article VII Amendment The provisions of this agreement may be amended by unanimous vote of the Policy Committee and two-thirds vote of the Council. N DUE ПОШЯ KISE 2 DEPARTMENT 144 August 11, 1942. Ky dear Mr. Voodrums Your letter of August . reached here just after the Secretary had left Vashington. I as forwarding the letter to Ma as I know that be will appreciate what you said about his fortheauing visit to Reambe. Sincerely yours, (Signed) H. S. Klotz 1. s, Elets, Private Secretary. Remorable Clifton A. Voodrum, Reamsks, Virginia. File in Diary in GEF/dbs copy of reply 4 sent ong to Secy8/11/42 Regraded Unclassified THE COMMITTEE ON APPROPRIATIONS CLIFTON A. WOODRUM - Dief, — - VA DIANE TAYLOR Congress of the United States - Douse of Representatives Mashington, D. C. Roanoke, Virginia, August 8, 1942. Mr. Henry Morgenthau, Jr., Washington, D.C. My dear Henry: I want to tell you how delighted I am that you are com- ing to Roanoke on the 24th of August in connection with the War Bonds Campaign. I am highly honored' that my constituents are to have the pleasure of entertaining you for a little while, and we are going to give you a warm reception. I also want to direct your attention to "Woodrum Field," the Roanoke Airport, where you are scheduled to land. We think it is one of the finest. Looking forward with great pleasure to your visit, I am Sincerely, your friend, CLIFTON Cliff K. WOODRUM Regraded Unclassified 146 August 11, 1942. Dear Mr. Shafreth: The Secretary is away from Veshington for - a few days' vacation, ml ⑉ 4 - nohnovledg- ing your letter of August 6 in his absense. of course I shall bring 10 to his attention as seen as he is back, and I know that be will appreciate your writing Ma $9 you 444. Sincerely years, (Signed) H. S. Klotz of d Private Secretary. año Mr. Morrison Shafroth, e/o Grant, Shafroth and Tell, Equitable Building. Deaver, Colorade. Shown to the Sery 8/20/20 GEF/dbs for Mice Chamay File in Diary Regraded Unclassified 147 GRANT. SHAFROTH AND TOLL COUNSELLORS AT LAW EQUITABLE BUILDING DENVER, COLORADO August 6, 1942 Honorable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. C. Dear Henry, I am delighted to see that Randolph Paul has been appointed General Counsel for the Treasury Department. He has in a marked degree the expert knowledge of revenue law and the fairness of mind which are so essential to the proper administration of the laws. The relations of the Treasury to the public are so important that a man of the mental attitude and expert knowledge of Paul will unquestionably be invaluable at this time. With kindest personal regards, Sincerely yours, Mamsa Morrison Shafroth Regraded Unclassified Sery 148 I I si I will I fax r di I Division of Pereign Trade Statistics, Attention: Mr. Simpson. I TTE s I I E % E Gold and Silver Reports and Importe for the vosit onling August 12, 1948 - Superb tate Benrer, Gelorado, of approximately 160,000 fine - of sald valued at $5,600,000. This chigness - from Baseta. It will not be covered w my I I (Signed) D. W. BELL D. W. Bell, Under Secretary of the Treasury. Initialed: FD no FD:18:8/11/42 Regraded Unclassified 149 COPY TREASURY DEPARTMENT United States Mint Service New York, New York Office of The Superintendent August 11, 1942 U. S. Assay Office 32 Old Slip Secretary of the Treasury Treasury Department Washington, D. C. Att: Mr. Frank Dietrich Honorable Sir: Referring to your letter of July 30 relative to 28 cases of gold to be deposited by the Federal Re- serve Bank of New York for the account of the Secretary of the Treasury of the United States, Special Account, we herewith enclese 10 copies of Form 42-R, covering this deposit. Respectfully, Superintendent SS/H Encs. COPY:lap-8/14/42 Regraded Unclassified R No. 1040 Form 42A. TREASURY DEPARTMENT, U.S. Mom SERVICE. FO REIGN 051 for the Information of the depositor, and la of no other value. MEMO. REPORT ON (SILVER) GOLD BULLION deposited at the Assay Office of the United States at New York August 5, 1948 , 193 by J. of to Credit of Bear of the I Spee e/o WEIGHT. GOLD. SILVER. DESCRIPTION OF BEFORE MELTINO. AFTER MELTINO. FOREXEM, VALUE VALUE AT CHARGES. FINENESS. NET VALUE. BULLION. Centa per fine OL RUBSIA Ounces. Dea Ounoss. Dec. 1,000ths. Dollars. Cts. 1,000ths. Dollars. Cts. Dollars. Cts. Dollars. Cts. Ref'd Bare 999.6 19 909.8 199.7 998.7 999.8 993.7 do 8 809 $ 999.9 1, 718 00 L'M TO 2,877 Fine SS 992 943 $ 55.90 y net value of the above deposit is payable as follows: $ job. Georgia For the Departatement. BY CHECK, $ Fine Sliver. 028. fine a. - nume - s-all 151 August 12, 1942 MEMORANDUM FOR THE FILES Subject: Telephone conversation with Dr. Herrera of the Cuban Embassy, August 12, 1942 I called Dr. Herrera of the Cuban Embaday regarding the message he had received from his Government on the purchase of gold. The Cuban Embassy has been informed by its Government that Cuba wishes to undertake three gold purchases of $5 million each, payment to be made in United States currency delivered in Havana. Dr. Herrera told me that it was clear to them that they are asking us to make these gold sales apart from the agreement of July 6, 1942. I explained to Dr. Herrera that the first telegram from Havana asked us to sell 85 million of gold against currency, which we agreed to do. The second telegram from Haver's requested us to have $1 million in gold earmarked to the account of Cobe. At the same time, we were asked whether we would agree to two further transactions of 85 million each. It appears from the exchange of telegrams and the conversation with Dr. Herrera that the Cuban Government regards the commitment to sell them $5 million in gold for United States currency as partially filled by the $1 million sale, and that two further sales of 85 million each are requested 80 that total sales would be $15 million. The Cuban Embassy is uncertain whether the $15 million mentioned in their instruc- tions from Havana is intended to include or exclude the recent purchase of $1 million. I informed Dr. Herrera that we would be prepared to proceed with the sale of the first $5 million of gold for United States currency delivered in Havana, but that we should prefer to consider each trans- action separately as the Cuban Government proposes it to us, without commiting ourselves now to undertake further transactions of a similar character. Dr. Herrera informed - that he expects to place the orders for the gold sales from the Embassy in Washington. We have provided Dr. Herrera with the cables to and from Havana. E. M. Bernstein 152 August 12, 1942 MEMORANDUM FOR THE FILES Subject: Conference with Mr. Niemeyer in Mr. White's office, August 12, 1942 In the absence of Under Secretary Bell, Mr. Niemeyer called on Mr. White to discuss the possibility of purchasing the 4 million ounces of ordinary silver held by the Treasury. Mr. Niemeyer stated that the silver was needed for war orders and that the shortage of silver was so great that they were considering closing down some of their operations. Mr. White said that the Treasury is eager to see the silver put into use in the war effort but there are some steps that must be cleared before the silver can be sold, and that the Treasury would like to sell it through such channels as will assure its use in a manner that will contribute most to the war effort. He added that no definite decision had been made yet as to the method of sale, but if there appeared to be any immediate prospect that some could be sold to the trade, we would let Mr. Niemeyer know. Mr. Niemeyer agreed to the desirability of this procedure. Mr. Niemeyer raised the question of how it would be possible to get the Treasury silver stock into use in the war effort. He said he realized that it was a difficult political question. Mr. White said that the principal interest of the Treasury was to see that nothing is withheld that could be useful in the war effort. Mr. Niemeyer then said that he was to see Senator McCarran this afternoon and that he intended to tell the Senator that the long-run interests of the silver producers and silver fabricators were the same; that it was not to the advantage of the silver producers to have pressure put upon the fabricators of silver jewelry and silver- ware. Mr. Niemeyer said he intended to propose that Senator McCarran agree to a bill authorizing the Treasury to sell its silver stocks not used as a backing for currency at the average price at which the Treasury acquired it with the provision that the Treasury repurchase an equivalent amount of silver after the war at a price not in excess of this average price. E. M. Bernstein EMB Regraded Unclassified 153 TREASURY DEPARTMENT PROCUREMENT DIVISION OFFICE OF THE DIRECTOR WASHINGTON August 11, 1942 MEMORANDUM TO THE SECRETARY: There is submitted herewith the operating report of Lend-Lease purchases for the week ended August 8, 1942. Preliminary steps are now being undertaken to obtain from the countries participating in the Lend-Lease program their estimated requirements for the calendar year 1943, which can be used as a basis for appropriation requests as the current allocations expire at the end of this year. Director of Procurement your Clifton E. Mack OBVICTORY BUY UNITED STATES BONDS AND STATE TREASURY DEPARTMENT, PROCUREMENT DIVISION STATEMENT OF ALLOCATIONS, OBLIGATIONS (PURCHASES) AND DELIVERIES TO FOREIGN GOVERNMENTS AT U. S. PORTS AS OF AUGUST 8, 1942 (In Millions of Dollars) Administrative Undistributed & Total U. K. Russia China Expenses Miscellaneous Allocations $1771.7 $1032.4 $447.0 $57.1 $3.7 $231.5 (1775.7) (1024.1) (449.0) (57.1) (3.7) (241.8) Purchase Authoriza- tions (Requisitions) $1416.1 $ 907.2 $450.6 $48.0 - $ 10.3 (1354.9) ( 896.0) (403.5) (48.0) - ( 7.4) Requisitions Cleared for Purchase $1328.1 $ 882.4 $388.2 $47.7 - $ 9.8 (1319.7) ( 876.1) (389.3) (47.6) - + 6.7) Obligations (Pur- chases) $1269.8 $ 868.9 $354.2 $40.2 $1.8 $ 4.7 (1260.4) ( 862.9) (351.3) (40.2) (1.7) 4.3) *Deliveries to For- eign Governments $ 509.4 $ 406.3 $ 81.2 $20.0 - $ 1.9 at U. S. Ports ( 497.7) ( 398.0) ( 77.9) (20.0) - 1.8) #Deliveries to foreign governments at U. S. Ports do not include the tonnage that is either in storage, "in-transit" storage, or in the port area for which actual receipts have not been re- ceived from the foreign governments. Note: Figures in parentheses are those shown on report of August 1, 1942. 154 155 EXPLANATION OF DECREASE The decline in total Allocations in the amount of $4,000,000 was caused by the revocation of $4,500,000 from Services & Expenses fund, which is included under Undistributed & Miscellaneous, and a net decrease of $2,000,000 in Russian Allocations, as against the total amount of new allocations reported for the week. Regraded Unclassified 156 COPY NO. 13 BRITISH MOST SECRET U.S. SECRET OPTEL No. 274 Information received up to 7 A.M., 11th August, 1942. 1. MILITARY RUSSIA. The Russians are making local attacks at several points in the northern and central sectors. The German advance on STALINGRAD has made no appreciable progress. In the CAUCASUS the Germans have advanced further. They have probably reached MAIKOP and are approaching KRASNODAR. 2. AIR OPERATIONS WESTERN FRONT. 9th/10th. OSNABRUCK. 166 aircraft including 88 heavy dropped approximately 300 tons of H.E. and 150 tons of incendiaries besides flares. Although flares were rather scattered the attack developed well and cer- tain known decoys helped crews in identifying the target rather than deceiving them. Several 4,000 lb. bombs were seen to fall in the old town and on the rail- way centra and some large fires were started. 10th/11th. 69 aircraft were despatched - sea mining off East DENMARK 52, anti-shipping 12, Intruders 5. 3 are missing. About 35 enemy air- craft operated chiefly over EAST ANGLIA. EGYPT. 8th/9th. Our bombers attacked TOBRUK HARBOUR and in co- operation with Naval aircraft landing grounds at EL DABA. On the 9th EL DABA landing grounds were again attacked and other bombers operated against shipping in BENGHAZI HARBOUR where one vessel was hit. MALTA. 10th. 3 JU 88's with fighter escort attacked TAKALI aerodrome and damaged 5 aircraft on the ground. 3 German fighters were destroyed. 1 Spitfire is missing. 3. HOME SECURITY 10th/11th. Scattered bombing over SUFFOLK and ESSEX chiefly with incendiaries. 7 persons killed and 50 uried under debris at a mental hospital. Regraded Unclassifie