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Volume 597, December 16 – December 18, 1942
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Volume 597, December 16 – December 18, 1942
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Henry Morgenthau, Jr. Papers
Diaries of Henry Morgenthau, Jr.
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DIARY
Book 597
December 16 - 18, 1942
Regraded Unclassified
- A -
Book Page
Adair, Thomas
See Financing, Government: War Savings Bonds ("Everybody
Every Payday")
Australia
See Financing, Government: War Savings Bonds ("Any Bonds
Today?")
- B -
Bank of America
Downey (Senator, California) asks to discuss branch bank
situation with HMJr - 12/17/42
597
79
(See also Book 598, page 133)
Belgium
See Occupied Territories
Bergman, Alfred
See also North Africa
HMJr tells Mrs. FDR "wise to drop correspondence with" -
12/23/42: See Book 598, page 312
Board of Economic Warfare
For future buying. see Procurement Division
Minutes of meeting - 12/17/42
110,297
a) Discussion of
1) Importation of strategic materials by air
2) "Reimbursable" Lend-Lease
Brown, Prentiss M.
Discusses with HMJr FDR's plans for him to succeed
Henderson as Office of Price Administration Administrator -
12/17/42
72,77
Budget Message
See also Book 594
Conference; present: HMJr, Bell, Paul, Blough, and
White - 12/16/42
26
a) Review of entire tax question or specific
recommendations.
30
b) Conference with Weldon Jones and Gerhard Colm
(Bureau of Budget) discussed by HMJr, Bell, Paul,
Blough, and Haas - 12/18/42
220
1) Blough memorandum
234
c) George and Doughton to be consulted by Treasury
in connection with tax suggestions - 12/21/42:
Book 598, pages 38 and 43
d) Tax program suggestions made by HMJr: Book 598,
page 48
e) Paul suggestions: Book 598, page 50
f) HMJr, Bell, Paul, Haas, Blough discuss Budget
Message: Book 598, pages 51 and 67
g) FDR: material sent to - 12/23/42: Book 598,
page 265
h) Weldon Jones and Gerhard Colm go to Paul's house
to discuss tax features - 12/28/42: Book 599, page 49
1) FDR-HMJr conversation reported to Treasury group -
12/29/42: Book 599, pages 160 and 165
Regraded Unclassified
- B - (Continued)
Book Page
Bullitt, William C.
See Foreign Funds Control: Tubelis, Madame Jadwiga
(widow of former Premier and later Finance
Minister of Lithuania)
- C -
Columbus, Ohio
See Financing, Government: War Savings Bonde
Consolidated Aircraft Corporation - San Diego, California
Labor trouble and effect on Payroll Savings Plan
discussed in Odegard memorandum - 12/18/42
597
266
Correspondence
Mrs. Forbush's mail report - 12/18/42
279
- D -
Downey, Sheridan (Senator, California)
See Bank of America
- F -
Financing, Government
Government securities - recent changes in prices and
yields: Haas memorandum - 12/18/42.
256
War Savings Bonds:
Conference; present: HMJr, Bell, Haas, Murphy, Lindow,
Shields, Woodward, and Buffington - 12/16/42.
1
a) 3-day survey around Columbus, Ohio: 11 communities
visited, population 6,000 to 40,000
1) Large group not reached by Victory Fund
Committee or Payroll Deduction Plan
5
2) Shields' report: Book 598, page 123
Gift Envelopes: Report by Federal Reserve Banks -
12/16/42
47
Music Publisher's Journal: Treasury expresses
appreciation of music contributed - 12/16/42
50
Sales for first 15 days of October, November, and
December - 12/16/42
51
International Printing Pressmen and Assistants' Union
of North America: Thanked for assistance - 12/17/42.
97
"Everybody Every Payday": Uhl-Adair-HMJr correspondence -
12/17/42
101,104
"Any Bonds Today?": Australian version - 12/18/42
260
Consolidated Aircraft Corporation - San Diego,
California: Labor trouble and effect on Payroll
Savings Plan discussed in Odegard memorandum - 12/18/42.
266
Payroll Savings Plan: Analysis as of December 12 -
12/18/42
268
Regraded Unclassified
- 1- (Continued)
Book Page
Foreign Funds Control
Tubelis, Madame Jadwiga (widow of former Premier and
later Finance Minister of Lithuania): Bullitt-Paul-HMJr
correspondence concerning funds for - 12/17/42
597
131
- G -
Gold Mines
Compton White (Congressman, Idaho) reports hardships of
Government order discontinuing: Correspondence with
HMJr, Marvin McIntyre, etc. - 12/17/42
118
Goldman, Julian
Tontine Plan of Insurance for Sale of Bonds: Discussed
in Goldman-FDR-Treasury correspondence - - 12/18/42
247
Government Contracts
See Plant Expansion
Guards
See Procurement Division
- H -
Home Front
Committee "to deal with problem on community basis":
Suggestion to FDR discussed by HMJr, Gaston, White
and Mager - 12/17/42
83,197,213
a) Letter as sent.
218
- I -
Inflation
See North Africa
International Printing Pressmen and Assistants' Union of
North America
See Financing, Government: War Savings Bonds
- K -
Kuhn, Ferdinand, Jr.
Duties outlined and suggestions made - 12/18/42
274
(See also Book 598, pages 12 and 138 - 12/19/42)
Regraded Unclassified
- L -
Book Page
Lend-Lease
United Kingdom:
See also Book 594
British Dollar Position:
Conference: present: representatives of Treasury,
State, and Lend-Lease
597
150
a) Agenda for meeting
184
b) Miss Kistler's memorandum
185
Stettinius tells HMJr Wallace and Byrnes planning
new committee to handle - headed by Wayne Coy -
HMJr repeats conversation to Miss Kistler -
12/22/42: See Book 598, page 164
a) South African situation discussed
1) Memorandum on situation for
Stettinius: Book 598, page 229
b) Oscar Cox-HMJr conversation: Book 598, page 170
c) Acheson-HMJr conversation: Book 598, page 175
d) White memorandum setting forth assets:
Book 598, page 181
e) Wallace-HMJr conversation: Book 598, page 222
f) Conference in Wallace's office; present:
Wallace, HMJr, Hull, Stettinius, Acheson, and
White: Book 598, page 224
Lithunia
See Foreign Funds Control
- M -
Military Reports
British operations - 12/16/42, etc
70,146,
147,299
"America and the Post-War World" - Office of War
Information report - 12/16/42
71
"The War This Week, December 10-17, 1942" - Office of
Strategic Services report 12/17/42
149
Mines, Gold
See Gold Mines
Music Publisher's Journal
See Financing, Government: War Savings Bonds
- N -
North Africa
Danger of inflation discussed in Alfred Bergman memorandum
after conversation with Dr. Somary - transmitted to
Treasury by Mrs. FDR - 12/16/42
62
- 0 -
Occupied Territories
Belgian Government's views with regard to occupation
currency - 12/17/42
145
Office of Civilian Defense
United States Citizens' Service Corps: Handbook . 12/18/42..
271
Ohio, Columbus
See Financing, Government: War Savings Bonds
Regraded Unclassified
- P -
Book Page
Plant Expansion
Government contracts to carry clause making Government
owned facilities available at end of war in connection
with rehabilitation 12/16/42
597
43
a) FDR told by HMJr and Ickes he should look
into entire situation - 12/31/42: See Book 600,
page 101
Printing Pressmen and Assistants' Union of North America,
International
See Financing, Government: War Savings Bonds
Procurement Division
Mack's agenda for discussion with HMJr - 12/18/42
293
a) Determination of requirements
-
b) Elimination of paper work
c) North African and relief clothing programs
d) Treasury rather than Public Buildings Administration
guards for Procurement Division
(See also Book 598, page 2)
e) Board of Economic Warfare buying - Perkins prefers
Procurement to Reconstruction Finance Corporation
f) Work Projects Administration procurement activities -
Liquidation or curtailment of
- R -
Revenue Revision
See Budget Message
- T -
Tontine Plan
See Goldman, Julian
Tubelis, Madame Jadwiga (Widow of former Premier and later
Finance Minister of Lithuania)
See Foreign Funds Control
- U -
Uhl, Richard
See Financing, Government: War Savings Bonds ("Everybody
Every Payday")
United Kingdom
See Lend-Lease
- W -
War Savings Bonds
See Financing, Government
White, Compton I. (Congressman, Idaho)
See Gold Mines
Regraded Unclassified
1
December 16, 1942
10:55 a.m.
FINANCING
Present: Mr. Bell
Mr. Haas
Mr. Murphy
Mr. Lindow
Mr. Shields
Mr. Woodward
Mr. Buffington
H.M.JR: You made a little trip?
MR. SHIELDS: Yes, I did, sir.
H.M.JR: Let's hear about it.
MR. SHIELDS: It was a three-day survey, including
one or more bankers in eleven communities, east, north-
east, and south of Columbus, Ohio, ranging in population
from six thousand three hundred to forty thousand. The
sample is quite small, of course, and the survey included
no community experiencing a war boom. Each town visited
has some manufacturing, but each is also the center of a
substantial agricultural area. The county populations
range from twenty-seven to seventy thousand.
In most of the communities it was not until the
week ending December 7 that the organization necessary
to the drive was even started, and solicitation--
H.M.JR: Did anybody tell Buffington to come up?
MR. BELL: No.
H.M.JR: He should be here.
MR. SHIELDS: Solicitation will not be under way
in any large extent until the week beginning December
14. The sales made before December 14 represent the
use of the same sales techniques as were applied in
Regraded Unclassified
2
- 2 -
the October financing, namely, a few telephone calls by
individuals connected with the Victory Loan organizations
to, mainly, the institutional type of buyer in the
community.
A few investors have responded to the advertis-
ing and come into the banks voluntarily; but the real
test of the selling techniques used for the first time
in the December drive cannot be measured until later
in the month. December is not an easy month in any of
these communities to start 8. drive.
(Mr. Buffington entered the conference.)
H.M.JR: I want you (Buffington) to arrange to
see Mr. Eccles and give him the same stuff Shields is
giving me.
MR. SHIELDS: December is not an easy month to
start a campaign because retailers are busy, and many
cities are in the midst of their Community Chest drives.
But from the point of view of the Treasury's
need for a field sales organization ready at any time
to participate in drives, the December campaign can
be regarded as largely organizational, for it is clear
from the conversations I held that it was not until
the Treasury opened the December campaign that any
effort was made to form a real selling organization.
Therefore, the decision to have 8. December cam-
paign was justifiable, no matter what the results in
that month, for the second campaign can be dealing
more with actual solicitation and less with the
building of an organization.
Some of the regional and county chairmen seemed
to me to be doing a splendid job. Many of them have
worked night and day. They have arranged daily
meetings of salesmen and others. They have worked
with Rotary and other clubs. They have been busy
in selecting salesmen and in preparing a prospect
Regraded Unclassified
3
- 3 -
list, which is very difficult. They must go over
the telephone books. The conventional practice,
apparently, was not to go over the lists of bank
depositors, but, rather, to take the telephone book
and work from that.
The organization ffort from the top seemed to
me to have been a realistic one, for the county
chairmen have been allowed considerable latitude so
that the particular situation in each community could
determine the form of the organization actually put to
use.
Thus in one community the sales effort is
organized by professional and industrial groups. In
another it is built around a particularly active
Rotary club. In another, it may lean heavily on the
labor organizations. In another it may be handled
almost entirely by the investment banking groups; and
in another it may be handled purely by the commercial
bankers. Sometimes the farm organizations are brought
in.
But it would be futile to set up a fixed pattern
of organization because here and there there are no
labor organizations. Some of the farm organizations
appear to be a little unpopular in certain communities,
and they should not be used. In some cities the
Rotary club is not very active and would not be able
to help the Treasury at all.
The banks have been participating splendidly in
the campaign. Their banking floors are full of
advertising. They telephone customers who have funds.
They represent the organization agencies in most
communities. They have spent a good deal of money
in advertising the obligations and handling the
transactions.
The basket, in the view of every individual
interviewed, seemed to include about the right number
and variety of issues for bank and institutional,
Regraded Unclassified
4
- 4 -
as well as for individual investors. However, a survey
of opinion after the drive is over might yield more
reliable information on this point.
I gather that the G's may very well make it more
difficult to sell the two and a half's.
The advertising job is generally regarded as a
good one. The only criticism expressed was with
regard to failure of the advertisements to feature the
whole basket. Most of the advertisements apparently
overstressed the two and a half's, which are difficult
to sell in the smaller communities in competition with
the E's and G's.
Then there was some talk about lack of zip in
the advertisements. The people out on the firing
line seemed to sense that the conventional form of
security advertising would work all right with the
high-bracket investors but that something a little
more popular is desirable if the low-bracket people
are to be brought into the picture.
Next, the talk of forced savings in several com-
munities seems to have frightened some investors, who
interpret that term to mean the conscripting of
present savings.
More than one of the bankers interviewed stated
that some prospects were fearful that if they held
their savings where the Government could lay its hands
on them the savings would be taken away.
While the consensus was that the basket is about
right, the difficulty of educating the salesmen
concerning the various issues in the December drive
might make it a good idea to use the same basic issues
for the next campaign. So more effort could be placed
on selling and less on educating the salesmen.
While the local chairmen are doing a splendid
job in the very short period they had available, they
Regraded Unclassified
5
- 5 -
can do a better job if they are given some professional
assistance between campaign number one and campaign
two.
In one community it might be desirable to lean
a little more heavily on direct mail approach, while
in another it might improve the sales effort to bring
the labor unions or the professional groups a little
more actively into the campaigns.
I think it was a help to a few of the men I
interviewed to find out what some of the other people
were doing. One man said that he had neglected entirely
a very active Rotary club and he- would have a meeting
the next day, at which the whole program could be
given a little zip.
It is clear in all of these communities that one
group of savers is not being reached at all, in either
the Victory Loan Committee or the War Savings Staff
drives.
The former is a very efficient means of reaching
the middle and upper-income brackets. The latter is
effective only in pay-roll deduction.
Many workers, even in the non-boom communities,
such as those visited, have funds which are not reached
with the ten-percent-payroll deduction, and many such
individuals are not on the Victory Committee prospect
lists. Such individuals are believed to have & sub-
stantial amount of funds. They are hard to locate since
they are not on the books of the banks, and in some
cases they are not even in the telephone or the city
directories.
These people whose savings have increased sharply
in the past year or so because of two or three workers
per family, overtime, increased wages, and work for the
first time for the full year instead of just for part
of it, can be reached only through a house-to-house
campaign. Every banker with whom I discussed the
Regraded Unclassified
6
- 6 -
question agreed with that. Even in these non-boom
towns the mal-distribution of the increases in incomes
which originate in the war effort is striking. While
many families have two, three, or even five times the
incomes they had two years ago, there are other
individuals whose dollar incomes are not up at all
and whose real purchasing power andsaving ability has
been curtailed by the rise in the cost of living.
It may be that the mal-distribution of these
increases in incomes is, from the Treasury's point of
view, quite important; for if in bringing the com-
munities savings to the Treasury, forced savings or
tax devices are used which take the hide of the
millions of people whose incomes have not increased
while they leave the chief beneficiaries of the war
effort enough money to increase their scale of living
materially or to spend lavishly at the local beer
parlors, as a great many of them are doing, it is
important.
This mal-distribution of increases in incomes
which I saw in each of these small cities simply
must be allowed for in setting up the next Treasury
drive.
The important thing to me was that I found in
these small non-boom communities further evidence
of the mal-distribution of increases in incomes. We
found this in certain other analyses. I found the
same thing in the Far West States, in Michigan, in
Illinois, and in Massachusetts, where I have taken
the trouble to study the situation a bit.
I have received from the chief employment executives
of a number of the largest corporations in the country,
on a confidential basis, evidence that while thousands
of their employees are making a very good thing out of
the war the white-collar groups are caught between
rising costs and stabilized incomes.
Regraded Unclassified
7
- 7 -
What the Treasury ought to do, in my opinion,
after this survey, is to try to get these increased
incomes into the Treasury by using the techniques
of salesmanship to induce the holders of those in-
creased incomes voluntarily to buy Treasury obliga-
tions.
H.M.JR: Would you arrange for him to see Mr.
Paul, Bell? I want him to tell him about the white-
collar group because in all this question of forced
savings and compulsory savings which they are talking
about they have completely overlooked the white-collar
worker, and he is going to get caught between this
nut-cracker.
MR. BELL: That is right.
H.M.JR: They are talking about this vast sum,
and they want to throw the volunteer plan out, and nobody
is thinking - we estimate there are six million white-
collar workers in the country. I would like him to tell
that to Paul.
MR. SHIELDS: I will be glad to do that.
MR. BELL: I think they have thought of it, but
they have not thought of any way of eliminating them
from that vise. Some fellow had a suggestion that
you take a formula along the lines of the excess profits
formula; you go back to a '39 income, or something like
that.
H.M.JR: He is going to see Eccles. Let him see
Paul. You are going back on the four o'clock?
MR. SHIELDS: I do not have to.
MR. BELL: He is seeing Eccles at two-thirty.
MR. SHIELDS: In one of these communities, Mr.
Secretary, five of the ten plants are working overtime,
three shifts, and five of them are turning out people.
H.M.JR: Turning out people - what do you mean
by that?
Regraded Unclassified
- 8 -
8
MR. SHIELDS: Curtailing their operations, going
completely out of business in the next few months.
H.M.JR: You say they are working three shifts
and then they are going to stop?
MR. SHIELDS: In one town with ten plants, five
of them are working three shifts and five of them are
reducing operations and turning out their employees.
H.M.JR: Turning them off, you mean?
MR. SHIELDS: That is right.
H.M.JR: When you say "out" you mean "off"?
MR. SHIELDS: Yes. It is the calendar industry
involved in this thing.
H.M.JR: In other words, it is terribly uneven?
MR. SHIELDS: That is right. It is far better, it
seems to me, to use a little high-pressure salesmanship
to induce a worker to use most of the increased income
to buy War Savings Bonds or War Bonds, than it is to
put into effect a fiscal program which would require
everyone, regardless of his ability to do so, to put
twenty or thirty percent of his income into War Bonds
or taxes. In the one case no one would be hurt, and
in the other, a good many American citizens may be
forced to cancel insurance, sell their homes, reduce
their assistance to dependent relatives, and reduce
their support of home charities, religious organizations,
or curtail other socially desirable expenditures.
The case for mobilizing for a real selling campaign
to get this money where it is, rather than try to squeeze
it out where it just doesn't exist, seems to me to have
demonstrated to have been a very good one. And it was
interesting for me to see that this mal-distribution
of income is quite pronounced in every one of the communi-
ties I visited.
The next point, the Victory Fund Committees sometimes
include the chairmen of the War Savings Committee. In
Regraded Unclassified
9
- 9 -
certain of the towns visited, the War Savings Committees
do not seem to be as active as they were a few months
ago, or as they ought to be. There has been a little
difficulty because in some cases the Victory Loan
Committees don't know whether or not they could sell an
E Bond, or would be permitted to sell an E Bond, and
because here and there the War Savings Staff feels that
when it gets a man invested in E's, that is all that is
expected of him.
But, in general, the Victory Loan Committees are
promoting E's, because in the small towns, many of
their prospects have not taken their limit in such obli-
gations. I gained the impression that the sales effort
is producing better results in those communities where
the Victory Loan Committees and the War Savings
Committees are cooperating closely.
The next point, currency is flowing out in most of
these communities; but in one of them the trend is in-
ward - week by week the banks in that community are return-
ing funds to the Federal Reserve. In one of them there
was no net in or out flow. In every case the banker
said that his prospect list did not include the people
who hold the currency in his community.
The reasons for holding currency are fear of con-
fiscation by way of forced savings schemes, unwilling-
ness to do business with the banks which have had to
initiate service charges and low rates of interest on
time deposits. Those were cited as reasons for currency
hoarding.
The money in circulation is not evenly distributed
by communities or by individuals in the communities.
It can be gotten out of circulation not, I think, by
warning people against hoarding, for that might merely
advertise the desirability of hoarding, but by having
8 solicitor point out that there is en attractive
alternative available, and that is investment in
United States Savings Bonds.
Regraded Unclassified
10
- 10 -
The more potent the salesmanship for bonds and the
stronger the appeal addressed to the lower income groups,
the more currency will be returned from current circula-
tion.
H.M.JR: How much more have you got? I have another
group out there.
MR. SHIELDS: Just about five minutes, sir. Is that
too much?
H.M.JR: No, I am terribly interested. It is very
valuable. I want that circulated to the wholenine-
thirty group.
MR. BELL: Do you mean his whole report?
H.M.JR: Yes, sir.
MR. BELL: Have you written it up yet?
MR. SHIELDS: No. All I have left, Mr. Secretary,
is some suggestions for your consideration, in connec-
tion with campaign number two.
First is that investigations such as that just
completed in Ohio, Illinois, and Indiana, be conducted
by fifteen to thirty trained investigators covering
every State in the Union in the first two or three weeks
of January, to discover what improvements in drive
technique are called for from the experience of the
December campaign. One of the market research agencies
can do that job for you quite easily. The large adver-
tising agencies can take care of it if you want it done
in that way.
Second, that on the basis of these reports--
H.M.JR: You mean somebody like that man that does
the thing for Fortune - what is his name?
Regraded Unclassified
11
- 11 -
MR. WOODWARD: Roper.
MR. SHIELDS: They could do it.
H.M.JR: Isn't he connected with some agency?
MR. SHIELDS: Yes he is, but I have forgotten which
agency.
H.M.JR: It is that sort of thing--
MR. BELL: He is a sort of poll man.
MR. SHIELDS: The advertising agencies have market
research people who can do this particular job for you.
MR. HAAS: Mike Thompson, or one of those--
MR. BUFFINGTON: J. Walter Thompson--
MR. SHIELDS: The second suggestion, just for your
consideration, is that on the basis of these reports,
a sales manual be prepared, listing the most effective
organizations set up, the sales appeals, the methods of
training salesmen, and so forth.
Next, that the fifteen to thirty investigators
be sent to spend one day with the chairmen of the
largest counties to counsel with them in setting up an
organization. That is not to force uniformity of
organization, but to make sure that each community
organization head knows the chief tricks of the trade.
They don't know them, in all cases.
By all means, and this is sort of an aside - by
all means, something must be done in New York City,
where the condition is one of organized chaos, with the
average of calls on a few prospects averaging about
fifteen, and in many cases, most of the potential in-
vestors not even called at all.
Regraded Unclassified
12
- 12 -
In New York I think we see the futility of using
the techniques developed to sell ten to a hundred
million dollars of utility or industrial issues to the
institutional or to the high-bracket people, when the
Treasury needs ten billion dollars of money in each campaign.
My next suggestion is that the Victory Loan Committee
and the War Savings Committee be brought into one selling
organization, with the chairman of the Victory Loan
Committee and the chairman of the War Savings Committee
serving as co-chairmen of the new committee, but with
the Victory Loan Committee in charge of solicitation of
the larger investors in each community, and the War
Savings Staff in charge of house-to-house solicitation
of all individuals not on the Victory Loan Committee
list; and of course in charge of any further pay-roll
deduction drives, but with both groups selling the en-
tire basket - concentrating, of course, on the securities
its prospects are interested in.
The other suggestion is that consideration be given
to the payment of an eighth to the individual salesmen,
or the house-to-house staff.
Now, in these small towns, I found that the banks
and many business concerns are under-staffed, Mr. Secre-
tary, and are unable to free individuals for door-to-
door solicitation. The Victory Loan Committee people
need not be compensated, for they will be recruited from
the well-to-do people in each community. It is a call
from the bank president to the head of some local indus-
trial concern. But the War Savings Staff salesmen may
be young lawyers, real estate agents, and SO on, who will
do their job better if there is some small compensation.
The larger security houses can, as did Morgan Stanley,
pay an eighth to their salesmen, but the smaller dealers
and the banks in the community simply can't do it.
H.M.JR: Morgan Stanley did?
MR. SHIELDS: Yes. It was also done in certain
other communities in the country.
13
- 13 -
Finally, I doubt if it is desirable for the Trea-
sury to expect an adequate advertising campaign to be
contributed locally. The Treasury needs to advertise
where the prospects are, not where some public-spirited
group is willing to contribute the funds. The advertis-
ing should not be in the form of the conventional an-
nouncement for the people - the masses need to be sold
on the desirability of investing.
Now, my final comment is that I believe a campaign
along the lines I have described will yield ten to
twenty billion dollars per annum from people who will
not be reached through pay-roll deductions or the Vic-
tory Loan campaign type of approach. A successful cam-
paign to sell securities voluntarily to the people who
have increased their savings sharply in the past two
years, and to those who have hoarded currency, may
make it unnecessary to resort to the device of forced
savings in any vicious form.
This campaign, Mr. Secretary, had to be experimental
and organizational, and in the smaller communities I
visited, it was successful in that sense, way beyond
my expectation - so successful, in fact, that I came
back convinced that the directional effort from the
top must have represented one of the finest jobs of its
kind ever done.
H.M.JR: Because I am hurrying, it does not mean
that I don't appreciate what you have done here, be-
cause I do, and what you (Woodward) have done. That
is good work.
Regraded Unclassified
14
December 16, 1942
11:20 a.m.
INCOME TAXES
Present: Mr. Sullivan
Mr. Helvering
Mr. Cann
Mr. Mager
Mr. Odegard
Mr. Kuhn
Mr. Gaston
Mr. Lemmon
Mrs. Klotz
H.M.JR: I am sorry to keep you all waiting, but
I can't help it. Those things do happen once in a
while, even in the Treasury.
Now, let me just read this joint memorandum, which
I have not read yet, if I may. (Referring to joint
memorandum dated December 15, 1942, copy attached.) The
only question is - I did read it once before - "It was
agreed that this program should be separate and distinct
from the work to be done by the Bureau of Internal Revenue
as outlined in the Commissioner's memorandum.
MR. SULLIVAN: Which is here.
H.M.JR: Does that mean that this is separate?
Are they going to dovetail, or is it going to be something
separate again?
MR. SULLIVAN: Mr. Odegard has for you a memorandum
that was prepared by Mr. Wilson and Mr. Long, and they
also recommended that it should be--
(Memoranda from Mr. Helvering, Mr. Wilson, and Mr.
Long handed to the Secretary, copies attached.)
Regraded Unclassified
15
- 2 -
H.M.JR: I can't read all this stuff; the day isn't
long enough. What is it all about, John? Tell it to
me; boil it down.
MR. SULLIVAN: When we met yesterday morning the
Commissioner outlined what the Bureau is doing, and
everybody seemed to be very much impressed with the
extent of the effort to bring this problem home to the
public and to help the public in the preparation of
their returns. I think they were in unanimous agreement
that it would not be feasible for school teachers to
assist the public in making out returns. We felt that
there were other things that they could do, and that
they should be encouraged to give courses of instruction
to their own pupils, and that they should--
H.M.JR: I read all that; boil it down, John.
MR. SULLIVAN: That is it. Now, that is as far as
we feel they should be asked to go.
H.M.JR: Who is going to head the thing up; and who
is it going to clear through?
MR. SULLIVAN: We feel that there is a good deal
of merit in the suggestions Mr. Wilson and up. Long
made. There are some questions in there about financing
it that we have not discussed. We just got this memo-
randum from them this morning. We think there are a
variety of ways in which it could be done. If you want
to go ahead on the basis that is outlined in our memoran-
dum, we will see what we can do in setting it up, a nd we
will submit a report to you.
H.M.JR: I am going to change just a little bit. I
am going to tell you and the Commissioner - I will
hold the two of you responsible that the hundred and
thirty million people in this country know as much as
it is humanly possible to know about how to fill out
their income tax.
MR. HELVERING: Well, Mr. Secretary, if you take the
time to read my memorandum of what we do, then you would
know what we are doing.
Regraded Unclassified
16
- 3 -
H.M.JR: I will, but I can't read it now. I have
it here. I will read it, but I just haven't the time
to work out the details. I started to, and I am going
to withdraw from the field and simply say that these
people are here to assist you, to make suggestions, and
so forth, and so on, but I have to hold Sullivan and
Helvering responsible.
MR. SULLIVAN: That is all right with me, Mr.
Secretary, if you agree with this memorandum that we
can go ahead and do this.
H.M.JR: Don't wait on me for anything.
MR. SULLIVAN: But we don't want any misunderstand-
ing that we are going to use the teachers or anybody
outside the employment of the Internal Revenue Bureau to
officially represent the Treasury or to give actual aid
in filling out an income tax return.
H.M.JR: John, I repeat myself again - a week a go
I was ambitious. I can't do it all; it is impossible.
I mean, I can't just get into it. I am saying to you
and to Helvering that this is your responsibility. I
have made a suggestion. If it is good, use it; if it
isn't, throw it out of the window. But I am looking to
you to see that the people know as much as is humanly
possible about it and are in as good a humor about it
as possible.
MR.- HELVERING: On this suggestion I will say, Mr.
Secretary, that on the suggestion made and outlined in
this memorandum which I have read over this morning,
in certain localities there is some good to be done by
the teachers following this program, in my opinion.
H.M.JR: Guy, I repeat myself again - I was going
to get in and familiarize myself with it. I can't do
it. I haven't got the time. I am just so bogged down
that I can't do it. I made a suggestion; maybe it is
good, maybe it isn't, maybe part of it is good. You
fellows take it. If I find out there are a lot of complaints
Regraded Unclassified
17
- 4 -
afterwards and people say that they weren't told how
to make out their income tax returns, then I reserve
the right to tell you SO. Is that fair enough?
MR. HELVERING: That is all right.
H.M.JR: But the responsibility is with you
two gentlemen.
MR. SULLIVAN: We can't kick about that.
H.M.JR: O.K. Sorry I had to keep you waiting.
Regraded Unclassified
18
MEMORANDUM
December 15, 1942.
TO:
The Secretary
FROM:
Messrs. Gaston, Helvering, Cann, Odegard, Mager, Lermon
and Sullivan.
After a description by Commissioner Helvering of the plans
that had already been made to give public instruction on the filing
of income tax returns (in accordance with the memorandum from
Commissioner Helvering which is attached hereto) it was the conclusion
of the group that the services of certain school teachers (especially
teachers of commercial subjects and social studies) throughout the
country could best be used in the following way:
They should be requested to instruct their own pupils
in the schools and such adult groups as they customarily reach.
These adult groups might include parent-teacher associations, women's
clubs, trade union groups, Americanization classes, etc. The material
which the Bureau of Internal Revenue has prepared for distribution
to daily and weekly newspapers, labor and farm journals plus tax forms
would be made available to these teachers and would form the basis
for this insturction. The advantage of this procedure is that it would
make use of already existing channels and would not therefore necessitate
"
the creation of new machinery for this purpose. It was agreed that this
program should be separate and distinct from the work to be done by the
Bureau of Internal Revenue as outlined in the Commissioner's memorandum.
Regraded Unclassified
19
Memorandum Concerning School Services on
The Reporting of Income Taxes in 1943
From: Howard E. Wilson and Forreat Long
I. Project: The schools of the United States can and should
render service to the Government and the war effort by
aiding the public in understanding the basic principles
of taxation and in filling out income tax returns during
January, February and March, 1943. The schools should
bring to the attention of the public the printed materials
of the Department of the Treasury to serve the groups
filling out tax forms, especially Form 1040 A.
II. Sponsorship: The project should be directed by a national
committee of one representative each from such professional
organizations as the American Association of School Super-
intendents, the National Association of Secondary School
Principals, the National Council for the Social Studies,
the National Council of Commercial Teachers, and National
Council of Mathematics Teachers. This Committee should
meet at the earliest possible moment at the request of the
Secretary of the Treasury. At an appropriate time the
United States Office of Education should be asked to
designate a member of its staff to serve with this Com-
mittee. The Department of the Treasury should sponsor
and finance the project, but the contact with schools
should be through the Committee. The Committee should
Regraded Unclassified
2.
20
make clear to schools and public that the teachers and
administrators cooperating in carrying out this work in
the schools are not official representatives of the
Department of the Treasury. The work of the Committee
should be supplementary to, and officially separated from,
the program of the Bureau of Internal Revenue.
III. Procedure: The national Committee of educators should
issue at the earliest possible moment an invitation to
every secondary school in the United States to participate
in explaining to the public the tax forms and procedures
for 1943. Specifically, secondary schools should be in-
vited to do the following:
a. Designate a teacher or committee of teachers to
act as the local agents for the program.
b. Set aside a room in the school to serve as a re-
source center or clinic where all materials issued
by the Department in explanation of the 1943 taxes
may be assembled. This room should be open to the
public during appropriate hours during January,
February and March. The school should take res-
ponsibility for publicizing the existence of this
room and urging the public to use it. Citizens
coming to the clinic should not be given detailed
advice by teachers on how to fill out their own
tax forms. The teachers on duty should do no more
than point out to a citizen the passages in available
printed materials which relate specifically to his
priblem or should refer the individual to the
representative of the Bureau of Internal Revenue.
Teachers in charge of the clinic should familiarize
themselves with printed materials issued by the
Department and, wherever possible, should have
preliminary instruction by local representatives
of the Bureau of Internal Revenue.
Regraded Unclassified
3.
21
C. The local agents should g ive or arrange to have
given by others explanations of the tax forms to
existing groups and organizations, such as Parent-
Teacher Associations, adult forums, League of
Women Voters, Citizenship Classes, etc. In
addition they should schedule special talks ex-
plaining the simplified tax form for groups of
interested citizens who care to come to the clinic
room for public meetings at designated times.
d. Wherever possible appropriate materials on the
1943 tax situation should be incorporated in the
secondary school curriculum with the expectation
that the explanations will be carried home by
students.
Regraded Unclassified
22
National Council Social Study - Roy Price, Syracuse Univ.
Math. - Rolland R. Smith, H. s., Springfield, Mass.
Residence - 16 Highland St., Longmeadow
Comm. - Carl Puckett, Indiana University
Prin. - Vergil M.-Herdin, Springrield, Missouri
Supt. - Homer Anderson, St. Louis and Treasury
23
COPY
December 15, 1942.
MEMORANDUM FOR SECRETARY MORGENTHAU:
To meet the exigencies of the fortheoming income tax filing period the
Bureau is now completing the material for a greatly enhanced educational
and informational campaign. A printed pamphlet containing 43 short articles
will be sent with a letter from the Commissioner to the managing editers of
approximately 2,200 daily newspapers, the first article to be released on
January 4, 1943.
In addition to the daily newspaper coverage 9 special articles have been
prepared for weekly newspapers and will be mailed with a letter from the
Commissioner to the aditors of approximately 11,500 weekly newspapers. The
first article will be for release the week of January 4th. In the preparation
of these special articles both for the daily and weekly newspapers the Bureau
has departed from strictly technical explanations of the various provisions
of the income tax law and regulations and is presenting them in much simpler
and understandable language which it is believed will have a far greater
appeal to the layman.
The Bureau is keenly aware that many of the new taxpayers on March 15,
1943 will be from the ranks of Labor and therefore has prepared 3 special
articles on problems that are peculiar to the income tax returns of that class
of taxpayers. These articles are in addition to the 43 articles furnished the
daily newspapers. This material will be furnished labor union publications
accompanied by a letter from the Commissioner.
Special material is furnished all farm journals, about 500 in number,
on the subject of farmers and Federal income tax.
The Bureau will prepare and distribute income tax brevities and spot
announcements for the use of radio broadcasting stations, about 900 in number.
Special radio script based on the Revenue Act of 1942 will be prepared for the
use of the 64 Collectors.
The Bureau recognises that many special problems will arise in connection
with the armed forces and is at this time reviewing memoranda prepared by the
Army and the Navy on the subject of income taxes to be distributed to the
military and naval personnel. This material will be reproduced in military
and naval post publications and will cover such special problems as allotments.
The publicity campaign as outlined above will be augmented from time to
time by the release of special material as the need becomes apparent.
On the subject of Victory tax the Bureau is furnishing every employer a
printed circular containing a complete statement of the employer's duties and
Regraded Unclassified
24
- 2 -
Regraded Unclassi
responsibilities under the Victory tax provisions of the Revenue Act of
1942. A poster entitled "Victory Tax Notice to Employees" is being
furnished every employer so that it may be posted at the pay window or in
some other conspicuous place in order that the employees may be aware of the
requirements of the 1942 law imposing & Victory tax. A poster "Notice to
Employees" containing more detailed information respecting the withholding
of the Victory tax was released on October 30, 1942. Special radio material
on the subject of Victory tax is being prepared for use in the latter part
of December. Special press releases on the subject of Victory tax will be
made available the latter part of December.
In a letter dated December 3, 1942, Collectors were instructed to dis-
tribute the leaflet "To Employers of Eight or More" with the request that one
of the leaflets be placed in the hands of each employe.
It is the practice each year for Collectors to augment the publicity
initiated by the Public Relations office of the Treasury and the Public
Relations office of the Bureau by arrenging with local newspapers and radio
stations for an expansion of the Department and Bureau publicity.
To further facilitate the filing of returns the Collectors' offices and
Division offices have been expanded from 94 to 448. The opening of these
additional offices will undoubtedly relieve congestion particularly in the
metropolitan collection districts. These new offices will also facilitate
the distribution of forms, the handling of mail and the furnishing of informa-
tion to the public.
The Bureau has requested each employer to post in a conspicuous place a.
notice containing the date that & deputy collector of internal revenue will be
available to assist taxpayers in preparing their returns. Employers have
also been requested to assist in the distribution of blank forms to individuals
liable for the first time for the filing of at income tax returns. of course,
all employees who filed returns for the year 1941 will receive blank return
forms from the Collector.
The Bureau, through its Collecters, will arrange with Post Commandate
for the assignment of deputy collectors to assist military and naval personnel
in the preparation of their returns. In the rural areas itineraries of deputy
collectors are furnished the public through the daily and weekly papers and
notices are also posted in conspicuous places in the post bffices.
You will recall that our force of field deputy collectors is being in-
creased from 5,579 to 7,979. This force during the filing period is available
to the general public throughout the country including taxpayers residing in
the urben and rural areas. The revenue agent force of approximately 3,700
25
-3- - -
is also available and to the extent necessary may be assigned to the function
of assisting taxpayers in the preparation of their returns.
The Bureau, in accordance with its established practice, will keep
Collectors' offices open at night during the latter part of the filing period
for the convenience of the taxpayers.
I have every confidence that the Bureau with its increased personnel
will be able to furnish the service to which the taxpaying public has become
accustomed.
Guy T. Helvering
/a/ Commissioner
26
December 16, 1942
3:20 p.m.
TAXES
menap-
Present: Mr. Bell
Mr. Paul
Mr. Blough
Mr. White
Mrs. Klotz
H.M.JR: Can someone tell me what this meeting
is for? (Laughter)
MR. PAUL: You called this meeting; I am glad you
don't know. (Laughter)
H.M.JR: This is the third time poor Blough has
come here and been kicked out today. He comes in, and
I say, "What are you here for, Roy?" (Laughter)
MR. BLOUGH: It was a mistake. Apparently my
name got on a piece of paper along with those of some
other people who were supposed to be here.
MR. PAUL: Here is what happened: you asked us at
the Monday meeting to get something together for the
President's Budget Message.
H.M.JR: And you are not ready this afternoon?
MR. PAUL: I would not say that we are not ready.
I would not admit that. I have been before too many
Congressional committees. We thought something up. (Laughter)
H.M.JR: I bet you did. (Laughter)
MR. PAUL: I criticized it so much that a completely
different article is produced, and we are less satisfied
with that. We were thrown for a loss - in other words,
Regraded Unclassified
27
- 2 -
we are less satisfied with that than we are with the
first one.
MR. BLOUGH: In other words, we have two drafts,
neither of which we like. (Laughter)
H.M.JR: I want something right now. (Laughter)
MR. BLOUGH: Here is the shorter draft and the one
you will enjoy reading.
MR. PAUL: That is the one I like the least.
H.M.JR: Roy is good; where was he--
MR. BLOUGH: Yesterday I was at Harvard and I
heard two eminent men say, "If you don't get a sales
tax by Treasury sponsorship, you are--"
H.M.JR: Put them away. Let me tell you fellows
something; I saw the President of the United States,
and I could tell - Mr. Bell will bear me out - you
were the Acting Director of the Budget for four and a
half years, up to three months ago, weren't you?
MR. BELL: Up to three years ago.
H.M.JR: But you finally got formal acceptance,
didn't you?
MR. BELL: Yes, that is right.
H.M.JR: And the President - I could tell by the
look on his face that he hadn't seen the budget, and
didn't know, and didn't care. He gave me the usual
thing, and I said, "Now, when do you want to take this
up, Mr. President?" He said, "Not before Christmas."
You know what that means.
MR. BELL: That means the 28th of December.
H.M.JR: I said, "That is wonderful," and then I
said, "Now look, Mr. President, the line we are working
Regraded Unclassified
28
- 3 -
along is to lay down what the formula is without any
specific recommendation." He said, "That is fine,
that is what I want."
Now then, they have got me all switched around,
Cabinet tomorrow afternoon, which leaves me - I could
go to the BEW meeting tomorrow morning, or I can't.
I gather there is nothing very important--
MR. WHITE: I don't know what it is.
MR. BELL: Have we heard?
H.M.JR: Yes.
MR. WHITE: We are talking about the BEW. The
other one is Friday.
(Lieutenant Commander Stephens entered the con-
ference temporarily.)
H.M.JR: What did they tell you that the BEW meeting
was about tomorrow morning?
LT. COMDR. STEPHENS: That was on - air transpor-
tation was one of them, and the other had something to
do with fiber, but I had better check.
H.M.JR: That is what you said. There is no reason
why I should go up on the Hill on that, is there?
MR. PAUL: On what?
H.M.JR: This is BEW, air transportation and fiber.
MR. WHITE: There was a meeting scheduled which was
not held--
H.M.JR: Go ahead, Steve.
LT. COMDR. STEPHENS: They will have the same agenda
as last week, on fiber and on air transportation.
MR. WHITE: That is what is recorded. I gather
that there was scheduled to be either a love feast or &
Regraded Unclassified
29
- 4 -
knockdown drag-out fight between Jones and BEW on
matters that were up before the committee.
H.M.JR: What I am getting at is, I could do this
thing, depending upon whether you fellows get ogether -
I could do it tomorrow morning - I have press, but that
is all. Or, I have all of Friday afternoon.
MR. PAUL: Make it Friday afternoon, because I
have to be away tomorrow.
H.M.JR: All right.
MR. WHITE: I think you ought to go up to that
meeting. I don't think you have been there since almost
the first meeting.
H.M.JR: All right. Why not say three o'clock
Friday, taxes. Now, when you gentlemen come in then,
please have people look at the thing, including Mr.
Gaston.
MR. WHITE: In a wee small voice, I made arrange-
ments to go to New York to deliver a kind of a talk
in 8. round-table discussion Friday night, and I would
like to leave on the one o'clock train.
H.M.JR: All right.
MR. PAUL: We will show it to you before.
H.M.JR: And you can file your usual minority
report, Harry. (Laughter)
MR. WHITE: If it is a minority report, I am liable
to cancel the round-table. (Laughter)
H.M.JR: I am just asking you - you can have me
either time.
MR. WHITE: That is perfectly all right with me.
Regraded Unclassified
30
- 5 -
MR. PAUL: Have it Friday morning if you want it.
H.M.JR: No, White has called & meeting for nine-
fifteen on Friday morning.
MR. WHITE: Which will take about three-quarters
of an hour or an hour.
H.M.JR: Then it is for Friday; and Harry will
be here if he thinks he is going to miss something,
is that right? (Laughter)
MR. BLOUGH: There is the question of whether -
if you reacted to any of this material now, it would
help us between now and Friday, or would you rather
not react?
H.M.JR: I don't mind reacting if you in your usual
concise manner can state the pros and cons, Roy.
MRS. KLOTZ: May I be excused?
H.M.JR: That is what Roy Blough does to you? (Laughter)
(Mrs. Klotz left the conference.)
MR. BLOUGH: I think the first question is how long
should something of this kind be.
H.M.JR: It isn't how long, but how good.
MR. BLOUGH: Second, should we try to go through
the whole question of taxes, or should we limit our
discussion to some narrow point like this fiscal - this
inflation - economic effects.
H.M.JR: I tell you what I think we should do - I am
thinking out loud - I think we should start the thing -
it doesn't make any difference whether the Director of the
Budget does it or not - at least we can do it. I got the
best piece from Robert Nathan - my gawd, he covered man-
power, war production, and everything else on two-thirds
of a sheet of paper, every darned thing. Itwas amazing
what he packed on two-thirds of a page.
Regraded Unclassified
31
- 6 -
What I think we should do is to simply start in
something like this - I don't know whether you are
covering '43 - twelve months or eighteen months, whatever
the period is - I should simply state the problem. I
don't care whether you say to do it the way I have it
on the piece of paper here, or whether you want to talk
in terms of national income paid out, or whether you
want to talk in terms of total productivity of the country.
I think you have to decide it. Certainly the way it is
here - the national income paid out is going to be for the
calendar year of '43, a hundred and twenty-five billion,
deduct fifteen billion of taxes and you get a net of one
hundred and ten. The volume of consumer goods and services
available for civilians is seventy billion dollars, and
normal savings are twenty-five, which leaves a net gap
of fifteen. Then you point out, that out of the hundred
and ten billion net paid out to individuals--
MR. BELL: For which there is only seventy bil-
lions of goods.
H.M.JR: ... you get your relationship of a hundred
and ten to forty. In other words, out of the relation
of four to eleven you get to save four dollars out of
every eleven - that is the problem.
MR. PAUL: Then pass on to the constructive hand-
ling of the problem, that the answer to that is, we must
absorb something additional by saving or by taxes. I
think one more point ought to be in it which we have in
there; which is that you don't solve your problem by
saving or by taxing, except on a net basis. You must
accomplish an additional saving, and you don't accomplish
anything by transferring one saving to another form.
MR. BELL: In other words, forty billion is the
problem, not fifteen.
H.M.JR: Forty is the problem.
MR. PAUL: He doesn't want to go into any particular
type of tax, does he?
Regraded Unclassified
32
- 7 -
H.M.JR: I gather not. I didn't quite understand
what he was saying this morning. What he was trying
to say to me this morning was that we in the Treasury
never made recommendations. The newspapers always said
we did, and they always put us in that position. We
simply went up there to make suggestions. But I mean,
I could not quite follow it. The net result that I
got when I spoke to him was that he wanted us to state
the problem, you see, and not give them, for instance,
these four alternatives. I didn't even raise that -
that we gave to Jimmy Byrnes.
MR. PAUL: He doesn't want to go into the remedies,
he wants to state the problem.
H.M.JR: I gather that he wants to say, and I have
been over this a number of times with him, "All right,
Congress, now I have stated a problem, and I put it in
your lap. Now it is up to you to say how this thing
should be done.
MR. WHITE: I think that is probably wise, because
if he does that, then Congress is confronted immediately,
not with finding fault with what he says, but they have
got nothing to shoot at. They can't spend all their
time by appearing to be righteous and picking a fault
with his particular proposal. They are immediately
saddled with the idea of coming forward with a proposal
themselves and creating - they are confronted always
with that figure, that magnitude which they must meet.
It seems to me that that is smart tactics.
MR. PAUL: On the other hand, it has the disadvantage
of its advantages because it will be a lack of endorsement
in anything that we do.
MR. WHITE: I think that is a secondary--
H.M.JR: He doesn't want to do it, and I am recom-
mending to him that he doesn't do it. What I said in
so many words is that every time we put forth something
we become the target. I mean, putting together - I have
Regraded Unclassified
33
- 8 -
talked with him about this thing two or three times.
This time what he wants to do is to state the problem,
put in the Congress's lap and say, This is the
thing that has to be corrected; what are you going to
do about it?" I think he is right, and I am urging
him to do that.
Maybe they will come forward with a sales tax.
O.K. Then we shoot at that.
MR. PAUL: What does that mean in terms of whether
we make any recommendations later in January?
H.M.JR: I can't tell you, Randolph, for this
reason, and I am not holding anything back from you,
because, by golly, this time neither you nor I are
going to go up there until I can try to get the President
to make a public commi tment.
Now, there is no use. I have been here ten years.
I have had some very able people associated with me,
of which you are amongst the able ones, on the tax prob-
lem, and Mr. Blough; and we can sit here and do the thing
that we think is right and just and fair and then we
don't get the right backing. It isn't only the - I
told you this morning that labor has never given us any
backing. I mean, they talk about it. By gawd, the only
thing that labor did was to force the President's hand
on the twenty-five thousand salary thing, and it has
done him more harm throughout the country and throughout
the Congress, and it has weakened his position.
When it comes for labor to go and say, "By gawd,
we can't have this oil-well depletion, and we should
not have this thing on future tax-exempts -" what did
William L. Green do? He just cut our throat, and CIO
has never made a fight. You say this time they are
going to - well, I am from Missouri; I would like to
see it. I am going to play this thing differently this
Regraded Unclassified
34
- 9 -
time. I want to first get the best kind of a plan we
can by talking to everybody at this end of the town,
and we will make up our minds what is the best and tell
the President we want to see him, and he can invite
anybody he wants to. We will see if we can get him
definitely nailed down on some kind of a program. Then
the next move is to sit down with the Democratic leaders
and get an agreement with them, then with the Republican
people, and do the fighting at this end before we go up
on the Hill and spend five or six months and have every-
body get a heart attack or something.
MR. PAUL: Sure, it is probably adding five years
to my life.
H.M.JR: Is there anything new about what I am
saying now?
MR. PAUL: No.
H.M.JR: I have told you this now for weeks.
MR. PAUL: Yes, but I wanted to crystallize this
last idea of yours in terms of what we do in general.
H.M.JR: I want to say that I realize perfectly
the risk that we are running, but we are not running
any more risk, because if the Congress wants to give
us a sales tax or does not want to give us & spendings
tax, they are going to do it anyway. The only difference
is we are going to save three months.
MR. BELL: That might be important.
Regraded Unclassified
35
- 10 -
H.M.JR: Which will be important.
Now, I will tell you something else. I am literally
scared to death of what we are facing in this coming year
in the way of reduction of goods.
Now, I have gone all through this thing with Nelson;
I have gone all through the thing with Robert Nathan; I
have gone all through the thing with General Somervell;
and I am convinced that they are going to go through with
it. They are convinced they need it, SO I am not going
to raise the point. Fortunately, I told that to Somervell
before the President had his four o'clock press conference
yesterday.
They say they need these men; they say it is a
military necessity; and they say that they can produce
these goods - that they can produce ninety billion
dollars' worth of goods in the calendar year '43.
Somervell says it may be ninety-five billion dollars'
worth. You deduct fifteen from that for soldiers and
sailors pay--
MR. PAUL: That is outside of non-war?
H.M.JR: He is talking just war - ninety to ninety-
five, including the pay of the soldiers, and everything
else.
MR. PAUL: That means a budget of ninety-six or
ninety-seven billion.
MR. WHITE: No, no, it means a budget of over a
hundred; if he reaches ninety-five, it means B. budget of
a hundred and two.
H.M.JR: I have gone all through this thing, and
to talk a little bit longer - I take it I am helping
to clarify--
MR. BLOUGH: Very much so.
Regraded Unclassified
36
- 11 -
H.M.JR: I had a very stiff talk with the President
this morning, and he took no objection to it. I told
him he had to get somebody - a warm, close friend - who
will organize some group in the Government to work on a
community basis to counteract this tidal wave of resent-
ment which is flooding the country on account of all
these rules and regulations which are improperly explained
to them.
MR. PAUL: And not too well executed.
H.M. JR: Well, I told him I could go into any
community, if he would give me time enough, and explain
the war - whether it took & day or a week - and the
community would be satisfied, if & person would sit down
and talk to them.
Then the President tried to put it that - well, it
was the local rationing boards that were not functioning.
I said, "Mr. President, you are wrong. The country
is smart enough. They are blaming you and me and Hopkins
and the rest, who are close to you. They are not blaming
the local rationing boards." He did not brush me off, or
say he had B. plan, or say he had thought of it.
MR. BELL: He will say that next week. (Laughter)
H.M.JR: No, he took it in very good stead. So I
am just saying to you people that you do not have to
impress me with what it means. I mean, I am trying to
buy a fountain pen for my son now. It is next to im-
possible. That is just nothing to what it will be
six months from now. The country is not prepared for
it, and we are not prepared for it on taxes.
MR. PAUL: Not prepared for it psychologically,
that is right.
H.M.JR: And I am going to keep after him and keep
after him, until he boots me out of the White House or
does something about it. I am going to put my teeth
Regraded Unclassified
37
- 12 -
into this thing, because I told him - I said, "Mr.
President, if you don't do something, the same thing
will happen to you that happened to Woodrow Wilson.
I didn't pull any punches any more than I would talking
with Danny Bell, or you (Paul). It was a heart-to-
heart talk. You know how he resents it; he shuffles
around or reaches for papers. He took it very well,
and there was none of that. He took no objection to
what I said.
I said, "How would you feel about my talking to
Hopkins about this?" He said, "I would love it. I
wish you would."
MR. WHITE: Hopkins has just gotten much the same
from another source, so it will be all to the good.
H.M.JR: So you gentlemen don't have to - I have
been in one community. I have seen the two men that
will have as much to do with this as anybody - who will
decide this thing - Somervell and Nelson - and I am
convinced they are going to go through with this thing.
I am convinced we are going to have the forty billion
dollars, and I am convinced we have got to do something
about it. But my own feeling is - I am urging the
President to state the problem and put it in the
Congress's lap.
MR. BLOUGH: You wouldn't want the budget to show
a figure of new taxes, or anything like that?
H.M.JR: No.
MR. BELL: The Budget will want to put in the
figure like they did last year - the seven billion -
as part of their financial setup.
MR. PAUL: We will have to have some figure there.
MR. WHITE: Look at the position Congress will be
in if it is made - and I presume it will be made - so
clear what the magnitude is. They have got to sit down
Regraded Unclassified
38
- 13 -
and find some way of doing it. And the first thing
they are going to do is they are going to call on you,
and say, What do you recommend?" The minute they do
that you are in a better position already because then
you can say that Congress has asked you to recommend,
and you can go around town and get agreement and say,
"Let's present 8. united front on something. If Then you
say, "You asked me to recommend it. Here it is."
H.M.JR: I will tell you why I don't think they are
going to use 8 tax figure, and I hope they don't.
Harold Smith told me the other night when he was here that
they were not putting any figure in for the Army and Navy.
MR. BELL: I heard that subsequently, but not from
Harold.
H.M.JR: He told it to me himself.
MR. BELL: The budget will be incomplete.
H.M.JR: So if they don't put any figure in for
the Army and Navy, why do they have to put a tax figure
in?
MR. BELL: They don't have to if that is the case.
H.M.JR: Harold Smith said there was no figure for
Army and Navy. If they don't, I would recommend to the
President they don't put a tax figure in.
MR. PAUL: It is much better, because it is either
taxes or savings.
MR. WHITE: And/or.
H.M.JR: I think what you should do, if you have
time between now and Friday, is to call up Harold Smith
and say, "My boss told me that there isn't going to be
any figure for Army and Navy; if that is correct, we
hope you won't put any tax figure in." Will you do that?
Regraded Unclassified
39
- 14 -
MR. BELL: That is new taxes?
H.M.JR: Yes. Where are the five of us apart in
our thinking?
MR. BELL: I think we are all right. What are we
going to do about getting agreement between this end of
the Avenue and the other end of the Avenue before any-
thing goes up? When we talked the other night we thought
we would have everybody around town together, and the
second step would be Doughton.
H.M.JR: I have an answer to that; old man Doughton
gave me the answer in the plane. He said, "Henry, I
have got to pick six new Democratic members of the Ways
and Means, and until I get them picked, and have got
my committee organized, I won't be ready."
He said, "When I am ready, I want you to come up
and sit down, and I will talk with you, which means--
MR. BELL: The first of February.
MR. PAUL: That is all right.
H.M.JR: Does that take care of Mr. Paul?
MR. PAUL: Yes, sir, except one thing.
H.M.JR: They won't be organized until the 15th
of January, easily, will they?
MR. BELL: I should not think so.
MR. PAUL: The 15th is a conservative date for that.
They are going to have a terrible fight about it.
H.M.JR: Six new Democrats.
MR. PAUL: The republicans are going to try to get
increased representation over what they had proportionately,
before.
Regraded Unclassified
40
- 15 -
H.M.JR: Does that help you any?
MR. BLOUGH: Yes.
H.M.JR: I think that is smart. I think it is
different, but I think it is smart; and as Harry says,
then they have got to say, "By gawd, we have got to send
for the Treasury and find out what they have in mind."
MR. BLOUGH: We want to be prepared so when they do
that we don't wait.
MR. PAUL: We will be prepared - better now than
we ever were before.
MR. BLOUGH: If there are any differences, that is
where they are going to show up.
MR. WHITE: At that point you have sort of a mandate
to clear with the others. We will go to the others and
say that we have been asked for something.
MR. PAUL: We will have to clear with the others
long before that.
H.M.JR: We have to clear with ourselves, too.
MR. BELL: To get agreement at this end is going
to be difficult.
H.M.JR: I mean, here in the Treasury.
MR. BLOUGH: This really postpones the problem, in
a way.
H.M.JR: Yes and no. After all, Roy, I can only
move as fast as the President does. Now, I saw him this
morning - I had this talk with him, and I have confirmed
what he said. I found that there was not this rush, and
it gives us a chance to put it in his hands, certainly
by Saturday.
Regraded Unclassified
41
- 16 -
MR. BLOUGH: I feel fine about this, Mr. Secretary,
but I think we ought not to have any illusions about the
fact that we still have to face the hard problem of
making up our minds.
MR. BELL: This budget won't go up until the 8th.
H.M.JR: It isn't 80 hot.
MR. BELL: They probably won't have a budget con-
ference on this message until after the first of the
year. He is going to address the Congress on the 7th.
H.M.JR: We have got the time, and, frankly, I need
& little time. I am thinking on the thing all the
time. I mean, it is never out of my mind, and I had
to first convince myself that we were going to have this
ninety billion dollar program. Now I am convinced we
are. There is no fooling about it, but I am convinced
they are going to go through with it.
MR. WHITE: Is it possible to initiate any kind of
an investigation or a survey by one of the agencies
that you are using - Miss Elliott or some one else -
it is not clear in my mind just how it could be done -
to see if we can get some kind of a sampling, or some
kind of information as to just what the situation is
with regard to consumers' goods. That would provide
some check on the figures. You say, for example, you
have tried to buy things.
The survey could be made after Christmas. The
Christmas season will be impossible, but sometime after
Christmas it would be worth it if you could spend quite
a little money to pick sample spots in the country.
They could go to wholesalers and to jobbers and see what
they have got on the shelves.
H.M.JR: Likert can do it.
MR. BLOUGH: There is a lot of stuff currently in
the Wall Street Journal of that kind. We could supple-
ment that.
Regraded Unclassified
42
- 17 -
H.M.JR: That can be done.
MR. BLOUGH: It should be done. The reason the
people aren't interested in all this, and haven't been,
is because they have not felt any pinch.
H.M.JR: Don't you feel any pinch on buying food?
MR. WHITE: Food is justterrific. The last couple
of times--
H.M.JR: I understand it is very difficult.
MR. BELL: There are lots of things you cannot buy.
You can't buy things like canned pumpkin.
MR. WHITE: You can't buy canned beans.
MR. BLOUGH: In New York, chewing gum - when you can
find it - is one package to a customer.
H.M.JR: Anyway, we will continue.
Does this help you a little bit?
MR. PAUL: This helps a great deal.
Regraded Unclassified
43
MEMORANDUM
December 16, 1942.
TO:
The Secretary
ILS
FROM:
Mr. Sullivan
You will recall that this afternoon while we were dis-
cussing the tax difficulties of the Glenn Martin Company involving
disposition of government owned facilities at the end of the war,
you expressed deep concern that all of these government owned
facilities be available for the construction of any articles needed
by the United States government for use here in America or for use
in foreign lands where we were attempting to rehabilitate invaded
populations. You spoke about the possibility that Governor Lehman
might need these particular facilities in which to manufacture
knock-down houses for shipment abroad.
Immediately after our conference I phoned the Internal
Revenue Bureau and asked them to draft language for this particular
contract which would effectuate your purpose. I also asked them to
meet with me tomorrow to draft general language to be inserted in all
future contracts by the War and Navy Departments. When this language
is prepared I will submit it to you. If you approve, I suggest. that
1 then discuss this matter with the War and Navy Departments in an
attempt to secure their agreement that this safeguard be inserted in
future contracts involving additional plant facilities paid for by
the United States government.
Regraded Unclassified
44
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
Secretary Morgenthau
December 16, 1942
FROM
Ferdinand Kuhn, Jr.
Mr. Doughton inserted your speech at Winston-
Salem and his introduction of you in the Congressional
Record yesterday.
J.K.
Attachment.
45
A4652
CONGRESSIONAL RECORD-APPENDIX
DECEMBER 15
War Savings Campaign
yourself and your family's security in the
days to come-in the days when American
in every State at the start or our second year
EXTENSION OF REMARKS
Industry quita producing the implements of
of war. I have come here tonight to pay my
war and begins to produce egain the goods
tribute of appreciation to the workers and
OF
We need in our daily living.
employers of North Carolina for their pars
HON. ROBERT L. DOUGHTON
We are honored and happy to have the
in the War Savings campaign. But in pay-
Secretary of the Treasury as our principal
log my tribute to them 1 want also to pay is
speaker on this grest occasion, We in North
to the workers and employers of the United
OF NORTH CARILINA
Carolina are especially hundred that be la
States as a whole.
IN THE HOUSE OF REPRESENTATIVES
going to speak to us and the Nation frum
Greas as our war effort this year bas been,
Tuesday, December 15, 1942
here in Winston-Salem, . great Industrial
however, we are just beginning to fight. Wai
city,
are just beginning to show what this coun-
Mr, DOUGHTON. Mr. Speaker, un-
He and I are long-time friends and DO-
try of 130,000,000 people can do when it puts
der leave to extend my remarks in the
workers in our Joint efforta to raise money
all its heart and mind and muscle into a
RECORD I include a speech made by Hon.
to carry on the Government. Our responst-
single job. This beginning of ours in 1042
Henry Morgenthau, Jr., Secretary of
Ullities have been greatly accentuated since
has already produced outstanding patrious
Federal expenditures have become so stu-
service to many fields, in this community
the Treasury, at Winston-Salem, N. C.,
pendous for war purposes.
and every community.
Saturday evening, December 12, at the
I have never known a more devoted or
Take, for example, the pay-roll savings pro-
awarding of flags to firms who had gone
fulthful public servant. He is a friend of the
gram in which your to North Carolina have
over the top in the bond saving program,
peóple, He la a patriot in the Roast setise,
made such an enviable record. Every large
or firms 90 percent of whose employees
The Onancial burdens he shoulders are the
factory In the State now has A pay-roll ar-
had participated in purchasing War Sav-
most gigantic in history.
Ings plan. In those facturies 99 percent of
ings bonds.
I have the high honor to present to this
all the workers are investing in War Bonds
I also include the address I made pre-
great audience the able and distinguisbed
week in and week out, by setting aside
art
senting the Secretary of the Treasury
Decretary of the Treasury, the Honorable
of their regular pay.
Henry Morgenthau, Jr.
upon that occasion:
In the Nation 04 a whole there were only
700,000 workers on the pay-roll advings plan
ADDRESS OF BOUERT L. DOUGHTON, OF NORTH
ADDRESS OF HON. HENRY MORGENTHAU, Jill,
& year ago, and they were Investing miy
CAROLINA
DECRETARY OF THE TREASURY
percent of their esrnings every pay day. To-
Mr. Teastmaster, Secretary and Mrs. Mot-
day more than 24,000.000 workers are setting
genthau, Governor and Mrs. Broughton, die-
I am happy to be speaking sonight in the
aside an average of 8% percent of their pay,
tingulatied guesta, ladies and gentlemen,
home State and in the home community of
so our soldiers and sallors and Bywrs can have
tonight I am highly honored to appear before
one of America's outstanding legislatore-
the wespons they need. This is an achieve
this splendid assemblage et North Caroliniana
my old friend, the chairman of the Ways and
ment "over here" that will give encourage-
in Winston-Salem and before the thousands
Means Committee of the House of Represen-
ment to our Allies and to our fighting men
of other patriotic Americans listening in
tatives, the Honorable L. DOUGHTON.
at buttle stations all over the world.
from every Blate-all with the DOB purpose of
No other committee In Congress carries a
We could never have achieted this success
doing our best, wherever we are and la
beavier burden of responsibility, for this la
without the untiring effort of our 300,000
every way we can, to win the war.
the committee that originates all tax legis-
volunteer workers who have been the un-
In every war of our great Republic, our
Intion.
sung heroes in this grand enterprise. Day in
Commonwealth, as well as this community,
Boa DOUGHTON and I have shared many
and day out our labor-management timmit-
bas been in the forefront of the battle when
labora together during these recent eventful
tees, of which there are many thousands Et
and where duty called.
years. We at the Treasury are Indeed for-
the Nation today, have also contributed, not
Our Nation has accepted the challenge to
tunate to be working in partnership-as be
only to the speeding up of production, but
our democracy, our liberty, and our lives by
himself described It only a moment ago->
to the of the war-savings effort as
the most brutal gangsters, who have ever
with a chairman who takes his responsibili-
well.
tried to overlord the human race and pollute
time so anriously in these grave days. And I
It La my firm belief that the good will
the stream of civilization.
think the taxpayers of the country are equally
created by the pay roll savings plan has been
Our boys are already In the thick of the
fortunate in having tax legislation originate
felt all along the production line, and will be
fight on all the fariling bettle fronts of the
under the leadership of a man like Bos
falt for years to come. I like to feel that
world. Hundreds and hundreds of thousands
DOUGHTON, who La 80 devoted to his country
the new relationship between labor and
more will soon be on the way. They know
and the welfare of its people, It is his wish,
management, which has been shown so
what they are fighting for They will not
and mine, that tax legislation shall always
magnificantly in this war-savings tampaign,
let us down and by the help of God we at
be the product of a meeting of minds, and
is helping to build the post-war world right
home will not let them down.
that It shall always be sound and just and
here and now. I like to feel that " is setting
I have not the slightest doubt, nor have
fair to all the taxpayers.
the pattern for the post-wer years-s pattern
you. about winning this war. We have made
In introducing me Mr. DOUGHTON spoke
of labor and management working side by
up our minds and are fighting with Indomit-
with understanding of the burden that resta
side for their own good and their country's
able determination. I know-and BO do
upon me nowadays as Secretary of the Treas-
good.
you-that the price will be great in blood
ury. That burden has been especially great
Important though the pay rott savings plan
and lives, in heartaches and suffering. In
in this month of December. The Treasury
1a, It represents only one phase of our war-
taxes and loans,
la now in the midst of borrowing $9.000,000,-
savings campaign. Millions of formers, the
tu my own humble judgment, We should
000 in n. single month-a borrowing operation
self-employed, and businessmen have put
pay for as much of the cost as we cap in
unequalled In the annals of this or any other
their savings at their country's disposal. All
taxes. Taxes are heavy. We know they
Government. In this Victory Loan drive we
in all 50,000,000 men and withen invested in
should be heavy-as heavy as can be de-
are depending upon the voluntary help of ni-
War bonds during the past year.
vised short of strangling enterprises or shat-
most 50,000 professional salesmen drawn from
the securities, banking, and Insurance fields.
These holders of War bonds are the people
tering sound economic stability.
However. much as we oan raise in takes,
It in their job to find the dollars that lie idle
who will be buying the products of American
we can pay for only 6. part or the cost In
in the hands of Individual investors, corpo-
Industry 10 years from nie, when the bonds
mature. The bonds that are bought today
taxes. A great part-the greater part for
rations, and custodians of trust funds; " la
represent new homes, new comforts, new
the time being-must be raised in loans by
their job to see that those dollars go to work
horizons for the common man. They will
all of our citizens to their Government I
for their country.
help to give body and substation to the ideal
am told that already more than 50,000,000
I am delighted to report to the Nation
of "freedom from want" in thousands of
of our people have hought War bonds and
that by today, only the twelfth business day
American communities and in millions of
Savings stamps.
of our drive, we have raised more than
American humes.
This war-savings program appeale to me
$6,000,000,000. We have come more than two-
To my mind this la a fact of real signin-
1- many ways-both for the Government and
thirds of the may toward our goal. This is
cance for the post-war years. It means, as
for our individual people In one way espe-
a magnificant response, another proof of what
Mr. DOCUMTON has sald, that more than 50,-
efally it Appeals to me. War savings mills for
a free. enlightened, and democratic people
000,000 Americans now have a direct and
thrift, and thrift begeta economy in our
can do when their country calla upon them.
personal stake in the finances of their Gov-
every-day Lives and in our Government, I
In this Victory Loan drive and in the War
ernment. n means that their savings not
have advocated economy in Government year
Envings campaign that bas brought us to-
only bear fruit now, in helping to win the
to and year out since 1 first went to Congress
gether tonight, you in North Carelina are
wat, but will also help to keep peacetime In-
au years ago.
doing great things. From the mountain
dustry active and strong in the future years.
When you buy War Bavings bonds today
homes to your western counties to your tac-
It means that habits of thrift are growing
you help finance your Government you put
tories in Winston-Salem and your shipyards
steadily attonger among the American peo-
the materials for Reghting in the hands of
on the coast, this State of yours is giving a.
pie, with results that will help to finance this
our REFUB over there: and you help finance
Abe esample of the spirit that is being shown
people's war and the people's peace to come.
Regraded Unclassified
46
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
Secretary Morgenthau
December 16, 1942
FROM Ferdinand Kuhn, Jr.
Herman Wolf sends you this editorial page of
a leading coal miners' paper in Pennsylvania, with
excellent War Bond material and an editorial on taxes
that probably grew out of your labor press conference.
In a recent issue this same paper ran a total of 27
items on War Bonds, including 7 advertisements sent
out by us.
J.K.
in
seep perap book )
47
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE: December 16, 1942.
To
Secretary Morgenthau.
FROM
Harold Graves. 5.9
I hand you herewith a report, with two Districts
missing, showing the distribution of War Bond gift en-
velopes by Federal Reserve Banks.
48
WIRE REPORTS BY FEDERAL RESERVE BANKS
ON DISTRIBUTION OF
ADOLF DEHN DESIGN BOND GIFT envelopes
TOTAL
NUMBER OF
QUANTITY
ISSUING AGENTS
Boston
100,000
769
New York
450,000
2,250
Philadelphia
Cleveland
Richmond
90,000
1,100
Atlanta
100,000
707
Chicago
450,000
3,000
St. Louis
90,000
900
Minneapolis
87,000
928
Kansas City
90,000
1,000
Dallas
100,000
825
San Francisco
125,000
1,000
capies to cart 49 Helch-
war DEPARTMENT
Mr. m.
WASHINGTON, D.C.
WD 201.3 (11-30-42) PE-A
10/14/42
Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
Dear Henry:
Thank you for the phonograph record of the songs
"Everybody, Every Payday" and "March for the New Infantry",
written by Sergeant Richard Uhl and Corporal Tom Adair. I
enjoyed it very much.
It is very gratifying to me and to the War Depart-
ment to receive such commendatory reports concerning services
rendered by the personnel of the Army, and it is appreciated
that this matter has been brought to my attention.
Copies of your letter have been filed with the
records of Sergeant Uhl and Corporal Adair, and copies have
been forwarded to their commanding officers.
Sincerely yours,
Henry h Stinson
Secretary of War.
FORVICTORY
BUY
UNITED
STATES
WAR
BONDS
AND
STAMPS
Regraded Unclassified
50
BEC 1 6 1942
Mr. Al Vann
Memaging Editor
THE MUSIC PUBLISHER'S JOURNAL
1270 Sixth Avenue
New York, N. Y.
Dear Mr. Vann:
As we review the first year of the
war, it is evident that music has played a vital
role in mainteining the morale of our nation. In
conducting the Treasury Department's War Bond cam-
paign we have been especially aware of this fact,
for one of the aims of voluntary War Bond sales
has been the bolstering of national morale.
Our campaign has been materially
assisted by the songs written for it. We have,
in this respect, shared a benefit brought through
music to the members of our armed forces and to our
men and women on the home front.
The people of the music world are to
be congratulated upon their record of past achieve-
ment, and upon their plans for the continuance of
this good work in the future.
Sincerely,
(Signed) H. Morgenthau, Jr.
cc in Diary
extra copies to Mr. Thompson
Regraded Unclassified
CONFIDENTIAL
51
UNITED STATES SAVINGS BONDS - SERIES E
Comparison of December sales to date with sales during the
same number of business days in November and October, 1942
(At issue price in thousands of dollars)
:
December
:
Cumulative sales by business days
Date
:
daily
:
December
:
November
:
October
:
December as
:
sales
:
:
:
:percent of November
ecember 1942
1
$ 4,116
$ 4,116
$ 5,164
-
79.7%
2
4,489
8,605
9,272
-
92.8
3
10,042
18,647
20,460
$ 5,045
91.1
4
39,690
58,337
31,309
42,285
186.3
5
16,648
74,984
53,076
52,984
141.3
7
46,424
121,408
62,326
73,919
194.8
8
11,887
133,295
96,366
98,490
138.3
9
17,857
151,152
111,002
117,077
136.2
10
13,607
164,759
146,494
131,593
112.5
11
38,664
203,423
161,929
169,859
125.6
12
17,480
220,903
181,120
179,232
122.0
14
52,056
272,959
188,497
194,811
144.8
15
15,530
288,488
230,083
222,243
125.4
ffice of the Secretary of the Treasury,
December 16, 1942.
Division of Research and Statistics.
ource! All figures are deposits with the Treasurer of the United States on account
of proceeds of sales of United States savings bonds. These figures have been
adjusted on the basis of wire reports and therefore will not agree with the
Treasurer's accounts.
Note: Figures have been rounded to nearest thousand and will not necessarily add
to totals.
CONFIDENTIAL
52
UNITED STATES SAVINGS BONDS - SERIES F AND G COMBINED
Comparison of December sales to date with sales during the
same number of business days in November and October, 1942
(At issue price in thousands of dollars)
:
December
:
Cumulative sales by business days
Date
:
daily
:
:
:
December
November
:
October
December as
:
sales
:
:
:
:percent of November
scember 1942
1
$
197
$
197
$
303
-
65.0%
2
329
527
1,115
-
47.3
3
2,688
3,214
7,846
$ 2,218
41.0
4
13,947
17,161
14,720
20,322
116.6
5
12,303
29,464
31,425
24,325
93.8
7
17,522
46,986
34,030
31,922
138.1
8
2,872
49,858
43,940
46,695
113.5
9
9,576
59,434
49,326
55,998
120.5
10
5,651
65,085
58,842
59,711
110.6
11
14,274
79,359
64,157
74,275
123.7
12
7,135
86,495
71,352
76,430
121.2
14
15,430
101,924
73,989
83,857
137.8
15
7,719
109,644
83,246
91,884
131.7
ffice of the Secretary of the Treasury,
December 16, 1942.
Division of Research and Statistics.
ource: All figures are deposits with the Treasurer of the United States on account
of proceeds of sales of United States savings bonds. These figures have been
adjusted on the basis of wire reports and therefore will not agree with the
Treasurer's accounts.
Note: Figures have been rounded to nearest thousand and will not necessarily add
to totals.
Regraded Unclassified
53
DEC 16 1942
My dear Mr. Vice President:
I - calling a meeting to be held in my
office on Friday, December 18, 1942 at 9:15
A.M. to discuss policy questions regarding the
dollar position of the United Kingdom and
certain other countries.
I should approciate it if you would
designate someone from the Board of Reonomic
warfere, who has been following these matters,
to attend.
Sincerely yours,
(Signed) H. Morgenthan. Jr.
Secretary of the Treasury.
The Honorable,
The vise President
Delivered by Schey 3:10 12/16/42
00 in Diary
extra copies to White direct
TMK;rl 12/15/42
Regraded Unclassified
54
DEC 16 1942
My dear Mr. Secretary:
I - salling a meeting to be held in my
office on Friday, December 18, 1942 at 9:15
A.M. to discuss policy questions regarding the
dollar position of the United Kingdom and
certain other countries.
I should appresiate it if you would desig-
nate someone in your Department, who has been
following these matters, to attend.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
The Honorable,
The Secretary of State.
Delivered by Schey 3:10 12/16/42
CC in Diary
extra copies to White direct
TMK:rl 12/15/42
Regraded Unclassified
55
DEC 1 6 1942
My dear Mr. Secretary:
I an calling a meeting to be held in my
office on Friday, December 18, 1942 at 9815
A.M. to discuss policy questions regarding the
dollar position of the United Kingdom and
certain other countries.
I should appreciate it if you or someone
you designate would attend.
Simerely yours,
(Signed) H. Morgenthau. Jr
Secretary of the Treasury.
The Honorable Jesse Jones,
The Secretary of Commerce.
Delivered by Schey 3:10 12/16/42
CC in Diary
extra copies to White direct
TMK:rl 12/15/42
Regraded Unclassified
56
DEC 16 1942
Dear Mr. Stettinius:
Im accordance with your letter of
December 3, 1942, I an calling a meeting to
be held in my office on Friday, December 18,
1942 at 9:15 A.M. to discuss policy questions
regarding the dollar position of the United
Kingdom and certain other countries.
I should appreciate it if you or someone
you designate would attend.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
MP. E. R. Stettinius, Jt.,
Administrator, Office of Lend-Lease
Administration,
515 22nd Street, N.W.,
Washington, D. C.
Delivered by Schey 3:10 12/16/4
00 in Diary
extra copies to White direct
TMK:rl 12/15/42
Regraded Unclassified
5
OFFICE OF LEND-LEASE ADMINISTRATION
FIVE-FIFTEEN 22d STREET NW.
WASHINGTON, D.C.
E. R. Stettinius, Jr.
Administrator
December 17, 1942
The Honorable Henry Morganthau, Jr.
Secretary of the Treasury
Treasury Department
Washington, D. C.
Dear Mr. Morganthau:
This will confirm advice given to your
office on the telephone this afternoon that
I am asking Mr. Dernhard Knollenberg, my
Senior Deputy Administrator, and Oscar Cox
to attend the meeting in your office tomorrow
morning to discuss the dollar position of
the United Kingdom and certain other countries.
Sincerely yours,
Streetpius,
58
December 16, 1942
My dear Mr. Hanes:
Like other Americans, we have often made
reference to southern hospitality. is we look
back on our pleasant visit in Winston-Salem,
this seference takes on a new significance to
us.
Mrs. Morgenthau and I are both grateful to
you and Mrs. Hanes for your cordial hospitality.
It was a most pleasant occasion and - enjoyed
every minute of it.
As I read the remarks you made at the dinner,
I an reminded of the splendid job you did as
toastmaster and I approciate the kind things you
said.
Mrs. Morgenthau joins me in wishing you and
yours the best of the season's greetings.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Mr. Re M. Hanes
Winston-Salem
North Carolina
TRG:jre
File in Diary
Regraded Unclassified
HONORABLE HENRY MORGENTHAU, JR.
59
ALL NORTH CAROLINA AND CERTAINLY WE IN WINSTON-SALEM ARE
HIG
HONORED BY THE PRESENCE OF OUR DISTINGUISHED GUESTS OF THIS
EVENING.
WE HAVE ALWAYS BEEN TOLD THAT ALEXANDER HAMILTON WAS PROBABLY
THE GREATEST SECRETARY OF THE TREASURY THAT THIS NATION HAS EVER
HAD, BUT HIS PROBLEMS WERE CHILD'S PLAY AS COMPARED WITH THE
TREMENDOUS RESPONSIBILITIES OF OUR PRESENT SECRETARY OF THE
TREASURY. SECRETARY HAMILTON NEVER DREAMED IN THE WILDEST
STRETCHES OF HIS IMAGINATION OF A BILLION DOLLAR TAX BILL, AND EVEN
ANDREW MELLON, WITH HIS VAST PERSONAL WEALTH AND WIDE FINANCIAL
#2
60
EXPERIENCE, WHO MANY THINK WAS A GREAT SECRETARY OF THE TREASURY,
COULD NOT EVEN CONTEMPLATE THE FINANCING OF A NATIONAL DEBT OF
ONE HUNDRED BILLION DOLLARS.
THE TASK OUR CAPABLE SECRETARY OF THE TREASURY FACES, AND
INTHEPAST,
WHICH HE HAS HANDLED SO ABLY ^ WILL, IN MY OPINION, PLACE HIM IN
AMERICAN HISTORY WITH OUR GREATEST STATESMEN AND FINANCIERS.
WE ARE PROUD TO HAVE THE OPPORTUNITY OF DOING HIM HONOR THIS
EVENING.
with deep affreciation and sincere
thanks for your visit. Rustand
Regraded Unclassified
61
December 16, 1942
My dear Mr. Fain:
Mrs. Morgenthau joins me in expressing our ap-
preciation to you and Mrs. Fain for your many cour-
tesies during our visit to Winston-Salem.
I know the many details that you had to take
care of to make the meeting 80 successful and we here
at the Treasury are grateful to you for the good work
that you have been doing in our War Bond Program. I
want to compliment you for taking this added chore in
your stride.
Mrs. Morgenthau joins me in extending to yourself,
Mrs. Fain and your family our best wishes for & happy
holiday season.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Mr. J. R. Fain
1830 Buena Vista Road
Winston-Salem, N. C.
PHO:jre
Copies in Diary
62
DEC 16 1942
MY dear Eleanor:
Thank you for sending no copies of the two
memoranda by Mr. Alfred Bergman.
I have brought the memorandum dealing with
North Africa to the attention of our Treasury
people who have been working on this problem, and
they have prepared a brief statement on the subject.
I an enclosing a copy of that statement for your in-
formation.
As you will observe, the problem of inflation in
areas occupied by United Nations forces has been & sub-
jeet of study in the Treasury, as well as in other
government agencies, for some time. Our people believe
that the solution for this problem lies along rather
different lines than those which Mr. Bergman suggests.
Affectionately,
(Signed) Henry
Courchory
Treasury.
Mrs. Franklin D. Roosevelt,
The White House.
Enclosure
Complete l'ile in Diary
By Messuger Harmon 12/16/42 4:50
0.8
OG:mww
HDW
12/11/42
FILE COPY
Regraded Unclassified
63
December 11, 1942
Regraded Unclassified
MEMORANDUM
The Problem of Inflation in North Africa
1. We have examined Mr. Alfred Bergman's memorandum of December 1, 1942,
entitled "Danger of Inflation in North Africa and Its Bad Effect". This
memorandum does not indicate the basic factors making for inflation in
North Africa. Nolther does it present any useful suggestions for meeting
the inflationary problem in North Africa or in other areas to be occupied
by United Nations forces.
2. Mr. Bergman says: "The entire price and currency policy of occupied
countries should be studied at once... I suggest that the financial section
of the War Department discuss these questions The price and currency
problems of occupied areas have been under active study in the Treasury,
the Board of Economic Warfare, and other government agencies for & very long
time. Consultation on operating problems has been going on regularly among
the interested agencies, including the War Department, for more than six
months.
3. The inflationary situation resulting from United Nations operations in
the Mediterranean area first became a problem in Egypt, Palestine and Syria.
The British Government has been acutely concerned with this problem for more
than a year. The zane problem is now arising in the Western Mediterranean.
Basically the sources of inflationary pressure are three:
(a) The armed foroes need to buy locally produced food and local
labor. They pay for everything they get. But they are not
in a position to provide imports for the local population to
buy. Sufficient shipping is not available. Therefore the
occupied area is rich in money but poor in goods.
(b) Soldiers are paid in accordance with the inocme standards of
their own country. They want to use their pay to buy such
comforts and luxuries as the area contains. They pay high
prices and tip generously. Local merchants and local people
rendering services welcome these generous customers, but the
prices of all goods and services rise rapidly.
(0) Where the international exchange value of the currency of any
occupied country is unstable, that instability may contribute
to an inflationary process. Individuals in the occupied
country, noticing that prices at home are rising, prefer to
hold foreign currency. The effort to buy large amounts of
foreign currency leads to & fall in the exchange rate. Such
& fall in the exchange rate produces a further flight from the
local currency. This process is accelerating and cumulative.
FILE COPY
64
Division of Monetary
- 2 -
Research
Three basic steps can contribute in an important way to preventing a
serious inflation in areas occupied by United Nations troops. These are
(a) to bring the maximum possible amount of essential imports into the
occupied area, (b) to induos our soldiers in the area to save a large
fraction of their pay, and (o) to peg the international value of the
currency of the occupied area.
4. In the first stage of United States military operations in North Africa
it was not possible to allocate shipping to the task of bringing into the
area importe which would be available for purchase by the local population.
However that Job is being taken in hand actively at the present time. Further-
more every facility is being offered to the soldiers in the United States
armed forces to save their pay. Over 2 million soldiers are now purchasing
savings bonds on a regular payroll deduction basis. We are also exploring
plans for the establishment of special soldiers' banks.
5. Mr. Bergman's particular suggestions for preventing inflation in Worth
Africa do not seem to be helpful. At present our soldiers in North Africa
are paid in dollars, and he suggests that they be paid in Occupation France.
The soldiers' dollars are now convertible into francs at & rate of 75 to
the dollar. This is not & high rate. Rates of over 150 to the dollar pre-
vailed before United States occupation.
It is the settled policy of this Government to pay our troops everywhere
in local currency as far as possible. Special circumstances made it impossible
to pay in local currency in North Africa from the very beginning. However the
transition to payment in local currency will be made as soon as arrangements
are completed.
6. We cannot agree with the point made by Mr. Bergman (paragraph 3. a.)
that the prices of "luxury goods" bought by soldiers are particularly
influential for the general price level. It is not particularly important
that our soldiers pay fancy prices in North Africa for jewelry or cometics.
It would be important if the demands of our armed foroes should cause an
inflation of the prices of essential foods, clothing, shelter, etc.
We need to ship to North Africa all of the supplies needed by our troops
together with as much as possible of the goods essential to the livelihood of
the local population. That is the most fundamental contribution - can make
to preventing any serious inflation.
7. When our civil administration in North Africa is perfected, it will be
possible to make & further contribution to the prevention of inflation
through new measures concerning local taxation, rationing and price control.
08
OG:raww
12/14/42
GDW
FILE COPY
Regraded Unclassified
65
THE WHITE HOUSE
WASHINGTON
December 5, 1942.
My dear Mr. Secretary:
Mrs. Roosevelt has asked me
to send you the enclosed letter from
Mr. Alfred Bergman.
Very sincerely yours,
Malvina C.Thompson
Secretary to
Mrs. Roosevelt.
Hon. Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, D. C.
-
BECEIVED
WAR DEPARTMENT
HEADQUARTERS. SERVICES OF SUPPLY
WASHINGTON, D.C.
December 1, 1942.
Mrs. Franklin D. Roosevelt,
The White House,
Washington, D. C.
Dear Mrs. Roosevelt:
I em sending you a copy of my recent
talk with Dr. Somary, which I think The President
will be interested in.
Sincerely yours,
Inc. - 1
Report
CC: Col. J. E. Butterworth
CTORY
BUY
Regraded Unclassified
12-1-52
THIRD REPORT OF CONVERSATION WITH DR. SUBJORY
MEMORANDUM FROM: Mr. Alfred Bergman,
Chief, Industrial Information Unit.
SUBJECT: Danger of Inflation in North Africa and
Its Bad Effect.
I saw Dr. Somery over the weekend and he cells my attention
to the following importent information:
1. Two different articles appeared in the New York Times
last Sunday, November 29th.
a. One article stated that America: soldiers were buying
goods and jewelry in great quantities because prices are BO cheep.
b. The second report from Germany said that Americans
were exploiting North Africe.
0. This is bad propaganda for America.
d. If the prices go up with the American occupation, the
Americans will be very unpopular as they will have brought hatted
caused by inflation.
2. The Americans are paid in stamped dollars, but these are
extremely high in exchange in North Africa, which gives the soldiers
far too much money and makes then find everything very cheap.
a. This 1e e great danger from a military point of view
as it is importent that we do not have unrest in the occupied countries.
3. Important - The way out would be through the creation of
Occupation Francs instead of dollars, even stamped dollars, and a
strict restriction on permitting the sending out of any articles from
the occupied countries no this is a very dangerous game.
a. All of the Africen population is not on our side, end
as particularly the price of so-called "luxury goods" 1s very influential
for the general price level, this practice should be stopped immediately.
b. The entire price and surrency policy of occupied
countries should be studied at once to prevent the same consequences
should it arise in European countries n.a we are later able to occupy them.
4. I suggest that the financial section of the Mar Department dis-
ouss these questions with Dr. Somary, who is probably the outstanding
Regraded Unclassified
- 2 -
finencial export in these matters in America. This Unit will be very
glad to make the necessary contact.
5. with respect to the military situation in North Africa,
Dr. Somary believes that the Germans cannot now hold Tunis and Bizerte,
but every delay is not good for the Allies as the Cermens can bring
up reserves. In case the Allies are able to dialodge the Germans, them
the situation of the Allies would be very strong, and of course here
time plays a big role.
6. Dr. Bomery feels that Hitler's handling of the French fleet
and the occupation of the unoccupied zone of France was a great mistake.
Hitler, like most Germans, is not good in defeat. His temperament is
not right for defent. The English end the Russians are good in defeat,
and, unfortunately, better than in victory. The Cormans are bad losers,
and their mentality would not survive for long after an Italian disaster
Unfortunately, the Italians and the French are also bad losers.
Regraded Unclassified
12-1-42
FOURTH REPORT OF CONVERSATION WITH DR. SOMARY
MEMORANDUM FROM: Mr. Alfred Bergman,
Chief, Industrial Information Unit.
SUBJECT: Japan
1. Although it is far too early to speak of a
seperate peace by the Japanese, I wish to give you the personal
feeling of Dr. Somary on this question. He feels that the
Japanese would not wait until the Germans are liquidated, but
will try to rake peace before Germany 1a finished. To fight
against America, Britain end Russie would be the end of Japan,
end they know that.
2. The Japs are very well informed on the German
situation as they have a leading General as Ambassador in Cermany,
and in Rome they have a leading Japanese General as a Military
Atteche. It in clear that they have excellent information on the
militery situation and will set assordingly.
Regraded Unclassified
70
NOT TO RE -TRANSMITTED
COPY NO.
13
BRITISH MOST SECRET
TECRUT
NTE
,,1L ormation received up to And, 16th December, 1942
The German -arke: COMMANIA, 9,850 tons, ARE sighted
tray by DHE 0f F.M. Stone whilet excorting a homeward bound
west 0° CAPS FINESTERY P5. tanker tried to seu tle and was
firs, officers and of and Ware picked up One of H.M.
trers has unidvad at ALGIETY_ _he German aircraft carrier GRAF
IV was it encher 05 KEEL on the 3rd, She was last seen
WINER in She is not yes operational,
TLITARY
LISYA. 14th. Enemy M.T. still moving westwards from
METILA whilst a weak rearguard withdrew without offering serious
deposition to our forward troops. Although mines again delayed pro..
THES
units of the 51st Division advancing alongside the coastal
70,d reached a point approximately 5 miles east of PL AGHEILA. Fur-
er south 8th Armoured Brigade moving north up the JIOFER Road met
osition but by nightfall had advanced to a point 12 miles north-
vest of JIOFER. In the extreme south 2nd New Zealand Division carrying
rut a flanking movement had advanced to a point 30 miles N.N.E. of
ARADA without reporting contact with enemy.
RUSSIA. A violent thaw in the central sector is likely
fronts. to affect operations, No important change on central or southern
3. AIR OPERATIONS
WESTERN FRONT. 15th. Fighters over Northern France
damaged a tug, 2 trains and 10 locomotives. A JU 52 was probably
destroyed, 5 enemy aircraft crossed our coasts, one was destroyed
and 2 damaged. Bombs dropped at alderburgh, SUFFOLK, killed 9 persons,
One Typhoon missing.
AEDITERRANEAN. 14th/15th. Naval aircraft torprioed a
2,000 ton ship beached near SOUSSE. 15th. Malta fighters inter-
cepted 15 southbound JU 52's. Enemy casualties 4, 2, 4,
TUNISIA. 14th. At FERRYVILIE, south of BIZERTA, a
tanker was torpedoed and burst into flames and another ship probably
hit, 18 bombers attacked the railway centre at SFAX and started
fires, Docks at TUNIS and BIZERTA were bombed by 29 U.S. Fortresses
and Liberators, Details not yet available.
14th/15th. 25 Wellingtons again attacked these docks
hitting three ships and starting some large fires.
TRIPOLITANIA, On 13th/14th and 14th fighter bombers
wersted against enemy M.T. west of EL AGHEILA but few targets were
Found and bad visibility hampered observation. Our losses, 2, nil,
Regraded Unclassified
71
PECIAL INTELLIGENCE REPORT
MERICA AND THE POST-WAR WORLD
12.16.42
à at Y 1 à '' 5 % N A % $ $ and 11 de 3 & 1 & E &
the AND and 1 % NEW
18 VISIT V
OFFICE OF
WAR INFORMATION
BUREAU OF
INTELLIGENCE
COPY No.
7
Henry Morgenthau, Jr.
CONTENTS
The Report in Brief
The Promise of the Future
1
Obstacles
2
Isolationism
4
The Role of the United States
6
Vagueness
9
Attitudes Toward Other Nations
11
Views on Economic Issues
13
Other Related Issues
14
Clusters of Opinions
15
Conclusions
17
Regraded Unclassified
THE REPORT IN BRIEF
Americans hope for a world In which they and their children
may live free from the threat of war. But they have scarcely
begun to think realistically about how this goal may be a-
chieved.
When asked how a better world might be brought into being,
40 per cent of a national sample could offer no suggestions.
Only 25 per cent made suggestions of a political or economic
nature. People's views about the post-war world are seldom
crystallized or held with real conviction.
There Is a general realization that isolationism no longer
spells security. Fewer than 20 per cent of the American peo-
ple appear to be firmly opposed to the principle of interna-
tional collaboration. The isolationists are predominantly
people with relatively low income and education and relative-
ly limited contacts.
The views of the people who favor some degree of U. S. par-
ticipation in world affairs fall into three broad classes.
One group of people believes in full political cooperation
with other nations. A second group urges simply that the
United States "be friendly" with other nations. A third group
wants the United States to dominate the post-war world.
People's fears appear to be the greatest obstacle to the be-
lief that peace can be maintained through International co-
operation. Isolationism is frequently related to mistrust of
England and Russia and to anxieties about the economic conse-
quences of close ties with other nations. A tendency to ex-
aggerate the importance of America's contribution to the United
Nations' war effort also appears to be associated with Isola-
tionism.
The belief that America should join a comprehensive organiza-
tion of natlons is also typically part of a cluster of opin-
lons. Those who hold this view tend to have confidence In
America's allies, tobe hopeful about the economic future, ano
to take a fairly realistic approach to war issues. The people
most aware of thedifficult problems Involved In winning both
the war and the peace are most willing to endorse the idea of
International collaboration.
Regraded Unclassified
"The better world for which you fight -
and for which some of you give your lives -
will not come mercly because we shall have
won the war. It will not come merely be-
cause we wish very hard that it would come.
It will be made possible only by bold vision,
intelligent planning and hard work."
- Franklin D. Roosevelt, January 6, 1942
AMERICA AND THE POST-WAR WORLD
An enduring peace is America's most widely accepted war eim. Americans
fight for a world in which they and their children can live their lives
free from the recurrent threat of war.
But people's wishes have not yet been translated into clear and concrete
goals. Little thought has been given to plans for achieving the better
world of which Americans dream. Until such plans are developed, and effec-
tively pre-ented to the people, there can be no assurance that they will
support an enlightened policy for the post-war world.
THE PROMISE OF THE FUTURE
Many factors favor the establishment of a stable international order at
the end of the present world war. The fighting itself has knitted together
some of the most powerful and populous nations of the world. Partnership
in the struggle against Fascism has broken down much of the suspicion and
ill will which stood in the way of close collaboration between the United
States, the British Empire, Russia and China before the war.
- 1 -
Regraded Unclassified
The United Nations have entered into a number of military, political
Men's fours may keep thes from attempting to achieve their hopes. Dis-
and economic agreements of far-reaching significance. At the end of the
trust and suspicion of other nations may once again cause Americans to shy
war an embryonic pattern for world collaboration may already be in exist-
away from international collaboration. Or action may be blocked by econom-
ence.
ic fears - by the belief that international cooperation will be costly
to the United States, or precipitate a depression, or lower the American
In many respects the war has been & great schoolmaster. It has made
standard of living.
people more aware of economic interdependence. It has fostered a realiza-
-
tion of the extent to which communication developments have shrunk the
Similarly, we may fear that our diplomate are certain to be outsmarted by
size of the world.
the suave representatives of other countries. Many other stareotypes of
this sort stand in the way of cooperative post-war planning. For example,
Another encouraging factor is the support the principle of international
there is the notion that the attempt to achieve a better world ie visionary
collaboration is receiving in the press. With & few conspicuous exceptions,
and impractical. There is the belief that internationalism is incompatible
newspapers want the United States to take part in international affairs in
with Americanism. There is the illusion that policies which have served
the post-war world.
America in the past will necessarily be appropriate and advantageous under
Most editors feel that we made a mistake, for which we are now paying dear-
the changed conditions of today.
ly, in not accepting our international responsibilities after the last war.
Many of these notions are being sedulously fostered by a small but power-
The assertion that this time we must win the peace as well as the war has
ful minority of America's newspapers. Certain papers are engaged in an
become a cliche. In addition to endorsing the principle of post-war col-
all-out campaign to sabotage the idea of post-war collaboration. Their bns-
laboration, newspapers have overwhelmingly supported such general state-
in strategy 1= to appeal to people's fears about the future. They argue
ments of America's war goals as the Atlantic Charter and the Four Free-
that America is certain to lose in any attempt to cooperate with other na-
doms.
tions. They foster mistrust of America's allies. Finally, together with
OBSTACLES
some newspapers of good will, they insist that attention to post-war prob-
less interferes with the prosecution of the war.
While the war is knitting some nations together, it is also leaving n ter-
rible heritage of bitterness and hatred. Even among the United Nations real
Even in the editorial columns of newspapers supporting the principle of
and important conflicts are almost certain to arise,
collaboration, there has been little discussion of specific plane for post-
war international organization or of the difficult social and economic
- 2 -
- 3 -
Regraded Unclassified
problems which will require solution after the war. Editorials have die-
made a mistake last time in not joining the League of Nations. Only 28
cussed America's war goals in extremely nebulous terms. Few prescriptions
per cent were convinced that we had not ande a mistake, and most of these
have been advanced for achieving those goals. The press has particularly
objected, not to the principle of joining an organization of nations, but
shied away from the fact that greater participation in international affairs
to some feature of this particular association.
my require important domestic adjustments.
Relatively few Americans now advocate complete isolation of the United
There is little danger that such factors as these will cause us to forget
States from world affairs when the present war is over. Only two people
our hopee, and keep us from making some attempt to achieve a more secure
in ten, of a national sample interviewed in August, disapproved of the
world. But they might readily make the attempt abortive. After this war,
idea of this country joining an organization of nations after the war:
as after the last one, there may be an immense tiredness, an overpowering
desire to "return to normalcy," to get the boys back home. This desire,
IN GENERAL, DO YOU APPROVE OR DISAPPROVE OF THE
IDEA OF THE UNITED STATES JOINING AN ORGANIZATION
OF NATIONS AFTER THE WAR?
reinforced by ignorance which clouds our vision and by fears which make
Approve
every course seen dangerous, may keep us from exerting ourselves sufficiently
63%
Disapprove
19
Don't know
to attain our post-war goals. They may make us reluctant to accept the re-
18
sponsibilities and the sacrifices which are the inevitable price of the ad-
In early December Gallup asked a very similar question. Trial tabula-
vantages of participation in & world society.
tions of the first small group of replies to be received indicate that
The readiness of the American people for international reformation, it is
six Americans in ten believe that the United Nations should move toward
clear, may determine the success or failure of the attempt to build a better
setting up & world organization before the end of the war. An additional
world order after this war. To estimate the extent of their readiness the
two in ten would favor an attempt to set up a world organization after the
war:
Bureau of Intelligence has conducted a number of investigations in recent
months. This report is based upon these studies, the most intensive of which
SHOULD THE GOVERNMENT TAKE STEPS NOW, BEFORE THE
was made in August.
END OF THE WAR, TO SET UP WITH OUR ALLIES A WORLD
ORGANIZATION TO MAINTAIN THE FUTURE PEACE OF THE
WORLD?
ISOLATIONISM
Yes
645
No, after the war
19
The war has taught most Americans - the hard way - that some form of in-
No, never
5
No opinion
12
ternational collaboration is necessary to preserve peace. In July almost
half of the people in a national sample had come to the conclusion that we
A number of other studies confirm the fact that fewer than 20 por cent of
4
- 5 -
Regraded Unclassified
the American people now cling to an isolationist position. They are pro-
world "stew in its OWD juice" after this war. But there are wide differ-
dominantly people with relatively limited contacts. There are proportion-
ences of opinion about the part the United States should play in inter-
ally more isolationists in the country than in the city.
national affairs. In addition to isolationism, three viewpoints were
People with relatively low income and education are more likely to be
found to be widely held:
isolationists than those more favorably situated. And the individuals
1. One group of people believes in full political cooperation with the
who are uninformed about international affairs, as a result of infrequent
rest of the world. They want the United States to participate in some
social contacts and limited educational background, are far more prone to
scrt of organization of nations. As one person put it:
favor isolationism than the well-informed.
"I suppose my idea would be an enlargement or refine-
ment of the League of Nations. Let all countries get
The people in the August sample who endorsed American participation in an
together 8.8 the United States; thirteen states origin-
ally got together and formed one Government. It would
organisation of nations were naked whether other countries besides the
have to have the hearty cooperation of the conquerors
and the conquered."
United States and her allies should be admitted to membership. The over-
whelming majority - 85 per cent of those to whom the question was put -
Most of the advocates of an association of nations want the United States to
felt that they should.
take the initiative in its organization and operation. One man declared:
"The United States should take the leading part. She
Those who replied in the affirmative were then asked whether the Axis
has the best minds, the ability and no prejudice re-
garding these things. I feel this war was unnecessary
nations should be admitted to the international organization. Seventy
if the United States had taken an active part in the
last peace terms and then had assumed the responsibility
per cent of those questioned replied that they should.
which was thrust at her but which she refused to accept."
These people comprised only 37 per cent of the total sample. It is en-
The people who urge full-fledged political collaboration are predominantly
couraging, however, that almost two-thirds of the American people apparent-
urban dwellers. They stand considerably above average in income and education
ly favor United States membership of an organization of nations; that a
2. Another group of people advocates simply that the United States "be
majority would not limit participation to the United States and her allies;
friendly* with other nations. These people tend to speak of nations as
and that even during wartine more than a third feel that the organization
though they were individual human beings. Often, too, they speak of the
should be ao comprehensive as to include America's enemios.
relationship of nations in a religious frame of reference.
THE ROLE OF THE UNITED STATES
Their genuine good will toward other peoples and countries may lead them
For people take the position that this country should let the rest of the
to support concrete plans for securing 6. stable international order, when
- 6
- 7 -
Regraded Unclassified
such plans are proposed. But they have not yet begun to think realistic-
ally about how to achieve the better world for which they hope. They are
unsware of the complicated economic and political problems which will con-
isation that security cannot be obtained through withdrawal from the world.
front the world after the war. They are well-intentioned but vague:
Now they pin their hopes on an America 20 strong that it can control all
potential dangers.
"We ought to be more friendly with others. Like
the Bible says, 17e are all brothers.' I think
we ought to practice the Golden Rule. It was hate,
VAGUENESS
and greed and sin that caused this war."
It is clear that most Americans have only nebulous, and in some cases even
The people who talk along these lines have lower than average incomes and
misguided, notions of the way to achieve a stable international order.
educations.
If anything, the preceding discussion understates the vagueness of people's
3. A third group of people vociferously demands that America dominate
thinking about the post-war world. In lumping together all the people who
the post-war world. They are internationalists, but in a strictly America-
take a somewhat similar viewpoint, the confusion and contradictions which
first sort of way. They might favor an organization of nations, but only
characterize the thinking of many individuals have been obliterated.
if they felt certain that the United States would dominate it. They talk,
The discussion fails also to suggest the tentativeness of Americans' views
sometimes rather belligerently, along such lines as these:
about the post-war world. A number of interviewers commented that most
"I think it's up to us to take a very active part and
people appeared troubled and uncertain when they tried to state their ideas
that we police the rest of the world. That's what we
should have done ten years ago; then we wouldn't have
about the nature of the peace.
had this war on our hands now. I think that's the
only way NO can have any peace, for us to put the rest
of the world where they belong and then police them for
The transition from isolationism to & wider outlook is evidently a pre-
at least a hundred and fifty years."
carious one. Most Americans 000 that isolationism did not prevent the pre-
The people who take this position possess alightly higher than average in-
sent war and that some new formula is necessary if peace is to be main-
come and education. More of them are men than women. There is evidence
tained. But BO far no specific proposal has been advanced which has cap-
that many of the people in this group were once isolationists. The change
tured their imagination.
in their attitude is less drastic than it might at first appear. In most
Ontil some proposal wine popular acceptance, there is
instances the key to their viewpoint on international affairs appears to
a very grave danger that, during the let-down after the
war, many Americans now generally sympathetic to inter-
be the desire for security. They have been forced by the war to the real-
national collaboration, may return to isolationism.
- 8 -
- 9 -
Regraded Unclassified
At present, they are looking forward to a world of democracy and friendli-
ness. They hope that, after the war, greater emphasis will be placed on
(Cont'd) WHEN THE WAR IS OVER, DO YOU THINK THE UNITED
religion. They ardently long for an enduring peace. But, when asked how
STATES SHOULD OR SHOULD NOT TAKE A FULL AND ACTIVE PART
ALONG WITH OTHER NATIONS IN:
the kind of post-war world they want can be brought into being, four in
Should Should not Don't know
ten could offer no suggestions. Seventeen per cent thought only in terms
Maintaining & world police
of winning the war. Twelve per cent felt that the United States could
force to guarantee against
future wars
86%
8%
%
best contribute to the maintenance of peace through educational and re-
ligious guidance. Only one person in four volunteered suggestions about
ATTITUDES TOWARD OTHER NATIONS
political and economic measures.
People's views on America's post-war policy are insvitably influenced by
There is convincing evidence, however, that Americans will respond to oon-
their attitudes toward other nations. Their views about England and Russia
crete proposals which embody their hopes about the post-war world. The
are of crucial importance. If they lack confidence in these nations, they
idea that the basic freedoms should be extended to all people throughout
are hardly likely to favor a cooperative approach to the problem of the
the world 1a enormously popular. As early as February, a national sample
post-war world.
overwhelmingly endorsed the idea of American collaboration with other na-
Many Americans still display & great deal of suspicion of their major allies.
tions to guarantee the Four Freedoms throughout the world:
About three-fourths of the American people believe that England can be
WHEN THE WAR IS OVER, DO YOU THINK THE UNITED STATES
counted upon to cooperate with us after the war. Some people expect her
WITH OTHER NATIONS IN:
SHOULD OR SHOULD NOT TAKE A FULL AND ACTIVE PART ALONG
to follow a more democratic and liberal policy toward her empire and to be
friendly to the United States in the post-war world.
Should
Should
not
Don't
know
Guaranteeing freedom of
speech all over the world
But a full fourth of the people interviewed in August expressed fears that
82%
11%
7%
Guaranteeing freedom of re-
England might cause trouble in the post-war world. The misgivings most
ligion all over the world
87
9
4
commonly expressed were that ahe would assume more than her due credit for
Guaranteeing that all nations
get a fair share of raw
winning the war; demand too important a role in international affairs; or
materials
83
9
8
stand pat on imperialism. & bitter minority charged that England was simply
Helping to secure better work-
ing and living conditions for
fighting for the preservation of her empire.
people all over the world
87
9
4
Almost a fourth of the people in the August sample also anticipated trouble
with Russia in the post-war world. About half of these people comented
- 10
- 11 -
Regraded Unclassified
that they "nover had liked Russia" or mentioned some specific action that
had offended them, such as the attuck on Finland. A number specified that
they were distrustful of Russia because of her form of government. It my
The understanding and knowledge of foreign nations,
which are prerequisites to real sympathy with them, are
be significant, however, that only four per cent of the sample expressed the
notably lacking. Many interviewers commented on people's
ignorance both of foreign countries and of America's in-
fear that Russia would try to spread communium throughout the world after
ternational policies. This lack of information was not
only apparent with respect to such a far-off country as
the war. And 35 per cent -- a far larger number than were apprehensive -
Russia; few people were concerned or informed about South
America, or this country's relationships with its neigh-
expected Russie's post-war behavior to be satisfactory and cooperative.
bors in the Western Hemisphere.
Significantly, persons who were ignorant about international affairs were for
Furthermore, confidence in Russia's post-war intentions is growing. On
more prone to be isolationists than those who were relatively well informed.
four occasions national samples have been asked: "After the war is over, do
you think Russia can be depended u,on to cooperate with us?" Affirmative
VIEWS ON ECONOMIC ISSUES
replied increased from 38 per cent in February to 51 per cent in November.
People's views about economic relationships in the post-war world were
The deep admiration people feul s bout Russia's valiant resistance to Nazi
also investigated by the Bureau of Intelligence. It was found that fear of
aggression is having its effect. In November, in the third month of the
unrestricted foreign competition still dominates the thinking of 6. rather
Russian stand at Stalingred, but before the launching of the North African
high percentage of Americons. The sterectypes of the 120a are still wide-
offensive, Americans believed that in relation to her means Russia was doing
spread: our industry must be protected from foreign underselling; cheap
more than any of the United Nations, including the United States, toward
foreign labor must not be permitted to undermine our high standard of liv-
winning the war.
ing.
In November, a national sample was asked if the United States would con-
Twelve per cent of the people in the August sample believed in free trade.
tinue to cooperate with its allies after the war, and if we should do so.
Fifty-four per cent were willing to senction trade protected by tariffs.
Right in ten felt that NM would and should cooperate with Russia; nine in
But eight per cent advocated that America not trade with other countries
ten that NO would and should cooperate with England.
at all, and a far larger number were skeptical about the benefits of in-
However, suspicion and hostility toward England and Russia have by no means
ternational commerce. As many believed that "we should buy at home and
been eliminated. They might easily mount to dangerous heights if the for-
preserve the American standard of living" as felt that "trade benefits every-
one."
tunes of war change or if conflicts of interest arise. Many Americans still
talk about Russia, England, and other nations in stereotyped, unrealistic
People's fear of foreign competition is also reflected in their views about
terms.
the immigration policy America should pursue after the war. Only 14 per
- 12
- 13 -
Regraded Unclassified
cent favor a policy of unrestricted immigration. Thirty-soven per cent
smig and complacent about the progress of the war are legs likely to favor
would use a quota system and reserve the right to exclude some groups al-
collaboration than those who are apprehensive and concerned.
together. Thirty-five per cent would not lat in any foreigners.
People who have 8 sense of community with the peoples of other countries,
Half of the people who want to place severe or complete restrictions on in-
who believe in the basic equality of all human beings, are more prone to
migration in the post-war world gave no reason to justify their position.
favor international cooperation than those who do not. Internationalism
The argument most frequently advanced by the Afters WAS that immigrants
10 often associated with the belief that the rights and privileges of the
compete with American workers. Other large groups maintained that immi-
common man should be protected and extended.
grants "cause trouble" or that they are "undesirable people." Some of
these replies reflected the immediate war situation and the fears of spies
In keeping with this position, the internationalists are more prone than
and sabotage.
the isolationista to feel that the United States should be generous in its
treatment of other nations after the war. However, the public as a whole
Americans also have deep anxieties about the domestic economic future.
appears to have a deep sense of America's responsibilities in mitigating
Most people have little confidence that the goal of freedom from want will
the chaos of the post-war world. In reply to a question asked last March,
be attained. Six people in ten of a national cross section interviewed in
eight people in ten said that the United States should feed and clothe
October expected the war to be followed by a depression. A full third be-
people in other countries, if necessary, after the war.
lieved that business would be worse and unemployment more prevalent in the
five years right after the war than it was in the years immediately pre-
People's views on America's policy in the post-war world are not invariably
ceding it.
related to the nature of their opinions on associated issues. In some in-
stances their viewpoint appears to be related rather to the definiteness
OTHER RELATED ISSUES
of their convictions. People who have definite opinions one way or the
other on a number of social and political issues are more prone to favor
People's views on the policy the United States should pursue in the post-
U. S. participation in international affairs than those who express no
war world were also found to be related to their appraisal of the nation's
opinion.
war effort. Persons who are prone to exaggerate the importance of America's
contribution to the United Nations' war effort are less likely to favor
CLUSTERS OF OPINIONS
international collaboration after the war than those who have a better ap-
While not invariably related to the character of an individual's beliefs,
preciation of the contribution of our allies, Similarly, persons who are
the view that the United States should Join & comprehensive organization of
- 14 -
- 15 -
Regraded Unclassified
nations is typically part of & cluster of opinions. Those who hold this
They are less prone than the rest of the population to engage in civilian
view tend to think also that England and Russia can be depended upon to
defense work, and they are far more prone to favor a negotiated peace.
00 , rate with us after the war; that the present amount of governmental
regulation of business is necessary and should be continued after the war;
CONCLUSIONS
that business conditions will be better in the post-war years than they were
The fundamental strategy of informational efforts connected with the post-
before the war; that the United States should wage the war offensively; and
wer world in inescapably determined by the need of appealing to people's
that a negotiated peace with Hitler should not be considered. They also
hojes and overcoming their fears.
tend to feel that we have not yet made enough sacrifices; and they are prone
The positive task involved is to show the American people that the world
to be active participants themselves in the war effort to buy war bonds,
of peace and security for which they hope is actually attainable through
to conserve needed materials, and to engage in some volunteer defense work.
international cooperation. Their vague wishes for a better world must be
In general, they take a fairly realistic approach to war issues.
translated into concrete goals. And definite plans must be presented for
In some instances, these ideas may be expressed as lip service to ideals now
achieving those goals, 80 that they will not seem impracticable and unre-
commonly accepted. In any case, real interest and faith in an effective
alistic.
post-war society of nations demand more than generalized hopes for the fu-
Simultaneously, the fears which might make people hesitate to accept the
ture. They are closely related to solid understanding of the problems in-
responsibilities of international collaboration must be attacked. Mistrust
volved in the prosecution of the war and the winning of the peace. The
of other nations must be broken down. It 10 particularly important that
people most aware of the nation's economic and military difficulties, and
residual suspicion of Russia and England be dissipated, BO that the United
most cognizant of the problems involved in post-war reconstruction, are
States can cooperate closely with them in peace a.e well BE in war. The fear
the people most ready to understand and accept the real significance of
that close economic relationships with other nations will be disadvantageous
international collaboration.
to the United States must be dispelled with facts and figures.
The isolationists, like the internationalists, typically hold 8. cluster of
Ignorance is almost S.E formidable 6. foe of cooperation no fear. Indeed,
associated opinions. In addition to disapproving of American participation
the two are closely interrelated. More often than not, distrust of other
in an organization of nations, they tend to believe that we were right not
nations ie a product of lack of knowledge, rather than of dislike. A final
to join the League of Nations; that there is no need for further rationing
essential task of informational policy must be to raise Americans' general
and macrifices; and that there should be no limit on wages and salaries.
level of knowledge of other nations and of international affairs.
- 16 -
17 I #
Regraded Unclassified
In part, the problem is one of supplying information, so that foreign peoples
will not seem remote and strange, and 80 that the public will have the facts
to appraise suggested policies. In addition, through forums and other means,
Americans must be given opportunities to discuss and debate these policies -
to think through for themselves the problems involved in building a more 86-
cure world.
- -
- 18 -
Regraded Unclassified
72
December 17, 1942
9:54 a.m.
HMJr:
Hello.
Senator
Prentiss
Brown:
Hello. This 18 Senator Brown, Mr. Secretary.
HMJr:
Hello, Senator.
B:
I felt I should call you and tell you that I
guess I'm stuck. I have been over to the White
House twice
HMJr:
Yes.
B:
in the last two days, and I have resisted
with all the power I have
HMJr:
Yes.
B:
what they want me to do.
HMJr:
I see.
B:
But - and I - I've had two, possibly three,
matters in mind which I had not decided between.
There's yours and a proposition Jesse Jones made
to me
HMJr:
Yes.
B:
and I had not made up my mind on - which I
preferred.
HMJr:
Yes.
B:
but I was going to lay off and go through
the hospital and get a check-up, and then make
up my mind then, as I told you
HMJr:
Yeah.
B:
but, by gosh, this man - your boss just....
HMJr:
Yes.
Regraded Unclassified
73
- 2 -
B:
tells me that I must undertake this, and I
don't think I'm fitted for it. I don't think I'm
of the executive type at all.
HMJr:
What do they want you to do?
B:
Well, take Henderson's job, see?
HMJr:
Oh.
B:
And it's - - it's nothing - it's another - it's not
in line with my own views, but they think that I
perhaps have a standing with Congress that would
be most helpful there where they're - they've got
undoubtedly a serious situation.
HMJr:
Yeah.
B:
And I have told him that I've got to do what the
Commander-in-Chief tells me under these circum-
stances
HMJr:
Yeah.
B:
and with my misgivings and 80 on, I said, "I'll
got where you want me," see? That's confidential
HMJr:
Sure.
B:
because it's not public, but I felt you ought
to know that.
HMJr:
Well, I'm glad you told me, because I've been sort
of counting on you.
B:
Well, I'm still hopeful that he'll - that he'll
HMJr:
Did they forget - has he forgotten he wrote you a
letter?
B:
What's that?
HMJr:
Did he forget
B:
I mentioned that to him, and I said I know - I said,
"You'll recall that you wrote me a letter saying
that you hoped I'd go with the Secretary of the
Treasury."
Regraded Unclassified
74
- 3 -
HMJr:
Yes.
B:
And the situation 18 one where he's been per-
suaded by - now Henderson 1s the author of
this idea, see - Leon Henderson.
HMJr:
Yeah, what's Leon going to do?
B:
He's just going to quit.
HMJr:
I see.
B:
He - he's been pommeled 8 great deal
HMJr:
Yes.
B:
....and he tells me that his health is very
bad. His eyesight 1e - really in bad situation,
and he's got to take care of that and one or
two more things. He's had a tough time of it.
HMJr:
Oh, yes.
B:
And his staff feel that they could be pretty
loyal to me, you know, on account of the fight
I put up for them.
HMJr:
Yeah, I know.
B:
Of course, I - - I think this, Mr. Secretary,
that (laughs) there's lots of things that I
would not do that he has done down there.
HMJr:
Yeah.
B:
In other words, I think there's been too much
of a publicity organization. I think they've
been on the front pages altogether too much.
HMJr:
Yeah.
B:
Don't you - doesn't it....
HMJr:
Well, I think that - I think that there's -
that the trouble 1s at the community level.
B:
Yeah.
Regraded Unclassified
75
- 4 -
HMJr:
The community doesn't understand.
B:
That's it. It needa - it needs to be explained.
HMJr:
And you - you've got to do what - what we call
extension teaching, take the - teach it to the
people.
B:
Absolutely, and that's one thing where they
think perhaps I could be helpful. But I
HMJr:
And
B:
I wanted you to know the real situation
HMJr:
Yeah.
B:
and
HMJr:
Well, I - it's very kind of you
B:
Well, it was very
HMJr:
to explain.
I
B:
kind of you.
HMJr:
I'm disappointed, and
B:
Well - well, here's one thing that I'm thinking
about. Well, I figured that I could be of
main use to you up here
HMJr:
Yeah.
B:
and it seems to me that a good many of the
things that you're going to advocate could
still be made the subject of my aid and assist-
ance.
HMJr:
Yes.
B:
It seems to me that if I go down there - if he
puts me there, as he indicates he will - it
seems to me that my purposes ought to be
pretty much in line with yours on this
HMJr:
Oh, sure.
Regraded Unclassified
76
- 5 -
B:
....and, therefore, I want you, if I do go there,
to count on me....
HMJr:
Yeah. Well....
B:
....in that respect.
HMJr:
Well, I'd like to.
Regraded Unclassified
co-Daniel Bell
77
December 17, 1942
9:54 a.m.
Senator Prentise
Brown:
There's one other matter that I wanted
to talk about if you've got a minute.
HMJr:
I got all the time.
B:
I have been - I talked with Dan Bell about
this
HMJr:
Yes.
B:
a couple of days ago, and I've been
vitally interested in helping some of our
people up there in two really small branch
bank extensions.
HMJr:
Yes.
B:
It's been a political football.
The Republican crowd has gone with the
small out-state bankers, and the - certain
group in the National
HMJr:
Yeah.
B:
of Detroit, while the only bank of any
size that's been at all inclined towards
us has been this Michigan National Bank.
HMJr:
Yes.
B:
It's very friendly to the Governor and to
me, and 80 on and 80 forth, and really this
1s an awfully small issue - it - Bay City,
where they want to take over a bank - there's
absolutely nothing that could be said there
other than that it - that it 18 in the
broad public interests, because they can
clean up a closed trust account of pretty
good size
HMJr:
Yes.
B:
....and pay off a hundred cents on the dollar
by this take-over, and in Detroit these
fellows have got real reason for - for taking
over that Michigan bank there.
Regraded Unclassified
78
- 2 -
HMJr:
Yeah.
B:
I've talked it over thoroughly with Mr. Delano,
and I've given Dan Bell the high spots.
HMJr:
Yeah.
B:
Now they tell me that one thing that worries
them 1s the - your general attitude towards the
Giannini crowd out there
HMJr:
Yeah.
B:
and the effect that it would have on this.
Well, I - I do think these fellows are entitled
to it under the law here, and I know the Manu-
facturers people have no - Bank which 18 the
second bank there
HMJr:
Yeah.
B:
have no real objection. I know that several
directors of the National Bank in Detroit are
well disposed towards this. Now I....
HMJr:
Well, look, I'll ask Dan to talk it over with
me. I'm not familiar with it. Nobody - - nobody's
mentioned it to me up 'till now.
B:
Yeah, well, I wish - it's just a matter where I
would like to get that last thing over before I
get out of here, and it's got to be done right
off.
HMJr:
Well, I'll ask Dan to
B:
You do that. Thank you.
HMJr:
Thank you.
B:
And I hope you have a good deal of contact on
this
HMJr:
I hope so, and I'm disappointed.
B:
Well, thank you, Mr. Secretary, and I'm sorry.
HMJr:
Okay.
B:
Goodbye.
Regraded Unclassified
79
December 17, 1942
10:11 a.m.
HMJr:
Hello.
Operator:
All right?
HMJr:
Go ahead.
Operator:
Go ahead.
HMJr:
Hello.
Senator
Sheridan
Downey:
Good morning, Mr. Morgenthau.
HMJr:
Hello, Senator.
D:
Mr. Morgenthau
HMJr:
Yes.
B:
the Bank of America, when I was last
out there, discussed with me certain of their
problems in
HMJr:
Yeah.
D:
relation to branch banking
HMJr:
Yeah.
D:
and I would like to have the opportunity
to discuss that matter with you sometime
today if that would be possible and conveni-
ent to you.
HMJr:
Well, we have Cabinet this afternoon.
That's the only trouble.
D:
Well, would tomorrow morning suit you?
HMJr:
Tomorrow morning would be much better.
D:
What time would be convenient for me to call
on you, Mr. Secretary?
HMJr:
Oh, ten-thirty?
Regraded Unclassified
80
- 2 -
D:
I'll be at your office at ten-thirty.
HMJr:
Righto.
D:
Thank you very much.
Regraded Unclassified
81
December 17, 1942
4:15 p.m.
INTERNATIONAL STABILIZATION FUND
Present: Mr. White
Mr. Gaston
Mr. Mager
Mrs. Klotz
H.M.JR: This is just for the benefit of White.
This happened while I was trying to get you.
Mr. Hull called me and said that he had been look-
ing into this memorandum on the World Stabilization
agreement, and that he had not had a chance yet to talk
with Herbert Feis, but he wanted to make sure that
Herbert Feis did not have any objections to it. He
would like to have everybody criticize it who could.
I said, "Fine." He said, "Do you have any objec-
tion if they have one more meeting of the technicians?"
I said, "None whatsoever," and that I would tell
White to call one, because Hull said he was still in a
fog on it.
Then he asked if any people from outside had seen
it, and I said, "No, we confined it to Government
circles."
Then he asked if Stewart had seen it. I said that
I thought he had, originally - that both Stewart and
Viner were advisors to the Treasury, and I was under the
impression that Stewart had seen the original draft.
MR. WHITE: I think so - I don't know.
H.M.JR: I said that I would be glad to send him an
up-to-the-minute one, and have him give us his opinion,
Regraded Unclassified
82
- 2 -
and that I also would tell White to call another meet-
ing of the technicians.
So he said that the thing he wanted to be sure of
was that if we had a world meeting of the technicians
we would have to be ready, then, to go forward. He
wanted to be sure that before we went any further, that
we wanted to see this thing through.
MR. WHITE: I will call & meeting right away.
H.M.JR: I would send Stewart a draft.
Regraded Unclassified
83
December 17, 1942
4:25 p.m.
HOME FRONT
Present: Mr. Gaston
Mr. White
Mr. Mager
Mrs. Klotz
H.M.JR: Now, what I want is this: I would like the
three of you to collaborate on this thing, and I would
like to have this in the morning - by noon, if possible.
I will just dictate this, and Mrs. Dennis can run this
off first and give it to you.
"My dear Mr. President:
"Continuing our conversation of Wednesday morning
about keeping the people of the United States informed
on what cooperation is expected from them to win the
war at home, I would like to make the following concrete
proposal.
"As I understand it, you have organized under you,
as Commander in Chief, 8. Combined Chiefs of Staff, who
advise you on military matters. I think you should have
a comparable organization dealing with the home front.
"At present you have 8. number of Departments and
independent agencies who deal directly with the people,
and I think that these organizations, comprising Claude
Wickard, Henderson, McNutt, Landis, Elmer Davis, and
myself, could be a committee which would meet once a
week, or as often as is necessary, to deal with this
problem on 8. community basis.
"What I have in mind is that if, for instance, we
have a War Bond meeting, or a meeting to explain the
Victory Tax in the community, it would be much easier
Regraded Unclassified
84
- 2 -
to explain at the same time to the same group how to
apply for their fuel oil and tires, and so forth, than
it would be simply to explain to them the question of
how to make out their income tax returns. In other
words, what I visualize is a group of people who will
go into each community and explain to every member of
that community what is expected of him and her to
carry out the measures necessary to win the war."
Now, that, of course, is much wordier than I would
like to have it, but I might say:
"I tried this out on Secretary Wickard at lunch
and then after Cabinet on the Vice President. The
Vice President was very enthusiastic about it, especially
when I explained to him what we had done in Winston-
Salem.
"Then he said that there was one other thing which
he had mentioned to you. That was we must do something
with the soldiers in the camps in the United States.
Nothing is being done there. He said that if these two
fronts were covered, he would feel that we had gone 8.
long way towards stopping this constant misunderstanding
on the part of the public as to what we are trying to
accomplish here in Washington."
Do you think, with that much - the three of you
get together. White has got to work - I will have my
car at your house at eight tomorrow morning, and you
come down and pick me up. Is that convenient or a
little early?
MR. WHITE: If I have to ome down that early, I
will need a separate car.
H.M.JR: Could you work a little while on it?
MR. GASTON: I don't think the wording of the
letter is a problem, if that is what you want to say.
I was trying to visualize the organization and whether
it is what we want or not.
Regraded Unclassified
85
- 3 -
H.M.JR: Well, if you are not in agreement with
me, talk it over and then prepare B. letter for me.
Then we will talk it over again.
MR. MAGER: There are two different problems that
I visualize immediately. Certainly the sort of thing
that you would say to civilians would be different from
the sort of thing you would say to soldiers in an Army
camp.
MR. WHITE: That is not implied.
H.M.JR: Prepare me a good letter, and then let's
talk about it.
MR. GASTON: If there is a need for such an organiza-
tion, and probably there is for some sort of an organization
in that field, I should say it is because the existing
organizations have not done their job.
MR. WHITE: This isn't an organization, I gather,
that the Secretary has in mind. What he has in mind is
an advisory group tagged with the responsibility to see
that the thing is taken care of. What agency is to be
used, I don't think is implied there.
H.M.JR: Give me 8. good letter covering that thing;
then let's argue about it tomorrow.
If you have a better idea - I think if he had a
half 8. dozen people who would meet, and when they hear
that this or that has gone wrong - then organize it so
that - Claude Wickard said to me, "I can handle the
farm people, but I am absolutely licked when it comes
to dealing with a housewife in the city."
MR. WHITE: Why hasn't he handled the farm people?
H.M.JR: I don't know, but anyway, that is his
trouble. We put somebody into the high schools to talk
on taxes, and the fellow says, "O.K., now I understand
that, but how do I make out my questionnaire to get
Regraded Unclassified
86
- 4 -
fuel oil in my house? He says, "I don't know - I
think it is lousy anyway." In other words, there
would be 8. team that would go into the community.
MR. GASTON: It is a job of coordinating our
education of the public, and it seems to me that that
ought to have been & function, if it isn't, of the
Office of War Information, and they are not doing it.
H.M.JR: Yes, but OCD isn't doing it, 50 I am
trying to work out something so that instead of
continually going to the President and saying, "It is
lousy," I say, Here are a half & dozen people -"
and if they got together and worked up a plan to give
to the President--
MR. MAGER: It may be that the Office of War
Information does not have the contacts with these
other groups.
H.M.JR: They don't; the OCD does.
MR. WHITE: I don't think it is the Office of
War Information's bailiwick; it is much broader than
that. It is public relations between the Government
and the community, and it touches every department.
War Information is one of them. This is not propaganda;
this is something - what we have been talking about is
explaining why the Government does certain things.
H.M.JR: And helping the fellow to do it.
MR. WHITE: I don't know whether it should go as
high as 8. Cabinet committee.
H.M.JR: It has to start there. Wickard didn't
want me to repeat it. He said that every day this week
he has called up Henderson and said, "When are you going
to get out your price regulations on poultry?" There
is forty percent more poultry in the country than there
was last year, and here we are, a week from Christmas, and
Regraded Unclassified
87
- 5 -
butchers can't get their poultry because Henderson
hasn't gotten out his price regulations. He hasn't
gotten them out as of noon today. Butchers can't buy;
they won't buy the poultry which is in the ice box
because he has not gotten out - and Wickard gets
blamed as food administrator because there isn't
enough meat to go around. If there were four or five
of us sitting around the table and we had Henderson
there, we would say, "You don't go to bed tonight
until you get it out, it is all damned nonsense."
Just remember this, I am thinking of how to
educate the man and woman living in the community, on
what the Government is trying to do and to get their
cooperation to do it. That is what I want done.-
MR. GASTON: And educate Henderson, too.
H.M.JR: Now, Herbert, don't be too sarcastic.
(Laughter) Educate or fire - anybody and everybody.
But you can't expect to go back to the 1933 level of
civilian goods, from the lush - go back to that and
have the people like it, unless somebody is going to
do some explaining. As the Vice President said, it
is all in the hands of the manufacturers now, and they
are not helping one bit.
MR. WHITE: Did you have 8. chance to listen to
Andy Kamarck on this business about soldiers and
officers, what they think? What he had to say would
bear you out very, very strongly. He thinks it is
criminal.
H.M.JR: The soldiers in the camps?
MR. WHITE: He said the officers. It must be
even more true of the soldiers.
H.M.JR: I am not attempting to get into that.
MR. WHITE: I mean, it is the same thing.
Regraded Unclassified
88
- 6 -
H.M.JR: At Fort Riley - I mean, there is nothing.
It was just nothing, but don't let's - it was Wallace
who brought in the camps. I am not bringing in the
camps. What I am trying to do - I went to the President;
he liked it. I criticized what is happening. The
reason is, Hopkins is coming for lunch tomorrow, and I
want to talk to him about it. I want something before
I see Hopkins at lunch time.
It is just like somebody coming to me and saying,
"Well, what the Bureau of Internal Revenue is doing is
lousy." I say, "I agree," and the next question is,
what should I do about it. If the fellow came in and
said, "Mr. Morgenthau, here is a plan, I would throw
my arms around him. I would say, "Wonderful."
I am putting you fellows down for eleven tomorrow.
Regraded Unclassified
89
THE WHITE HOUSE
WASHINGTON
/. We have combined chief
of staff for War. We
need me on home ? front
2. Namous a agencies who
have to deal directly
with public should be
organized to deal with
home first.
C/. agric,
2, 2.0.P.H. P.H.
3, Treas.
4. Manfower
S.O.C.
6.0.W.I.
Weal with public in community
on a cambined basis.
90
December 17, 1942
4:35 p.m.
HMJr:
Hello.
Operator:
Harold Thomas.
HMJr:
Hello.
Harold
Thomas:
Mr. Secretary?
HMJr:
Hello.
T:
Hello.
HMJr:
Morgenthau.
T:
Harold Thomas talking.
HMJr:
Go ahead.
T:
How about Monday?
HMJr:
Monday?
T:
Yeah.
HMJr:
Nothing the matter with Monday?
T:
If Mr. Hill and I come down in the morning -
if we could see you about one, two o'clock?
HMJr:
Now just a moment. What a peculiar time.
T:
Well, we get there about that time, and we
could get back on the four o'clock. We'll make
it, of course, at your convenience.
HMJr:
How about two-fifteen?
T:
Two-fifteen.
HMJr:
Yes.
T:
All right, fine and dandy.
HMJr:
Now that's Mr. Hill?
Regraded Unclassified
91
- 2 -
T:
Yes.
HMJr: And yourself.
T:
That's right.
HMJr: Well, that'll be fine.
T:
All right, two-fifteen on Monday.
HMJr: How 1s he - susceptible, is he?
T:
(Laughs) Well, we'll tell you that story when we
get down there.
HMJr: Fair enough.
T:
All right, fine.
HMJr: Thank you.
T:
Thank you.
Regraded Unclassified
92
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE Dec. 17,
1942
TO
THE SECRETARY
FROM
Mr. ODEGARD
You asked for information concerning the distribution
of certain War Savings materials by air express. This
material consisted of the following:
1. Item consisted of materials for Women-at-War
week which were distributed to 50 points with
the approval of Mr. Graves.
2. Posters and other material for December 7, and
subsequent display in retail stores with the
general theme "My Declaration of War." This
material went to 188 points without the know-
ledge either of Mr. Graves or Mr. Gamble.
Mr. Graves has already had & conference of all persons
concerned in this matter and has sent to Mr. Sloan a
memorandum, of which a copy is attached. Mr. Graves has
also replied to the letter from Noland Blass, to which
you referred this morning. A copy of this letter is also
attached. Mr. Graves has called for a complete report
on this which should be available soon.
Regraded Unclassified
93
copy
December 11, 1942
MEMORANDUM FOR MR. SLOAN:
Please bring to my attention before approval any
further proposals for posters or other display material
designed to meet a particular date, sucha S Christmas,
Lincoln's Birthday, "Women at War Week" (November 22-28).
I am inclined to think that we should consider the
elimination of "dated" material of this kind for two
reasons:
First, the difficulty and, in some cases,
the exorbitant cost, of getting material
distributed in time to meet the necessary
deadline; and
Second, the fact that "dated" material is of
course obsolete and useless after the date
has been passed, and therefore expensive
above the average.
I have asked Mr. Hirzel, to whom I have talked
about this, to discuss the matter with you in detail
on Monday.
Harold N. Graves
Assistant to the Secretary
Regraded Unclassified
o
94
P
y
December 10, 1942
Mr. Noland Blass
President
The Que Blass Company
Fourth and Main Street
Little Rock, Arkansas
Dear Mr. Blass:
The Secretary appreciates the friendly and helpful criticism
expressed in your letter of December lat, and has asked me to reply
to it and to explain to you some of the circumstances in connection
with the shipment of promotional material to which you refer.
While regretting the unusual expense of this shipment and of &
number of similar shipments, the Secretary feels that he is justified
in believing that it is not often that such criticism can justly be
made of the operation of the Mar Savings Program. Otherwise the ad-
ministrative cost of selling Mar Bonds could not have been held to
the very low figure of one tenth of one percent.
You are undoubtedly aware that the material in the shipment was
a part of 8 rather important national program. To achieve its maximum
effectiveness it was necessary that the material reach final dis-
tribution points before December 7th. It was also considered 1m-
portant that the distribution be nation-wide.
In planning and preparing the material we allowed ample time
for distribution by ordinary means based on conditions that existed
until toward the end of October. Unexpected difficulties in production
and distribution arose after the campaign had been announced and when
the greater part of the expense of production had already been incurred.
Some of these difficulties could not have been foreseen.
When the material was finally delivered we were faced with the
question whether to forego the campaign in some areas of the western
part of the country, or go to the additional expense of shipping by
Railway Express and Air Express. We decided upon the latter course,
and had to ship by Air Express to reach Little Rock and a number of
other places west of the Mississippi where Railway Express would not
guarantee delivery on time. We did not use Air Express, or even Red lway
Express, when delivery could be made on time by other means.
Regraded Unclassified
95
Mr. Noland Blass
-2-
December 10, 1942
We give considerable attention to improving our procedure in
the production and distribution of promotional materials, and you
may be sure that we are benefiting by this experience. Your letter
will be helpful to that end.
The comment in the last paragraph of your letter about quan-
tities of literature is being referred to the Retail Section of
the War Savings Staff for their careful attention.
I take this opportunity to thank you and your firm for your
generosity in allowing Mr. C. L. Roesch to act as Chairman of the
Display Mens Committee in Little Rock. The service has been a
definite contribution to the War Savings Program.
Sincerely yours,
Harold N. Graves
Assistant to the Secretary
WH:mnl
cc to St. Adm. Paschal, Little Rock, Arkansas
12/10/42
Regraded Unclassified
- 6 -
96
Unfavorable Comments on Bonds
William W. Staplin, Summit, N.J. Enclosed are copies
of letters which I am writing today to two divisions
of the Treasury Department, one indicating that I have
waited three months for a simple exchange of Defense
Savings Bonds, and another indicating that I have
waited one month for advice of 8. removal of a stop
payment order which my wife and I asked the Government
to place against B. Bond which we have since found. It
seems to me that the public might be morereceptive to
your $9,000,000,000 Bond issue and other appeals for
subscriptions to War Bonds if this inexcusable delay
did not occur whenever it is necessary to do any business
with the Government. #
#
Noland Blass, President, The Gus Blass Co. (Dept. Store),
Little Rock, Ark. # * * Yesterday there was delivered to
the Display Department of this store posters sent via
Air Mail Express, with prepaid charges of $88.77. The
writer realizes that emergencies call for unusual ex-
penses and speed, but for every person who has this type
of reasoning, there are a thousand or 8. hundred thousand
who would question this large expenditure, which undoubt-
edly would reflect adversely on the sale of Bonds to the
public. I therefore pass this information on to you
purely as constructive criticism so that B. little more
speed in planning will prevent 8. similar occurrence in
the future. * # # Also, it seems that the amount of
literature sent direct to stores might very well be
checked into to see if all of the printing is being
used or whether only 8. small part. ###
Fred Unverzagt, Burlington, Wis. For the past 35 months
I have bought a $50 monthly Bond through the Treasurer.
Have them, intend to keep them, intend to keep it up.
Please advise why your office isn't satisfied, it's about
20% of my salary. I work for C. M. St. P. & P. RR Co.
They keep after me to join the 10% Club. Claim your
office keeps after them to get me in the 10% Club. What
is idea, advantage, etc? You had no trouble getting
check cashed did you?
Regraded Unclassified
- 6 -
96
Unfavorable Comments on Bonds
William W. Staplin, Summit, N.J. Enclosed are copies
of letters which I am writing today to two divisions
of the Treasury Department, one indicating that I have
waited three months for a simple exchange of Defense
Savings Bonds, and another indicating that I have
waited one month for advice of 8. removal of a stop
payment order which my wife and I asked the Government
to place against 8. Bond which we have since found. It
seems to me that the public might be morereceptive to
your $9,000,000,000 Bond issue and other appeals for
subscriptions to War Bonds if this inexcusable delay
did not occur whenever it is necessary to do any business
with the Government. ***
Noland Blass, President, The Gus Blass Co. (Dept. Store),
Little Rock, Ark. # " # Yesterday there was delivered to
the Display Department of this store posters sent via
Air Mail Express, with prepaid charges of $88.77. The
writer realizes that emergencies call for unusual ex-
penses and speed, but for every person who has this type
of reasoning, there are a thousand or a hundred thousand
who would question this large expenditure, which undoubt-
edly would reflect adversely on the sale of Bonds to the
public. I therefore pass this information on to you
purely 8.S constructive criticism so that & little more
speed in planning will prevent 8. similar occurrence in
the future. # Also, it seems that the amount of
literature sent direct to stores might very well be
checked into to see if all of the printing is being
used or whether only a small part. ###
Fred Unverzagt, Burlington, Wis. For the past 35 months
I have bought a $50 monthly Bond through the Treasurer.
Have them, intend to keep them, intend to keep it up.
Please advise why your office isn't satisfied, it's about
20% of my salary. I work for C. M. St. P. & P. RR Co.
They keep after me to join the 10% Club. Claim your
office keeps after them to get me in the 10% Club. What
is idea, advantage, etc? You had no trouble getting
check cashed did you?
Regraded Unclassified
97
December 17, 1942
Dear Mr. Berry:
I have been much interested in reading your
letter of December 3rd in which you draw my attention
to a statement released on December 7th about the
renewal of your International Apbitration Agreement
with the American Newspaper Publishers Association for
another five-year period.
It was also most kind of you to give me the
details of your national union's record in promoting
the purchase of War Bonds by its members. I hope that
this record may be kept up and extended. Many of your
members, I notice, have joined the armed forces, but
those who do not have the opportunity to get into
uniform will certainly want to continue to lend their
money to the Government, 80 that the best possible
weapons can be put into the hands of those on the
fighting line.
The booklet about your Pressmen's Home, which
you enclosed with your letter, is & fine story of
accomplishment on the part of your Union, and I con-
gratulate you upon it.
With best wishes,
Sincerely,
(Signed) H. Morgenthan. Jr
Mr. George L. Berry,
President, International Printing
Pressmen and Assistants' Union
File to Thompson
of North America,
Photo file in Diary
Pressmen's Home, Tennessee.
(Booklet in bookcase
FK/ogk
Regraded Unclassified
99.75
INTERNATIONAL PRINTING PRESSMEN &
ASSISTANTS' UNION of NORTH AMERICA
A PROGRESSIVE AND HUMANITARIAN ORGANIZATION OFFERING SERVICE AND
PROTECTION TO ALL PRESSROOM WORKERS OF NORTH AMERICA, OPERAT-
68333 3400000
ING A TECHNICAL TRADE SCHOOL HOME POR SUPERANNUATED
MEMBERS, SANATORIUM. THE AMERICAN PRESSMAN
OLD AGE PENSION AND DEATH BENEFITS
1040
HEADQUARTERS
PRESSMEN'S HOME, TENNESSEE
$80
OFFICE OF GEORGE L BERRY. PRESIDENT
December 3, 1942
1163
The Honorable Honry Morgenthau
322362
SUBSIT
Secretary of the Treasury
Washington, L. C.
My dear Mr. Secretary:
Attached is n statement which 1s to he released on Monday, December
7, 1942, which I recommend for your perusal. It relates to the re-
newal of our International Arbitration Agreement with the American
Newspaper Publishers Association for another 5-year period, which
will bring the relationship up to 41 years when the new contract has
expired.
The release refers to the international referendum vote which was
overwhelmingly in favor of the renewal of the Agreement. There remain
several days yet to recolve the returns but to date 268 local unions
have voted for the renewal with only 22 against it.
Quite acide from the fore oin(; references, I know you will be pleased
to be advised that to date 3,451 mombers of our organization are in
the armed forces of the country and approximately 2500 are in war
industrics, We are renting to those in the armed forces immunity
from the payment of their monthly per capita tax which has now reached
the fi,uro of 6,405.10 per month.
In additi DA Lo U.S. our monbership has to date purchased in War Bonds
and Stanps 22,302,100.49, so you will observe we are doing our bit all
down the line.
I wish to extend to you and ours s'ncere good wishes for a pleasant
holiday period, and 1 join with you in the hope that soon we shall
have restored to the world peace und good will which can only come
through victory of the ..111od Nations. With my compliments please
accept as C C: ristains remembrance & booklet of Pressmen's Home, which
is going forth under separate cover, which indicates what we have
tried to do in the interest of humanity and education. I hope you
will Mind it possible to peruse it.
Sincerely and respectfully yours,
President.
P.S. I have noticed nonething about t.l.e possibility of your
retiring. I do hope this is unfounded. You have made a great
Secretary.
GLB
Regraded Unclassified
The International Printing Pressmen and Assistants' Union of North
America re-commits itself to local and international arbitration.
George L. Berry, President of the International Printing Pressmen
1
Assistants' Union of North America, announced today that the mem-
hership by referendum vote held in November had again approved renewal
the International Arbitration Agreement as between the American
Newspaper Publishers Association and the International Printing Press-
- and Assistants' Union of North America by an overwhelming majority.
President Berry in commenting upon the matter stated:
"The International Arbitration Agreement negotiated between
representatives of the American Newspaper Publishers Association and
the International Printing Pressmen and Assistants' Union of North
America has been approved by referentum vote of the membership through-
out the United States and Canada for an additional five-year period.
This Contract has been operative, except for a short time many years
ago which involved negotiations, for thirty-six years. The renewed
Contract will extend it to forty-one years. During the period of its
operation one violation of its terms has occurred. This, of course,
establishes an unprecedented record of continuous peaceful relationship
investor, management, and labor as it affects the printing
of the newspaper plants on the Continent of North America.
*It is especially significant in this time of world turmoil
that the great membership of the International Printing Pressmen and
Assistants' Union of North America by a referendum vote have not only
exercised their prerogatives as free mon in considering this important
matter but have hold firm to the proposition that peaceful adjustments
always the best adjustments since they have come to fully under-
stand that their interests, the investors' interests, and the
Regraded Unclassified
00
managerial interests of the newspapers are inseparable. It 10 good
that we can maintain the great principle of pease and the instrumentali
of justice and that these practical idealism can find support in the
midet of world confusion, belligemency, and war."
as DEC 1 W.
S
Regraded Unclassified
101
December 17, 1943.
Dear Sergeant Uhl:
I have received your letter of December 14 and
want to tell you that I appreciate your greetings
and good wishes.
I feel sure that you will be interested in
seeing the enclosed copy of a letter which I have
just received from Secretary Stimson.
with best wishes for the holiday season,
Sincerely,
(Signed) H. Morgenthau, Jr.
Sergeant Richard Uhl,
80th Division Artillery Band,
File in Diary
Camp Forrest, Tennessee.
Enclosure.
KP/dbs
Regraded Unclassified
102
ID 201.3 (11-30-42) PE-A
DEC 12 1942
Henorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. c.
Dear Henry's
Thank you for the phonograph record of the songe
"Everybody, Every Payday" and "March for the New Infantry",
written by Sergeant Richard Uhl and Corporal Tom Adair. I
enjoyed it very much.
It is very gratifying to me and to the War Depart=
ment to receive such commendatory reports concerning services
rendered by the personnel of the Army, and it is appreciated
that this matter has been brought to my attention.
Copies of your letter have been filed with the
records of Sergeant Uhl and Corporal Adair, and copies have
been forwarded to their commanding officers.
Sincerely yours,
12 13 1415
HENRY L. STIMSON
06/07/20 8 DEC DISPATCHED 12 2 1942
Secretary of Nar.
as DEC 10 VW
Regraded Unclassified
103
1
ANTOISIPICARDY SECTOR
ST. MINIEL OPPENSIVE
HEUBE-ARGONNE OFFENSIVE, FIRST. SECOND AND THIRD PHANES
copy N mrs.
EIGHTIETH
DIVISION
so
margenthan 10/7/42
CAMP FORREST, TENNESSEE
December 14, 1942
Dear mr. Morgenthan:
your wonderful package arrived
in my mail at in opportune time -
the day before I left camp for a
furlough at home. e carried it with
in, and both my family and I had a
lot of fun reading the various releases.
Tom and I hope that the song will
live up to everyone is expectations. we
had so much fun writing and working at
the Treasury, that we won 'h be content until
we hear everybody singing "Ten per cent, that's
the rent!", and hear them doing something
of at it too!
Regraded Unclassified
it was alittle hard coming back
to the field army, after the excitement
w
of Washington, but the old army routine
quickly settles you down.
I have begin to find it too much of
a compromise Do mix misic and the army,
so have gone military all the way, and
applied for officer Candidate s charl in the
Fuld antilley I haven 2 yet been a crepted,
but hope to go by the end of January. By
that time, Henry will probably have won
his commission. The going is pretty rough, but
he certainly went about it and the right way.
again, thank you for the words and the
publicity releases. Theywill always re-
mind me of the happy summer you gaveme
in Washington.
Please give my best wishes to Mrs.
Morgenthan and Joan. and Do you andall
your family \ a merry Christmas
sincerely yours,
Dick Who Regraded Unclassified
104
December 18. 1942.
Dear Corporal Adairs
I have received your letter of December 15 and
want to tell you that I appreciate your greetings
and good vishes.
I feel sure that you will be interested in
seeing the enclosed copy of a letter which I have
just received from Secretary Stimson.
with best wishes for the holiday season,
Sincerely,
(Signed) H. Morgenthau, Jr.
Corporal Thomas Adair,
File in Diary
Radio Division,
Post Public Relations Office,
Fort Jackson, South Carolina.
Enclosure.
GEF/dbs
Regraded Unclassified
copy to mrs. m.
1
18/17/42. 105
December 15, 1942
Radio Division
Post Public Relations Office
Fort Jackson, S.C.
The Honorable Henry Morganthau, Jr.
Secretary of the Treasury
Washington, D.C.
Dear Mr. Secretary:
I want to thank you for the very interesting
items of promotional naterial you sent me on "EveryBody Every
Payday.' It is Dick's and my most sincere wish that the results
of the song will justify your gratifying confidence in our abilities.
Mrs. Adair and I send you our kindest regards and
ask to be remembered to Mrs. Morganthau.
Respectfully yours,
TOM ADAIR
Regraded Unclassified
106
December 17, 1942
Dear Mr. Berlin:
I thought you might be interested
in seeing a photostatic copy of the
Australian version of your song,
"Any Bonds Today?"
With best regards,
Sincerely yours,
Henry Morgenthau, Jr.
Mr. Irving Berlin,
799 Seventh Avenue,
New York, New York.
Copy in Diary
Regraded Unclassified
107
UNITED STATES SAVINGS BONDS - SERIES E
Comparison of December sales to date with sales during the
same number of business days in November and October, 1942
(At issue price in thousands of dollars)
: December
:
Cumulative sales by business days
Date
:
daily
:
I
December
November
I
October
:
December as
:
sales
:
:
:
:percent of November
ecember 1942
1
$ 4,116
$ 4,116
$ 5,164
-
79.7%
2
4,489
8,605
9,272
I
92.8
3
10,042
18,647
20,460
$ 5,045
91.1
4
39,690
58,337
31,309
42,285
186.3
5
16,648
74,984
53,076
52,984
141.3
7
46,424
121,408
62,326
73,919
194.8
8
11,887
133,295
96,366
98,490
138.3
9
17,857
151,152
111,002
117,077
136.2
10
13,607
164,759
146,494
131,593
112.5
11
38,664
203,423
161,929
169,859
125.6
12
17,480
220,903
181,120
179,232
122.0
14
52,056
272,959
188,497
194,811
144.8.
15
15,530
288,488
230,083
222,243
125.4
16
22,764
311,252
241,624
239,891
128.8
ffice of the Secretary of the Treasury,
December 17, 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. These figures have been
adjusted on the basis of wire reports and therefore will not agree with the
Treasurer's accounts.
Note:
Figures have been rounded to nearest thousand and will not necessarily add
to totals.
Regraded Unclassified
CONFIDENTIAL
108
UNITED STATES SAVINGS BONDS - SERIES 7 AND G COMBINED
Comparison of December sales to date with sales during the
same number of business days in November and October, 1942
(At issue price in thousands of dollars)
: December
:
Cumulative sales by business days
Date
:
daily
:
:
:
:
December as
December
November
October
:
sales
:
:
:
:percent of November
ecember 1942
1
$
197
$
197
$
303
-
65.0%
2
329
527
1,115
-
47.3
3
2,688
3,214
7.846
$ 2,218
41.0
LL
13,947
17,161
14,720
20,322
116.6
5
12,303
29,464
31,425
24,325
93.8
7
17,522
46,986
34,030
31,922
138.1
8
2,872
49,858
43,940
46,695
113.5
9
9,576
59,434
49,326
55,998
120.5
10
5,651
65,085
58,842
59,711
110.6
11
14,274
79.359
64,157
74,275
123.7
12
7,135
86,495
71,352
76,430
121.2
14
15,430
101,924
73.989
83,857
137.8
15
7.719
109,644
83,246
91,884
131.7
16
5,146
114,789
88,588
98,457
129.1
Office of the Secretary of the Treasury,
December 17, 1942.
Division of Research and Statistics.
Source: All figures are deposite with the Treasurer of the United States on account
of proceeds of sales of United States savings bonds. These figures have been
adjusted on the basis of wire reports and therefore will not agree with the
Treasurer's accounts.
Note: Figures have been rounded to nearest thousand and will not necessarily add
to totals.
Regraded Unclassified
TREASURY DEPARTMENT
109
INTER OFFICE COMMUNICATION
DATE December 17, 1942
TO
Secretary Morgenthau
GS.
FROM George Buffington
The comment was made by Mr. Murray Shields yesterday that
Vorgan Stanley was paying a commission of 1/8% to their organiza-
tion for the sale of Victory Loan securities. This statement is
incorrect. Morgan Stanley does not have a sales organization,
and have not paid a commission in connection with Government se-
curilies. Harriman Ripley and Company, and one or two other com-
panies, in Chicago have paid commissions to salesmen.
Regraded Unclassified
110
Minutes of the Meeting of the Board of Economic SECRET Warfare
Held December 17, 1942, at 10:00 8. m.
meeting of the Board of Economic Warfare was held in the Vice President's office in
the Capitol Building at 10:00 B. m., on December 17, 1942:
Those present:
The Vice President, Chairman of the Board
Mr. Dean Acheson, representing the Secretary of State
Dr. Harry White, representing the Secretary of the Treasury
Mr. R. P. Patterson, representing the Secretary of War
Mr. Charles Fahy, representing the Department of Justice
The Secretary of Agriculture
Mr. Nelson A Rockefeller, Coordinator of Inter-American Affairs
Mr. Donald M. Nelson, Chairman, War Production Board
Mr. E. R. Stettinius, Jr., Lend Lease Administration
In addition, the following persons were present:
Mr. Wayne Taylor, Department of Commerce
Mr. % L. Clayton, Department of Commerce
lir. Leslie Wheeler, Department of Agriculture
Mr. Harold H. Neff, War Department
Mr. Wayne Coy, Bureau of the Budget
Mr. Bernhard Knollenberg, Lend Lease Administration
Mr. John Lockwood, Office of Coordinator of Inter-American Affairs
Mr. Milo Perkins, Board of Economic Warfare
Mr. E. W. Gaumnitz, Board of Economic Warfare
The Vice President opened the meeting, indicating that the first report was that
entitled, "Importation of Strategic. Materials by Air," dated December 1, 1942, and
asked Mr. Perkins to comment.
Mr. Perkins stated that a considerable volume of important materials were being in-
ported by air, and that at certain times such movement had been extremely important.
He called attention to a modification of the estimated movement for November and
December, and there was distributed a applementary table, "Addendum to Importation of
Strategic Materials by Air," showing actual movement for specified weeks in November
and December: compared to the estimates of movement prepared in October. He indicated
that every assistance had been given by the Air Transport Command, and that the re-
duced traffic was a matter of non-availability of planes.
The Vice President raised the question as to the relative cost of carrying cargo by
air compared to other means of transportation. Mr. Perkins indicated that air trans- (
port costs were definitely higher, although he pointed out that there were a number
factors making it very difficult to make a fair comparison; for example, the cargo
being carried was almost entirely back-haul and under unusual conditions. He esti-
mated that cost was perhaps five or six times as high 88 rail and water transportatic
and might be ten times as great. Ho stated that in many cases, however, rail and
water facilities were not available as alternatives, so it was either a matter of
transporting materials by air or not at all.
Regraded Unclassified
Mr. centa per septed that recent information indicated that air cost wes around fifty
111
possible that there could be some tightening in the availability or Lond Lense to the
Empire.
In response to E question.by. the Vice President, Mr. Nelson stated that he thought
air freight was entirely fensible and expected that about ten por cent of inbound
Mr. Perkins stated that he thought all of the agencies concorned should be informed
freight night be handled by air.
as to this government's policy, though et present it seened impossible to secure a
policy statement. For example, who was responsible for 8. docision na to the Relgion
Fibers:
Congo-
The Vice President then referred to the report on Fibers, entitled, "Fibers," dated
Mr. Patterson nsked what agency or person made the determination no to whether arti-
October 15, 1942, and asked Mr. Perkins to comment,
eles wore handled on 6. Lond Loase or commercial basis. Mr. Perkins stated that n
similar question was raised by the Republic Chemical Corporation letter, copies of
Mr. Perkins stated that while the report spoke itself, be wished to draw attention
which had apparently been sent to several Board members. (Letter to Mr. Stottinius
particularly to the fact that the hard fiber problem was e matter of the loss of
dated Docember 5, 1948 in which the question was raised na to why private exports of
certain areas from which fibers had been received previously. Thile every effort FL
"peraffin woxes" wore now being handled under Lend Lensa.)
being made to increase production of various fibers in the areas still open, it was
clear that the hard fibers were likely to be extremely short in 1943 even though
In response to n question by Mr. Patterson, Mr. White stated that one problem which
there were extensive substitution of soft for hard fibers.
had never been answered was whether from a dollar standpoint the Pritish Empire shou
be considered as a single ontity, or whother the parts should be considered indivi-
Mr. Wickard suggested that every effort be made to increase the supplies of certais
dually. As a result, when the Treasury was osked as to the dollar position of one
fibers from foreign sources, calling attention to the difficulties being anticipated
part of the Empire, it was not in at position to supply the information since reports
in the production of hemp domestically. He stated that it was very doubtful Whether
of the parts of the Empire were only reported through the Empire overhoad group.
more than 100,000 of the 300, 000 hemp acreage goal would be reslized in 1943, that
Giving South Africa DO nn example, he indicated that If the dollar position were to
good land, and wes 8 relatively heavy uner of labor.
furners generally are not experienced in growing hertp, that hemp takes relatively
be calculated on the basis of the Empiro, there was no point in securing data as to
the South Africon position.
There with further discussion of substitutes for hard fiber and verious other con-
The question of the policy of the United States and the Fritish with reference to th
grain. servation measures such as the use of onto as hay crops instead of being cut for
maintanance of foreign commercial personnel was reised 08 it bore on the question of
dollar balances, it being pointed out that it could be argued that the United States
W18 in effect enabling the British to muintain foreign trade connections nnd ot the
Cortain Problems of Export Policy:
sume time denying assistance to our importers and exporters. ltr. Stettinius stated
that the British answer to this type of question was that they were paying only for
The Vice President stated be wished to present B problem, IL part of which had been
necessary services rendered.
Government been reived by correspondence and otherwise, namely, the general of the
had montioned just prior to the neeting and with reference to which a number of question
As part of the sund general policy, Mr. Reckofeller roised the question of other
Lease. as to the amount and the type of assistance to be rendered policy under Lond
United States activities abroad involving finances which were in effect subsidies.
Be then asked Mr. Atettinius to commit.
The question of the use of "reimbursable" Lond Lease was also rolsed. Apparontly,
business. operation under Lend Lease and the place of private use
ment government's policy porticularly regarding the of exporters government-to-comers inquire
Mr. as to Stottinius the stated that about a year ago a group of private bed
originally Lend Lease was used when a country needed war materials and the purchase
wes not possible because of the obsence of funds. The present use of "reinbursable"
Lend Loose, however, seemed to have a different and inexnot basis.
agencies would could be helpful If fl statement of policy could be Mr. Stettinius which all
that it No very clear statement was nade at that time. exporters in the export suggested
Mr. Rockefeller stated that no ho understood the use of Lond Lease in the Puerto
subscribe and which would surve as B general prepared, guide for to operations.
Rican area, the government's action certainly souced open to criticism.
He stated noted that that Lend Lense was presenting " budget to Congross and 10
It was suggested that a technical sub-committee be appointed to study the several
questions which he was not in a position to give satisfactory on January 11th, of the
problems involved and to report back to the Boord. It appeared that in addition
larly those would probably be rained on the Government answere to many parties-
to the Treasury Department, Lond Lease Administration, State and Board of Economic
Lease old, regarding the conditions governing the extension export and conditions policy, of Land
Worfare, Commerce and the Coordinator's Office should also be represented.
The question having been reined na to representation of the Pureau of the Audget on
6. year decured and as to the dollar position of the Dritish Stettinius stated that t in
being In response to a question by the Vice Procident, lb. data with
the sub-committee, Mr. Coy stated the Rudget Rurenu the quite confused 62 to the
policy of the government, that the Bureau was studying the question involved in
and for ago, the as estimated for the middle of 1943, both Empire, at the present the Empire
foreign subsidies from various funds, and that no far it had been unable to determin
most important component countries. He stated in also total that for It was quite
the Inotors determining the extent of subsidies, or determining which funds were
used. It was quito clear that specific foreign situations could be handled by funde
a
3
Regraded Unclassified
112
from any one of several sources.
SECRET
Hr. Acheson stated his fear that the problems raised covered such " wide range that
any committee would have on inpossible task and indicated that the lend Loane
Minutes of the Meeting of the Board of Economic Warfare
blom was one of considerable magnitude by itself, there boing involved the question pre-
Held December 17, 1942, et 10:00 a, n.
of what other countries could contribute to the war offort.
Mr. Thite proposed that the committee night attempt to outline the principles doter-
A meeting of the Board of Economic Werfare was held in the Vice President's office in
mining the extent of Lend Lease aid, the use of Reverse Lond Lease, and the nothods
the Capitol Building at 10:00 a. m., on December 17, 1942:
to be used (private Versus public) and typos of products to be included,
Those present:
Mr. Coy stated that a discussion of the problem set forth by Mr. White with reference
to the extent of Lond Lease could also be raised in 0 number of programs not involv-
The Vice President, Chairman of the Board
ing Lond Lease, montioning specifically cortain loans and purchases.
Mr. Dean Acheson, representing the Secretary of State
Mr. Harry White, representing the Secretary of the Treasury
Further discussion served to make it clear that the question of policy with reference
Mr. R. P. Patterson, representing the Secretary of War
to the use of subsidies and a mothod of reaching decisions was in need of clarifics-
Mr. Charles Fahy, representing the Department of Justice
which had boon raised by mimbers of Congress, exporters, and importors, os well
tion. It uns generally agreed that clear answers were not available to many question
The Secretary of Agriculture
Mr. Nelson A. Rockefeller, Coordinator of Inter-American Affairs
representatives of the soveral agoncios present and that the procedure for socuring no
Mr. Donald M. Nelson, Chairman, War Production Board
answors was likewise not clour.
Mr. E. R. Stettinius, Jr., Lend Lense Administration
There was further discussion of the functions of the sub-committee, and it was
In addition, the following persons were present:
docided to give the sub-committoe considerable looway, with the possibility that
further sub-division night bo necessary.
Mr. Wayne Taylor, Department of Commerce
Mr. W. L. Clayton, Department of Connerce
Mr. Acheson stated that with the scopo of the connitted involving extensively the
Hr. Lealie Wheeler, Department of Agriculture
foreign trade policy of the United Statos, he would surgost that the Vice Prosiden
Mr. Harold H. Neff, War Department
discuss the quostion with Socretary Hull.
Hr. Wayne Coy, Bureau of the Budget
Tr. Bernhard Knollenberg, Lend Lease Administration
The the Vica Prosident suggested that Itr. Achoson report to Mr. Hull the discussion
Mr. John Lockwood, Office of Coordinator of Inter-American Affairs
a committee and that he convey to Mr. Hull his (the Vico President's) concern that in
Mr. Nilo Perkins, Board of Economic Warfare
of clour, the statement of policy be available, porticularly with reforence to the position
Mr. 2. W. Caumnitz, Bqard of Economic Warfare
United States towards the British Empire problem.
The Vice President opened the meeting, indicating that the first report was that
entitled, "Importation of Strategic Materials by Air," dated December 1, 1942, and
asked Mr. Perkins to comment.
Mr. Perkins stated that a considerable volune of important materials were being in-
ported by air, and that at certain times such movement had been extremely important.
He called attention to a modification of the estimated movement for November and
December, and there was distributed a applementary table, "Addendun to Importation of
Strategic Materials by Air," showing actual movement for specified weeks in November
and December compared to the estimatos of movement prepared in October. He indicated
that every assistance had been given by the Air Transport Connand, and that the re-
duced traffic was a matter of non-availability of planes.
The Vice President raised the question as to the relative cost of carrying cargo by
air compared to other means of transportation. Mr. Perkins indicated that air trans-
port costs were definitely higher, although he pointed out that there were a number
factors making it very difficult to nake a fair comparison; for example, the cargo
being carried was almost entirely back-haul and under unusual conditions. He esti-
nated that cost was perhaps five or six times na high as rail and water transportatic
and might be ten times as great. Ho stated that in many cases, however, rail and
water facilities were not available as alternatives, so it was either n matter of
transporting materials by air or not at all.
4
Regraded Unclassified
113
Mr. Clayson stated that recent information indicated that air cost wes around Fifty
cents por ton mile.
possible that there could be some tightening in the avoilability of Lond Lense to the
impire.
In response to EL question by the Vice President, Mr. Nelson stated that he thought
air freight was entirely fensible and expected that about ten per cent of Inhound
Mr. Perkins stated that he thought all of the agencies concerned should be informed
freight might be handled by nir.
ns to this government's policy, though at present It augried impossible to sicure a
policy statement. For example, who was responsible for n decision 0.0 to the Rolgion
Fibers:
Congo.
The Vice President then referred to the report on Fibers, entitled, "Fibers," dated
Mr. pattorson nsked what agency or person nado the determination DE to whether arti-
October 15, 1942, and asked Mr. Perkins to comment.
clos were handled on R Lend Lense or commercial boots. 1b. Perkins stated that n
similar question was raised by the Republic Chemical Corporation lotter, copies of
Mr
Perkins stated that while the report spoke itself, he wished to drew attention
which had apparently been sont to several Board members. (Lotter to Dr. Stettinius
particularly to the fact that the hard fiber problem was a matter of the loss of
dated December 5, 1942 in which the question was reisod ne to why private exports of
certain oreas from which fibers had been received previously. Thile every affort PO
"puroffin waxes" were now being handled under Lend Lense.)
being mode to increase production of various fibers in the areas still open, it was
clear that the hard fibers were 11kely to be extremely short in 1943 even though
In response to A. question by Mr. Patterson, Mr. White stited that ono problem which
there were extensive substitution of soft for hard fibers.
had never boon answered was whether from a dollar standpoint the Pritish Empire shoul
be considered os a single entity, or whether the ports should be considered indivi-
Mr. Wickard suggested that every effort be made to increase the supplies of certain
dually. A.B. a result, when the Treasury was asked as to the dollar position of one
fibers from foreign sources, calling attention to the difficulties being anticipated
part of the Empire, it was not in at position to supply the information sinco reports
in the production of hemp domestically. He stated that it was vary doubtful whether
of the parts of the Empire were only reported through the Enpire overboad group.
more than 100,000 of the 300,000 hemp acreage goal would be realized in 1943, that
Giving South Africa as an example, he indicated that if the dollar position more to
formers generally are not experienced in growing hemp, that hersp takes relatively
be culculated on the besis of the Empire, there was no point In securing date na to
good land, and was a relatively honvy user of Inbor.
the South African position.
There was further discussion of substitutes for hard fiber and varioys other COD-
The quostion of the policy of the United States und the Pritish with reference to th
grain. servation mensures such as the une of onto us hay crops instead of boing cut for
)
maintenance of foroign commorcial personnel NGB reised 08 it bore on the question of
dollar bolances, it being pointed out that it could be argued that the United States
wes in effect enobling the British to muintain foroign trade connections and at the
Cortain Problems of Export Policy:
simi time donying assistance to our importers and exportors. ltr. Stottinius stated
that the British answer to this type of quostion vos that they were poying only for
The Vice President stated he Wished to present a problem, a part of which had been
necessary services rendored.
montioned just prior to the neeting and with reference to which 6 number of question
had been reised by correspondence and otherwise, namely, the general policy of the
An part of the same general policy, Mr. Reckefeller raised the quostion of other
Government na to the amount and the type of assistance to be rendered under Lend
United States activities abroad involving finances which DETO in effect subsidies.
Lenno. He then Baked Mr. Atettinius to comment.
The quostion of the use of "reimbursnble" Lond Lease was also raised. Apporontly,
Mr. Stattinius stated that about is year ngo a group of private exporters had inquire
originally Lend Lease was used when a country needed war motorials und the purchase
as to the government's policy particularly recarding the use of government-to-morer
MIS not possible because of the absence of funds, The present use of "roinbursable"
business. ment operation under Lend Leabe and the place of private exporters in the export
Land Lanne, however, meemed to have n different and inoxect beeis.
that No very clear statement was Mode et that time. Mr. Stettinius suggested
agencies could subscribe and which would serve 08 " general guide for operations.
it. would be helpful if n statement of policy could ber prepared, to which n11
Mr. Recksfeller stated that on he understood the use of Lend Lease in the Puorto
Riegn arou, the government's action certainly gegred open to criticism.
Be stated noted that Land Lonan me presenting 8 budget to Congross on January 11th, and 20
It were suggested that a technical sub-committee be appointed to study the several
that he WILB not in a position to give satisfactory answors to of the
problems involved and to report book to the Board. It appeared that in addition
larly questions those which would probably. be neisod on the Government export policy, many particu-
to the Treasury Department, Lend Lease Administration, State and Board of Economic
Lease aid. regarding the conditions governing the extension and conditions of Lond
Harfors, Commerce and the Coordinator's Office should also be represented.
The question having been relsed od to representation of the Pureau of the Budget on
In response to a question by the Vice Prosident, Hr. Stattinius stated that date will
the rub-committee, Mr. Coy stated the Rudget Bureou "as nuite confused na to the
being a secured na to the dollar position of the Dritish Empire, at the present t Im
policy of the government, that the Bureau was studying the question involved in
and year for ago, and as estimated for the middle of 1943, both in total for the Empire
foreign subsidies from various funds, and that so for It had Been unable to determin
the most Important component countries. He stated also that it THE quite
the Tactorn determining the extent of subsidies, or determining which funds were
used. It vos quite clear that specific foreign situations could be handled by fundr
2
-
Regraded Unclassified
from any one of several sources.
Mr. Acheson stated his fear that the problems raised covered such a wide range that
any committee would have an impossible task and indicated that the lend Lease pro-
blem was one of considerable magnitude by itself, there being involved the question
of what other countries could contribute to the war effort.
Mr. White proposed that the committee might attempt to outline the principles doter.
mining the extent of Lend Lease aid, the use of Reverse Lend Lease, and the methods
to be used (private versus public) and types of products to be included.
Mr. Coy stated that a discussion of the problem set forth by Mr. White with reference
to the extent of Lond Lease could also be raised in a number of programs not involv-
ing Lend Leaso, mentioning specifically certain loans and purchases.
Further discussion served to make it clear that the question of policy with reference
to the use of subsidies and a method of reaching decisions was in need of clarifica
tion. It was generally agreed that clear answers were not available to many question
which had been raised by members of Congress, exporters, and importers, as well as
representatives of the several agencios present and that the procedure for securing
answers was likewise not clear.
There was further discussion of the functions of the sub-committee, and it was
decided to give the sub-committee considerable leeway, with the possibility that
further sub-division might be necessary.
Mr. Acheson stated that with the scope of the committee involving extensively the
foreign trado policy of the United Statos, ho would suggest that the Vico Prosiden.
)
discuss the question with Secrotary Hull.
The Vice President suggested that Mr. Acheson report to Mr. Hull the discussion in
the committee and that he convey to Mr. Hull his (the Vice Prosident's) concern that
a clear statement of policy be available, particularly with reference to the position
of the United States towards the British Empire problem.
4
Regraded Unclassified
114
DEC 1 7 1942
My dear Mr. Williams:
Mrs. Morgenthau and I wish to thank you
and Mrs. Williams for your many courtesies during
our visit to Winston-Salem. We have not made a
more pleasant trip since our stay in Washington
and the time we spent with you added much to our
enjoyment.
We came away with & better feeling about
the job we are all trying to do in this time of
emergency.
It was a delightful experience for us and
we are both looking forward to the time when we can
meet again.
Mrs. Morgenthau joins me in extending to
you both every good wish for Christmas and the New
Year.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Mr. Clay Williams
Robert E. Lee Hotel
Winston-Salem, N.C.
Copies in Diary
Regraded Unclassified
115
December 17, 1942
My dear Eleanor:
I am enclosing herewith a
memorandum from Mr. D. W. Bell, which
will bring you up to date on the
matter of cashing checks at Union
Station.
Affectionately,
(Signed) Henry
Mrs. Franklin D. Roosevelt,
The White House.
Copy to Mrs. Morgenthau
(Tetter and enclosure)
File in Diary
Sent by Sturgis 5:30 12/17
Regraded Unclassified
THE UNDER BECRETARY OF THE TREASURY
WASH NOTON
December 17, 1442
TO THE STORETARY:
Subject: Cashing Government crecks
for persons in the military
service, end their vives.
: thing to Tolson, is charge of Union
Station, 230 If revises ":- that this matter came to
ris attention about ten 278 PTO, at which time he
ordered a survey : ascertain if possible the
probable voluse of checks. In 2 week's survey
he found some need for facilities to cash checks in
the rands of persons in uniform, out he has had no
case brought to his attention where the wife of a
military man asked to have a check cashed.
In order to take care of the situation, he
has authorized certain of ais ticket agents to cash
Government checks for men in uniform when they present
proper identification. This is a twenty-four hour
service. As I said, he has not as yet had a case of
the wife of a military man, but if he should get one,
it would be handled on its merits. He feels that he
can not advertise the fact that these ticket agents
are cashing Government checks for the reason that he
believes he would ret such a. volume from the Navy Yard
and other sources that he could not possibly take care
of them, but the person in charge of the Lounge at the
Station has information 28 to the windows which will
cash the checks and when a soldier asks for that informa-
tion he will be directed to the proper window.
Mr. Tolson will continue to study this and if
the volume rets such that it can not be taken care of
at the ticket windows, he will have to set un some
special facilities to handle the matter. He has promised
CTORY
to keep in touch with me from time to time and keep
BUY
me advised as to how it is going.
DWB
Regraded Unclassified
117
THE WHITE HOUSE
WASHINGTON
December 10, 1942
Dear Henry:
In the Government lounge, where
Mrs. Helm has been working on Sundays,
she tells me that the boys sometimes come
in with pay checks. On every day but
Sunday you cash these, but they are just
as bad off sometimes on Sundays. She wonders
whether you could either authorize some one,
or put some one in the Central Post Office
near the station on Sundays, to cash these
checks. Will you let me know what you think
might be done?
Very sincerely yours,
U.P.
118
THE WHITE HOUSE
WASHINGTON
Pirs sonal
December 17, 1942
Dear Henry:
Your note just received. It is about
as sensible as Jimmy Valentine asking a third
rate locksmith how to get into e safe.
In order that Pa may "rest in peace",
why not head Fanny Perkins off after Cabinet
today and take it up with him then, as you
threatened to do two weeks ago?
Seriously yours,
Mac
M. H. McINTYRE
Secretary to the President
Honorable Henry Morgenthau,
Secretary of the Treasury,
Washington, D. C.
119
December 15, 1942
Dear Marvin:
I have received your memorandum
of December 11th together with the
enclosed carbon of a letter which
Donald Nelson and I sent to you on
November27. In this memorandum,
you state that - should take this
matter up with the President. How
does one go about doing that?
Sincerely yours,
(Signed) Henry
Ebmorable Marvin McIntyre,
Secretary to the President,
The White House,
Washington, D.C.
Complete file in Diary
By Mossonanr Harmon 12/16/42 4:50
120
THE WHITE HOUSE
WASHINGTON
December 11, 1942
MEMORANDUM FOR SECRETARY MORGENTHAU:
Please note the last paragraph in
your letter to me of November twenty-seventh,
copy of which is attached.
I don't know whether you have taken
it up with the President or not, but if not,
will you arrange it as per your suggestion?
motm M. H. McINTYRE
Secretary to the President
Attachment
121
WAR PRODUCTION BOARD
WASHINGTON, D. C.
OFFICE OF
November 27, 1942
JOHN LORD O'BRIAN
GENERAL COUNSEL
Dear Henry:
As requested in your letter of November 9th,
I have prepared and signed a letter to Mr. Marvin McIntyre
giving him the information requested in the letter to him
of October 30th, from Congressman Compton I. White.
If this meets with your approval, will you please
sign and deliver it to Mr. McIntyre?
Sincerely,
4 In. luloan
Donald M. Nelson
Honorable Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, D. C.
FORMICTORY
BUY
-
STATES
WAR
BONDS
-
stude
122
NOV 27 1942
Mr. Marvin MaIntyre
Secretary to the President
The White House
Dear Mr. MeIntyre:
Congression White's letter to you of October 30, 1962, seeking
as expression of the President's wishes with respect to legislation to
provide relief for sperators of gold nines compelled to close dom by
resent order of the Mar Production Beard, which you referred to us for
reply, reises & very important quastion.
While - are acutely conseious of the hardship which the order
in question has brought upon the gold nine owners and operators, - regard
this as but - of the importent aspects of the bread national problem
of the dislosation of normal debier-oroditer relationships and property
rights, resulting from the imposition of government centrol over materials
and facilities in order to insure mademn war production, Stops to allow-
late the financial distress of the gold nine operators if taken at all
should only be taken in confustion with neasures of wider mays, having
as their objective the equitable and orderly adjustment of financial
relationships in general, which have been disrupted by compliance with
orders and regulations of government were agencies.
Our joint position with respect to the entire problem may
be adequately expressed by quoting the following emeryte from the
testimeny of the Chairman of the Mar Production Beard before the
Senate Special Committee To Study Problems of American famil
Business, Wednesday, September 30, 1962s
"Whatever - my be solected for saking the adjustment
of claims, thead - should above all be coordinated with the
operations of the War Production Board in the latter's noves to
put people, inventories, mashines, buildings, and 1and, into
productive we work. I came's over-emphnsise the necessity the
quickly reneving whatever obstaoles to freedom of action by the
War Production Heard my be presented by the commulated debter-
over claims.
Regraded Unclassified
123
Mr. Marvin MeIntyre
- # -
"I a not presenting a Mill, mer is I propared to out-
line the details of how best to provide for the orderly
adjustment of financial claims against physical, productive
assots. Much more study of the problem is required than has
yet been given to it. But I would like to repeat the propect-
ties that as action should be tabse by the Gengrees e by
administrative agencies which will imobilise or freese into
an unproductive state for the duration of the was any of the
elements of productive copacity - management, labor, materials,
machinery, buildings or commercial lend,"
There will be increasing pressure for relief of the kind
suggested in Congressen White's letter with the increasing severity
of priority orders. We would suggest for the President's considers-
tion, the appointment of a condition representative of the interested
government agencies to study this whole problem and report to him
their recommendations, If you will make the arrangements we will
be glad to talk with the President about this matter after the
Cabinet meeting - next Friday.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Harry Jr.
Secretary of the Treasury
(Signed) D. E. Welson
Denald No Rolson, Chairman
Her Preduction Beard
Hel. by ss agent 6:17 12/4/42
File in Diary
Regraded Unclassified
124
WAR PRODUCTION BOARD
WASHINGTON, D. C.
OFFICE OF
DONALD M. NELSON
November 11, 1942
CHAIRMAN
My dear Mr. Secretary:
I have asked our Legal Division to prepare
a joint reply to the questions raised by Congressman
White in his letter of October 30 to Mr. McIntyre,
and shall have it in your hands the early part of
next week.
Sincerely yours,
Whilelen
Donald M. Nelson
The Honorable
The Secretary of the Treasury
FORVICTORY
BUY
UNITED
STATES
WAR
BONDS
AND
STAMPS
125
November 9, 1943.
Dear Demalds
The enclosed letter from Congressean Compton 1.
White has been forwarded to no from the White House,
with the request that as anover be prepared in
cooperation with W.P.B. Would you be so good as to
prepare a reply for our joint signatures? I would
approciate year assistance in this mtter.
Simcerely.
(Signed) H. Morgenthau, Jr.
Sent by Mess. Givene
Nonorable Donald N. Helson,
Chairman, Var Production Board,
4:27 11/10/42.
Social Security Duilding,
Vaskington, D. c.
Enclosure.
GEF/INS
Regraded Unclassified
126
THE WHITE HOUSE
WASHINGTON
November 5, 1942
MEMORANDUM FOR THE SECRETARY OF THE TREASURY:
The attached is self-explanatory.
matm M. H. McINTYRE
Secretary to the President
Attachment
127
THE WHITE HOUSE
WASHINGTON
November 2, 1942.
MEMORANDUM FOR
MAC
Will you get an answer
prepared to this by Treasury
and WPB?
F. D. R.
COPY
HOUSE OF REPRESENTATIVES
COMMITTEE ON
IRRIGATION AND RECLAMATION
Washington, D. C.
October 30, 1942
Colonel Marvin McIntyre,
Secretary to the President,
White House,
Washington, D. C.
Dear Colonel McIntyre:
The government order discontiming the operation of gold mining
properties for the duration is a severe hardship on owners and
operators who must assume the expense of maintenance and who
are obligated under contracts for payments on their property
as well as equipment. In this connection, I am transmitting
herewith a letter which I have received from Mr. M. F. Ward,
1102 Third St., Lewiston, Idaho, part owner and operator of
a gold mine in the Elk City district of Idaho, and I call your
especial attention to his statements as follows:
"Unfortunately, during our four years of successful pro-
duction, the profits were spent on development and the
installation of expensive, but necessary, equipment;
which places us in the position of having a well developed
mine with fine equipment, but, in poor shape to cope with
the present emergency. As you well know, a mine can not
be simply shut down, but must be constantly maintained,
which is not only expensive but ithout compensation.
In addition to being without income from the mine and
having to maintain the property, I, because of a contract
made several years ago, am bound to make large monthly
payments on the property."
I shall appreciate it if you will take this matter up with the
President and advise me of nía wishes concerning an equitable
adjustment of this situation. If he believes that legislation
declaring a moratorium on contract payments due where mines
have been closed by the emergency, I shall be glad to intro-
duce a bill for that purpose, and I shall also be agreeable to
cooperating in any other manner to secure relief for the good
people WITH have put their time, effort and money into developing
the mining resources of our muntry.
Sincerely yours,
/s/ Compton White
te
Compton I. White, M.C.
Regraded Unclassified
COPY
Lewiston, Idaho
Oct. 2€, 1-2
Hon. Compton I. White
House of Representatives
Washington, D.C.
My Dear Mr. White:
I as taking the liberty of presenting to you the
problems which confront me, as the owner and hither-to,
operator of a gold mine in Idaho. I do 80, in the hope that
thru your effort, honesty and good judgement, something will
be done to protect, not only me and my interests, but, I dare-
say, many who find themselves in similar circumstances.
The mine, which is privately owned by myself and two
partners, with no corporation or stockholders, is located in
the Blk City district of Idaho and normally employe from twenty
five to fourty men. Unfortunately, during our four years of
successful production, the profits were spent on development and
the installation of expensive, but necessary equipment; which,
places us in the position of having a well developed mine with
fine #quipment, but, in poor shape to cope with the present
Mergency.
Regraded Unclassified
As you well know, a mine can not be simply shut down, but,
must be constantly maintai ned; which is, not only expensive but
without compensation.
In addition to being will thout income from the mine and
having to maintain the property; I, because of a contract made
several years ago, am bound to make large monthly payments on
the property.
We are wholly in accord with any step which might, in any
small way aid the war effort. However, I should like to know that
I will be able to protect the investment which represents the
lifetime effort of a small group of serious, hard working people;
which until the present emergency arose, was a gratifying achieve-
ment.
I feel sure that you will agree, that if direct aid to
owners for the maintainance of mines, is not possible, at least,
there should be a moratorium declared on payments to be made on
mining properties where production has been ceased because of the
war effort.
I trust that you will find time to give our problem
consideration.
Thanking you kindly, I remain,
Very truly yours,
/s/ M. F. Ward
M.F. Ward
1102 3rd St.,
Lewiston, Idaho
Regraded Unclassified
131
December 17, 1942
Dear Bill:
with further reference to your note of
December 3 concerning Madame Tubelis, we find
that the funds from which she derives her
support, and from which any increase in her
allowance would have to come, can be drawn on
only by the Lithuanian Minister. The Minister
receives, under a monthly renewable Foreign
Funds Control license, funds for the Legation's
expenses, including his salary.
If the Minister will agree to increase the
amount made available to Madane Tubelis, we will
be Llad to increase the monthly license by an
equal amount. Persuading the Minister to do
this would appear to be the job of the State
Department, and we have informally advised State
that we will increase the amount of the monthly
license if the Minister will undertake to make
additional funds available to Madame Tubelis.
Yours sincerely,
(Signed) Henry
M. William C. Bullitt,
2447 Malorama Road, N.W.,
Washington, D. C.
Copy in Diary
File direct to Paul
12/18/42
MLHoffman:hd 12/17/42
Regraded Unclassified
132
TREASURY department
INTER OFFICE COMMUNICATION
DATE Dec. 8, 1942
TO
Secretary Morgenthau
FROM Randolph Paul
Attached is a copy of an acknowledgment of
Mr. Bullitt's letter concerning Madame Tubelis which you
referred to me yesterday. The matter is complicated by
the fact that the former President of Lithuania, A.
Smetona, who is supporting Madame Tubelis, receives his
funds from the Lithuanian Minister, who apparently is not
sympathetic to Madame Tubelis. The Lithuanian Minister
is the only person who has the power to draw on
Lithuanian funds.
I learned that this matter has also been raised
with State and that State believes that something can be
worked out by convincing the Lithuanian Minister that he
has an obligation to see that Madame Tubelis receives the
amount of the pension due her under Lithuanian law. Since
State is already attempting, through diplomatic channels,
to work out some adjustment of this matter, we propose to
take no further action at this point. We will continue to
press State on the matter and if State is unable to solve
the problem, we will then consider the use of our licensing
powers to bring the Minister into line. Of course, State
would expect us to clear anything of this character with
them in any event.
Attachment
Regraded Unclassified
Followed up unth 133
Pehle 12/14/42-
December 8, 1942
Dear Bill:
I have your note of Decem-
ber 3rd concerning Madame Tubelis.
We are checking into the matter
and will let you know as soon as
possible what, if anything, can be
done by the Treasury to improve
her situation.
With kind regards,
Sincerely yours,
(Signed) Henry
Honorable William C. Bullitt,
2447 Kalorama Road, N.W.,
Washington, D.C.
File to Laul
Phato file to MKM
Regraded Unclassified
2447 KALORAMA ROAD, N. W.
WASHINGTON, D. C.
Less
Personal.
Dear Heary:
AS I set to le DE
last evening, Jalvica Twellis,
widow of the former Unitier
Lithuania, to 102 Prine Minister for
ten years, and is estitled under Lithmon-
ian lar: to a pension by virtre of the
positions her Ausband Lold, is in Creat
fináncial difficulty. Che is et the
moment living in on universited garret
room in Brooklyn for ic. the pays
ten dollars : Month. I.or osition is
aggravated be the fact that Ler twenty-
year old daughter, who is a cripple, is
about to leave the school at vi.ich she
has been kent through charity without
cost to Indane Tubelis, The dau liter
wishes to continue her studies at Columbia,
if possible, and LoCame Tubelis needs
therefore funds assigned to her from the
Lithuanian monies fro: which payments
are now being rade to the forner President
of Lithuania, A. Snetona.
Madane
The Honorable
enry Morgenthau,
cretary of the Treasury,
shington, D. C.
Regraded Unclassified
2447 kalorama ROAD, N. W.
WASHINGTON, D. C.
-
infore Totalls ando Cat 0.00 nind
her Card liter CFT get alou very tell
indeed on 2000 a will is, as I
said to you, iv lost pallent AND intelligent
lady and metly O₂ nay doclainice you can
give hor. Letreen ourselvet, I suspect
that the Litenanian inister in vathington,
who is a ver; stall and reen potato, will
be of no assistance.
Since I low both Tubelis and his
wife well in the days when they were
powerful and Denov, I feel a deep personal
interest in this case. 50 for as I know,
Tubelis is about the only Rimister of
Finance aside from yourself who rigorously
refrained from putting one penny abroad
for saving himself on an evil day. I
think Lis widow an daughter should be
rewarded and not punished for his honesty
and I hone that you may be able to let
them have the $200 per month.
I append a brief statement with
regard to the case.
Very sincerely yours,
William C. Bullitt.
losure:
Statement as indicated above.
Regraded Unclassified
2447 KALORAMA ROAD, N. W.
WASHINGTON, D. C.
INVOICE
Ladame Jadwiga Tubello and daughter,
Varia Tubelis, widor: and daughter of
Joseph Tubelis, former Finance Mister
and Prime Minister 01° Lithuania.
I'mdame Tubelis and daughter lest Lithuania
on June 17, 1940, two days before Soviet
occupation of Lithuania, spent three months
In Germany, and came to the United States
In October 1940.
Vadame Tubelis came to the United States
under a group visa issued to the family
or household of President A. Snetona of
Lithuania, who is her brother-in-law.
President Smetona at the present time is
receiving $800 per month from Lithuanian
funds in this country and has given l'adame
Tubelis $100 per month from this sum; but
be is doing so more and more reluctantly
each day "on account of the increased high
sost of living in America", and it would be
preferable if Madame Tubelis could be placed
on 8 basis of $200 per month as the widow
of the former Prime Minister of Lithuania.
Regraded Unclassit
137
12/17/42
Mr. White
Secretary Morgenthau
Would you please handle this directly with
Mr. Currie?
Treasury Department
Division of Monetary Research
Date December 1, 1942 19
To:
Secretary Norgent au
From:
Miss Kistler
I am not clear that the understanding
reached involved constant and joInt consulta-
tion with the Canadian Ministry of l'inance.
If it was agreed upon, it V.S done before I
arrived at the meeting.
THE WHITE HOUSE
WASHINGTON
December 8, 1942.
Dear Mr. Secretary:
The following is my recollection of the understanding
which you reached with Mr. C. E. Wilson, Chairman of the
Joint War Production Committee, U. S. and Canada, this
morning:
1. The Secretary of the Treasury and the Canadian
Minister of Finance shall keep close watch upon Canada's
United States dollar position.
2. Whenever the Canadian dollar position appears to be
excessively drawn down or built up the Secretary shall, after
consultation with the Canadian Minister of Finance, notify
the Chairman of the American Committee that it would be
desirable within a given period to have additional payments
of a certain amount made to Canada or to have payments of a
given amount withheld.
3. If more payments are indicated the Chairman could
request the procurement agencies to make advance payments
on contricts. If less are indicated, the Chairman could,
in agreement with the Chairman of the Canadian Section,
cancel certain orders on which delivery is currently being
made. It is presumed that these orders would be for
British-type equipment, destined for Britain and financed
with lend-lease appropriations. In the case of such can-
celled order: the Canadian Minister of Munitions could
simply debit them to the gift to Britoin.
You will note that these suggestions imply further
consultation with the Canadians. I have already got the
assent to the principle involved from Mr. C. D. Howe,
Minister of Munitions. So far as I know, however, nobody
in the office of Mr. Ilsley, the Minister of Finance, has
been approached.
Sincerely
Lie C KOUPS,
Lauchlin Currie
Administrative Assistant
to the President.
Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D, C.
Regraded Unclassified
140
DEC 1 7 1942
lig dear Mr. Secretary:
This will acknowledge the receipt of your letter of
December 7, 1942 relating to non-military matters arising
in connection with the ailitary occupation of territories
in Europe and North Africa.
This Department will be very glad to cooperate with
your Department and other agencies of the Government in
dealing with the problems referred to in your letter.
Às you know, M. Josiah be DuBois of this Department
already is en route to North Africa as & member of the
special mission you mention. The status of . Dubois as
set forth in your letter is agreeable to this Department.
In this connection THE assume that while all reports and
other communications will be mde by Mr. DuBois through
hr. Murphy to the Secretary of State and to the Treasury
Department or other agencies, he will be perfectly free
through these facilities to furnish this Department with
his views and recommendations concerning problems of
Interest to this Department. Similarly we will be free
to communicate to fr. DuBois on the same basis.
We also are in accord that sen who may be sent to
replace the chief representatives of the Treasury in this
service shall have a like status in all respects to that
accorded A. DuBois.
We are inclined to believe that the definitive status
of personnel which the Treasury Department may provide for
more permanent assignment in North Africa should be con-
aldered at the time of their designation for such dution
and in the light of conditions then provailing. Among
other things, this Department will want to consider the
Regraded Unclassified
141
- 2 -
type of personnel requested, their availability and contem-
plated duties, and the extent to which this Department may
be called upon to contribute to the program in general.
However, it is not anticipated that these considerations
should be the cause for any delay or difficulty and we will
be glad to canvass the subject further whenever you suggest.
Very truly yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
The Honorable,
The Secretary of State.
Photostat File - Diary
Orig. File - DWBell
copies - White
Del. by Sturgis 5:30 12/17/42
AFL:nrd - 12/16/42.
Regraded Unclassified
R
DEPARTMENT OF STATE
WASHINGTON
December 7, 1942
My dear Mr. Secretary:
Pursuant to directives which the President has
iven to me concerning the economic, political and
fiscal questions which are developing in the wake of
our Armies in North Africa (and similar problems which
will develop throughout the world) an Office of Foreign
Territories has been established in the Department of
State. By agreement between the Secretary of Agri-
culture and myself Mr. Paul Appleby has been temporarily
loaned to the Department of State to serve as Special
Assistant to me and to take charge of this Office which
has responsibility for dealing with all non-military
matters arising as a result of the military occupation
of territories in Europe and North Africe by the armed
forces of the United Nations and affecting the interests
of the United States.
Since the President has put this responsibility
upon me, and since obviously the carrying out of the
assigned functions calls for cooperative action BO as
to assure the effective and coordinated use of the re-
sources of various governmental departments and agencies,
I am writing to request your cooperation and assistance.
Specifically, Mr. Appleby has been charged with
the responsibility of organizing a special reoccupation
mission, which will be sent to North Africa at the
earliest possible date, to assist Mr. Robert Murphy,
Chief Civil Affairs Officer and for the present, by
directive of the President, a member of General Eisenhower's
staff, in dealing with all non-military problems arising
in that area. To assist Mr. Murphy in dealing with
these
WIEFENSE
The Honorable
Henry Morgenthau, Jr.,
BUY
Secretary of the Treasury.
UNITED
STATES
Regraded Unclassified
-2-
these questions, I shall greatly appreciate your detail-
ing two competent members of your staff to accompany this
special mission to North Africa. It is contemplated that
the members of the mission will be assigned to the field
only temporarily, for the purpose of getting the necessary
work started. At an early date I shall probably request
your assistance in recruiting personnel for more permanent
staff assignment in North Africa.
In the case of the two representatives of the Treasury
Department on the original and immediate mission, and the
corresponding representatives of other agencies, their
assignments will be temporary, though of varying and flex-
ible periods. It is intended that they shall return to
their duties in their respective agencies at the end of
their present assignment. I assume, therefore, that you
will wish them to retain in all respects their present
status in the Treasury Department and that their salaries
will continue to be paid by the Treasury Department in
their capacity as employees of that Department. That is
the plan which it is proposed to follow.
Since, on the other hand, it is essential that the
members of this special mission be given appropriate
status under the Department of State, they would be
designated temporarily, for the duration of their respect-
1ve assignments in North Africa, as Special Advisers on
North African Affairs in the Office of Foreign Territories,
Department of State; as such, appropriate instructions and
travel orders will be issued to them by the Department,
after consultation with your agency, and their travel and
similar expenses, including per diem, would be paid by the
Department from funds which have been made available by
the President for this purpose. They will be given diplo-
matic passports.
The members of the aforementioned mission will re-
port for duty in Algiers to Mr. Murphy, the Chief Civil
Affaire Officer. They will be subject in all respects
to his authority and they will work under the general
direction of Mr. Murphy. Instructions prepared as re-
quired in consultation with the other agencies concerned
in Washington will be issued to them by the Secretary of
State through Mr. Murphy. Reports and other communica-
tions will be made by them through Mr. Murphy to the
Secretary of State and to the Treasury Department or
other
Regraded Unclassified
-3-
other agencies. As a matter of practice, outgoing
telegrams would be headed, e.g., "For Murphy and DuBois",
and incoming telegrams would be headed "For OFT and
Treasury". It 1s intended that men who somewhat later
may be sent to replace, for a longer period but not on
permanent assignment, the chief representatives of the
Treasury in this service, shall have like status in all
respects.
In the case of personnel which the Department may
later request you to nominate for more permanent staff
assignment in North Africa, it 1s intended that such
persons shall be appointed in the Auxiliary Foreign
Service, Foreign Territories Division, Department of
State. Their salaries, however, will continue to be
paid by the department or agency with which they are
connected, and their tenure as employees will continue
to be dependent on the decision of their respective
departments or agencies.
I should appreciate your informing me promptly if
the foregoing arrangements are agreeable to you so that
no further time may be lost in completing the organiza-
tion of this mission and despatching it to North Africa.
Sincerely yours,
Regraded Unclassified
145
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE December 17, 1942
TO
Secretary Morgenthau
FROM Mr. White
Subject: VIEWS of the BELGIAN GOVERNMENT With Regard to
OCCUPATION CURRENCY
The Belgian Government in London has transmitted a
memorandum to Ambassador Biddle expressing in strons, though
diplomatic, language its objections to the procedure followed
by the United Nations in issuing occupation dollars and pounds
sterling in North Africa and indicating a determination that
tue Morth African procedure shall not constitute a precedent
for Belgium. The Belgian Government also indicated that its
Ambassador in Washington was being instructed to take up this
matter with the United States Government,
The points made in the memorandum of the Delgian Government
are the following:
1. The Belgian Government 1s prepared to out at the
disposal of the American Government & sufficient
quantity of Belgian notes to cover the needs of
an American Expeditionary Force in Belgium.
2. " the Belgian Government feels concerned re-
garding the monetary and social effects which
might eventually result both in the Congo and in
Belgium, after the liberation of the latter's
territory, from the rate of exchange adopted
in North Africa".
3. The rate of exchange between the Belgian franc
and the dollar is a question which "falls within
the sovereignty of the Belgian Government,
guaranteed in principle by the Atlantic Charter".
The Belgian Government will consult with the
American authorities on the rate of exchange but
must regard the final decision on this question
as its own.
The Belgian Government "attaches the greatest
value to receiving the agreement of the American
authorities" with regard to the points listed
above.
Regraded Unclassified
146
NOT TO BE RE-TRANSMITTED
COPY NO.
13
BRITISH MOST SECRET
U.S. SECRET
OPIEL No. 436
Information received up to 7 A.M., 17th December, 1942.
1, MILITARY
LIBYA. 15th. Our troops made a number of small but
successful attacks on enemy rearguards holding area RAS EL AALI -
KARBLE ARCH. Some of our armoured units reached MERDUMA and the
main road 12 miles northwest of MARBLE ARCH during the afternoon
but 51st Division advancing in the coastal area were delayed by
mines although leading elements reached IL AGHEILA.
16th. 2nd New Zealand Division took up positions
from MATRATIN southward along the WADI RIGEL and in the NERDUMA
Area cutting the enemy columns in two, Enemy units to the east of
these positions including 15th Panzer Division were trying to break
through and were losing heavily and 7th Armoured Division advancing
upon them from the east had reached MARBLE ARCH by noon. Further
west the road between RAS DL IHUDIA and NOFILIA was blocked with
the enemy who were heavily attacked by the R.A.F. Fighting con-
tinues and the enemy is being severely mauled,
RUSSIA. No confirmation of German claim to have en-
circled a Russian Shock Force southeast of TOROPETZ. It appears
that the German thrust southwest of STALINGRAD has been checked.
2, AIR OPERATIONS
WESTERN FRONT. 16th. 11 enemy aircraft operated
over Southern England. Two were shot down and two damaged. Gas
works at Bognor Regis seriously damaged. 5 killed in attack on
train in SURREY. 16th/17th. 28 aircraft were sent out - Diepholz
Aircraft Park near OSNABRUCK 8, seamining 20, One missing.
ITALY. 14th/15th. Liberators from Libya Hombed
HAPLES starting fires near the main power station and oil storage
depot. Bursts also seen near railway station, arsenal and steel
works but low cloud hampered observation.
TUNISIA. 15th/16th. Wellingtons bombed and hit
barracks and the railway centre at TUNIS. Bombs dropped on the
tenal attacked. reported to have blocked the entrance. LA GOULETTE also
TRIPOLITANIA. 15th. Light bombers and fighters
maintained harassing attacks on enemy M.T. west of "L AGIT:ILA.
16th. The road from RAS EL IHUDIA to NOFILIA was blocked with
intervals. enemy transport which was heavily bombed and shot up at 15 minute
BURMA. 15th. CHITTAGONG Airfield was bombed by 18
escorted Japanese bombers. Damage was negligible.
Regraded Unclassified
147
NOT TO Be RE-TRANSMITTED
COPY NO.
OPICE No. 442
Following is supplementary resume of operational events covering the
period 10th to 17th December, 1942.
1. DAVAL
Throughout the week bad venther has caused considerable disorganiza-
sion of convoys LO and from NORTH APRICA. No change in disposition of German
feavy chips - 1 Cruiser and 2 light Cruisers Northern NORWAY, TIRPITZ still in
aren. Over 20 submarines nd come 150 aircraft In NORKAY. Gulf of BOTHNIA
orginning to freezo one month later than usual. Freezing will interfore with
German iron oro traffic from SWEDEN.
MEDITERRANEAN. H.M. Submerines und Navel Aircraft claim 6 ships
destroyed and 8 hit including a Destroyer in Central Mediterrunean. Three LITTORIO
,Inse Battleships end 2 8º cruisers which recently loft NAPLES and MASSINA res-
postivaly not DO far sinco located.
SUBMARINE WARPARE. Passage of recent homeward bound north Atluntic
convoy outstinding example of air and surface craft collaboration. Convoy shadowed
nd attacked by some 20 U-boats over period of 3 or 4 days only lost 2 ships. First
My air escrot flow 8 hundred miles to rouch convoy and stayed in company for 6
bours. Considered that more than 1 ship would have been lost following night if
resence of this aircraft during day had not kept submarines down. Next day air-
traft in company for R hours anu mude 7 ittacks, one very promising. 2 other air-
craft also assisted. Following day weather conditions prevented air escort and
second ship lost. Next night 1/ attacks developed but were beaten off by surface
scorts which made several promising counter attacks. Last day aircraft with this
convoy again carried out very promising attuck on U-boat. 3 other promising nt-
tacks by Naval craft other areas reported during the week.
TRADE. Since beginning of July 1942 six Italian ships totalling
early 30,000 tons proviously engaged in BILBAO-BAYONNE ore trado have passed
brough STRAIT OF LOVER. Imports in convoy week ending 12th 184,000 tons, including
6,000 oil.
MILITARY
LIBIA. Enemy losses in confused fighting during rearguard action
OFILIA ares - 20 tenks and soverel hundred vehicles destroyed and 30 guns and
00 prisonors captured. Our casualties very light. Both reilway and ports con-
dute to handle satisfactory tonnugo. BENGHAZI capacity especially showed gratify-
06 increase.
FRENCH NORTH AFRICA. The rocont withdrawal to our present positions
an not ropotition not the result of onemy ressure. Allied forces now cover the
old running from BEJA. Good lateral communications ensured un/l forward troops
nerating under botter conditions na regards torrain. @ithdrawal mndo with fow
munities but United States Armoured combat command WILL compolled by mud to
Dan on many tenks und mechanical transport on 11th. Enemy infantry (?and) tank
Mack at WARES ALPBAB repelled by combined United Kingdom-French force, Axio
einforcements continue dospite heavy bonbing of bases. Estimated strength
1,000 Germens and 12,000 Italians, serviceable Gorman tanks about 100, Italian
about 50.
PAR EASI. BURMA. Enomy strongth in AKYAB Area estimated 1 regiment
with artillery.
3. AIR OPERATIONS
WESTERN FRONT. Owing to bud weather no important bombing operations
alther by day or night. During countal operations st loast 3 ships totalling
15,000 tons were hit besides to 2,000 ton tanker damaged. Two hundred and oleven
700 mines loid.
LIBYA. Our fightors and fighter bombers followed our advance closuly
and vero very notive against retreating onemy columns. Light bombors and United
States bombers and fightors also co-oporated. Attacks on transport ircraft and
shipping both on Libyan and Tunision aug ly routes wore continued by aircraft from
MALIA. United States bombers from LIBYA again attacked NAPLES by day.
Regraded Unclassified
148
- 2 -
FRENCH NORTH AFRICA. Continued heavy attacks on TUNIS and BIZERTA
by Wellingtons by night and escorted United States Fortresses and Liberators by
day.
RUSSIA. Russian air force made concentrated attack on transport
aircraft supplying German 6th Army and on German airfields and railways. STALIN-
GRAD - ROSTOV line is cut southwest of MOROSOVSKAYA.
4. EXTRACTS FROM PHOTOGRAPHIC AND INTELLIGENCE REPORTS ON RESULTS OF AIR ATTACKS
ON ENEMY TERRITORY IN CUROPE.
LILLE. United States attacks 8th November and 6th December at
APELIERS D'HELLEMS. Damage to several shops and foundry. Over 10 locomotives
destroyed, many others damaged. Railway traffic seriously dislocated by loco-
motive shortage. At Fives-Lille many shops damaged and several are being reroofed.
Locomotives unable to use engine depot for 3 days owing to damage to permanent way.
TURIN. Reliably reported that Macchi has been obliged to hold up
production of 202 type fighters owing to shortage of engines. Repeated attacks
have been most effective and made attempts at re-orgenization difficult. Notice-
able effect on population who regard re-organization as a hopeless task and aro
therefore uncooperative.
5. HOME SECURITY
Estijated civilian casualties week inding'6 A.M., 9th - killed 36,
seriously wounded 58.
Regraded Unclassified
149
NUMBER 62
SECRET
OFFICE OF STRATEGIC SERVICES
THE WAR
THIS WEEK
December 10-17, 1942
Printed for the Board of Analysts
Copy No. 6
The Secretary afthe Treasury
Regraded Unclassified
DECEMBER 10-17, 1942
SECRET
THE WAR THIS WEEK
The Soviets have closed the pincers about the German Sixth
Army between the Don and Volga Rivers, but the southern
arm remains relatively weak and inadequately supported
against a strong enemy counterattack.
While the Allies are apparently consolidating their present
positions in Tunisia, the Germans continue to reinforce their
bridgehead with considerable rapidity. Enemy forces may
number more than 35,000 in that area, and German air power
has been notably strengthened-a situation suggesting that
the Axis may now intend a major defensive stand in Tunisia.
Meanwhile Rommel is executing a strategic retreat from El
Agheila, along the exposed Libyan highway. If Rommel
retires to the Buerat-Misurata region, he will have greatly
eased his own supply problem and rendered that of the
British correspondingly more difficult.
As Allied forces continued to narrow the hold of the
Japanese on the beaches about Buna, the enemy boldly made
& fresh landing some 45 miles to the northwest, aimed per-
haps at diverting Allied strength and increasing the security
of Japanese bases at Lae and Salamaua.
The Soviet Pincers Close
Near Marinovka, on the Don bend-Stalingrad Railway,
the Russian pincers have now closed, entirely surrounding
the German Sixth Army between the Don and the Volga.
But the contact between the broad northern arm and the
relatively weak and poorly supplied southern arm remains
unstable, and the Soviet triumph is by no means complete.
While the Russians have maintained the offensive in Stalin-
grad itself, the invaders have made every effort to rescue
their 20 or more entrapped divisions-by counterattacking
against the northern pincers from the upper part of the Don
1
SECRET
SECRET
bend, and against the southern pincers from the Kotelnikovo
railhead. In the latter sector, the supply situation favors
ing stocks" of medical supplies, food, and winter clothing
sent as gifts to the USSR.
the Germans. For supplying the Sixth Army the invaders
are apparently using large numbers of Ju-52's flying at high
Retrospect on Finnish Policy
altitudes. The Russians report taking a heavy toll of these
In reviewing the events of the past year, an observer of the
three-motored transports, and add that the Nazis are press-
Finnish scene finds few alterations in policy. The chief ac-
ing all available planes into service, including mail carriers.
complishment of American diplomacy, he feels, was our
Similarly on the central front, the Russian drive below
success in keeping the Finns from attacking Soroka or indeed
Rzhev toward Beli suggests that Rzhev itself may soon be
anywhere else along the line. Aside from that, however, our
completely isolated. Even if that should occur, however, the
diplomatic messages have impressed the Finns far less than
fall of the German outpost would not be inevitable, and
our actions, and our rupture of consular relations had more
Rzhev might offer a most effective "hedgehog" defense.
effect than all our protestations.
Already the Nazis are counterattacking vigorously, especially
As "realists," our observer continues, the Finns have little
in the Velikie Luki sector, where they have themselves
faith in the Atlantic Charter. To induce them to withdraw
encircled some Russian units southeast of Toropets.
from the war, Britain and the United States must give them
The eight-day bombing of Murmansk, culminating in an
food, a satisfactory peace settlement, and guarantees against
unusually heavy attack on the tenth, suggests that the Ger-
Soviet aggression (including a proviso that no Russian troops
mans will make strenuous efforts this winter to interdict the
will enter the country). Meanwhile, the Finns still regard
Allied supply lines to the north. Along the Don south of
the Continent as impregnable and the Nazis as invincible-
Voronezh, the Russians have staged a successful attack
Allied successes in Africa being too far away to have much
against an Italian-held sector. On the Caucasus fronts, the
bearing on the northern front. As for actual military
Red Army has maintained the initiative.
operations, our observer continues, the Finns, who now have
all the territory they want, feel aggrieved every time the
The Russian Press Warms Toward Its Allies
Russians break the informal truce that has been in effect for
Concomitant with the recent Soviet successes, the Russian
the better part of the year.
press and radio have been referring in friendly terms to Britain
Certain evidences of an independent Finnish line have
and the United States and explicitly calling them "Allies."
appeared in the past month. The Nazi censors are permit-
The second front is no longer a subject of criticism, while the
ting Finnish newspapers to publish Allied communiqués-so
Russians apparently view our African campaign as the pre-
long as pro-Axis captions appear above them. Further-
requisite for a continental landing. The Moscow News, an
more, despite the efforts of local superpatriots, several Finnish
English language semi-weekly, has published articles denying
youth organizations have resisted reorganization on a totali-
that the Soviet Union is dissatisfied with our African venture,
tarian basis. The Finns, our observer concludes, are now
praising the North American medium bombers which have
groping to discover how they can save their country if their
reached the Eastern Front, and describing the "ever-increas-
Nazi support collapses.
2
3
Regraded Unclassified
Because
Summ
Secret
Securr
Change of Commind in Germany
A mall mimy force also receipted Punt de Fala to the
etrength in Tunisia, suppents that Berlin is planning à major
mit and reorganize his form proding Germany's decision
The replacement of General Frans Halder by Cleani
without
délensive stand in Tunisia.
regarding reinforment. Unusually strong natural posi-
Kurt Veitaler as Chief of the General Staff of the Amy, Wd
Farther south, small opposing furnes ontine to more for
The line general explanation of the Allied problem is
time were available here, especially at & point about 20
Na appointment of General Hans Jemebonnek and Main
number of minor junctions on the not-rest roadi. The
Tenisin name in Secretary Stimson's release of Inst Saturday
pilm emt of the town where the inland sit tisnh entends
Rurt l'ricko M Chief of the Air and Navy Staffs, respectively,
may in reported in be lelding Kairoma, Djebel
After the prompt censition of englist in Algeria and Mumeo,
3 the consit, traversed only by the Libyan highway. Bere
lisve around newspaper speculation in this country abred
and (ther such pointe with farena runging Ina 200 to so
light furner meed should into Tanisia in spúte of the fact that
Renmel werded probably have made a stand, if the High
supposed madiet belween Nasis and "Junke"
-
are tad ant had time for isdrquate prepuration of air -
Command in Berlin had decided to reinform him, or If be
Halder, however, vse (if) Junker, and had never enjoyed No
Air warfare has followed the familiar pattera, hip
soil los of supply. This had to be dome in an effort to dess
led sen any apportunity for a ountersitack. But if Get-
official favor, having failst to find 4 plane 00 the Est of -
sinne have here limited by the weather. The Axis has em-
the Germune the change to gain entrol of Tunials. TM
man higher strategy decided to constrate mindorement in
reals promoted to the rank of finid marshal after the M el
entrated IIII Allied ports, shipping, and the momunications
step lig dep foundations for our military imperations are -
the Tunisisn bridgebead, Rommel could - tia OWN eapply
Praces. His sureenor, although an intimate of
and at Bouk el Arim, the Allies on shipping, sindromes,
heing fast, and the real fighting thus live about
direction and lengthen British lines by withdrawing to the
hand of the Gestape and the 88, is not monthly . politician,
and hartor and storage facilities in Tunia and Harrts. The
The ultimate objectiven, Mr. Stioneon said, were plain
Burrat-Misurata region (mee map, The War This Week,
but has served as a regular Army officer since 1921. Will
rain and mud enhanced the Axis advantage of powerning the
"Elest, to expet (XP destroy Axis power in Timisis a
November 19-26). He could therefry relieve his fuel stort-
the exact political and military significance of these change
all all-wather airdromes in the forward AZEA.
when that is amouplishmet, for attack Tripoli and destroy
- perhaps triple the effectiveness of his motor transport,
la as yes unclear, the appointment of Zeitaler apparably
Bormal by anting in behand ham: and Uninf, Inally to -
and guin use of the road network and sir bases of the Tripoli-
TM Allint Problem in Tuninio
represente $ certain gain in power for the 88 at the expens
trul, in with Great Britain coming from the other
tas area. Here also is would be more difficult for the British
of Army carrerists.
The Axis is still reinfureing its Tunisian bridgebead. Its
eil, the delign North African cuast and make the Moditer-
to the supplies amded for a knockout offensive, 500
chipping loss have been costly, hot is is apparently getting
nation 4. number Non of communications with the Mid-East."
miles from Benghazi and 700 miles from the raillead TIREST
Operations in Tunisia
through a number of small boats. Air transportation has
Tobruk.
- IMI . large scale. Exeorted flights of 20 to 30 Jo-52's
Remail Wildress in Libra
Although the westlur in now improving, mud and heavy
The primary strategic feature of the region between El
rains restricted land and air operations to Tunisia during
- to be taking place with sume regularity, and 6-engine
In TO prime reports, the Axis withdrawal Permis
Ashelle and Mistrats in Un sleence of any available line of
of the week. The of vehicles has been
transporte with . capacity of eighty are also in Use
El Aghelle began M . strategie retrest with which Britab
revent other than the great Libyan cuastal highway.
in mails, and in the forward are many of them were and
Total enemy forws are believed to number more than 35,000
foreas for a time Inst contact. The enamy evamated la
The terrain to the southward in totally unsuited to any heavy
unable After the havy loss In mechanized expirament
- with about 17,000 German tronpi in the Tunis-Bixerte
advance positions of El Agbeila on December 10. Italian
motor transport. This means Bommel's entire Amy-if il
suffered as Tebourba, the Allies were apparently worl-
region. The latter are reported to include advance elements
units loui previously moved westwant. and the large amount
in to withdraw th the wet-will be exposed to Allied air
dating their present positions, trying to move relationsemente
of the 10th Panner Division, formerly in France. Reports
of - desired suggests that the withdrawal may have
attack on a road 23 fes wide. But the pursuing forees must
and supplies to the forward area, and laying the tasta for M
also continue of havy German troop and train movements
bein under way La event days, British infantry brigades,
passe the name continual lattlenenk, and can probably In
expension of are antivities German infantry and tack
into Italy.
working the was Binnagh extensive minefielda, had reselved
effectively delayed by efficient demolition of causeways and
columns made three attacks on Medjer el Bab 00 December
The Axis has concentrated . powerful air armada in Bar-
. poid 40 miles were of El Agbeila on December 16. At the
bridges slong the road There are five major concrete bridge
is and II, and another attack southward from Mainur on (M
dois, Italy, and Sicily, increasing the number of German
servi time, another British force advancing from the with
between El Agheils and Misurata.
Allied spearhead. All attacks were repulsed. Rubsequently
planes here by several hundred. This concentration, trugether
- off part of the retreasing annuny, including some Passer
is memo doubtful that the Axis would withdraw this Army
the enemy has attempted indiltration around Mailjes el Date
with Rammiel's withdrawal and the standy growth of Axis
vilementa, 20 miles further West Allied air fores have
weet of Tripoli, an set which would make that port available
Minutify branked and straind the retreating foreen.
- A have to which the Allite rould ship abundant supplier
Olamyers that Rommel balted at El "
accumulated in Egypt. This opinion is actived by the
4
5
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SECRET
SECRET
movement eastward from Tripoli of Italian forces (which may
velt, our informants conclude, enjoys the complete trust of
consist largely of native units). Rommel's present forces are
the French: personal appeals like his radio address of No-
estimated at about 16,000 Germans, 20,000 Italians, 100 tanks
vember 8 will find a heartfelt response.
and 140 planes.
Darlan Explains His Position
Vichy: Collaboration and Its Results
Nothing as yet indicates that American explanations about
As Vichy has settled down to serious collaboration with
the Darlan affair have reassured the French public, according
the Nazis, recent decrees have provided for the delivery of all
to one observer in Switzerland. Two days ago, the Admiral
arms, with heavy penalties for their transport, sale, or loan;
himself joined in the chorus of reassurance, advocating a
have restricted the freedom of movement of French and
"maximum military effort" against the Axis and the "unity of
foreign Jews; have extended the corporative organization of
all citizens, regardless of their political or religious opinions."
economic life; and have regulated concentration camps, im-
While promising that "the French people themselves will
posing harsh punishment on those aiding prisoners to escape.
decide freely the form of government and national policy they
According to Chilean diplomatic sources, German sailors
desire," Darlan claimed that he had liberated all United
have already appeared in southern France-presumably as
Nations sympathizers in North Africa. It is still too early to
prospective crews for the ships at Toulon that escaped
estimate the effect of this announcement. To judge from the
destruction.
Brazzaville radio, however, which has expressed surprise that
In reply to these measures, passive resistance has again
Darlan did not declare himself a defender of democracy and
become marked. At Marseille, reports of the first dock fires
the Third Republic and has again denounced the Admiral as
in many months suggest the outbreak of sabotage against
a traitor, the Fighting French are still unreconciled.
Nazi arms shipments. In Alsace, the Strasbourg press has
complained of the appearance of inscriptions vilifying the
Moroccan Miasma
Germans and praising De Gaulle, the RAF, and the United
In Morocco, the French official behavior toward the Ameri-
States. Observers in Switzerland regard the Marshal's
can occupying forces is "incomprehensible", according to a
leadership as completely discredited with the French people,
confidential neutral report, and is characterized not 80 much
and Darlan's potential following as negligible compared with
by enthusiasm as by confusion and a passive acceptance of
that of De Gaulle. Inside France, our informants state, the
faits accomplis. While the American authorities have reposed
man in the street hardly knows the Admiral's name, which
confidence in the French officers who opposed their landings,
commands scant respect in any case. According to these
pro-Ally officers remained in custody long after our invasion.
observers, the French desire a union of De Gaulle, Darlan,
Members of the Vichy Legion have continued to wear their
and all other leaders in exile on the basis of a simple program
insignia, and Pétain's portrait is still publicly displayed.
for defeating the Germans, while following President Roose-
From other sources, we learn that the position of the
velt's suggestion of leaving to the French people the organiza-
Moroccan press, controlled almost entirely by the former
tion of the future government of the country. Mr. Roose-
collaborationist Pierre Mas, is undermining American pres-
8
9
501580-42-2
Regraded Unclassified
SECRET
SECRET
tige: Radio Maroc has been broadcasting Vichy propaganda.
efforts to cause trouble between the French and Spanish
In the Spanish zone, all the French consuls threaten resig-
Zones-and thereby detain Allied troops in Morocco-Orgaz
nation, with the exception of the consul at Melilla, whose
suggested an agreement providing that no troop movements
pay the Moroccan Residency has not cancelled despite his
be made near the border and that no reinforcements be made
continued allegiance to Vichy. Although these consuls are
in a zone farther back. He was reported to be highly gratified
not granting visas to Italians desiring to return to the French
at Noguès' acceptance of these terms.
zone, the border guards apparently permit them to pass
The Axis is apparently continuing its war of nerves with
unhindered. Former collaborationists and persons evading
regard to Spain's position in the war. Although recent
military service in French Morocco have likewise been able
observation showed no troop movement in the Port Bou and
to slip out across the frontier. At least one French general
other areas, the Nazis have taken over complete control of a
has advised a zealous young officer not to be over-anxious
40-kilometer strip along the French Pyrenees frontier, accord-
about offering his cooperation to the United States.
ing to reports. Axis propaganda is also pointing up and
Faced with these contradictions, a pro-American French
widely publicizing Spain's own defensive measures. Mean-
official has expressed himself as completely disillusioned in
while, & review of Iberian policy will undoubtedly take place
his hope that Noguès might serve as a bridge between the
when the Spanish Foreign Minister, Jordana, makes & state
Fighting French and former Vichy adherents in North Africa.
visit to Lisbon in the coming week.
Noguès' equivocal attempts to maintain himself in the favor
both of Vichy and the United States, our informant feels,
Pro-Ally Leanings in Turkey
reflect his long residence in the treacherous atmosphere of
The Turkish Foreign Minister has indicated to various
Morocco. French reactionaries in North Africa will grow
foreign envoys in Ankara that Turkey is now sure the United
bolder the more they see themselves assured of Noguès' tacit
Nations will triumph; that she would mobilize completely if
support, and defeatism among the people may replace the
the Wehrmacht crossed the Pyrenees; and that, if Allied
present sympathy for the United States. Our informant
successes continue, Turkey might in the spring or summer of
concludes that the only way to check the progressive deteri-
1943 deviate from her past policy of absolute neutrality. A
oration of the Allied political position in Morocco would be
Turkish military spokesman, echoing these views, has also
the prompt organization of a government-in-exile uniting De
pointed out the contribution Turkey has already made in our
Gaulle, Giraud, and the less dangerous of the former adher-
darker days by resisting Nazi demands and blocking off the
ents of Vichy.
Nazis from the Eastern Mediterranean, thereby giving the
Allies some freedom of movement. The Turkish Govern-
Spain's Position in the War
ment has lately begun a meticulous survey of enemy espio-
An agreement has been reached with General Orgaz, the
nage activities, which has already led to several arrests.
Spanish High Commissioner in Morocco, on measures to
These developments are reported to have caused Von Papen
avoid any incident along the border. Fully aware of Nazi
to inform his Government that Germany can no longer be cer-
tain of Turkish neutrality. Although Numan Bey assured
10
11
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SECRET
Von Papen that Turkey would enter the conflict only if her
before the capitol, milling crowds gathered and pillaged food
fundamental interests required it, Von Papen is said to fear
stores, broke windows, and damaged the residence of Premier
that the pressure of Allied successes "might become irre-
Qavam before police and military authorities were finally
sistible," if they continue. A Turkish source has apparently
called out. Several were killed and many wounded. Although
indicated that one reason why Turkey might eventually enter
Iran's food crisis is at the basis of the unrest, the immediate
the war when our victory appears certain, would be to take
disorders were apparently aided and abetted by the Shah
a stand in Bulgaria and at the peace table to forestall any
and an Army faction who wanted to oust the present Premier
possible Soviet designs on the Bosphorus.
and establish 8 military regime subservient to the monarch.
The Turks are still anxious not to provoke the Germans,
Seemingly this group was responsible for the failure of the
however. They suspended the newspaper Vatan for trying
police to quiet the riots more promptly. Other political
to run an American broadcast to Turkey together with n
groups, a youth organization, and some editors and legislators
picture of Charlie Chaplin and Jack Oakie impersonating
also participated in the demonstrations, which spread to
Hitler and Mussolini. But the Government's most immedi-
include acts against the Legislature and against the English.
ate concern seems to be with its declining internal prestige,
Assured of British backing, Premier Qavam refused the
resulting from fiscal and economic problems, particularly high
Shah's requests to resign, and the British Ambassador took
prices and the food shortage.
a firm line with the Shah. The Ambassador apparently
insisted on dissolution of the obstructionist legislature, full
German Movements Into the Balkans
investigation of the riots, compensation for people who
German troops have been steadily moving into the Balkans
suffered damage, dismissal of corrupt and pro-German
in recent weeks, according to a number of reports reaching
officers, the strict enforcement of laws against hoarding, and
Ankara. These indicate three to five German divisions in
the setting up of a new ministry under Premier Qavam.
Greece and from two to four German divisions in Yugoslavia.
With regard to the critical wheat question, the British envoy,
Most of the recent arrivals are understood to be tired and
it is reported, questioned the Shah's right to expect wheat
lacking fresh equipment, and appear to have been moved from
until Iran adopted a more friendly attitude.
the Stalingrad front. The number of German troops sta-
British policy on the wheat issue and the arrest of the
tioned in the Aegean Islands has apparently not increased
Governor General of Isfahan as a Nazi conspirator, without
substantially. Sizable German forces have been in Crete
consulting the Persian Government, have apparently caused
for several months, including an entire parachute division.
native suspicion of British pressure aiming at more complete
The recent German movement seems to be primarily defensive
military and political control at Tehran. British authorities
in character.
have, however, taken measures to move wheat to Iran, and
Riots in Iran
are hopeful that transfers of grain can be effected from parts
of the country now occupied by the Red Army. Stalin is
Tehran was torn by riots on December 8. Following a
reported to be anxious to give the Irani a square deal, and to
bread demonstration of school children led by their teachers
have categorically promised to withdraw every man of the
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Red Army when peace is restored. At present the Soviet
may have expected to divert some Allied strength from the
troops in Iran have excellent discipline and are causing a
present battleground. More likely-having given up their
minimum of trouble.
forces on the Buna beachhead-their intention is to increase
At Tehran a precarious quiet now prevails, with Premier
the security of bases at Lae and Salamaua and to keep alive
Qavam negotiating to form a new government. The Irani
the campaign in the Papuan jungles. The enemy's desire to
clearly feel that the Allies regard their country as little more
keep the Pacific war centered in jungle areas (where—except
than a convenient military highway. Their spokesmen have
in the air-machines and mechanical skill are less at & pre-
indicated that small shipments of food and other necessities
mium than individual fanaticism and small appetites) is quite
could go far toward winning Persian support and good will.
understandable.
Fresh Landings in New Guinea
The Situation at Buna
Allied troops have pressed in upon the remaining Japanese
Allied capture of Buna village has widened the wedge
positions in the Buna area, but the enemy has succeeded in
driven last week between Japanese forces entrenched in the
establishing a new beachhead about 45 miles to the northwest
Buna-Cape Endaiadere area (site of Buna Mission) and those
in the neighborhood of Cape Ward Hunt. The new landings
still holding out at Sanananda and Cape Killerton. In the
were made in the face of heavy counter action by our aircraft,
former area, the hardest fighting is proceeding across the
but the first wave of landing craft-carrying perhaps 1,000
open spaces of Buna's two landing fields-the "old strip"
troops-is reported in news dispatches to have gotten ashore
and the "new strip" (see map at back, with Appendix III).
intact. The two enemy cruisers and three destroyers from
Turning inland from the beach, American troops have occu-
which the landings were made sustained no direct hits, and all
pied the north edge of the "new strip" and are attacking
were able to leave the scene of battle after disgorging their
enemy trenches at the west end. Other contingents are
troops and supplies. The main fire of our aircraft was directed
attempting to clear the Soputa-Buna trail, to which the
against the latter, and casualties inflicted on enemy person-
Japanese have been clinging tenaciously. At Sanananda and
nel are reported to have been heavy.
Cape Killerton, Allied troops, attacking along the road from
The area in which the landing was made-between the
the south, have repulsed repeated enemy counterattacks and
Kumusi and Mambare estuaries-is thinly settled and alter-
continue a slow advance, while Australians move down the
nates between dense forest and swamp. The beach offers
beach from Gona. At Gona itself-occupied last week-
the only coastal trail to Buna, and it is crossed by many
more than 600 Japanese dead have now been counted, and
streams and lagoons which would impede travel. From the
the number of prisoners still appears to stand at 16. The
mouth of the Mambare there is a trail system which leads
bodies of the dead reveal that the Japanese were in good
inland to Ioma, whence other trails lead to Buna-a round-
physical condition, despite the siege which preceded the final
about journey of more than 100 miles.
occupation of Gona; apparently the Japanese did not suffer
While it is unlikely that the Japanese could hope from this
from a shortage either of supplies or ammunition. At Buna,
region to make a land attack designed to relieve Buna, they
however, enemy aircraft continue to drop some supplies by
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parachute, suggesting that here our aerial blockade may have
Roosevelt announced the appointment of William Phillips as
had more telling effects.
his personal representative "near the Government of India"
Activity in the Solomons
with the rank of Ambassador.
In the Solomons, a force of 11 Japanese destroyers was
New Conservative Leadership in Canada
attacked off the New Georgia group of islands on December
The election of Premier John Bracken of Manitoba to the
11 by our air and small surface craft. At least five were
leadership of the Canadian Conservatives marks & party
damaged by direct bomb hits, one was sunk by surface craft,
reorientation symbolized by the new leader's successful
a second probably sunk, and a third damaged. Reports do
insistence that in future the party be called Progressive
not indicate, however, whether supplies or reinforcements
Conservative. At the Winnipeg Convention which elected
finally succeeded in getting through.
Bracken, the former Conservative leader, Senator Arthur
On the island itself, meanwhile, there has been little change.
Meighen, convinced his own right-wing supporters that the
Our aircraft all week have bombed and strafed two new
Conservatives could never win another election unless they
Japanese landing strips and other air facilities at Munda
carried the agricultural west and that to do so they needed
Point (New Georgia group), some 200 miles to the north of
the undoubted political master of the west, John Bracken.
the airfield on Guadalcanal. The new facilities evidently are
Meighen was even willing to accept Bracken's low tariff
intended as bases for fighter-planes in the next full-scale
views, although it is possible that right-wing Conserva-
attempt to reconquer Guadalcanal, where the enemy's
tives will balk at this change of policy.
inferiority in the air already has cost him heavily.
While politically honest and personally sincere, Bracken
has a firm belief in one-man government. Lacking & broad
India: Extension of the Viceroy's Term
educational background, he offers a curious mixture of in-
The extension of Lord Linlithgow's term as Viceroy of
herent conservatism and intellectual radicalism. Although
India has suggested that the British Government is planning
he has largely outgrown the anti-American prejudices of his
no fundamental changes in its Indian policy. To this event,
earlier years, he has retained, to a considerable degree, an
the Indian press has reacted in characteristic fashion, the
instinctive distrust of the French Canadians. A former
British-controlled journals praising Lord Linlithgow's "sober
"dirt farmer" and president of the Manitoba Agricultural
but progressive policy", and the nationalists ridiculing the
College, Bracken entered the provincial legislature in 1922,
"repeated doses of 'expansion' of his Executive Council"
where as leader of the dominant Agrarian Party he was
indulged in by a Viceroy "who has agreed to stew in his own
immediately chosen Premier. Subsequently he organized a
juice of repression and deadlock". A less extreme comment
coalition government including Progressives, Conservatives,
was that of the Statesman, which ascribed the extension to the
Liberals, and the Canadian Commonwealth Federation.
"extraordinary difficulty of selecting a suitable qualified
Early this month, as a result of Bracken's decision to seek
successor at this anxious time".
the conservative leadership, the C. C. F. withdrew its
Shortly after the extension of the Viceroy's term, President
support. In fact, the urgency of the Conservative demand
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for Bracken's leadership was largely due to the growth of
C. G. T.-whose 263,000 members represent over 75 percent
C. C. F. sentiment throughout the Dominion, particularly
of organized Argentine labor-should prove a most effective
among ordinarily Conservative farmers. In the future,
although the younger "progressive" Conservatives and the
weapon, it is believed, in the current campaign of pro-Allied
elements in Argentina seeking to align their country with the
Old Guard under Meighen will probably both try to control
United Nations.
Bracken, it is unlikely that he will be the tool of either faction.
In time, however, Bracken might rally the support of left-
wing Conservatives and right-wing Liberals to form a mod-
erate Progressive Party. With the merger of the two old
parties, the C. C. F. might then become the other major
party in Canada.
State of Siege in Bolivia
Reorganization of Bolivia's cabinet on November 19 appar-
ently has failed to solve the country's deepening political and
economic crisis: President Peñaranda has now declared a state
of siege. This decree may assist the Government in fulfilling
its immediate commitments to the United States-among
them several agreements with Standard Oil-but the fact that
resort had to be made to such a drastic measure does not augur
well for the regime's stability.
The C. G. T. Enters the Lists in Argentina
In Argentina, where President Castillo announced this
week the continuance of that country's state of siege, a
committee of the Argentine General Confederation of Workers
(C. G. T.) has agreed to drop its stubborn aloofness to direct
political action and has called for a conference of its affiliates
"to launch a campaign against the pro-Hitler policies of
Castillo." Rejecting the position of its now repudiated
General Secretary, José Domenech, the new Executive Com-
mittee proposes to follow the example of its neighbor unions
in Chile, which exert political pressure through the Chilean
National Democratic Alliance. Active mobilization of the
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Cooperation between the Army on one hand, and Industry and Government on
APPENDIX I
the other, is assured by the placing of high Army officers in responsible positions
in the governmental and industrial hierarchy. During the past year, it is true,
MILITARY AND CIVILIAN CONTROLS IN THE GERMAN
the number of officers BO placed has declined markedly. Colonel Von Schell,
WAR ECONOMY
Commissioner General for Motor Vehicles, was compelled to resign; and Lieuten-
ant General Von Hanneken has left the Ministry of Economics for a post in
Until the spring of 1942, the German war economy operated under predomi-
Denmark. Nevertheless, it should be remembered that the most powerful
nantly military controls. The Wehrwirtschaftsamt und Ruestungsami of the
economic agents on the regional level are the Ruestungsinspokteure and Wehrwirt-
Supreme Command of the Armed Forces, headed by General George Thomas, was
schaftsinspekleure-that is, officer-engineers who have received their training in the
largely responsible for over-all planning of war production. But the first Russian
armed forces, even though they may now be subject to civilian authority.
campaign revealed such serious defects in this organization of the economy-
Determination of Military and Civilian Requirements
duplications and over-lappings of authority, a mounting volume of paper work,
Under the recent reorganization, final reconciliation between civilian and
administrative bottlenecks, etc.-that in April and May, 1942, the Nazia began
military requirements in the responsibility, not of the Wehrmacht command, but
to overhaul the system. The military's sphere of control was definitely curtailed
of two civilians: Walther Funk and Albert Speer. As Minister of Economics
and civilian authority-in the person particularly of Herr Speer-was corre-
and as Commissioner General for War Economy, Funk enjoys supreme command
spondingly enlarged.
over the civilian sector of the German war economy, having the power to appoint
Power Relationships
all the leading directors of the great business organizations. Speer, in his capacity
as Minister of Armaments and Munitions, exercises effective control over the
The reorganization has not, however, led to the establishment of one over-all
military sector. If Speer and Funk fail to agree on fundamental policy, the issue
supreme economic authority in Germany. Decisions on basic policy are reached
may be carried to Goering as chairman of the Ministerial Council for Defense of
by agreements between the major power groups which, in the order of their present
the Reich and chief of the entire war economy, or even, ultimately, to Hitler
importance, are: the Party, Industry, the Armed Forces, and the High Civil
himself. Arbitration of this kind is, however, the exception-as a comparison
Service.
between the number of rulings issued by Funk and Speer and the number issued
The rise in status of Industry, whose self-governing organizations have acquired
their most substantial increment of power since the early days of the Nazi move-
by Gooring makes clear.
The decree of May 30, 1942, established Speer's authority over arms production
ment, is & salient feature of the reorganization. German business has now been
by splitting up the Wehrwirtschaftsamt und Ruestungsamt and placing the all-
thoroughly organized into functional economic groupe and regional economic
important Ruestungsamt under Speer's Ministry of Armaments and Munitions.
chambers. Every businessman now belongs to both units (which are operated
The Wehrwirtschaftsamt remains under the supreme command of the Army, but
on the Führerprinzip); in fact, the smallest workshop in the German economy is
its program of military requirements must be cleared through the Ruestungsamt,
now fully integrated into & network of business agencies subject to directives
and even some of its officer personnel (officer-engineers, economic officers, and
from above,
munitions inspectors) are subject to Speer's orders as well.
The Party retains ita measure of control over the economy by seeing to it that the
Demands for matériel which originate in the various branches of the armed
key figures in government and industry are also leading Party members-Speer
services are first sent to the Wehrwirtschaftsamt which, by setting up & balanced
(Munitions), Sauckel (Labor), Funk (Economica), Backe (Agriculture), Reinhard
program of requirements, seeks to eliminate competition between these rival
(Finance), and, above all, Goering. This same system of personal union of Gov-
claimants. From here, this program is transmitted to the Ruestungsamt, where
ernment and Party officials is repeated on the lower levels in the case of the
it is considered on the purely economic level and adapted to raw material and
presidents of the provincial economic offices, the trustees of labor, and the presi-
labor resources and to the productive capacity of German industry. No branch
denta and advisers of the economic chambers of the Gaue (who at the same time
of the armed forces can assert any demands which have not been sanctioned by
are also businessmen).
this controlling body. The Ruestungsamt under Speer, therefore, is revealed M
In general, the Party is less concerned with administration than with leading,
the central, directing agency of German arms production.
driving, and manipulating the masses. Mase manipulation in particular has
As an addendum to Speer's power, it should be noted that in the Ministry of
assumed prime significance 48 the demands made upon the German people have
Munitions there has been set up & special department entrusted with the expansion
cumulatively increased during the past year. It was because the labor problem
had become one of the most acute in the war economy that Sauckel and his band
of armament plants (Ruestungsausbabau) with regional offices (Aussenstellen) which
of Party Gauleiters took over control of the labor supply.
carry out the policies of the Ministry in each army corps area.
Based B 5 memorandum prepared In the Research and Analysis Branch of the Office of Strategic Services.
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Contract-Letting
Scheduling and Allocation of Raw Material
The letting of war production contracts under the present German economy is
governed by two factors-prices and technical conditions of production.
No precise information in available on actual scheduling. The method applied,
however, may be inferred from the system by which raw materials are allocated.
(a) Prices. For government orders, cost-plus prices no longer exist, but are
The methods now employed were established in the summer of 1942. At that time
either uniform, group, cartel, or administrative prices. If the Wehrmacht requires
the center of gravity was shifted from the Reichatellen-which were government
goods subject to cartel prices (as with cement or coal) or administrative prices (m
bureaus for the control of raw materials-to the organizations of the industrialists.
with leather or cloth), the government is compelled to pay them; but since combas
The new quota system employed in the iron and steel industry may serve as a
material is not priced in this way, this is the exception rather than the rule.
fair example.
Uniform prices are established for one article (or a part of it) and are valid for
A limited liability company (Ruestungskontor), organized in the Speer
every producer in the territory of the Reich.
Ministry, has established B clearing department (Verrechnungsstelle) which opens
But if, owing to variation in production costa, uniform prices cannot be set,
an account for each of the agencies that order iron and steel. The firms that use
group prices are fixed which take into account these differences. When such
jron and steel draw upon their accounts by means of "iron checks" (Eisenscheine),
group prices are determined for a spécific article, the producer may choose which
which are certified by the clearing department. With this transaction the inter-
group unit he desires to join: that is, if be is a high-cost producer he will probably
vention of the government agency ceases: the remaining transactions are ex-
join one of the lower-rated groups, in which he will receive a relatively high price
clusively private in character. The owner of an "iron check"-which ie a kind of
but a low priority on materials, no tax-exemptions, etc. If he can join a higher
draft upon his r&w materials account-issues on his own responsibility "iron-
group, his price may be lower, but be will run less risk of being shut down for want
transfer-checke" (Eisenuebertragungscheine) to his subcontractore up to the total
of materials; and he may suffer less from the excess-profits tax and other levies.
amount of the quantities to be supplied.
Uniform and group prices are fixed by a working committee (Arbeitsstab), which
Accounts are established on a quarterly basis. Each "iron check" contains a
is a kind of liaison committee between the Reich Price Commissioner and the
note indicating the holder's prospective requirements for the ensuing quarter. If
Ministry of Munitions. It is interesting to note that no industrialist is represented
an order exceeda an entrepreneur's quota for the current quarter, a sufficient
in the Arbeitastab.
quantity of iron and steel in reserved for him to enable him to meet his commit-
(b) Technics. The determination as to who is to produce and how the article
ments. Since entrepreneurs are thus given only quarterly quotas, and are held
is to be manufactured is in the hands of Speer and the industrial organizations
to strict account for additional supplies, hoarding of steel becomes almost impos-
proper. These organizations, representative of industry, are the so-called Main
sible.
Committees (Hauptausschuesse) and Industrial Rings (Industrierings). These
What in decisive, of course, is the manner in which the accounts or quotas with
Main Committees and Industrial Rings are represented at the center of affairs in
the clearing department are set up. This was formerly the duty of the Com-
the Armament Council (Ruestungsrat), composed of five high army officers and
missioner General for Iron and Steel, Lieutenant General Von Hanneken. Since
eight industrialists, which serves as an advisory body to Speer. The Main Com-
he was sent to Denmark, his functions have been transferred to the peak cartel,
mittees, made up chiefly of engineers, operate on & regional and local level and
the Iron and Steel Reichsvereinigung. Briefly, therefore, it is the iron and steel
may be considered BE agencies whose prime function is to rationalize war produc-
monopolies that allocate the quotas, which, in turn, are handled as accounts.
tion. The Industrial Rings are national organizations, also composed of engineers,
As indicated above, production schedules are set ordinarily for three months,
whose function it is to standardize the production of such commodities as are used
on the basis of & production plan drawn up by the Ministry of Munitions according
in a variety of military articles. If, for example, a cog-wheel is used in tanks,
to those military requirements specified by the Wehrwirtschafteamt. The Minister
trucks, and other armored vehicles, it is they who design its type and construction.
of Munitions transmita this plan-which determines the amount of raw material
Contracts may be placed either directly with an industrial firm, or indirectly
to be allocated for this períod-to the Ruestungskontor.
through a national peak cartel (Reichsvereinigung). If directly, the contract is
concluded between the Ministry of Munitions and the firm, but only after the
The Allocation of Labor
Main Committee or the Industrial Ring pronounces the firm's technical equip-
Supreme authority for the allocation of labor is vested in the Commissioner
ment satisfactory. If the contract is placed with a peak cartel, the cartel in turn
General for Labor Supply, Gauleiter Frits Sauckel. Sauckel's office has been
allocates the order to one or more of its members, at its own discretion.
superimposed upon the Ministry of Labor, upon the trustees of labor who fix
Once a contract has been awarded, subcontracting and farming out are left to
wages and determine labor conditions, and upon the labor exchanges, which are
the prime manufacturer, who furnishes both the designs and the raw materials
the agencies that hire and fire and train and retrain labor. Until the regional
There are, however, certain cases in which the Ministry of Munitions deals directly
armament commissione were set up, Sauckel used the local Gauleiters as instru-
with pools of small manufacturers, especially in the case of goods designed for both
menta for the control of the trusteee of labor and the labor exchanges. He has,
civillan and military consumption, such as uniforms and boots.
however, no power to interfere with drafting for the army, although the Wehrmacht
generally accepts the deferment recommendations of the labor exchanges.
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Within the scope of civilian labor Sauckel appears to be supreme in Germany
call in other officials, such as the presidents of the regional railway administration,
and the occupied territories. Yet a careful perusal of the decree of March 14,
the managers or leaders of the regional organizations of industry proper.
1942, appointing Speer BE Minister of Armaments and Munitions, makes it quite
These armament commissions have complete authority over all the five agencies
clear that Speer has final authority over the raw materials and the labor required for
that are represented in them. By appointing the chairmen of these commissions,
armament production. It is quite probable, therefore, that Sauckel is bound by
the Minister of Munitions can impose his will on all the regional agencies involved
Speer's decisions. Obviously, military requirements come first, and Bauckel is
in the execution of the war production program. Should the orders of the
there to see that the necessary labor is available. Concretely, this means that the
armament commission conflict with policies established by other ministries, the
Minister of Munitions informs Sauckel of the production plan for the next three
regional office affected by such an order may appeal to the Minister of Munitions,
months. Through his local agents Sauckel is in a position to discover whether
who has the right of decision after consultation with the ministry to which such A
sufficient labor is available. If there is not, he must take measures in conjunction
regional office belongs. Such an appeal, however, cannot postpone the execution
with the regional armament commissions which will inform him which plants
of the order.
should be closed and which should obtain a larger supply of labor.
One of the interesting features of the decree of September 17, 1942, is the fact
that the old army corps areas (Wehrkreise) have been abandoned in favor of the
Relation between Central and Regional Agencies
Party Districts (Gaue) as the new administrative units, It is, therefore, the
While the decree of May 30, 1942, established in the Ruestungsamt an authorita-
regional organization of the Nazi Party that provides the pattern for regional
tive central agency for the control of German war economy, regional administra-
organization. The munitions inspectors, originally appointed for each army
tion until recently presented 8 picture of considerable confusion. This confusion
corps area, are now appointed for each one of the 42 Party Districts, or Gaue.
was due to the existence of a multiplicity of regional officials and bodies with III-
The regional economic offices of the Ministry of Economics were adapted to the
defined jurisdictions, and to the lack of authoritative control within the scope of
Gaue on November 1, 1942, and the provincial labor exchanges are soon to follow.
regional administration. All previous efforts to introduce greater coordination
The decree of April 20, 1942 had already abolished the prevailing chamber system
among these regional agencies had failed completely. In the hope of remedying
in favor of the Gau economic chamber (Gauwirtacha/tskammer).
this situation, Goering established by his decree of September 17, 1942, the 42
Certainly, the decree of September 17 leaves no doubt about the sweeping
regional armament commissions or Ruestungskommiasionen. The chairman of
powers of these armament commissions. They can order the provincial economic
these armament commissions are henceforth appointed by and responsible to the
offices to close down any plant which they do not deem efficient. They can,
Minister of Munitions. By foreing all the organs of regional economic control,
through the Gau economic chambers, order business firms working on war orders
those of the state and army as well as the self-governing agencies of industry, into
to exchange trade secreta, technical information, machines, and machine tools.
these commissions, Speer hopes effectively to centralize regional authority. The
They can order the provincial labor exchanges either to grant or deny manpower
membership of these armament commissions embraces the following major
to particular industrial firms. In this matter the armament commissions have
agencies:
absorbed the functions of the combing-out commissions, which have since been
1. The munitions inspector (Ruestungsinapekteur) of the Munitions Ministry,
dissolved. By the same token, however, the power which the Party Gauleiter
the real representative of the interesta of war production in the regional ans.
possessed over the provincial labor exchange appears also to have been nullified.
He is an army engineer and frequently the chairman of the armament commission.
There are also the Wehroirtschaftainspekteur and the Wehrkreisbeauftragter repre-
APPENDIX II
senting both the Wehrwirtschaftsamt and the Ministry of Munitions. Clearly,
both the Supreme Command of the Wehrmacht and the Ministry of Munitions
POLISH POLITICS IN THE UNITED STATES
are amply represented.
2. The armament chairman (Ruestungsobmann) representing the Main Com-
The arrival in this country on December 1 of Prime Minister Sikorski of Poland,
mittees of experts and the Industrial Rings. This chairman is an industrialist
and his recent activities here, have been interpreted by some liberal and leftist
who must also be an engineer or a construction man. He controls the other chair-
Polish circles in the United States as evidence that, apprehensive of a too strong
men of the committees of experts and rings in his district (Hesirksobmaenner).
post-war Russia and attentive to the criticisms which are being voiced in this
3. The president of the provincial labor exchange (Landesarbeitsami), operating
country of his Russian policy, he has thought it wise to seek some measure of
under the authority of the Ministry of Labor.
political reinsurance in the West.
4. The president of the provincial economic office (Landencirtschaftsams)
The purpose of Sikorski's visit is stated officially to be military. He wishes to
operating under the authority of the Minister of Economics.
inspect our tank and plane production and to confer on lend-lease problems. It
5. The president of the district economic chamber (Gauwirtachaftekammer) and
is understood that he is also concerned to obtain American as well as British help
his economic adviser (Gawwirtschaftsberater).
Based on a memorandum prepared by the Foreign Nationalities Branch of the Office of Strategie
6. Whenever the need arises, the chairman of the armament commission may
Services.
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in welding into a single military force the Polish elements which are now dis-
the principle "that with the establishment of the new world order nothing shall be
tributed in the British Isles, the Near and Middle East, and Russia.
instituted without Poland or against Poland that concerns the territories situated
The Prime Minister has gone out of his way to confer at some length with the
about the tributaries of the Danube, Oder, Niemen, Dwina, and Narwa."
President of Ecuador, and he plans now to make B special visit to Mexico. The
In addition to the "Colonels" group and the KNAPP, there is another extreme
purposes of the trip are not known, but it is widely rumored that, perhaps as part
rightist element which looks for leadership to Dr. Tadeuaz Bielecki, head of the
of his reinsurance policy, he is now trying to build up among the United Nations
Endek (National Democratic) Party and one-time member of the Sikorski
an anti-Russian, Catholic bloc. It is said, moreover, that he is, for this reason,
Government-in-Exile. In Poland, Dr. Bielecki headed the reactionary Youth
not wholly displased by criticism of his Russian policy on the part of Polish
Movement wing of the Endek. He has become today one of the strongest oppo-
rightist elements in the United States and Great Britain.
nente of Sikorski in London and has vehemently denounced those members of the
At all events, the Prime Minister's visit has thrown into high relief the divergent
Endek Party who have given their support to Sikorski. Through the monthly
forces that underlie Pollsh opinion in this country. These forces may be roughly
Myst Polska (London), Bielecki and his followers carry on a campaign against the
classified for purposes of analysis into three main groups-the Right, the Center,
Pilsudski-Ites as well as against the Sikorski-ites, both of whom they regard as
and the Left.
"remnants of the regime which led Poland to catastrophe."
Bielecki is said to be represented in the United States by two members of the
The Right
Endek Party, Prince Druckl-Lubecki and Romuald Gantkowski. Official Polish
This is, pre-eminently, the nationalistic bloc, stemming from the "Colonels"
circles look upon Gantkowski as a military deserter on the ground that he failed
or "Sanacja" group which led Poland at the time of its defeat in 1939. Its oppo-
to register with the Polish military authorities in Lisbon. Some assert that
sition to the Sikorski Government-in-Exile came into the open after the signing
Drucki-Lubecki and Gantkowaki work closely with Matuszewski and other
on July 30, 1941, of the Russo-Polish pact which restored diplomatic relations
members of the "Sanacja" group. Drueki-Lubecki and Gantkowski have cen-
between Russia and Poland and provided for future collaboration.
tered their activities primarily on the Polish clergy in the United States, it is said,
In May, 1942, a number of these rightists, who had come to the United States,
hoping thus to gain moral and financial support; they argue that Catholicism is
inspired the presentation to President Roosevelt, by some 131 American citizens
endangered by the Sikorski Government's pro-Russian policy. Working toward
of Polish descent, of & memorandum directed against Russia's alleged designs 00
the establishment of a Polish Catholic anti-Sikorski union in the United States,
Eastern Poland; and in June, 1942, the National Committee of Americans of
Gantkowski is alleged to have the private support of one or more officials of the
Polish Descent (abbreviated from the Polish as "KNAPP") was organized.
Polish Information Center in New York.
The KNAPP is now a mounting political force, thanks in part to the organizing
The Center
ability of its secretary, Ignacy Morawski, one of the editors of the New York
Nomy Swiat. Morawaki has been touring Polish communities and delivering
This is represented primarily by the Polish American Couneil, which asserts
fiery anti-Russian speeches. Through such activities and with the aid of the
that it speaks for some 4,000,000 Polish Americans. Its leadership supports the
Nowy Swiat and the Detroit Driennik Polaki (two of the largest and most
Slkorski Government, but declares that after final victory has been achieved,
influential foreign-language dailies in the United States) the KNAPP has grown
the people of Poland should themselves determine the character and composition
rapidly. Since June, some twenty new branches have been set up.
of their government.
The outstanding intellectual in the rightest group is Colonel Ignacy Mato-
Among the organizations which compose the Council, by far the largest is the
exewski, n Polish citizen who came to the United States shortly after the fall of
Polish National Alliance. Founded in 1879 in Chicago, the Alliance today has
Poland. As one of the "Colonels" he has & background of wide and varied experi-
2,300 branches in 26 states and a total membership of 275,000. Older by & few
ence in war, diplomacy, politics, and journalism. From 1929 to 1931 he served
years than the Polish National Alliance, but not so large, in the Polish Roman
as Minister of Finance to the Polish Republic, and for several years he edited the
Catholic Union. The Union has a membership of 180,000, centered primarily
official government organ In Wareaw, Gazeta Polska. Today he contributes what
in Chicago. Other prominent Polish organizations with national beadquarters
are generally agreed to be brilliant articles on political and military affairs to the
in Chicago are the Polish Women's Alliance of America with 60,000 members, and
Nowy Swiat and the Driennik Polaki.
the Polish Alma Mater of America with 16,000 members.
The anti-Russian platform of the KNAPP makes it possible for the organization
In the East, the important Polish organizations are: The Polish Union of the
to appeal directly to the nationalistic element among Polish Americans. Arguing
United States (40,000 members), the Polish Falcons (15,000), the Polish Na-
that Poland, prior to 1939, "embraced only a part of those territories which for
tional Alliance of Brooklyn (15,000), the Polish National Union of America
centuries belonged to Poland", the KNAPP platform demands reconstitution of
(10,000).
Poland in toto, with changes in the Polish-German frontier "which would give
The Left
Poland security and freedom of economic development, primarily through the
liquidation of Eastern Prussia". The KNAPP argument calls for recognition of
The principal strength of this fraction comes from the Polish Labor Group,
the Communists, the Polish Section of the I. W. O., and to some extent from the
26
27
Regraded Unclassified
SECRET
SECRET
Polish membership of the American Slav Congress. By and large, these leftlet
imagination, are B. peaceful and friendly lot, accustomed to work on the plantations
elements have supported the Government-in-Exile, particularly on its paet with
or in Papua's gold mines, with a game of soccer their only approved form of
Russia, although they would like to see the Left better represented in the Cabinet.
communal violence.
One of the more important figures on the Polish Left in the United States is
Wladyslaw R. Malinowski. Mr. Malinowski is prominent in the Polish Labor
Airplane Facilities
Group in New York, which although officially unconnected with the Polish
Before the war, there was a small emergency landing-feld & mile and a half
Socialist Party, appears to be its ideological counterpart in America. An affiliate
southeast of Buna, and & somewhat better airfield at Kokoda (the former, together
of this organization in the American Friends of Polish Democracy, made up of
with a new landing strip nearby, has been the scene of recent fierce fighting).
American citizens headed by Professor Robert M. MacIver, the eminent sociolo-
In addition, the grassy plaine inland from Buna have flat areas capable of being
gist, For some time, this affiliate has been publishing a bulletin entitled Peland
turned quickly into large airfields, particularly in the Dobuduru district. The
Fights, to which Malinowski and his associates contribute. Although Mallnowski
strategie significance of airfields in this region is indicated by the following table
and his friends are, on the surface, friendly to the Government-in-Exile, they are
of air distances from Buna:
Miles
believed (as socialists) to stand fundamentally in opposition.
Port Moresby
105
Salamaus
147
APPENDIX III
Lae
167
Rabaul
400
THE BUNA REGION 1
Buka Passage
500
Australian and American troops, continuing their offensive across New Guines,
Terrain
last week captured Buna village and pinned Japanese detachments against the ets
The land around Buna barely rises above sea level; swamps are prevalent,
(see map). Possession of the beachhead now in dispute appears essential to my
especially between Buna and Sanananda, and back of Buna. Since 80 much of the
plans the enemy may have for a renewed overland assault on Port Moresby;
terrain is waterlogged, fox-holes and trenches are often out of the question, and
conversely, elimination of this threat by seizure of the coastal strip has become
defenses must generally be built above ground. Where the ground is firmer, it in
equally important to MacArtbur's forces. The following are notes on the strategi-
usually covered partly by forest and partly by rank alangalang grass, which growe
cal geography of the Buna area,
about four feet high.
From Soputa, eight miles southwest from Buna, the land rises slowly to the
Settlements
undulating plains of the Sangara and Kumusi River regions. Southward rise
Buna itself, although the government headquarters station for the Northern
spurs of the Hydrographers Range and Mount Lamington-the area through
Division of Papun, included in peacetime but three European-style buildings,
which the American forces moved in surprise attacks on the Japanese flanks.
several native-style structures, two white officials, and one white trader. The
The foreshore in the Buna region consists of & hard beach of brown sand, stretch-
adjoining native settlements-Buna village and Siwori-had a population of
ing almost unbroken for many miles to the northwest and southeast. Offshore
scarcely 120 persons.
lie extensive coral reefs and sandbanks-particularly opposite Buna and Cape
Eastward along the shore, for about a mile from Buna, stretches a government
Endaisdere. These have not been carefully surveyed; even captains of coastal
coconut plantation of about 200 acres. Four miles northwest of Buna, Sanao-
vessels familiar with these waters prefer to anchor at night. No harbors exist, but
anda (outlet for the government coffee plantations around Sangara) boasted at
channels in the reefs lead to reasonably sheltered anchorages at Sanananda, Gona,
the opening of the war a coffee shed, rest-house, and two trading stores; from
Oro Bay, and Buna, where boats drawing even 10 feet can approach within 50
here a motor-truck road had been cut to the Sangara region to transport Sangara's
yards of the shore. Smaller bosts or barges can come right to the beach. For
coffee to the coast.
embarkation purposes, the Japanese would find the river-canoes of the natives
Gona and Eroro on the coast, and Sangara and Isivita in the interior, are
not very serviceable; on the other hand, such an operation would be aided by
stations of the Anglican Mission, with white missionaries normally in residence.
December's generally calm weather.
As for the Sangara region, it contains quite extensive rubber plantings and BOBE
experimental sugar plota, Ten miles south of Buna, near the coast, lice the
Climate
Warlsota Plantation, which raises rubber and coconuts.
The winter months of December, January, and February in the Buna region are
Native settlements are quite numerous on the plains back of Buna and on the
usually the wettest of the year, precipitation averaging about 13 inches per month.
slopes of the range to the south; the region's native population totals about 9,000.
Sudden squalls (the most tempestuous of which are known as "gubas") occasion-
These people, the "Orokaiva," far from being the head-hunters of the public's
ally disrupt the general calm; at such times, rivers and streams are subject to
I Based on a memorandum of the Research and Analysis Branch of the Office of Strategic Services.
quick flooding.
29
28
Regraded Unclassified
SECRET
Trails
The Buna region has an elaborate network of native trails, good and bad, and
also several main government roads and trails. The truck route from Sanananda
to the Sangara area is about 11 yards wide, and runs through forest and grass
country. Buna settlement is the coastal terminus of the historic Port Moresby-
Kokoka-Buna "road"-which is really & foot trail only. Another important
trail leads from Buna southeastward to the airfield and on to Dobuduru. A
coastal trail, which follows the beach, may in places be covered at high tide,
The mouth of the Girewo River and the lagoons in this region are crossed either in
native canoes or on foot at low tide; they form substantial obstacles for our troops
advancing along the coast. Eastward this coast trail passes around Cape Endais-
dere, and a fair trail system continues right along from here to the Milne Bay area,
30
#. s. GOVERNMENT PRINTING OFFICE 1943
Regraded Unclassified
CONFIDENTIAL
BUNA AREA IN PAPUA
195
100
148'10'
148°19'
148 20'
150
146'25'
Kovieng
BUNA AREA
BISMARCK ARCHIPELAGO
Robout
HOLNICOTE BAY
"
Gona
I
6'
Kieto
35
MONTHEADT
SOLOMON ISLANDS
c. Killerton (Waytutu Pt)
Jos
NEW
Buinb
Salamova
GUIMA
Sageri
POREST
INVAMPT WEAR COME
Sanananda
I
COVERED WITH MANDBLITE
C. Ward Hunt
case
Tarakena
TERMITORY
Senoni
Stwori
0
E
THICK
Buna Village
Part
PAPUA
-
200
QUADRICANAL
y
BUNA
H
Moresby
10°
Hamburate
so
Nautical Miles
Hougoto
THE
CHANGE
Ahora
$
DM Landing Drip
Girigirita
Kukumbato
150°
CRAM PATCHES
3
THICK KULB
160
C. Endeladere
155°
o
HEAVELY
THAMP
Julivata
a
Anbego
TIMBIRED
40
3
FOREST
Ango
New
Bareo
Ongohe
FUREST AMP
Soputa
GRASS
Landing
LAUR
CRASS
SCHLTS
Horiko
Sphro
/
PSinemi
X/Hanohamburi
Airfield
/
Site
Warisolo
Togohow
of
Divinikoori
/ In
©Areha
Kanari
Beuru,
Popondettà
Nolkihinda
FOREIT AND CRASS
Moson's
Borkerg
/
Mongi
8"
CRAIM
45
45
POSSET AND RAM
WARISOTO
Sombop
Dobuduru
PLANT'N
Amdembo
Sangara
o
Dombado
for
/
Embi
Babiredo
Imanitury
Eroro
NATIVE
IN
Incode
Aware
Hogenahambo a
Koropato
(Waside
Soropula
8
Chogi
so
Sasembato
lsivito
Motor Road
Japanese-held Area
Dipori
a
Mumum
Ombi
Possible Motor Road
Allied Advance
Tara
Gorarj,
Nimo
Trail
I
Anchorage
To Kolada
Wairopi
Wire Rape Indge
HYDROGRAPHERS
Ord
RANGE
0
4
Mt. Lamington
MILES
55
147'55
148°
148°05'
148'10'
148'15'
MAP NO 1442, DEC. 16. 1942
COMPILED AND DRAWN IN THE BRANCH OF RESEARCH AND ANALYSIS, oss
THROUGH BY THE 055 REPRO DV
Regraded Unclassified
150
December 18, 1942
9:15 a.m.
BRITISH DOLLAR POSITION
Present: Mř. Bell
Mr. White
Miss Kistler
Mr. Berle
Mr. Feis
Mr. Pasvolsky
Mr. Stettinius
Mr. Cox
Mr. Knollenberg
Mr. Coe
Mr. Clayton
MR. STETTINIUS: Mr. Secretary, I have another
meeting and would like to leave early, but I would like
to make a statement.
H.M.JR: Do you want to make your statement now?
MR. STETTINIUS: I think my letter presents the
issue pretty clearly, the general problem being that
when the U.K. cash position got down to around two
hundred million, I think we generally agreed and they
agreed--
H.M.JR: How many million?
MR. STETTINIUS: About two hundred - it was the
general feeling that when it got up around six hundred,
that would be a comfortable position. They agreed to
that. The tabulations that Harry will present show
that it is up approaching 8 billion, now - up to almost
two billion for the Empire, and almost 8 billion for the
United Kingdom.
We go before Congress on January 11 for another
Lend-Lease appropriation, and I am sure that one of the
first questions that will arise is the relation of the
new appropriation to the dollar position of the Lend-
Lease countries.
Regraded Unclassified
151
- 2 -
We felt that it was vital that we have 8. meeting
with you and the other representatives in this room
to determine a definite policy on this whole subject.
I think my letter ratherspecifically states some other
facts and figures that Adolf might not have seen.
H.M.JR: I will read the letter aloud; maybe Mr.
Clayton has not seen it. It is dated December 3, 1942.
"I have a memorandum from Oscar Cox dated November
23 saying "I think some serious consideration ought to
be given to how high the British gold and dollar balances
should be allowed to rise, particularly in view of the
possible boomerang from the standpoint of Congress'
reactions to additional appropriations' for Lend-Lease.
I understand that your records show that as of October
31, 1942, the United Kingdom's official dollar balance
was $237,000,000., and its so-called 'available gold'
$468,000,000. with an additional so-called 'scattered'
gold of $210,000,000., and that the United Kingdom's
gold and dollar position is growing increasingly strong.
"In the light of these facts I think it might be
well for Dean Acheson, Milo Perkins, and me to have a
talk with you about this situation and the possible
advisability of taking steps through Lend-Lease opera-
tions or otherwise to keep the British combined gold
and dollar position from rising materially above its
present relatively high level.
Well, it is not only England; we have Canada and
South Africa, and I think for the benefit--
MR. WHITE: And Norway.
H.M.JR: I think for the benefit of those that
were not there yesterday - Mr. Berle may have heard,
I don't know - supposing White - were you there yester-
day?
MR. CLAYTON: At the BEW, yes, sir, I was.
Regraded Unclassified
152
- 3 -
H.M.JR: Will one of you sketch what happened
yesterday? I don't want any extra committees, you know.
MR. CLAYTON: As I recall it, the question first
arose with reference to the operations of Lend-Lease
putting American exporters out of business; and from
that the discussion passed on to the question of who
was deciding & policy 8.8 to how much - after the de-
cision had been made by the President - as to what
countries should obtain Lend-Lease aid - who was de-
ciding - who was making the policy as to how much that
aid should amount to.
Then the question arose as to the balances of the
British. There was a good deal of discussion about
the South African position, and about our forcing Lend-
Lease on South Africa, which really didn't want it.
The English position is that they want to treat the
Empire as a whole, and the view of some of the consti-
tuent parts - as South Africa and Canada, and so on - is
they wanted to be treated separately.
Out of that discussion a committee was appointed
to discuss the matter and to make recommendations.
I think that states it.
MR. WHITE: To make recommendations to the BEW -
to the sub-committee.
H.M.JR: Is Dean coming this morning?
MR. BERLE: I don't think so - or at least I don't
know that he is, Mr. Secretary. I think he told Leo
and me to show up here.
MR. COX: The problem is a little more complicated
than that in terms of--
H.M.JR: Can it be? (Laughter)
MR. COX: More complicated?
Regraded Unclassified
153
- 4 -
H.M.JR: I say, can it be?
MR. COX: I think so - and also, in some senses,
much narrower. Now, I don't think you can judge the
dollar balance position, for example, without taking
into consideration another political fact, which is
the kind of thing that Ellender raised in his letter
to you. (Copy of letter dated December 7, 1942, from
Senator Ellender to the Secretary, and reply dated
December 11, 1942, attached hereto.)
H.M.JR: Who raised it?
MR. COX: Ellender.
You may be able, as a rational matter, to convince
one percent of the Congressmen that the money which is
received by the British is sterling, and therefore
something different from dollars, but after you get
through with that they keep saying, "What is happening
with the money?"
It seems to me that realistically you have to
assume that is the way the Congress and the American
public will react.
You have a much broader question underneath it
which has been indicated by the polls, and that is
that only thirty-nine percent of the American public
now feel that the Lend-Lease obligations ought not to
be repaid in money or goods. It started at fifteen
percent, and after a certain amount of education, came
up. The balance, of course, feel that it ought to be
repaid in either money, gold, or goods.
It seems to me that in judging the dollar balance
position, you ought to consider the other factor, which
has had the most effect on the American people - that is,
the reciprocal Lend-Lease aid arrangement, by which stuff
moves from the other countries to the United States.
Regraded Unclassified
154
- 5 -
Now, I think there is 8 good deal of study that
has still got to be done. For example, I would be sure
that, exclusive of the pay of the troops in the United
Kingdom - which I don't think we ought to ask the
British to pay for, for several reasons: One, that you
want to get away from this mercenary business; and
secondly, the thing may run into enormous volume and
throw you back two years, as far as the dollar exchange
position is concerned. But I would be sure that, at
least to some extent, the whole machinery of the British
Government could not be used for the kind of reciprocal
Lend-Lease aid that we have in mind. In other words,
when the quartermaster's office wants to buy five heads
of lettuce, they are not going to use the whole machinery
of the Government to transfer it, and therefore you must
be using a certain amount of sterling obtained from
American dollars to do that.
The question that I would like to offer for con-
sideration is whether the British should not, for the
purposes of facilitating reciprocal Lend-Lease aid -
not as a credit, or not in terms of credit and debit -
but make available to the United States Government
some sterling to facilitate the obtaining of recipro-
cal Lend-Lease aid in terms of supplies and materials
that particularly our people over there are using.
I don't know that anybody has made any kind of 8
study to see what the dollar sterling amount is, of
the things we buy; it is administratively not feasible
to handle under the present arrangement.
One of the theories of money is that in certain
places it is administratively more desirable to use
that device than to use a barter arrangement, or 8
straight government-to-government dealing basis.
H.M.JR: Look, Ed Stettinius says he has to go now.
I would like to make a statement before he goes.
We here in the Treasury just have one interest, which
is the direct responsibility which the President placed
on me since about '37 - beginning with '37.
Regraded Unclassified
155
- 6 -
The first instance was when we were doing the
foreign purchasing - we must never let either England
or France say that they quit fighting for lack of
weapons. That was the first mandate he gave us. Then,
subsequently, we gave up that mandate in March--
MR. STETTINIUS: Forty-one.
H.M.JR: When Lend-Lease was created. But then,
subsequently, he gave us the mandate - it was up to
us to see that these various nations had sufficient
dollars with which to function. Now, that is my only
interest, I mean - that we see that Canada and England
and Australia and New Zealand and South Africa, and 80
forth, have what we can only describe as a comfortable
working balance.
There was B. time when they sent that economist
over here - who was that economist?
MR. COX: Keynes.
H.M.JR: He was around here. They, at that time,
sort of felt that six hundred million dollars--
MR. COX: Haven't you got another interest - and
that is--
H.M.JR: Just one second, please, Oscar. Now, the
reason I am making this - I want Stettinius to hear
this - in view of the discussion that took place at
BEW yesterday, as far as I am concerned, I am perfectly
willing to submerge this committee into another committee
of BEW, or any other group. I mean, I want to make that
very plain, because I gather that they appointed 8
committee yesterday, didn't they?
MR. CLAYTON: That is right.
H.M.JR: Because I certainly, 88 Secretary of the
Treasury, don't want to pass on whether you should have,
or use, import or export dealers.
Regraded Unclassified
156
- 7 -
We do that as far 88 the Treasury Procurement is
concerned, and we don't have them, but if that is going
to be 8 governmental policy, I don't think that is the
Treasury's business.
MR. STETTINIUS: That is right.
H.M.JR: But, on the other hand, we don't know
what these chits amount to that the Army and Navy are
using all over the world. You may know, but I don't.
MR. STETTINIUS: They are being reported to us
currently.
H.M.JR: I don't know.
MR. WHITE: I thought Oscar said nobody knew.
MR. COX: They know the ones that are reported,
but not the ones where dollars and sterling are used.
H.M.JR: I said the chits.
MR. WHITE: Nobody knows whether they are using
dollars merely because it is convenient--
MR. STETTINIUS: Harry, we know from the Army and
Navy and the Maritime Commission reporting to us monthly
what goods or services they receive from our allies and
in what forms. In some cases they are reported in dollars,
some cases in sterling, and in some cases & general
description of the use of an air field.
MR. WHITE: But that is all you receive in recipro-
cal Lend-Lease.
MR. STETTINIUS: Oscar is entirely correct. I ran
into it particularly in Northern Ireland, with the United
States Navy having spent dollars quite freely and had
not adopted the reciprocal Lend-Lease machinery.
Regraded Unclassified
157
- 8 -
H.M.JR: I am going to be very frank, because I
think it pays off. I don't want to get thrust into a
departmental fight, and I am not going to be thrust
into one, because I have got too much to do, and I
disapprove of them, anyway. I mean, we have got
enough enemies. So if there is going to be any fight
about who has got to have jurisdiction on this over-
all business, I am going to be a bystander.
We might just as well cail a spade a spade. Just
as long as we in the Treasury can fulfill our obliga-
tions that the President has given us, as to the dollar
positions of these various members of the United Nations--
MR. STETTINIUS: Of course, up until yesterday's
meeting, Mr. Secretary, our relations have been direct
with you on this policy. We have come to Harry time
and time again and discussed our operations - with your
record of dollar positions. Now, as far as broadening
out into other agencies, yesterday was the first--
MR. WHITE: It broadened out in subject matter, too.
H.M.JR: But your letter, of course, antedated
this thing. I just want to put it all on the table,
because, as I say, some of the people here - half of
the people here, weren't there yesterday. But I want to
make it perfectly plain where I stand and what the
Treasury's interests are.
Now, I am more than willing to continue the dis-
cussion, but I am not going to be a partisan in this
fight.
MR. FEIS: What was decided yesterday, if anything?
MR. STETTINIUS: It was decided that the committee -
a sub-committee - technical working committee, under the
chairmanship of Frank Coe, was to examine the whole
question of the status of importers and exporters in
relation to BEW activity, Lend-Lease activity, and to
make a general review of the dollar position of the
United Nations in relation to the BEW Lend-Lease activi-
ties. Is that correctly stated?
Regraded Unclassified
158
- 9 -
MR. WHITE: That is right, plus probably, also,
a review of the possibilities of that sort of thing
Oscar was talking about.
MR. STETTINIUS: The working committee was to report
to the BEW Board, and the BEW Board was to discuss it
as a policy matter, and I imagine would make a recommen-
dation somewhere.
MR. CLAYTON: I was just going to say I think the
main point that it brought out, Mr. Secretary, was that
if there is anybody who decides how much Lend-Lease
aid shall amount to in each country, nobody knew who
it was, and that it was highly important that somebody
have that responsibility. So when people - that is
the point Milo Perkins made time and time again, that
he is going to have to go before Congress sometime and he
is going to be asked that question. He doesn't know who
to say. - who it is, if there is anybody, who fixes that
policy.
MR. STETTINIUS: Fixes the amount of Lend-Lease aid?
MR. COX: That policy is decided by the President
and the Congress.
MR. CLAYTON: As to how much?
MR. COX: Certainly.
MR. WHITE: Wait, Oscar, how much - whether or
not England shall get more or less is determined by
Congress?
MR. COX: That is the practice in effect, because
when we go up for every appropriation there is a break-
down.
MR. STETTINIUS: In detail.
MR. COX: In detail, as to how much of the money
is for what kind of commodities for what country.
Regraded Unclassified
159
- 10 -
MR. WHITE: Why aren't you givenmore than you are
given? You could use up the money faster.
MR. COX: Because of the limitations of funds
granted by Congress.
H.M.JR: Harry, could I interrupt just a minute?
If anybody asked me that question I would think that
was Mr. Stettinius'.
MR. STETTINIUS: It is our question. It is our
answer.
MR. WHITE: He asks us that question, Mr. Secretary.
MR. COX: No.
MR. WHITE: Wait, let's not confuse this, because
it is an important issue. He had asked us how much
certain countries have.
MR. STETTINIUS: In dollars?
MR. WHITE: In dollars, that is right; and does he
determine that South Africa hasmore than enough or less
than enough? If what you say is true, he should not
even want to know what they have got. You said the limit-
ing factor is how much you have got to spend.
MR. COX: No, let me tell you - maybe this is not
the form to argue the question on this other committee.
H.M.JR: Excuse me, could I just read from this
letter here? He says, "In the light of these facts,"
and so on, "--to have a talk with you about the situa-
tion and the possible advisability of taking steps
through Lend-Lease operations or otherwise to keep the
British combined gold and dollar position from rising
materially above its present relatively high level."
ask the Treasury's advice, "Do you think it is too high?"
What I get is this, that Mr. Stettinius wants to
Regraded Unclassified
160
- 11 -
And then, if we say, "Well, it is beginning to get too
high," he would say, "All right, we will adjust the
thing."
MR. STETTINIUS: The President has told Henry to
keep it at 8. given level. We come to you and you say,
"Manage your operations to keep it at a six hundred
million dollar level rather than a billion dollar level.'
MR. WHITE: Then you are suggesting that it is the
Treasury who decides how much they shall get, because
if we say it is too high, you will give them less; if
we say it is too low, you will give them more, which is
different than Oscar--
MR. STETTINIUS: When we go before Congress we
break down tons of copper or tons of egg powder, by
quantity, with a forecast. Then you or somebody appears
and makes a statement as to what their security position
is, or their dollar position, and Congress appropriates
the funds to such a country for such a purpose, for such
a time.
MR. COX: Can I add another thing on this? You
have got to remember one other fact, it seems to me,
and that is - it is typified by the Ellender letter -
I think the very fact that Ellender wrote to you is
based on a popular conception that you are the fiscal
officer of the Government.
H.M.JR: I am the what?
MR. COX: That you are the fiscal officer of the
Government.
H.M.JR: Is he wrong?
MR. COX: No, I think he is right.
MR. WHITE: What do you mean by calling it a "popu-
lar conception"? (Laughter)
Regraded Unclassified
161
- 12 -
H.M.JR: I thought he said "misconception."
(Laughter)
MR. COX: It seems to me that the question of ex-
porting and importing governmental things-is essentially
8 separate problem from this other one. What you have
in the other problem is not the narrow question of merely
whether the dollar exchange position has gotten too
high, but you have a problem interrelated with 8 Lend-
Lease problem, and essentially what the State Department
does, because you can under-cut the whole effectiveness
of all these master agreements unless you intelligently,
in terms of American public opinion and the Congress,
handle the dollar exchange position and certain of the
Lend-Lease operations.
I don't quite see, in terms of the responsibility
that has been fixed on the Secretary, the State Depart-
ment, and Lend-Lease by prior arrangements, what parti-
cular function this new committee can perform in terms
of both the popular understanding and what the problems
are.
Now, the question of private exporters or importers
is, to & degree, interrelated, but it is so remote in
other aspects to this major problem that it seems to
me a completely separable problem.
Now, on the straight government-to-government
dealing, which are the big things in the Lend-Lease
operation, it is perfectly obvious that you are not
going to sell airplanes through private dealers any
more. When you get down to the large bulk of things
like copper and zinc, and what not, between U.K. and the
United States, for example, it is perfectly obvious that
for the course of the war you are not going to seil
those through private dealers.
MR. BELL: Who makes the decision as to how much
Great Britain will get out of our total production?
MR. COX: The Combined Production Resources Board.
Regraded Unclassified
162
- 13 -
MR. BELL: What is it?
MR. COX: Combined Production Resources Board.
H.M.JR: Who is chairman of that?
MR. COX: Lyttelton and Nelson.
MR. BELL: The question of what is Lend-Lease is
determined by you, because the whole total is Lend-Lease
except their dollar balances, isn't it?
MR. STETTINIUS: Yes, that is right, sure.
MR. BELL: They give you the total they get out of
production and you get from us the dollar balances;
and of their excess you deduct that from the total, and
the balance is Lend-Lease, isn't it?
MR. WHITE: No, no.
MR. BELL: It isn't that simple?
MR. COX: In the course of this war you develop
mechanisms to deal with different phases of 8 complex
problem. For example, the Combined Raw Materials Board
looks at it from the physical phase of raw materials on
the allocation. That is integrated with the problem of
getting the money to procure the stuff in accordance with
the division which is made by the Raw Materials Board
between U.S uses and the United Nations' uses. You
have the same thing in munitions, shipping, production,
and so forth. The other thing is basically fiscal and
economic policy and foreign policy, as integrated with
the operations. It seems to me you have already got the
arrangements without the need for the new committee to
try to work out a duplicate set of arrangements.
H.M.JR: Ed, could I ask you a question? Why didn't
you raise - continuing my frankness - why didn't you
raise the point yesterday that you were going to meet
today, at your request, on this question?
Regraded Unclassified
163
- 14 -
MR. STETTINIUS: Frankly, I had not seen the notice.
My desk was piled up; I had not been told of this nine-
fifteen meeting, and didn't know about it until Wednes-
day afternoon when I asked Knollenberg and Oscar to come
and represent me. The meeting was referred to yesterday,
during the conference, but I wasn't quick on the trigger
and didn't realize that it was an answer to my December
third letter to you. I had missed that.
H.M.JR: The reason I asked that is, I again want
to state the position. I don't want to be--
MR. STETTINIUS: Harry mentioned in the meeting -
you mentioned yesterday morning that there was going to
be a meeting here this morning on this subject, and I
didn't quickly relate it to my December third letter.
H.M.JR: I don't want to be caught in between a
fight of BEW or anybody else, that this committee should
continue or whether it should not continue. That is my
point. There certainly should not be two committees.
MR. WHITE: I think that Oscar has not - it seems
to me has made the thing sound 8 little more complicated,
though true, what it is. Here is a group of policies
which are closely related, which obviously affects
Lend Lease policy, affects foreign policy, and it affects
the Treasury policy. They each have responsibilities
and direct interests. It affects BEW, and it affects
Commerce. They all have an angle to it, and all that
was attempted by the suggestion of 8. committee, was to
provide a sub-committee.
H.M.JR: Harry, you didn't mention foreign relations.
MR. WHITE: Yes I did.
MR. COX: You said "foreign policy. May I--
MR. WHITE: Oscar, may I finish?
Regraded Unclassified
164
- 15 -
All they said was that there shall be a sub-
committee which shall supply the factual information -
the recommendations, to the large committee, upon
which each one of these agencies is represented, and
that there shall be a recommendation as to policy.
It was agreed that irrespective of what had been going
on - apparently there was no satisfaction, from the
very confusion which existed around the table, as to
who was responsible for what, and as long as there
is doubt in our minds, I don't think there is a clear -
I don't agree, apparently, with you on everything,
and therefore there must be some doubt about it.
MR. COX: The only point I was trying to make -
really two points - was; one, that this committee which
has been acting now for months, is already performing
the same functions, substantially, that were proposed
for the new committee; and secondly, to my mind--
MR. WHITE: Which committee has been acting for 8
month?
MR. COX: This group.
MR. WHITE: For a month?
MR. STETTINIUS: What group?
MR. COX: This group has covered the field. The
second thing is, to my mind--
H.M.JR: Longer than that - since your creation.
MR. STETTINIUS: I wanted to interrupt there, be-
cause Harry will bear me out, that yesterday at the
meeting I made crystal clear to the whole group that we
had a constant relation with you on this matter since
March, 1941, and these questions were reviewed here,
monthly, and that there was nothing new as far as Lend-
Lease coming to the Treasury and asking to examine
the dollar position of every Lend-Lease country, con-
stantly.
Regraded Unclassified
165
- 16 -
H.M.JR: Just so you gentlemen know it all, this
past week Mr. Wilson, who is chairman of a joint
Canadian-U.S. board, and Lauch Currie came here and
asked us to change our policy where, instead of review-
ing in advance contracts to be let in Canada, review
the financial position every three months, which We
agreed to. Everybody has agreed to it, but nobody
has asked Mr. Ilsley up in Canada whether he likes it.
(Laughter) So, there is 8 relationship between the
Treasury and this board. You are secretary of it,
aren't you?
MR. COE: Not any more.
H.M.JR: Who are you working for now?
MR. COE: Milo Perkins and the Vice President.
H.M.JR: You are not on that?
MR. COE: Milo was chairman of that, and then it
was shifted over to War Production, to c. E. Wilson.
H.M.JR: You are here for BEW?
MR. STETTINIUS: He is representing Milo.
MR. COX: The second point I wanted to make--
H.M.JR: But I mean, you get - we have the relation-
ship between that committee, which we are working out
on a three months' basis, when we will consult, and if
the Canadians like it - I mean, this is a brainstorm of
Wilson's and Currie's. I don't know how the Canadians
will like it, but I want to throw that in.
MR. COX: The second point I would like to make is
that in terms of the Congress and the American public
I think it is a fundamental mistake to pitch this on
the level of Economic Warfare. I think basically the
whole Lend-Lease operation in relationship to the
master agreements and the dollar exchange position is
Regraded Unclassified
166
- 17 -
primarily at the present moment military and political
strategy in which economic is one part. I think you
are leading yourselves into a bad trap vis-a-vis
Congress if you have a Board of Economic Warfare committee
passing on these kinds of questions.
MR. CLAYTON: I don't think, Mr. Secretary, it
was intended that this committee would pass on the
questions.
(Mr. Stettinius left the conference.) (The
Secretary left the conference temporarily.)
MR. KNOLLENBERG: There has been discussion about
the meeting yesterday and the calling of this group
together. It wasn't Mr. Stettinius' request or suggestion;
it was the Vice President who said, "Why don't We have
a committee to study this?" Mr. Stettinius did not like
to protest against the suggestion that there be this
recollection. study committee. That is the way it came out, to my
MR. COE: Mr. Secretary, may I say B. word or two
on one or two of these things? First, as to any fighting
on it, I think that speaking from the point of view of
the Board there is uncertainty - certainly in our staff -
as to where and how a number of decisions which were dis-
cussed at the Board meeting were made. I understood at
the discussion yesterday that they argued over the dollar
position, the position of private exporters, private im-
porters, Lend-Lease shipments in various fields, with
great divergence of opinion, subsidies on imports, and a
number of things on imports and exports.
Certainly from our point of view we know we don't
make the decisions; and the suggestion was made, I
thought, by Mr. Stettinius, that there be appointed a
committee of the relevant persons to work on the technical
aspects and say what the policies were or should be, or
make recommendations back to the Board.
Again, as Lend-Lease has said, I don't think there
would be any disposition to get in the way of any machinery
Regraded Unclassified
167
- 18 -
that is already established for determining what the
dollar position of countries is or, on the basis of that,
who is to get what lend-lease, and what exports ought
to go by commercial channels. On the other hand, on
certain problems which came up - I think South Africa
was one - we certainly don't know why, on the basis of
the gold that they are holding and the general British
dollar position, the extension goes on of more and
more lend-lease to them.
I think it was that sort of a thing which was dis-
cussed, and there was great diversity on why what was
happening was happening.
MR. COX: My central position is, assuming that
diversity and that the export-import thing is reasonably
separable, that you have already got functioning a com-
mittee, whether it functioned well or not, that simply
could be strengthened; and secondly, that I think it is
practically inadvisable in terms of the reactions in
Congress now and what they are likely to be, to have
such a governmental committee in the Board of Economic
Warfare - not that I have any criticism of BEW, but this
is a problem which cuts across, and primarily as of this
point is not an economic warfare problem. I have talked
to the people on the Hill about - I mean--
MR. WHITE: Why didn't your agency raise those
questions at the meeting yesterday?
MR. COX: That is water over the dam.
MR. WHITE: That is why it shouldn't be dragged
up now.
MR. COX: I am not so sure that you can't reconsider
things.
MR. WHITE: That you can pull water back over the
dam? (Laughter)
MR. COX: No, that the necessary flow goes over
another dam. (Laughter)
Regraded Unclassified
168
- 19 -
MR. WHITE: You see, the same group would do the
work.
MR. COX: I have no quarrel about that.
MR. WHITE: State and BEW and the same technicians
will do the work. It is a question of getting somebody
who is tagged with the responsibility of doing that
work, and nobody has been.
MR. COX: You can have a committee with a chairman.
My point is that the label on this thing six months
yesterday. from now may be a lot more important than it was thought
MR. WHITE: Then, as the Secretary said, we don't
care who is chairman as long as there is a committee.
MR. PASVOLSKY: What is the committee called?
MR. WHITE: Just a technical committee.
H.M.JR: Could I just say this - I am just going
to, acting as Secretary of the Treasury - for the moment
I am going to forget about what happened yesterday. I
am just going to throw out this feeler to the people
here who are representing the various departments, that
I think the English dollar balance is approaching 8.
place where it may be - we may have to consider that it
should not go any bigger. I would like to ask the
State Department and Lend-Lease what steps you could
take to see that the dollar balance, if we decided - I
mean, what steps could you take to see that the dollar
balances don't grow any bigger; in other words, to
stabilize it, if possible, at this point, and what
can you do about it?
MR. WHITE: BEW also buys raw materials which they
said they may be able to get on Lend-Lease in Reverse
if the decision is made not to supply more dollars. That
is a part of their interest in it.
Regraded Unclassified
169
- 20 -
MR. COX: I would like to suggest--
H.M.JR: I would just like to throw that out,
that it seems to me it is getting to that point where
it should be examined. How much does BEW buy in
England?
MR. COX: Very little now. It buys a good deal
from some of the British possessions.
MR. CLAYTON: Mr. Secretary, the actual purchases
are all made by RFC subsidiaries. If we are buying
anything in England, I don't know it. We are buying 8.
great deal in South Africa and in India and British
Guiana - for example, bauxite - and it runs into a great
deal of money. I would not undertake to say how much,
because I have not taken & look at it from that point
of view.
MR. COX: In the United Kingdom, though, there are
purchases being made now by private people. For example,
recently we got some benzol from the British through
the British Government on Reverse Lend-Lease for use in
war production here.
Now, I think that one of the studies that ought to
be made is what raw material and materials that are
essential for our war production in relationship to the
dollar balance can be obtained under Reverse Lend-Lease.
I mean, if you do it that way, that cuts down their dollar
income respectively, and so it tends to stabilize.
MR. CLAYTON: We pay cash for everything we buy.
H.M.JR: Just sort of take 8. look into it - how
much has it run since the first of the year, how much
each month is it growing, and is it getting smaller?
MR. CLAYTON: I will be glad to.
H.M.JR: Would you mind writing me 8. letter on it?
Regraded Unclassified
170
- 21 -
MR. CLAYTON: All right. Of course, Mr. Secretary,
what I would give you would only be Government pur-
chases, that is, RFC purchases. It doesn't take in the
private purchases.
H.M.JR: We couldn't do anything about the private.
MR. CLAYTON: That helps to make the balance higher.
H.M.JR: Yes, but I don't see what we can do about
the private. If we had the RFC, which does the buying
for BEW - is that right?
MR. COE: You could put it that we buy it together.
H.M.JR: Anyway, if I got it from him, it would
cover both.
MR. CLAYTON: We make the contracts and the pay-
ments.
MR. FEIS: Mr. Secretary, what I should think you
would need is really a rather complete tabular statement
of all the main operations between ourselves and the
component parts of the Empire, involving payments in
both transactions. You would have to have almost that
complete tabular picture 80 that you could judge which
of those for which we are now paying we might switch
to Reverse Lend-Lease, or which of those we are now
paying Lend-Lease for that we might ask cash for. I
think you would have to have it in all its parts,
because the transactions run to different elements of
the Commonwealth, and the Empire, which do not keep
common accounts. You would have to select, rather
carefully, the six or eight points of action on which
you might want to change policy.
I suggest that, rather than concentrate interest
on commodity purchases, which will come largely from
parts of the Empire, which you might not want to make your
adjustment--
Regraded Unclassified
171
- 22-
H.M.JR: Doesn't White have that?
MR. WHITE: No, that is exactly what the technical
sub-committee should do. We have never been given the
authority - no one has ever been given the authority
to get that from the Dominion Empires; we get it from
U.K.; we get it from Canada. Those are the two countries
we follow, because that has been clearly a part of the
responsibility that you have undertaken. We have not
been given the other, and that is exactly what the -
one of the things the technical sub-committee would do.
It doesn't matter under whose chairmanship.
MR. FEIS: First, I don't know that we have to
postpone any action until we have the complete picture.
There might be one or two obvious points of action to
be taken at once. Secondly, even if we want such a
complete study, the question still exists as to whether
it should be done by a committee of the BEW or by the
two or three agencies that have direct responsibility.
That, I can't settle on.
MR. WHITE: It doesn't matter which agency - it
would have to be a committee - a group - 8, technical
committee.
MR. FEIS: In one case you go before a full board
and get a new debating ground for these questions that
you have not had in the past.
MR. CLAYTON: I would like to make this point, Mr.
Secretary: I was just an innocent bystander there
yesterday and have no direct interest in the matter.
But the main point that was made there yesterday, that
I think the Vice President is particularly anxious to
get an answer on, is that if there is anybody in the
Government who decides how much lend-lease shall be
given to any country that they don't know it. He doesn't
know it. Milo Perkins doesn't know it; and if there
was anybody there that knew it, I don't believe it was
evident. He didn't say SO. That is number one.
Regraded Unclassified
172
- 23 -
Number two is the question of the British Empire,
whether it should be dealt with as a unit or dealt
with separately. An example is the case of South Africa,
who did not want lend-lease, but it was rather forced
upon them. I think they were the two main points.
The one that the whole discussion started on, the
question of whether we would use private exporters or
importers, rather faded into insignificance before we
got through. The two things I mentioned were the
main questions.
If, as Mr. Cox indicates, I believe, that matter
is decided - I mean, if there is somebody who decides it,
the Congress or the President, I think it ought to be
made known.
MR. COX: Also, I think you have to tie it in with
operations. For example, this thing that the Secretary
just asked about, there is obviously an interrelation-
ship between the dollar exchange position and what kind
of action you want to take under Lend-Lease - either
Reverse Lend-Lease or direct Lend-Lease.
MR. CLAYTON: The question is, who decides it.
That is the point that was raised yesterday.
MR. COX: It has been decided by this committee,
because three major agencies have been involved, State,
Treasury, and Lend-Lease.
Now, on your second question--
MR. WHITE: It has been decided by them? Did we
have any share in the decision that this lend-lease
stuff should go to South Africa? I don't think we
did, Oscar.
MR. COX: No, no, I was going to cover that in
another phase of the problem. That probably is part
of the picture, that you said that the State Department
had been asked to give an answer as to whether you deal
Regraded Unclassified
173
- 24 -
with them separately or as a unit. Now, that obviously
can't be decided by the committee without certain opera-
tions by the State Department.
MR. FEIS: May I get a little more light on this
question? Just what question is it that the State
Department is supposed not to have answered?
MR. WHITE: Not to have answered, because, as Dean
made clear yesterday, it was an extremely difficult
problem, and the British Empire - the British Government
itself has been up to date unable or unwilling to give
an answer. That was whether or not in our determination
as to what assets these countries have, which would
enable Lend-Lease to make certain decisions - and our-
selves - whether we were to consider the assets of the
British Empire as a whole or whether in their dealings
with South Africa they were to consider the South
African assets as 8 whole and deal with South Africa.
It makes a substantial difference as to how it is
approached, because as it is now, the U.K. says that
the only assets that we shall consider are U.K. assets.
Any arrangements that we have in Lend-Lease with South
Africa or the Dominions are through U.K. - because We
handle all their dollar balances.
MR. COX: It comes up in other brackets. It came
up on the question of reciprocal Lend-Lease agreements,
whether they ought to be agreements with the U.K. only,
or the U.K. with constituent parts, or U.K. and U.S.
and constituent parts.
MR. FEIS: I can understand it from the diplomatic
end, but from the fiscal end I should not think it would
be a problem.
MR. WHITE: You point out if the fiscal problem is--
MR. COX: You pointed out one phase of it yourself.
If you have all the data for the whole Commonwealth
and Empire - supposing, for example, South Africa were
producing commodity "X," which you thought it might be
Regraded Unclassified
174
- 25 -
wise to get on reciprocal Lend-Lease rather than by
dollar payment, then would you say to South Africa,
"You supply it," or would you say it to the U.K.,
or to the U.K. and South Africa?
MR. WHITE: Or take this point - we have been asked
how much gold South Africa has. Frankly, we don't know.
We know what is reported. There was reported to me - I
don't know how valid it is - by some high official, that
there is some gold that South Africa is not recording.
We are not in any position to ask South Africa about
that. We did ask them about eight months ago and they
said that it was a confidential matter. They don't want
lend-lease there. We are in no position to ask them.
The same thing is true - England has not told us yet exactly
what her financial arrangements are with South Africa.
There are a lot of such questions that if there is a
clear-cut mandate for a sub-committee - it doesn't matter
under whose chairmanship it is - they can go ahead and
get that data. Then we will go to these various - we have
known the questions to ask; we have known them for two
years, and we have written them down. They have never
given us the answers, and the Treasury has never felt in
& position to ask or insist upon those answers. Once
some sub-committee is given a clear mandate to get it, we
will give you all the facts that you need to make your
policy decisions. That is what this sub-committee was for.
MR. BELL: What authority do they have to have that
the Treasury didn't have to get that information?
MR. WHITE: Merely a mandate-from the Administration
for whoever is on the Board, represented by these same
groups or committees - for this committee to go ahead.
Once we have that, we can go to these various countries
and say that we would like this and that.
H.M.JR: Since hearing this discussion, I have
changed a little bit. I mean, certainly I would like
to talk with the President. I would like to talk with
Mr. Hull. T mean, I think we are getting pretty far
Regraded Unclassified
175
- 26 -
afield in this thing. I think that - as I said
earlier, I am not going to get into a fight. Let's
again call 8. spade a spade. Is Economic Warfare - does
that come into dealing with our Allies? If, for instance,
we decide after careful consideration to recommend -
certainly, I know the President would want to know
himself before any decision was taken whether we are
going to cut down on the lend-lease to England. I mean,
what I have heard here, I don't see this Economic - We
are not waging economic warfare against our Allies.
MR. WHITE: You do in the sense that - I gather
economic warfare has two phases; one, it helps its
Allies, and the other is, it hurts its enemies.
MR. COX: It is a part of the Government's military
and political strategy as to whether you are going to
cut down on the supplies to our Allies or whether you
are going to cut down on their dollar balances.
MR. CQE: Mr. Secretary, so far as I heard yesterday,
they weren t discussing this subject as a matter of
economic warfare with the various agencies. They wanted
some orderly method of being able to tell one another
what was being done and why. I should think, as far as
BEW is concerned, that if there is any other arrangement
which will get that done, we will be just as happy to
have it as the sub-committee of the Board.
MR. WHITE: I think that is a true reflection of
their attitude, both at the meeting and prior to the
meeting. They called us up 8. number of times asking us
questions and said, "Where can we get this information?"
We said, "We don't know; try Lend-Lease."
They said, "Lend-Lease says they get it from you."
There is a difference of point of view.
I think Frank is accurately reflecting BEW's attitude.
They don't care who handles it as long as there is 8
committee to handle it.
MR. COX: I gathered you said there was some com-
mittee of the Board--
Regraded Unclassified
176
- 27 -
H.M.JR: Look, I am going to have to stop this,
because this is getting into - I am not going to get
into it. What I am going to do is this, Oscar -
after all, this meeting here was called at the request
of Mr. Stettinius. I don't know what his title is,
chairman, or director of Lend-Lease--
MR. COX: Administrator.
H.M.JR: I think it is up to Mr. Stettinius to
take his hat - put his hat on and go around and get
this thing settled. Mr. Stettinius has to go on the
Hill and ask for the appropriation.
MR. COX: That is right.
H.M.JR: I think it is up to him to go around
and knock at a few doors and find out - I mean, because
he is the Administrator, and if he could - in the
meantime, we will be looking into, particularly,
England's balances. But if he goes around, and you
can't - I am not going to have it settled in this
office. I think you ought to see Mr. Hull. I think
you ought to talk to the President or whoever it is
that he looks to, and let us know.
MR. COX: I agree.
H.M.JR: It is up to him; it is his job. If
these people in the room here say the question was
raised yesterday as to who decides this, well, if Ed
Stettinius doesn't - and you sort of slid into this
South African thing without full approval of the
Administration - I think the quicker he gets this thing
cleared up, the better it is for him and his organization.
Now, do you agree?
MR. COX: Yes, sir.
H.M.JR: So let's leave it that way, and let him
get busy and put his hat on, go around town; and as
soon as he knows, let him advise us. Is that all right?
Regraded Unclassified
177
- 28 -
MR. BERLE: That is first-rate.
MR. KNOLLENBERG: May I ask just one question?
He will have to go around town to Mr. Hull and to you
to find out about these British balances. He can't go
to the British authorities for that.
MR. COX: No, what he meant was on the arrangement--
H.M.JR: No, the question that has been raised was
as to policy, whose job is it to decide on what we
supply England with and what We get from England or the
Dominion. Mr. Stettinius has a very important part.
He asked us just about the dollar balances, but this
whole question - this raises the whole question of
his jurisdiction and his authority. Where does it
begin? Where does it end? If I were in his place, I
would get around and find out, as I said in the begin-
ning, and I say again, that Idon't want to settle it.
It isn't my responsibility.
MR. BERLE: Before we close I would like to say one
thing on behalf of State. We, of course, have assumed
that the handling of this lend-lease was primarily the
task of the Administrator, but that since this did involve
& vital fiscal relationship with the Treasury, the
problem of taking care of the situation which began to
get out of hand was presumably a matter which he would
discuss with you, and presumably you - or both of you -
will discuss with the President.
In the second place, I think, in the State Depart-
ment we have had the view that you could not forecast
the amounts in any given place at any given time, because
they depend on military and other circumstances. Therefore,
the major question was whether the total balance was
getting out of hand.
Inr esponse to your suggestion that the U.K. balance
of nine hundred and thirty millions is beginning to get
Regraded Unclassified
178
- 29 -
above that comfortable stage where it justifies looking
over, I think we would be in accord.
MISS KISTLER: I would like to ask Mr. Berle -
when you say total balances, just whose are you referring
to?
MR. BERLE: I presume that that would work in
respect of every country with which we have lend-lease.
MISS KISTLER: You would take a position of indi-
vidual relations? That is the fundamental question
which we have run up against.
H.M.JR: I think what you mean is, for instance,
that if we cut down on England it immediately affects
Canada.
MISS KISTLER: No, I am thinking of the rest - the
sterling area countries. Do you consider all of them
as a unit, or each as a part - I mean, as a unit?
MR. WHITE: That question has just got to be
decided, or we are talking in a fog.
MR. FEIS: I suspect that you will never want to
answer that question in terms of one thing or the other.
MISS KISTLER: But then you would have to give us a
guide. Should we act on this assumption or on another
assumption?
MR. COX: For certain practical purposes.
MISS KISTLER: That is right. That hasn't even
been answered to that extent.
MR. FEIS: I agree with that, but I don't think
the answer is ever going to be clear-cut as to whether
you should do it this way or that way. I suspect also
that the primary formulation of it will be made inside
the Treasury, and not in State - the consultative decision,
which I think We look to Treasury to make.
Regraded Unclassified
179
- 30 -
MR. WHITE: It is just dodging the issue. The
issue is very simple.
MR. FEIS: I don't have any intention of dodging--
MR. WHITE: Merely for working purposes - not for
any public announcement or official reason. For working
purposes when we are asked what is U.K.'s balances, or
the British balances, or Africa's balances, we have got
to know what is the policy of the Government, because we
can very quickly give the answer if we know the working
policy - which may change B. week from now. There has
been no settlement of that policy. Therefore, when England
tells that her dollar balances represent the British
balances, which she has said repeatedly, we say, "They
don't." We know they don't. But they say, "Well, but
what you are doing is treating the Empire as a whole.
We say, "Should we treat it as a whole, or should we
treat it individually?" They won't give us an answer.
I mean, the thing is - if you dipped into it, you would
find it has been confused for a long, long time. You
know the difficulties, but--
MR. PASVOLSKY: I would--
MR. WHITE: A year and a half ago - almost a month
after war broke out, we had a long list of those questions.
We raised those questions with them, and they have been
re-raised repeatedly, each time, because we have been
thoroughly cognizant of the difficulties of getting that
data and of giving the kind of answer which other agencies
have a legitimate right to ask of us.
H.M.JR: Well now--
MR. PASVOLSKY: Then we will have to get the answers.
H.M.JR: Let's stop on this thing. I have suggested
that Mr. Stettinius get busy and walk around town and
find out just where he starts and where he finishes. If
after he has done that he will do me the courtesy of
Regraded Unclassified
180
- 31 -
giving me a call, I would appreciate it very much. In
the meantime we will make the few inquiries - I still
would like to have from RFC what I asked for.
MR. CLAYTON: All right.
H.M.JR: Thank you all.
Regraded Unclassified
OFFICE OF LEND-LEASE ADMINISTRATION
181
FIVE-FIFTEEN 22d STREET NW.
WASHINGTON, D.C.
E.R. Stettinius, Jr.
Administrator
December 3, 1942.
The Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
preasury Department,
Washington, D. C.
Dear Mr. Morgenthau:
I have a memorandum from Oscar Cox dated November 23
maying "I think some serious consideration ought to be given
to how high the British gold and doller balances should be
allowed to rise, particularly in view of the possible boomerang
from the standpoint of Congress' reactions to additional
peropriations" for Lend-Lease. I understand that your records
show that I.S of October 31, 1942, the United Kingdom's official
dollar balance W&B $237,000,000., and its so-called "available
gold" $468,000,000. with an additional so-called "scattered".
gold of $210,000,000., and that the United Kingdom's gold and
dollar position is growing increasingly strong.
In the light of these facts I think it might be well
for Dean Acheson, !!ilo Perkins, and me to have a talk with you
about this situation and the possible advisability of taking
steps through Lend-Lease operations or otherwise to keep the
Oritish combined gold and dollar position from rising materially
above its present relatively high level.
Sincerely yours,
E. Brettoms
ORDEFENSE
BUY
UNITED
STATES
RAVINCE
PRINDS
-
Regraded Unclassified
182
C
December 11, 1942
0
P
Y
My dear Senator:
I have your letter of December 7, 1942 making a
number of inquiries with regard to Lend-Lease operations
between this country and Great Britain.
Your questions relate in general to operations
which fall within the jurisdiction of the Lend-Lease
Administration rather than of the Treasury, and I an
confident that a letter addressed to that agency will
result in your obtaining the information you are seeking.
I believe that a similar inquiry addressed to the State
Department would also be productive, but the Lend-Lease
Administration would, in my view, be the best single
source.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Hon. Allen J. Ellender
United States Senate
Washington, D. C.
JJO'C.Jr/lsw
12-9-42
Regraded Unclassified
183
C
UNITED STATES SENATE
0
P
Committee on Naval Affairs
Y
December 7, 1942
Honorable Henry Morgenthau, Jr.
The Secretary of the Treasury
Washington, D. C.
Dear Mr. Secretary:
Re: Lease-Lend Progrem.
If consistent with your duties, I would Like to have you in-
form no chat arrangement, If any, our Government has with the Government
of England with reg act to the disposition or distribution of American
lease-lend Goods sent to England for account of the civilian population.
For exemple, if e cargo of civilian goda should be nt to the Govern-
ment of England for distribution among the English civilian jojulation,
are those goods sole by the Government of England? What becomes of the
proceeds? Who regulates the ,rice of the goods sold to the consumer?
If sold at & profit, ho benefits?
I should like to have the seize inform tion 1th respect to
the hondling of such matters with other foreign governzenia.
If the goods are n/t sold by the British Government, out in-
stord are turned over to the ai itary or other department of (OV at,
I chould 11< to be advised now the 80000 are distributed after they
10:00 England, and what England LOBE or promises to do to compensate
us for the value of such goods. Also, I should Lik to KOOW the value
of civilian goods that have been shipped to date to angland -nd to
other gove asents for istribution heir respective proplem.
I would also like to have information, If consistent 1th ur
duties, as to the manner and asthon of accounting between our govern-
about and the various governments receiving aid from de 1th res, ect to
implements of ar and other military items inclu 106 food nd clothing,
shipped und r our nd progra.
Not knowing how the goods are handled under the lease-land
program, it 12 rather difficult for 20 to Le more specific with my
questions. I shell greatly a. reciste any light that you any be in D
position o throw on the subject.
with kindest regords,
Sincerely,
(Signed) Allon J. Ellender
NETTLE
Regraded Unclassified
184
Agenda for Meeting in the Secretary's Office
December 18, 1942
9:15 A.M.
1. Dollar position and prospects of British countries.
2. Financial arrangement between the U.K. and other
British Empire countries, particularly as concerns
South African gold.
3. The adequacy of Britis. gold and dollar holdings.
4. The need for an over-all policy on extension of
financial assistance to Allied governments.
Regraded Unclassified
TREASURY DEPARTMENT
185
INTER OFFICE COMMUNICATION
DATE Dec. 17, 1942
Mr. White
TO
Miss Kistler
FROM
Subject:
British Dollar Position
1. As of the close of November 1912, British Empire countries
(excluding Canada) held 1.8 billion of gold and U.S. dollars, as
follows:
(Millions)
United Kingdom
930
South Africa
590
British India
275
New Zealand
25
Australia
10
This represents an Increase since the beginning O₂ the current
year of 650 million. The hold S of the United Kingdom and South
Mrica are about three-quarters again as high as they were on
January 1, 192.
I' audition, the above countries hold an assrogate of more than
200 million of private dollar balances in the United States.
(For more detailed figures of U.S. dollar assets of British
wpire countries see Appendix A.)
2. On the basis of information available, we estimate that
the Sold and U.S. dollar holdings of British Empire countries will
increase a further 200 million by arch 31, 1943, or to over ,2
billion.
(For itemized estimates of the U.S. dollar expendi tures and
receipts of the Sterling Area 860 Appendix 8. Estimates of ,,old
4,16 U.S. dollar holdin S of British Empire countries as of
are 51, 1943 are given in Appendix C.)
Accordin to the latest Britisi: data submitted to the Treasury,
Starling Area countries will have an excess of U.S. dollar expendi-
thires over U.S. dollar receipts on current account, December 1902
through March 1943, of 130 million. To meet this, they will have
(200 million of newly-mined gold and about $120 million of re-
coipts from U.S. Government xpenditures, principally for the
Regraded Unclassified
186
Division of Mone tary
Research
- 2 -
armed forces, leaving a net surplus of gold and U.S. dollar re-
ceipts on all accounts of 8190 - $200 million for this four-month
period.
3. So far as concerns Canada, Canadian gold and U.S. dollar
holdings have increased steadily since the beginning of the
current year. The prospects are for continued improvement and
it is now estimated that Canada will close the first quarter of
1943 with over 8300 million of gold and U.S. dollar balances.
The Canadian Government's U.S. dollar exchange assets are
now larger than they were at the outbreak of the war; that is to
say, the entire loss of U.S. dollar exchange experienced by Canada
to date is represented by the decline in private U.S. dollar balances
which were requisitioned in the earlier months of the war.
(For Canadian estimates of U.S. dollar e xpenditures and receipts,
December 1942 through March 1943, see Appendix D.)
Regraded Unclassified
187
Appendix A
Gold and U.S. Dollar Balances of
British Empire Countries
(Millions of Dollars)
Gold
Official
Total
Increase
(as of vari-
U.S.Dollar
since
ous dates)
Balances
Jan.1,1942
(11/30/42)
United Kingdom (11/30/42)
702*
226
928*
430
Union of So. Africa (11/6/42)
587
5
592
220
Bricish India (8/31/42)
275
-
275
-
Australia
-
10
10
-
ew Zealand (7/31/42)
23
2
25
-
Total
1,587*
243
1,830*
650
Canada (9/30/42)
122
165
287
100
* o This 11 sure does not include the $105 million of Belgium gold. It
does include, however, $10 million of gold reported held against
immediate liabilities and 238 million of scattered Bold.
Preasury Department, Division of Monetary Research
December 17, 1942.
Regraded Unclassified
188
Appendix B
British-Estimated U.S. Dollar Expenditures and
Receipts of the Sterling Area
December 1, 1942 - March 31, 1943
(These figures are based upon information sup-
plied by the British to the Treasury, in large
part last February, and thus may no longer
accurately reflect British current expectations)
(In Millions)
I. U.S. Dollar Expenditures
A. Payments to U.S. by U.K.
1. On British Purchasing Mission commitments (net)
$
43
(Only 310 million (net) remains due on B.P.M.
commitments after March 1943)
2. For other merchandise imports
40
3. For interest, shipping and other services
55
4. All other
27
165
Payments to U.S. by other Empire countries
1. For merchandise imports
85
(U.S. exports on commercial account to these
countries during recent months have been roughly
at this rate)
2. For interest, shipping and other services
35
120
C. Payments by Sterling areas outside U.S. requiring gold
or U.S. dollars
1. For American-owned oil
20
(We have never been clear concerning this item,
Lend-Lease informs us that all oil used by the
British regardless of where purchased is eligible
for lend-lease, but the British have consistently
carried an estimate of expenditures for purchases
of American-owned oil outside U.S.)
2. For all other items
25
45
Total estimated U.S. dollar expenditures
330
189
- 2 -
(In Millions)
II. U.S. Dollar Receipts
A. Receipts from U.S. by U.K.
1. For merchandise exports
- 35
(This approximates the level of U.S. merchandise
imports from U.K. during first half of 1942)
2. For interest, shipping and other services
25
3. For all other items
25
85
B. Receipts from U.S. by rest of Sterling Area
1. For merchandise exports
100
2. For interest, shipping and other services
15
115
Total estimated U.S. dollar receipts
$ 200
stimated U.S. dollar deficit on current account, exclud-
ing newly-mined gold
$ 130
C. To meet this deficit, British Empire countries will
have at least the two following principal sources of
U.S. dollar exchange receipts
1. Newly-mined gold, at current rates of production. 200
South Africa
165
(During the first 8 months of 1942, about
one-half of South African newly-mined Gold
was a arently not made available to the
United Kingdom)
Australia
13
(Sale of Australian gold has in the main
been made directly to the U.S.; however,
no such gold has been sold to this country
since the beginning of the current year)
Other
22
(This assumes a 50% reduction from the
1941 level)
Regraded Unclassified
- 3 -
190
(In Millions)
In addition to this newly-mined gold, Britain may
acquire gold out of private holdings or from non-
Empire countries such as Russia. The British
Government reported receiving 860 million of such
gold during the year, April 1941 - March 1942.
The British claim that the availability of this
Bold is effected by shipping conditions. They
request that they be allowed to keep currently
produced gold as a reserve against British
liabilities to countries other than the U.S.
2. Receipts from U.S. Government expenditures,
principally for U.S. armed forces, at current
rates of expenditures
$ 120
U.K
$60
(This estimate includes all transfers made
to the British account with the New York
Federal Reserve Bank and thus covers es-
timated expenditures to be made on behalf of
U.S. armed forces and of the State Depart-
ment in Sterling Area countries other than
the United Kingdom)
Australia
40
Other
20
Total of newly-mined gold and receipts from U.S.
Government expenditures
320
Estimated net amount to be added to British dollar ex-
mange holdings, December 1942 to April 1, 1943
$190
reasury Department, Division of Monetary Research
December 17, 1942.
Regraded Unclassified
191
Appendix C
Estimated Amount of Gold and U.S. Dollar Balances
Held by British Empire Countries as of
March 31, 1943*
(In Millions)
United Kingdom
$ 1,025
Union of South Africa
675
British India
275
Australia
25
New Zealand
25
Total
$ 2,025
Canada
$ 315
(This figure assumes that Canadian estimates
for the first quarter of 1943 will be reason-
ably accurate.)
* These figures are based on the assumption that the United
Kingdom's acquisitions will include only one-half of
South African gold output and no Australian newly-mined
gold.
Treasury Department, Division of Monetary Research December 17, 1942.
Regraded Unclassified
Appendix D
192
Estimated U.S. Dollar Expenditure and Receipts of Canada,
December 1942 through March 1943
(In Millions)
I. U.S. Dollar Expenditures
À. Payments by Canada to U.S.
1. For merchandise impor ts
$325
(Between 40 to 50, of these expenditures are
for military equipment or for goods to be
used in war production).
2. For services
125
3. For bond maturities and other capital re-
payments
7
B. Payment of U.S. dollars to Non-Sterling Areas
outside U.S
11
Total U.S. dollar expenditures
$468
II. U.S. Dollar Receipts
A. Receipts by Canada from U.S.
1. For merchandise exports
330
(Receipts from "Hyde Park" exports are ex-
pected to account for 8163 million of the
receipts forecast for the four months ending
March 31, 1943).
2. For services
64
3. For newly-mined gold
30
4. For exports of securities and other capital
assets
42
466
3. Receipts of U.S. dollars by Canada from Non-
Sterling Areas outside U.S
18
C. Net receipts of U.S. dollars from Kewfoundland
10
28
Total U.S. dollar receipts
$494
Net excess of U.S. dollar receipts over expendi-
tures
$ 26
treasury Department, Division of Monetary Research December 17, 1942.
Regraded Unclassified
193
Canada's Liquid U.S. Dollar Reserves,
September 1939 to date,
as Reported by the Canadian Government
(in millions of U.S. Dollars)
Gold
Official
Total
Private
Total
U.S.Dollar
Official
U.S.Dollar
Balances
U.S.Dollar Balances *
Reserves
Actual, as of
Sept. 15, 1939
205
56
261
130
Dec. 31, 1940
136
391
194
330
-
Dec. 31, 1941
136
330
52
188
-
188
Mar. 31, 1942
126
104
230
-
230
June 30, 1942
125
119
244
-
244
Sept. 30, 1942
122
138
260
-
260
timated, as of
Dec. 31, 1942
267***
267**
Mar. 31, 1942
293
293
This figure is exclusive of about 20 million in minimum working
balances.
On December 9, 1942, deposits held by the Canadian Government
with the Federal Reserve Bank of New York for Canada's own account
totalled $143 million, as compared to $108 million on September 30,
1942. Since no gold has been reported sold by the Canadian Govern-
ment out of its reserve, these figures indicate an increase in
Canada's official gold and U.S. dollar reserve of 635 million
during the last eight weeks, in contrast to the rise of $7 million
forecast for the entire three-month period.
rensury Department, Division of Monetary Research
December 17, 1942.
Regraded Unclassified
194
December 18, 1942
10:26 a.m.
HMJr:
Dean?
Dean
Acheson:
Yes, Henry.
HMJr:
Good morning.
A:
Good morning, sir.
HMJr:
What happened to you this morning?
A:
What happened to me?
HMJr:
Yes.
A:
What do you mean by that?
HMJr:
Well, we had this meeting, you know, where we -
called at the request of Stettinius to consider
the dollar balances.
A:
I - I never heard of it, Henry.
HMJr:
Well, I wrote Mr. Hull a letter and asked him
to send somebody over, and you've always come
to the meetings, and it....
A:
He never spoke to me about 1t. I never heard
about the meeting until this minute.
HMJr:
And instead of that appeared Pasvolsky and Feis
and Berle.
A:
Oh, good lord! Really? Gee whiz!
HMJr:
What? You've always come to these meetings.
A:
I know I have.
HMJr:
Yeah.
A:
That - (laughs) oh, gee whiz. Now - now we're
certainly in the mess.
HMJr:
Yeah.
A:
Well, I suppose...
Regraded Unclassified
195
- 2 -
HMJr:
Well, let me tell - let me tell you what I
just did 80 that you'll know. It gives you a
breathing spell. I said that - you see -
well, you know what we've done at these meetings
in my offices on dollar balances.
A:
Yes.
HMJr:
And I'll send you over a copy of Stettinius'
letter to me calling it, 80 that you'll know
why it was called - hello?
A:
Yes.
HMJr:
And - well, I can just tell you. He said would
we please call a meeting to consider whether
the English balances are too large or not.
That was the purpose of the meeting. Well, then
I said in view of what happened yesterday up
at Wallace's, I thought Stettinius should take
his hat and go around town and find out whether
he's running Lend-Lease or whether somebody else
is running Lend-Lease and let us know.
A:
Yes.
HMJr:
And 80 that gives us all a breathing spell.
A:
(Laughs) Well, that was one of the things that
was bothering me in the meeting yesterday
HMJr:
Yeah.
A:
if that's Wallace's place.
HMJr:
Yes. Well, I wanted to tell you, because I
don't know what's going on over at the State
Department, but I certainly expected you here
this morning.
A:
Well, I - - I had expected to be there. I thought
that what we were - decided yesterday was that
HMJr:
No.
A:
there was going to be a technical committee
created first of all, of which I was going to be
(cont.)
Regraded Unclassified
196
- 3 -
A:
a member, and that was to try and collect all the
(cont.)
information 80 that you and Stettinius and the
Secretary would know what the facts were.
HMJr:
Well, you now know the meeting took place....
A:
I know.
HMJr:
and you - you might - you can say that I called
up to find out why you weren't here. You can use
that. You can say that.
A:
All right, sir, thank you.
HMJr:
That gives - that gives you something to hang it
on, you see?
A:
(Laughs) Thank you, Henry, very much.
HMJr:
I mean that gives you an excuse.
A:
Yes.
HMJr:
You can say I called up and said, well, why weren't
you there. You've attended every other meeting.
A:
Yes. Well, I'll - I'll try to - I'll try to get
back into the picture again.
HMJr:
I wish you would.
A:
I'll do my best.
HMJr:
Thank you.
A:
Thank you, Henry.
Regraded Unclassified
197
December 18, 1942
11:25 a.m.
HOME FRONT
Present: Mr. Bell
Mr. White
Mr. Gaston
Mr. Mager
Mrs. Klotz
(The Secretary read draft of letter to the
President, dated December 18, 1942, copy attached.)
H.M.JR: How did you get in this last thing here
about Wickard? That is bad from there on.
MR. GASTON: That was in your dictation; I thought
you wanted it in.
H.M.JR: It is all right down to there.
MR. GASTON: Do you want to mention Wallace and
the camps? I distinctly thought you wanted that in.
H.M.JR: No, I think it is good down to there.
MR. WHITE: I think it strikes 8 little wrong note.
H.M.JR: Do you?
MR. WHITE: Yes. I think that what is necessary -
what you are asking for is not that there be coordina-
tion of the efforts, but. that there be some group - I
think it would be a mistake to formalize it beyond &
group that would accept the responsibility, and be
saddled with the responsibility to see that each of
these agencies, in dealing with the public, is doing
the most effective job it can in its particular field.
Regraded Unclassified
198
- 2 -
In other words, what is not needed here in Wash-
ington is another coordinating group. What is needed
is somebody who will see that each one of these agencies
is doing some kind of a job, and who will spend time
thinking about the problem and pushing each department
to do the best job it can.
H.M.JR: I disagree with you. That is the Rosenman
formula, with Jimmie Byrnes and that. I disagree with
you. You are taking the responsibility away from the
public who have got it.
MR. WHITE: No, not as I visualize it. You have
this group to represent the agencies that are dealing
mostly with the public, and they talk over the various
ways in which they can most effectively reach the pub-
lic. It isn't that you need coordination between those
groups, but rather that you need to promote some approach
within each of those agencies.
H.M.JR: Look, Harry--
MR. GASTON: I think you need coordination, but
as & result of coordination you will get some increased
activity.
Ferdie mentioned the fact that the Office of Civilian
Defense has 8 division they call a "Division of Campaigns,"
and they are not doing anything that is effective at all.
They are supposed to be right in this field.
MR. BELL: What I think is needed is to have some-
thing that will give more effective operation. You have
plenty of organization.
MR. GASTON: If you put some pressure on it by a
group that talks the thing over, I think you should get
that result.
MR. MAGER: It seems to me this is not a superimpo-
sition on something that already exists. What you are
doing is really coordinating the activities of existing
agencies - not setting up something new.
Regraded Unclassified
199
- 3 -
MR. WHITE: Do you want to coordinate their
agencies? Is it not rather that they are not doing a
job?
MR. MAGER: Why aren't they?
MR. WHITE: Because they are not being coordinated;
nobody is accepting the responsibility - being aware of
the difficulties.
MR. GASTON: Isn't it because they are all afraid
of stepping on somebody else's toes?
MR. BELL: You don't like the word "coordination"?
MR. WHITE: That is right, because the President
is likely to say, "Oh, hell, another coordinating agency?"
These divisions aren't quarreling with each other or
stepping on each other's toes.
MR. BELL: Use another word - "more effective opera-
tion."
MR. MAGER: There is one change which should be
made, I think, Mr. Secretary, and that is this. I tried
to be as literal as possible to the letter that you
dictated yesterday, ani therefore I included this
reference to Joint Chiefs of Staff and said that what
we would create now is "a comparable organization deal-
ing with the home front.
I think, in a sense, that is a misplaced analogy.
I don't think that it holds on all fours, and I would
cross out that paragraph. I think if you did that,
then we would highlight what we mean by "coordination."
I think we would emphasize that actually what is meant
is cooperative activity from the point of view of
planning and making campaigns that would appeal to the
people.
MR. GASTON: Isn't that just what the Joint Chiefs
of Staff are supposed to do in the military field, pre-
vent the Army and Navy from working at cross purposes -
to work together on unified campaigns?
Regraded Unclassified
200
- 4 -
MR. MAGER: I think they do something more than
that. I think what they do, if I understand their
activities aright, is to actually coordinate - not
propaganda, but actually coordinate problems of supply.
MR. GASTON: Of course.
MR. WHITE: That is the wrong aspect of the analogy.
I think the analogy is a good one, but I don't think it
should be in for 8. different reason. I think it makes
the group you are suggesting appear to the President
a little more important than I think you really want it
to be, and I think it also says to advise him. It isn't
that he wants 80 much somebody to advise him as he wants
some group to take the responsibility to effectuate a
policy of reducing or eliminating the misunderstanding.
You naturally have the heads, the Cabinet heads
of those agencies that deal mostly with the public, to
sit down and wrestle with the problem.
MR. MA GER: I agree with you.
H.M.JR: Before I talk, how does it hit you, Bell?
MR. BELL: I thought it was very good. I like the
analogy to the Chiefs of Staff.
H.M.JR: I do, too.
MR. BELL: The word "coordinating" didn't worry me,
but maybe Harry has a point, and it could be changed.
H.M.JR: This is the point. I have had this talk
with the President. I know he likes it. I know from
his attitude to me yesterday, that he likes it. The
reason I didn't bring it up at Cabinet is because I
didn't want him to know I was discussing it with other
people. This idea of comparing this thing with the
combined Chiefs of Staff - and you want something com-
parable - I think will highlight a good note with him.
Regraded Unclassified
201
- 5 -
MR. BELL: You could say, "comparable in a sense."
H.M.JR: I said "comparable." What I am trying to
do is to say something which will ring a bell in his
mind, and he might say, "Henry hasn't got it; it isn't
just like that, but something like that. He will say,
"I want to keep him thinking on the thing."
I want to show this thing to Hopkins at lunch; that
is why I wanted it. I will say, "Now, Harry, how do you
think this will hit the President?" and I will get his
reaction.
The reason I didn't bring it up at Cabinet was I
didn't the President is peculiar, and if he does this
thing - I have worked with him so long - he will want
to do it as his idea, 80 I don't want to say that I
discussed it with Wickard.
MR. GASTON: Let's cut out the last paragraph.
H.M.JR: May I read this again? This is one of the
times where it is, again, the relationship between the
President and myself. I want to show it to Hopkins,
who sees him all the time, and see how it hits him.
All I am trying to do is to say to the President, "I am
not criticizing, but say this group could--" - well,
let me read it again. It struck me very good down to
there; I liked it, the way it came back - you liked
it, didn't you, Herbert?
MR. GASTON: After thinking about it, I would say
it is all right.
H.M.JR: They never can be perfect, but I am think-
ing of the impact on the President - I think it would
be good. I would like to read it to Harry, but if Harry
says no - I personally think it would get 8 good reac-
tion from him.
(Reading) "During our conversation on Wednesday
morning we discussed the need of keeping the people of
the country better informed as to the measures necessary
Regraded Unclassified
202
- 6 -
on the home front for a more effective prosecution of
the war. I am convinced thatmuch of the misunderstand-
ing that prevails can be traced to the lack of coordi-
nation in the efforts of departments and agencies deal-
ing directly with the people. Different departments and
agencies go to the people with different appeals and
different programs. The result is often bewilderment
and confusion." That is correct.
"In the Joint Chiefs of Staff you have an organi-
zation to advise you as Commander in Chief on military
matters. I think you should have a comparable organi-
zation dealing with the home front." I like it.
MR. WHITE: There is another aspect which I think
he had in mind, that presupposes that which you have
in mind - something very much greater than what you
have in mind.
The Joint Chiefs of Staff run the war; I don't
think you intend to run the home front. All you are
intending to run is an aspect of the home front,
namely--
H.M.JR: No, no.
MR. WHITE: The home front means everything.
H.M.JR: You should have somebody comparable--
MR. WHITE: Then you have something other in mind
than what I thought you had.
H.M.JR: No, this would direct the campaigns and
go into the community, and he has to have somebody so
that this kind of thing dealing with the people--
MR. BELL: Can't you say, "somewhat comparable"?
MR. WHITE: In other words, you want a group, not
an organization, unless what you have in mind is some-
thing with a name. But if you don't have in mind some-
thing with a name, then I think you are more apt to
Regraded Unclassified
203
- 7 -
get committee. what you want if it is an informal group or informal
MR. MAGER: That point is made clear by the next
paragraph when he discusses the actual set-up.
MR. WHITE: You may be touching on something here
that is much broader than I thought you wanted.
H.M.JR: "I think you should have an organization
somewhat comparable dealing with the home front." Just
put in the word "somewhat. Let me try this out on
Hopkins.
I don't know how other to bring in an example
except Joint Chiefs of Staff.
MR. WHITE: It implies that what you have in mind
is something much bigger than I thought you had in mind.
It may be desirable.
H.M.JR: Let's leave it. I am going to try it
on Hopkins and see how he reacts.
"I would like to offer a proposal which should
contribute in my opinion to greater public understand-
ing and result in more intelligent cooperation by the
people as 8. whole. I recommend the creation of a
committee--"
Instead of saying, "I recommend," say, "I suggest."
MR. BELL: "--for your consideration."
H.M.JR: Yes, that waters it down.
MR. BELL: It wouldn't hurt, as Harry says, to
make it an informal committee. Don't have an Executive
Order, or something like that, formalizing it.
H.M.JR: All right, put in the word "informal."
That means no Executive Order?
Regraded Unclassified
204
- 8 -
MR. BELL: Yes.
H.M.JR: All right. "I suggest the creation of an
informal committee, including Claude Wickard, Leon
Henderson or his successor, Paul McNutt, James Landis,
Elmer Davis, and myself -- all heads of departments or
independent agencies dealing directly with the people --
to take up the problem of coordinating our programs and
appeals to the people in the community. This committee
would meet once 8 week, or as often as is necessary."
Instead of using the word "coordinate," I would
use the word "unify.
MR. MAGER: That is stronger.
MR. BELL: Say, "--making more effective."
MRS. KLOTZ: That includes coordination.
H.M.JR: It is coordination; let's leave it - I
mean "coordination."
"The coordination achieved here in Washington
would make possible, as I visualize it, corresponding
coordination in the field. If, as an instance, we have
& War Bond meeting, or a meeting to explain the Victory
Tax in any community, it should be possible at the same
meeting to clear up doubts about the rationing of fuel
oil and tires, or any other matter of government acti-
vity about which the people of that locality are uncer-
tain or badly informed."
Now, here - "If, as an instance, we have a War
Bond meeting, or a meeting to explain the Victory Tax
in any community--" put this in: "--representatives
from the other agencies should be present, who, at the
same meeting--" and 80 forth.
MR. GASTON: "Representatives from the other agencies
could be present at the same meeting to clear up doubts
about--"
Regraded Unclassified
205
- 9 -
H.M.JR: I had this, "--who would act as a team,"
you see? They go in as a team.
MR. GASTON: Where you had that is in the next
sentence, "In other words, what I visualize is a group
of people who will, go into each community"--
H.M.JR: Let me explain. When I was in Farm Credit
I held thirteen regional meetings - four States each -
and I would act as chairman. On the program would be
somebody who could explain what we did on cooperatives,
somebody who could explain what we did on land banks,
somebody on each of the activities of this organization;
and then if there is a question on land banks, the head
of the land banks would answer the question. If they
wanted to know something about those seed loans - pro-
duction credit - the fellow who was there from produc-
tion credit would answer. If somebody wanted to know--
MR. GASTON: Intermediate credit.
H.M. JR: A fellow would say - in other words, we
acted as a team.
MRS. KLOTZ: That was all one organization.
H.M.JR: This is, too. We are all working for
Mr. Roosevelt.
MR. MAGER: There is one great difficulty, and
that is this. Many of these organizations have people
in the field - we have people in the field, the OPA
has people in the field, and it may involve, where
you say to have people out in the field act as a joint
team, the creation of new jobs for people in agencies
that do not have enough people in the field.
H.M.JR: That may be necessary.
Look, let me get this thing - I am a little bit
arbitrary this morning because I am pressed for time.
Regraded Unclassified
206
- 10 -
I am shooting foran idea which will be watered down, so
I have got to make it more perfect than I expect. I
should take more time to explain, but I am setting up
something - I visualize, if they called a meeting in
the Poughkeepsie High School to explain why the war
requires this order, then anybody else that has doubts -
I mean, the Administration should hit the communities
as a team, and not call ten meetings.
MR. WHITE: That is a very good suggestion.
H.M.JR: They should hit the community as a team,
and people should be there that can answer anything that
has to do with the constriction or curtailment of
civilian life.
MR. WHITE: Have town meetings in every place.
MRS. KLOTZ: What you are saying now is something
else.
MR. WHITE: Something else. What you are suggesting
is a more effective program. It isn't that each one of
these people have a town meeting in which each one
answers questions; they don't have them. You are sug-
gesting something like town meetings, orany meetings,
to have all the representatives of these agencies and
invite the public to ask questions that are troubling.
That is 8 more effective program.
MR. GASTON: I think you are getting down too much
into detail when you suggest that because I think most
of all of these agencies have subjects for discussion
that are likely to - if you make any progress, you will
have to confine yourself to that one subject during any
meeting. I think more important is to see that these
things are done, and that the other departments know
what is being done in the community.
H.M.JR: Herbert, if you don't mind, I would like
to get over the idea of what I visualize. I say again
it is an idea - a New England town meeting. I would
Regraded Unclassified
207
- 11 -
like to say that when we go in to call a town meeting,
every agency that has 8. program that needs the coopera-
tion of the civilians - where we are asking them to
curtail the normal life - will explain to them why.
MR. WHITE: It is a very novel and excellent idea.
It is bringing the Government to the people. They
will come to a meeting. I think it is a novel and
interesting idea. It doesn't replace the other, but
it is an additional effective idea.
H.M.JR: It is extension teaching; taking the
teaching to the public rather than bringing the people
to the school. Again, I ought to take - I would like
to get a rough draft to show Hopkins. When they hold
the thing, instead of holding a half a dozen meetings,
and everyone leaving with doubts in their minds, the
thing would be explained.
I am going to repeat myself. I want to have ex-
plained why I have to curtail my normal life, and how
I go about it - what the reasons are for it. I want
that thing to be done.
MR. WHITE: I am going to make one more try and
see if I can insert this one word - see if you accept
the idea. Where you speak of the Joint Staffs, "I
think you should have a comparable organization deal-
ing with" - instead of "the home front" say, "dealing
with the misunderstanding on the home front." "Dealing
with the home front" means every Government activity,
just as the Joint Chiefs of Staff deal with every bit
of military activity.
H.M.JR: I just want to use that as an illustra-
tion, the Joint Chiefs of Staff - they are coordinating
what we do in the war, supposedly. What I am trying to
do is to get a coordination on the home front, somewhat
similar to the Chiefs of Staff.
Regraded Unclassified
208
- 12 -
MR. BELL: He probably won't get it in that form, it
is just going to the President.
H.M.JR: I just want to ring 8. bell. He will say
the first flash, "By golly, I have got nothing on the
home front; I need something like that." That is all
I want him to do. "I need something like a Joint Chiefs
of Staff." That is all I am trying to get him to say,
and you can't give me 8. better illustration; if you can
I will use it. Simply to have him say, "Henry is right;
I need something like the Joint Chiefs of Staff to deal
with the home front."
MR. GASTON: I think the figure is all right.
H.M.JR: Look, we have got another hour. Will you
come back at quarter of one - it can be a rough draft.
I want to show it to Hopkins.
MR. MAGER: Do you want to leave out the la st
paragraph?
H.M.JR: Yes, and include with this thing, "I
would like to have an opportunity to discuss this wi th
you further at your convenience.
MR. WHITE: "If the idea appeals to you."
H.M.JR: No, no. It does appeal.
MR. BELL: The only thought I had, in that connection,
in your first paragraph you might say, "I feel so strongly
about this that I am again bringing it to your attention.
H.M.JR: No, that would irritate him.
MR. GASTON: You want to get in the idea that you
want representatives of all the different agencies to
work as a team in the field.
Regraded Unclassified
209
- 13 -
H.M.JR: Yes. You have a community meeting - and
I will go over it again - and when you have a community
meeting, whether it is at Poughkeepsie or wherever it is,
at the high school or wherever it is, you do the job
once and if the thing is worked out - you would have to
have regular instruction books for these people - you
would have to instruct them. As Wickard says to me,
"If you could do the thing - you can't have beef, but
you can have all the poultry--" - there is forty percent
more poultry in the country than there was last year -
"You can have all the poultry you want, but you can't
have beef."
"Why can't you have beef?"
There are reasons why you can't have butter; we
are shipping ten million pounds of butter a month to
Russia. There is no use of hiding it. If the people
know that ten million pounds of butter a month are
going to Russia - "All right, I am satisfied. That
tells me why I can't have butter."
"Now, where is the beef going? Why can't I have
beef?"
MR. BELL: It might satisfy them to know that ten
million pounds of butter is going to Russia. (Laughter)
H.M.JR: Now, look, I am going on the assumption
that the American people are entitled to know and not
have it come out through our enemy.
MR. WHITE: If the American people don't want butter
to go to Russia, it shouldn't go.
H.M.JR: They should know it. If somebody who
doesn't like Russia says, "Do you know why you are not
getting butter?" and so forth and so on - I mean, I am
going on the assumption that the American people want
to prosecute the war to a victorious end, and they are
entitled to all the information and they are not getting it.
Did you know that ten million pounds of butter a
month was going to Russia?
Regraded Unclassified
210
- 14 -
MR. WHITE: No. I knew they were slipping around
there, but I didn't know it was on butter. (Laughter)
MR. BELL: I knew they couldn't sell them oleo-
margerine, but they wanted butter.
MR. WHITE: You are wholly right on this thing.
I think you are wholly right on this.
H.M.JR: And I am going to say something else. I
want you to - there is something missing here. I may
horrify some of you. I want you to know everything
that is in my mind. The thing that is missing to help
the President on this thing is that he has let his
political organization go to pot. So there is nobody
in the community who is loyal to him for one reason or
another, and he and his political organization has just
melted away.
There is this other side of the thing - so he has
nobody that will fight in the community for him. I
was thinking last night - what is the matter with this
thing?
MR. WHITE: It constitutes the essence of democracy,
too, for the people, where they are asked to do some
things, and get their comments. I think it is an
excellent idea. I am sure you will have other ideas
to effectuate the program, and I think that is just one
of them. That is why I wouldn't put it all in this one
thing.
HMJR: Well, let's get something, anyway.
Will you come back at quarter of one, please? You
like it don't you, Dan?
MR. BELL: Yes.
Regraded Unclassified
Diaft 211 I
THE SECRETARY OF THE TREASURY
WASHINGTON
December 18, 1942.
My dear Mr. President:
During our conversation on Wednesday morning we
discussed the need of keeping the people of the country
better informed as to the measures necessary"on the home
front for a more effective prosecution of the war. I
am convinced that much of the misunderstanding that pre-
vails can be traced to the lack of coordination in the
efforts of departments and agencies dealing directly
with the people. Different departments and agencies go
to the people with different appeals and different pro-
grams. The result is often bewilderment and confusion.
In the Joint Chiefs of Staff you have an organiza-
tion to advise you as Commander in Chief on military
matters. I think you should have a comparable organiza-
tion dealing with the home front.
I would like to offer a proposal which should con-
tribute in my opinion to greater public understanding
and result in more intelligent cooperation by the people
as a whole. I recommend the creation of & committee,
including Claude Wickard, Leon Henderson or his successor,
Paul McNutt, James Landis, Elmer Davis, and myself -- all
heads of departments or independent agencies dealing di-
rectly with the people -- to take up the problem of coordi-
nating our programs and appeals to the people in the com-
munity. This committee would meet once a week, or as
often as is necessary.
The coordination achieved here in Washington would
make possible, as I visualize it, corresponding coordina-
tion in the field. If, as an instance, we have a War Bond
meeting, or a meeting to explain the Victory Tax in any
FORDEFENSE
community, it should be possible at the same meeting to
BUY
clear up doubts about the rationing of fuel oil and tires,
UNITED
or any other matter of government activity about which the
STATES
SWINGS
people of that locality are uncertain or badly informed.
BONDS
Regraded Unclassified
212
- 2 -
In other words, what I visualize is a group of people
who will go into each community and explain to every
member of that community what is expected of him and
her to carry out the measures necessary to win the war.
I tried this out on Secretary Wickard at lunch, and
then after Cabinet mentioned it to the Vice President.
Wallace was enthusiastic about it, especially when I told
him what we had done in Winston-Salem. He said that there
was one thing he had mentioned to you, which was that we
must do something with the soldiers in the camps in the
United States. Nothing is being done there. he said
that if these two fronts were covered, he would feel that
we had gone a long way towards stopping this constant mis-
understanding on the part of the public about what we are
trying to accomplish here in Washington.
Faithfully,
Secretary of the Treasury.
The President,
The White House.
Regraded Unclassified
213
December 18, 1942
12:50 p.m.
HOME FRONT
Present: Mr. Gaston
Mr. Mager
Mrs. Klotz
(The Secretary read draft of letter to the Presi-
dent, copy attached.)
H.M.JR: I don't like this at the end, "In this
way the people in each community would be apprised in
a detailed and at the same time systematic way of the
things that are required of them for the more effective
prosecution of the war."
It is kind of a long sentence.
MR. MAGER: (Reading) "In this way the people in
each community would be apprised in a detailed, and at
the same time systematic way, of the things that are
required of them for the more effective prosecution
of the war."
H.M.JR: It makes sense.
MR. MAGER: It doesn't?
H.M.JR: Yes, I guess it is all right.
(Continuing) "They would understand better the
reasons why it is 80 necessary to interfere now with
normal civilian life."
Instead of saying "interfere" I would rather say
"interrupt." "They would understand better the reasons
why it is 80 necessary to interrupt now with normal
civilian life.'
Regraded Unclassified
214
- 2 -
MR. MAGER: No, it is more than "interrupt";
interrupt means a partial cessation with a continuance
on the same level, whereas "interfere" actually means
to--
H.M.JR: "Interfere"?
MR. GASTON: Yes, I think SO,
H.M JR: All right.
"Cooperation as a team by different Government
agencies" - what does that mean, the people?
MR. MAGER: The fact that these people would come
together and, in a sense, hear and discuss all the
things that would--
H.M.JR: Couldn't you say this: "Cooperation as
a team by different Government agencies, both in Wash-
ington and in the communities"?
MR. GASTON: Yes.
H.M.JR: That is what I want.
MR. GASTON: Or you might say, "--would serve to
stimulate a corresponding cooperation."
MR. MAGER: That would be better.
H.M.JR: How does it read?
MR. GASTON: "Cooperation as a team by different
Government agencies, both in Washington and in the communi-
ties, would serve to stimulate a corresponding cooperation
by the people in each community, assembling, as it were,
so to speak, in town meeting.
H.MJR: You haven't said about assembling the town
meeting. It is sort of throwing that in.
Regraded Unclassified
215
- 3 -
MR. GASTON: I think you could throw that out.
"Cooperation as a team by different Government agencies,
both in Washington and in the communities, would serve
to stimulate a corresponding cooperation by the people
in each community."
H.M.JR: "--in each community," period.
MR. GASTON: Yes.
H.M.JR: As long as we have a chance, I would like
to say, "I would like an early opportunity to discuss
this matter further at your convenience.
I think it is all right.
MR. GASTON: Do you like, "sincerely," or "faith-
fully," or "respectfully"?
H.M.JR: "Sincerely yours."
Regraded Unclassified
216
My dear Mr. President:
During our conversation on Wednesday morning we
discussed the need of keeping the people of the country
better informed as to the measures necessary on the home
front for a more effective prosecution of the war. I am
convinced that much of the misunderstanding that prevails
can be traced to the lack of coordination in the efforts
of departments and agencies dealing directly with the people.
Different departments and agencies go to the people with
different appeals and different programs. The result is
often bewilderment and confusion.
In the Joint Chiefs of Staff you have an organization
to advise you as Commander in Chief on military matters.
I think you should have 8 somewhat comparable organization
dealing with the home front.
I would like to offer 8. proposal which should contribute
in my opinion to greater public understanding and result in
more intelligent cooperation by the people as 8 whole.
I suggest for your consideration the creation of an informal
committee, including Claude Wickard, Leon Henderson or his
successor, Paul McNutt, James Landis, Elmer Davis, and myself --
all heads of departments or independent agencies dealing
directly with the people -- to take up the problem of coordi-
nating our programs and appeals to the people in the community.
This committee would meet once a week, or as often 88 is
necessary.
The coordination achieved here in Washington would make
possible, as I visualize it, corresponding coordination in
the field. If, as an instance, we have a War Bond meeting,
or a meeting to explain the Victory tax in any community,
the representatives of the other departments and agencies
dealing with the people should be present 80 that all matters
Regraded Unclassified
217
- 2 -
involving civilian aspects of the war effort might be
handled at one and the same meeting. In this way the
people in each community would be apprised in a detailed
and at the same time systematic way of the things that
are required of them for the more effective prosecution
of the war. They would understand better the reasons why
it is 80 necessary to interfere now with normal civilian
life. Cooperation as a team by different Government
agencies, would have its counterpart in a corresponding
cooperation by the people in each community, assembling,
as it were, in town meeting.
Sincerely yours,
The President,
The White House
Regraded Unclassified
218
DEC 1 1942
My dear Mr. President:
During our conversation on Wednesday morning we
discussed the need of keeping the people of the country
better informed as to the measures necessary on the home
front for & more effective prosecution of the war. I am
convinced that much of the misunderstanding that prevails
can be traced to the lack of coordination in the efforts
of departments and agencies dealing directly with the people.
Different departments and agencies go to the people with
different appeals and different programs. The result is
often bewilderment and confusion.
In the Joint Chiefs of Staff you have an organization
to advise you as Commander in Chief on military matters.
I think you should have a somewhat comparable organization
dealing with the home front.
I would like to offer a proposal which should contribute
in my opinion to greater public understanding and result in
more intelligent cooperation by the people as 8 whole.
I suggest for your consideration the creation of an informal
committee, including Claude Wickard, Leon Benderson or his
successor, Paul McNutt, James Landis, Elmer Davis, and myself --
all heads of departments or independent agencies dealing
-
directly with the people -- to take up the problem of coordi-
nating our programs and appeals to the people in the community.
This committee would meet once 8. week, or as often HB is
necessary.
The coordination achieved here in Washington would make
possible, as I visualize it, corresponding coordination in
the field. If, as an instance, we have a War Bond meeting,
or a meeting to explain the Victory tax in any community,
the representatives of the other departments and agencies
dealing with the people should be present so that all matters
Regraded Unclassified
219
- 2 -
involving civilian aspects of the war effort might be
handled at one and the same meeting. In this way the
people in each community would be apprised in 8 detailed
and at the same time systematic way of the things that
are required of them for the more effective prosecution
of the war. They would understand better the reasons why
it is 80 necessary to interfere now with normal civilian
life. Cooperation as a team by different Government
agencies, both in Washington and in the communities,
would serve to stimulate 8 corresponding cooperation
by the people in each community.
I would like an early opportunity to discuss this
matter further at your convenience.
Sincerely yours,
(Sgd.) Henry Morgenthou, Jr.
The President,
The White House
Sent by Secret Service Agent 3:10 12/18/42
Copy in Diary
Regraded Unclassified
220
December 18, 1942
3:10 p.m.
TAXES
Present: Mr. Bell
Mr. Paul
Mr. Blough
Mr. Haas
MR. BLOUGH: Since we met on Wednesday, one change
in the situation has intruded itself. Weldon Jones
asked to have a conference. He was over Thursday, and
over again this morning with Colm. That somewhat
affected our own memorandum; and also you may be inter-
ested in the first page, which is a summary of what
happened.
(Memorandum entitled "Memorandum for the Secretary,"
dated December 18, 1942, handed to the Secretary)
H.M.JR: I will read it now. Was Bell there?
MR. BLOUGH: He was there the first day, but not
today.
H.M.JR: This is what they think?
MR. BLOUGH: That is right.
MR. PAUL: We agreed--
MR. BLOUGH:
...
with much of it.
MR. PAUL: Except four.
H.M.JR: "1. Do not put exact figures for the so-
called 'gap!"
Regraded Unclassified
221
- 2 -
MR. PAUL: I don't object to that.
H.M.JR: I don't agree with them at all.
MR. BLOUGH: Our feeling is, that there is no way
to guarantee that that figure is correct, and for the
President to put his stamp of approval on it is not
safe.
H.M.JR: If you have to indicate that, the whole
thing I want falls by the wayside.
MR. PAUL: I don't feel so strongly as you do
about that, Roy. I feel that the figure we give will
be a minimum figure.
MR. HAAS: That is right.
H.M.JR: I certainly will not go along with three
and four.
MR. PAUL: I can imagine your not going along with
four.
H.M.JR: I am not going to go along with three at
this time.
MR. BLOUGH: Three is written into our memo.
MR. BELL: Your conversation with the President
the other day would not indicate that you wanted to
go along with five. There wasn't any kind of figure
to go in the budget.
MR. PAUL: They go very much further than that.
They object strenuously to even leaving it with a
figure. They think there ought to be a set-up of
exactly what--
MR. BLOUGH: We got them down off that.
H.M.JR: That is on a level with Jones and Colm.
If the President wants to over-rule me, all right, but
Regraded Unclassified
222
- 3 -
I certainly made it plain what I wanted to give him the
other day. I went over it with Hopkins, and he said,
"All right.' If the President does not want to use it
or wants to use something else, all right, but we have
been at odds with Colm right straight along.
MR. PAUL: I think you are at more odds with
Colm than you have ever been. But all this affects
only the last page of this memo.
H.M.JR: Have you seen this?
MR. BELL: I just saw this. I was in on the
discussion yesterday, and this is about the same thing
that we discussed yesterday.
MR. BLOUGH: The memo you are starting on now -
I wrote it trying to approach somewhat their position, but
not going into the consumption tax.
H.M.JR: I wish you had given me what I asked for.
MR. BLOUGH: Read it and see if it isn't mostly
what you asked for.
MR. PAUL: The only thing that is different from
what you asked for is the second paragraph, and the
figures can easily be put in if you want them.
H.M.JR: (Reading) "During the coming fiscal year
we face not one, but two fiscal problems.
"On the governmental front the fiscal problem is
to supply the funds required to pay for the war. We must
look forward to meeting the financial cost of the war to
a far greater extent by means of taxes. The revenue acts
of the past three years, and particularly of 1942, have
greatly increased tax revenues but expenditures for
defense and the war have increased at vastly greater
rates. Taxes, under existing law, will raise less than
one-third of the amount needed to pay for the Federal
expenditures in the fiscal year 1944. To borrow the rest
Regraded Unclassified
223
- 4 -
would put on taxpayers after the war and on the next
generation a larger part of the load than they should be
asked to bear. They will have their problems too. The
taxes will be easiest to bear now because we have the
income now and we must in any event bear the actual
economic cost now."
What is the matter with that middle paragraph?
Is that the one you said I wouldn't like?
MR. PAUL: No.
H.M.JR: I think that is good. I think the
first paragraph is good.
MR. PAUL: So do I. I said the only one you will
have to change is the one beginning at the bottom of
the page and only to put figures in. The only difference
between that and what you said is that the precise fig-
ures are not there.
H.M.JR: It is easy enough to put them in.
MR. PAUL: I think it is well stated.
H.M.JR: I think it is very well stated.
"The second fiscal problem is on the economic front.
The people of the United States in the aggregate will
have many billions of dollars higher incomes than they
have had in the past and there will be billions of dollars
less goods to buy than there have been recently. Half
or more of our production is going directly to the war
effort. Only the other half or less is available to
produce civilian goods and services. Every effort will
be made to keep the supply of civilian goods and services
as large as is consistent with a maximum war effort and
to make them available when and where they are needed
most. There will be enough for decency and health but
there will not be enough at present prices for the dollars
people have to spend. If those dollars are spent, prices
and the cost of living will rise and at an accelerated rate."
Regraded Unclassified
224
- 5 -
MR. BLOUGH: You may want to throw out compulsory
savings.
H.M.JR: "The tragedy of inflation need not be -
it must not be - and it will not be if we take all the
steps necessary to meet the danger.
"Many vital steps we have already taken. We have
set price ceilings, thus preventing the spiral of further
price rises which is set off by rising prices. We have
stabilized wages and salaries, thus avoiding rising
business costs and restraining the increases in money
incomes. We have limited credit expansion and brought
about a great amount of debt repayment. We have rationed
some essential, scarce goods to assure everyone of a
necessary minimum and to protect the price ceilings.
"Other steps we must take. The amount of spending
must be reduced. It should be reduced primarily by
higher taxes. If taxes-" the trouble with that is, Roy,
leaving out the fact that -Iam still groping - that is,
it makes it 80 easy to refute it. Say, "All right, We
have forced savings; we don't have to have 80 much taxes."
Of course, this is the argument that Doughton is using,
and it is not--
MR. BLOUGH: I think that is a very serious question,
whether the Budget Message should be the place to suggest
the back door of compulsory lending.
H.M.JR: I would like to leave that out, because
of the very argument that you put in the mouth of the
President that if you have compulsory lending or forced
saving you don't have to have so much taxes.
MR. PAUL: I am going to disagree with you. I
don't like to see the President - I happen to believe
in forced lending or forced saving, whichever it may
be, but I hate to see the President not go out for it
in his Budget Message because Congress is going to
enact it. It is just another one of those unnecessary
places where there will be disagreement between him and
Congress.
225
- 6 -
H.M.JR: The point is - I am not arguing, for the
minute - should we have forced lending or not - what
I am arguing is, I think it is a mistake, "If taxes are
not increased enough on that basis everyone will
say, "Hurray, all we have to do is have forced savings
and we don't have to have taxes."
MR. HAAS: Put it the other way and say that you
need both of them rather than either one or the other.
MR. BELL: What would you think if you cut out that
paragraph at the top of page three and just leave in the
second paragraph, in a vague way, "Taxes will have to
be increased. Savings will have to be increased"?
H.M.JR: Where are you reading?
MR. BELL: The second paragraph on page three.
H.M.JR: I like that.
MR. PAUL: Take the first sentence from the first
paragraph.
MR. BELL: "One thing we must remember is that taxes
will have to be increased." You don't say how savings
will have to be increased.
MR. PAUL: Cut out that sentence, "One thing we
must always remember -" and start with "Other steps we
must take. Taxes will have to be increased."
H.M.JR: How would this be now?
MR. PAUL: Leave the first sentence in that para-
graph.
MR. BLOUGH: And jump down to "Taxes will have to
be increased," in the next paragraph.
MR. PAUL: That makes it read very smoothly. I
would like to change the language there, "the less
rationing and control we shall have to have."
226
- 7 -
MR. BELL: "We shall need."
MR. PAUL: That is better.
H.M.JR: "I have tried to make clear that higher
taxes are the best solution to the fiscal problem on
the Government front and the fiscal problem on the
economic front." That is all right.
MR. BELL: "Fiscal problem on both the Government
and economic--"
H.M.JR: What is that, Dan?
MR. BELL: "The best solution to the fiscal problem
both on the Government front and on the economic front."
H.M.JR: That is all right.
MR. BELL: In the second sentence, I think it would
be better to use "We must use war measures," instead of
"war tax measures."
H.M.JR: "The backbone of our war tax program
should continue to be the individual income tax. The
rates should be increased from top to bottom. We should
make virtually impossible the receipt of more than
$25,000 free of tax. We should eliminate special pri-
vileges and loopholes.
"It is important that we collect as much as possible
of the individual income tax currently by withholding
at source. Thereby the tax is made as easy as possible
for the taxpayer. Thereby, also, the money is brought
into the Treasury more quickly and more certainly and
has a greater effect on avoiding inflation.
"In our wartime revenue program corporate tax rates
should be increased. The special excises should be
placed at maximum revenue levels."
That is all right. so far.
Regraded Unclassified
227
- 8 -
"Moreover, I suggest that you consider carefully
the discouragement of spending by means of a highly
progressive tax measured by spending for consumption."
MR. BELL: A commercial plug always slips in some
place.
MR. BLOUGH: I don't say it should go in, but I
don't think it should go in any stronger than that. He
should not recommend it to them. The strongest he should
recommend is that he recommends they consider it.
H.M.JR: The trouble with that - I believe in it,
but you get into - going back, "We must use war tax
measures. The backbone of our war tax program should con-
tinue to be the individual income tax. The rates should be
increased from top to bottom. We should make virtually
impossible the receipt of more than $25,000 free of tax.
We should eliminate special privileges and loopholes."
That is what he wants; you are taking that out of
his memo to us.
MR. BLOUGH: I would be perfectly willing to take the
sentence out, but I assume it is something he would want in.
MR. PAUL: We rephrased that so he could retreat in
this respect: We say "virtually impossible," meaning you
can raise your tax and cut out all the other controls.
H.M.JR: "In our wartime revenue program corporate
rates should be increased." That is all right. Down to
there you can say it is just more of what we have done.
Then you say, "Moreover--"
MR. BLOUGH: You can cut that out without hurting
my feelings.
H.M.JR: I think I would, on the theory that we
are not giving them any special recommendations.
MR. BELL: You cut out the lending proposal and--
MR. PAUL: I want you to consider this, that if you
don't come out for that - if he doesn't have this in here,
he won't get it. You have got to fish or cut bait on that.
Regraded Unclassified
228
- 9 -
MR. HAAS: It bothers me from another angle, Mr.
Secretary, that this message - when the people see it,
they have to have confidence that you are not going to
have inflation. The only way they are going to have
that confidence is that there are enough methods sug-
gested which will cope with the problem. If that is not
in it, I think there is a big gap.
MR. PAUL: All we say is that "I suggest that you
consider carefully."
H.M.JR: I will come back to that. "I have placed
the fiscal problem before you. I hope you will find the
best solution. In my opinion we should strike for not
less than $20 billion of annual additional funds, to be
provided by Congressional action during 1943. If a revenue
measure of this magnitude were passed promptly the cash.
yield in fiscal 1944 would be $15 billion. The largest
possible portion should be from additional taxation. The
balance should be secured through requiring minimum lending
to the Government, where possible by means of deductions
from payroll. Any minimum lending requirement should be high
enough to make allowance for any resulting reduction in
other savings." Do you want to put in twenty billion
dollars?
MR. BELL: That is not the problem; it doesn't
solve the problem.
H.M.JR: What is that?
MR. BELL: Twenty billion dollars.
MR. PAUL: Part of it is lending, and part of it
is taxes.
MR. BELL: More than that, it is only half the
problem, and you may take it all out of currency, out
of past savings.
MR. PAUL: We mentioned that in the last sentence.
Regraded Unclassified
229
- 10 -
MR. BELL: That is the trouble with stating fig-
ures.
H.M.JR: Now look, let me do it my way for a
minute without arguing; then I will explain it to you.
I am going to cut out this "Moreover, I suggest."
The way it reads now is, "In our wartime revenue program
corporate tax rates should be increased. The special
excises should be placed at maximum revenue levels
"I have placed the fiscal problem before you. I
hope you will find the best solution." I think I would
say, In the shortest time possible."
MR. BELL: Time is of the essence.
MR. PAUL: This is a good addition, "In the shortest
time possible."
H.M.JR: "The largest possible portion should be
from additional taxation. The balance should be secured
from--"
MR. BELL: You have cut out all reference to
anything but taxation.
MR. PAUL: You will have to take out that next to
the last sentence.
MR. BELL: Also "The largest possible portion
should be from additional taxation."
MR. BLOUGH: You can finish up this way if you
wish, and say that, "Of course, the Secretary of the
Treasury has suggested--"
H.M.JR: The Treasury Department - this could go
in at the end - "The Treasury Department, as always, is
ready to consult with the appropriate committees in
working out this very difficult problem as promptly
as possible."
Regraded Unclassified
230
- 11 -
Let me just write a letter to the President. In-
cidentally, he is leaving tonight; he is not going to
be back until Tuesday, so we have plenty of time. He
won't touch it now.
"My dear Mr. President:
"I am forwarding herewith a memorandum for your
Budget Message which has been drawn up along the lines
which you and I discussed, to wit, that it would describe
the problem, lay it in the Congress's lap without specify-
ing any particulars.
"I believe that we can make the greatest progress
towards getting a tax bill passed if you should decide
to follow this suggestion, as it will give us ample
opportunity to work out a tax program between yourself,
Members of Congress, and the Treasury.
"If after reading our first draft of suggestions you
should decide that you want to make specific recommen-
dations on the fiscal and monetary front, we are prepared
to do so very promptly.
Yours sincerely,"
Now, with that in mind, I am asking you people to
draw up what you think he should do. Then I would like
to go over that with you.
MR. PAUL: Remembering that there will be a pressure
from Budget on that front--
H.M.JR: I don't want to say that in the letter.
MR. PAUL: No, I am saying to you--
H.M.JR: But you got what I said in the letter, you
see, 80 that when I get back here Monday you will have
something which you say you (Paul) would like to do.
MR. PAUL: Why don't we put it in columns?
Unclassified
231
- 12 -
H.M.JR: Any way that you want - don't you think
that is a good way to approach it? What better--
MR. BELL: One thing - it won't help your
relations with the Budget. I assume you appreciate
that.
MR. PAUL: That is right.
MR. BELL: I think he will send that to the Budget.
MR. PAUL: There is another thing that I would
like to say, that unless you think something important
will be gained by having that go to the President this
afternoon--
H.M.JR: I don't want it to go until Tuesday.
MR. PAUL: That is fine. I wanted you to see these
other things before you--
H.M.JR: Not until Tuesday. I expect to work with
you again on this Monday morning.
Who raised the question of relationship with the
Budget?
MR. BELL: I did.
H.M.JR: Look, Dan, we are 80 far apart that there
is no use, you see. I mean, I just haven't the time to
try to wear them down and be worn down and then reach--
MR. PAUL: We are only apart really on one main
thing and one minor thing. We went all through this
thing with them yesterday and today.
MR. BELL: You are apart on two things, first, on
stating the problem concretely, and two, on putting in
tax figures.
Regraded Unclassified
232
- 13 -
MR. PAUL: No, they agreed to this.
MR. BLOUGH: They don't feel too strongly about
putting the money in, but would rather not put in a
figure for the gap, because they are afraid it may not
be supportable as time goes on.
MR. PAUL: I think they would yield on that. They
are for the twenty billion dollar figure. The only
basic place where they are apart from us is on the sales
tax.
MR. BLOUGH: That is right.
MR. PAUL: We have one minor point about collection
at the source. That does not even need to go in here.
They agree to that, 80 I think what Dan says is important.
H.M.JR: Look, gentlemen, I happen to be extremely
tired. I would like the thing drawn up. I am prepared
to sit down with you people Monday morning and go over
the kind of draft that you would like, if that is fair
enough. I mean, that is fair enough.
MR. PAUL: What time do you want to see us Monday?
MR. BELL: I would rather see you take it personally
to the President and bring it back in your hands after
he reads it, and get a conference. The other point
is that--
H.M.JR: I will see you at ten o'clock Monday.
MR. BELL: I think you will probably have a hard
time getting by Smith and Byrnes that part in the let-
ter where you say that the Treasury and the Congress
will work out the tax bill in a Budget Message. I
think you will have some trouble on that point, but I
would like to see it go in.
Regraded Unclassified
233
- 14 -
H.M.JR: I think your argument that I should walk
it over is the best thing.
MR. BELL: Yes, then you can carry it back. It
won't go any place.
234
December 18, 1942
MEMORANDUM FOR THE SECRETARY
In discussing the fiscal aspects of the Budget
Message Message with Mesors. Jones and Cola of the
Budget Bureau yesterday in Mr. Bell's fice and
today in Mr. Paul's office, the following points
appeared to be important in their position.
A. with respect to the Budget Message:
1. Do not put exact figures for the so-called
"gap". Treat this subject in general terms.
2. The necessity for a large amount of collection
at source should be strongly emphasized.
3. The necessity and desirability of a minisum
lending requirement (compulsory lending) should be
stated.
4. Willingness to sccept a general consumption
(sales) tax should be indicated.
5. A program involving 815 billion additional
each collections in fiecal 1944, or approximately
120 billion on an annuel basic should be recommended.
B. with respect to the revenue program:
1. A revenue program should be agreed upon in the
Administration before the Budget Message is submitted
and serving to sup ort the revenue figure in the Message.
The amount of the split between taxes and compulsory
lending should be indicated, together with the sources
of each.
2. A joint resolution should be passed celling
for collection at source at approximately 25 percent
above exemptions, to begin about April 1, end cancelling
to the extent necessary the 1942 taxes on the first
$2,000 of net income.
RB:dad
12/18/42
Regraded Unclassified
235
December 18, 1942
During the coming fiscal year we face not one but
two fiscal problems.
On the Governmental front the fiscal problem 1s to
supply the funds required to pay for the var. we sust
look forward to meeting the finencial cost of the war to
h far greater extent by meane of taxes. The revenue note
of the past three years, and particularly of 1942, have
greatly increased tax revenues but expenditures for
defense and the war have increased at vestly greater
rates. Taxes, under existing low, will raise less than
one-third of the amount needed to pay for the Federal
expenditures in the fiscal year 1944. To borrow the rest
would put on texpayers after the wor end on the next
generation & larger part of the load than they should be
saked to bear. They will have their problems too. The
taxes will be esciest to bear now because we have the
income now and ve suet in any event bear the actual
sconomic cost now.
The second fiscal problem 16 on the economic front.
The people of the United States in the aggregate will
have any billions of dollars higher incomes then they
have had in the past and there will be billions of dollars
Regraded Unclassified
236
- 2 -
less goods to buy than there have been recently. Half
or more of our production is going directly to the war
offort. Only the other half or less is available to
produce civilian goode and services. Every effort will
be made to keep the supply of civilian goods and services
as large as is consistent with a maximum war effort and
to make them available when end where they are needed
most. There will be enough for decency and health but
there will not be enough at present prices for the dollars
people have to spend. If those dollars are spent, prices
and the cost of living will rise and at an accelerated rate.
The tragedy of inflation need not be -- it must not
be -- and it will not be if we take all the steps necessary
to meet the danger.
Many vital stops we have already taken. we have set
price coilings, thus preventing the spiral of further
price rises which is set off by rising prices. We have
stabilized wages and salaries, thus avoiding rising
business costs and restraining the increases in money
incomes. we have limited credit expansion and brought
about 8 great amount of debt repayment. We have rationed
some essential, scarce goods to assure everyone of B.
necessary sinimus and to protect the price ceilings.
Regraded Unclassified
231
- 3 -
Other steps we must take. The amount of spending
must be reduced. It should be reduced primarily by
higher taxes.' If taxes are not increased enough we may
need to reduce spending by requiring a minimum standard
of lending from current income. We must look forward
to more rationing,
One thing we must always remember is this. Taxes
will have to be increased. Savings will have to be
increased. And rationing and controls will have to be
increased. But the more taxes are increased and the more
savings are increased, the less rationing and control
will have to be increased.
I have tried to make clear that higher taxes are
the best solution to the fincal problem on the Government
front and the fiscal problem on the economic front. This
is wartine.
de sust use war tax measures. The backbone
of our war tax program should continue to be the individual
income tax. The rates should be increased from top to
bottom. we should make virtually impossible the receipt
of more then $25,000 free of tax. We should eliminate
special privileges and loopholes.
It is important that we collect as such as possible
of the individual income tax currently by withholding
at source. Thereby the tax is made as easy as possible
Regraded Unclassified
238
- 4 -
for the taxpayer. Thereby also the money is brought
into the Treasury zore quickly and more certainly and
has a greater effect on avoiding inflation.
In our wartine revenue program corporate tax rates
should be increased. The special excises should be
placed at maximum revenue levels. Moreover, I suggest
that you consider carefully the discouragement of spend-
ing by means of a highly progressive tax measured by
spending for consumption.
I have placed the fiscal problem before you. I
hope you will find the beat solution. In my opinion we
should strike for not less than 120 billion of annual
additional funds, to be provided by Congressional action
during 1943. If a revenue measure of this magnitude
were passed promptly the cash yield in fiscal 1944 would
be 315 billion. The largest possible portion should be
from additional taxation. The belance should be secured
through requiring minimum lending to the Government, where
possible by means of deductions from payroll. Any minimum
lending requirement should be high enough to make allowance
for any resulting reduction in other savings.
Regraded Unclassified
239
December 18, 1942
4:04 p.m.
Operator:
He'll be right on.
HMJr:
Hello. Hello.
Operator:
He'll be right on. Calling through the
White House.
W. H.
Operator:
Mr. Morgenthau on the White House phone.
HMJr:
Hello.
Vice Presi-
dent Wallace:
Hello, Henry.
HMJr:
Yes, Henry.
W:
I've just been going over the - this pre-
liminary draft of the United and Associated
Nations Stabilization Fund, which your boys
got up on December 11 - mimeographed on
December 11.
HMJr:
Right.
W:
It seems to me that it's a highly necessary
thing....
HMJr:
Good.
W:
and I don't profess to be any technician
in this field, but it looks to me like the
boys have done a good job and the thing to do
1s to press it along. It seems to be better
than the alternative British plan.
HMJr:
Well, that's what we're doing. Mr. Hull's
asked us to have one more, meeting of the
technicians, and I said I'd be glad to.
W:
Hmm.
HMJr:
Hello?
W:
Yes.
Regraded Unclassified
240
- 2 -
HMJr:
And it. he said, as to the principle he - he's for
W:
Yeah.
HMJr:
I'm glad you like it.
So I told Harry White to call one more meeting.
W:
Yeah.
HMJr:
That's very encouraging.
W:
The - Frank Coe was telling me a little bit about
the meeting you had this morning.
HMJr:
Yeah.
W:
He said you were rather inclined to shy off from
getting into the thing.
HMJr:
Yeah. (Laughs) I was very frank. Maybe I was
too frank.
W:
You had been wise that somebody ought to -
somebody ought to get that thing defined, Henry.
HMJr:
Well, I agree with you, and I - - as I told the
Lend-Lease people that I thought that they were
definitely open for criticism, that they didn't
have all the answers on Lend-Lease in Reverse
and all the rest of the stuff.
W:
I think things are a mess and it would have
brought it up here on the H111.
HMJr:
Pardon?
W:
I think it's a mess and it was likely to have
brought it up here on the Hill.
HMJr:
Yeah, well, I - I don't know whether he told
you that I said Stettinius should put his hat
on and go around?
W:
Yeah, that's exactly what he told me.
HMJr:
Yeah - and I told them - I said definitely that
if they had everything under control, this
thing never would have come up.
Regraded Unclassified
241
- 3 -
W:
However, the way - it sort of - - the slant you
took this morning sort of - more or less put
the "kabosh" on the committee we set up yester-
day. (Laughs)
HMJr:
Well, no, I wouldn't - I was very careful that -
I told them at the beginning and the end that I -
I didn't want to be - here we were functioning -
I didn't want to get in on any fight. I didn't
have energy or strength left.
W:
Yeah.
HMJr:
And....
W:
You think there's a fight in this, do you?
HMJr:
I know there 1s.
W:
Is that so?
HMJr:
oh, yes. Well, it's that - the evidence 1s that
they didn't let Acheson come. They sent Berle
today, and Acheson has attended every other meet-
ing at my office.
W:
Well, that does tell it.
HMJr:
What?
W:
That does tell it.
HMJr:
And, frankly, I - - I - - (laughs) I don't know
whether it's - what it is but I just can't be
fighting at home when we've got BO many enemies
all around us.
W:
That's right.
HMJr:
And I blame Lend-Lease on this. I told it to
Stettinius and I told it to Oscar Cox afterwards.
W:
Are - are Berle and Oscar working pretty close
together on this?
HMJr:
I haven't the slightest idea. Berle had never
been in on this before - didn't know anything
about it.
Regraded Unclassified
242
- 4 -
W:
I understand he's having a meeting tomorrow on
it - having - having - well - what' 's-his-name -
Myron Taylor in on it. I don't know just why.
HMJr:
I don't either. No, he's - I was amazed that
Acheson didn't come. He didn't - he's always
attended, and that Berle should be shot in on
this thing. That was one of the things that made
me leary.
W:
Yeah.
HMJr:
Well, I hope I didn't do anything that disturbed
you, but
W:
Well, it makes it a little.
HMJr:
Difficult?
W:
Yeah, it makes it a little difficult for this
committee to go ahead.
HMJr:
Well
W:
I mean sort of - it means this committee 18
HMJr:
Well, if - if I continue my frankness of this
morning it may be unwise, but I think that
W:
It may - it may be a good thing not for us to
go ahead with 1t. The thing ought to be resolved
some way.
HMJr:
I think 80. I think - and I said to them that
they ought to do it in the next two, three days.
W:
Is that 807
HMJr:
Yeah.
W:
Yeah.
HMJr:
I think if it went ahead, Henry -- if you don't
mind my saying -- I think it would only get us -
all of us in - into another big row.
W:
I getcha.
Regraded Unclassified
243
- 5 -
HMJr:
What?
W:
Well, I'm glad to know that. I didn't know it
was that - I didn't know there was that much
history to it all.
HMJr:
Yeah, I - I think BO.
W:
I wonder what the elements of this issue are?
HMJr:
Well, it's just a question of - this whole ques-
tion of foreign relations and all the rest of
that stuff. I'd be glad to sit down and tell
you everything I got on my mind anytime that -
that you're free, Henry.
W:
Yeah.
HMJr:
And not - I'm not very good on the phone.
W:
I see. (Laughs) All right, sir.
HMJr:
What? But anytime that you want me over - I'm
home over the week-end. I'll drop around to see
you, anything that you'd like. Just give me a
ring.
W:
Well, I'll árop around and see you in ten
minutes if you want.
HMJr:
Well, I'd much rather do it either tomorrow or
next day, if that was convenient to you.
W:
All right.
HMJr:
Quite frankly, I - I was going home. I wasn't -
I wasn't feeling very well. You just caught me
with my hat on.
W:
Yeah. Well, how about - how about ten o'clock
tomorrow morning?
HMJr:
All right. You name the place.
W:
Well, I'll drop in to see you tomorrow morning
at your office.
HMJr:
Fine. Or do you want to - hello?
Regraded Unclassified
- 6 -
244
W:
Yeah.
HMJr:
What time - what time do you - are you going to go
from your home or something?
W:
I thought I might be browsing around down town
tomorrow morning.
HMJr:
Oh, because I thought we could take a walk together.
W:
Well, all right. I'll tell you what let's do.
If you don't - do you feel like walking this even-
ing?
HMJr:
Well, I - you've got me bad tonight. No, I'm -
I'm going out tonight. Are you going to be busy
tomorrow morning all morning?
W:
No.
HMJr:
Well, look - let me - I gather you're going to be
down town shopping or something, 1s that it?
W:
No, I thought I might be dropping in on B.E.W.
HMJr:
Oh. Well, couldn't we take a walk around the park?
Could I call for you?
W:
Well, I'll tell you what - what you do, I'll meet
you at your entrance
HMJr:
Yes.
W:
I'll meet you at the entrance of your shop, that
1s, where your - the car drives in, you know,
downstaire?
HMJr:
Yeah.
W:
I'll meet you there with my car, and we'll drive
over to the park and take a little walk.
HMJr:
Fine. Around ten o'clock?
W:
Yeah.
HMJr:
That'll be perfect.
Regraded Unclassified
- 7 -
245
W:
Fine.
HMJr:
Thank you, Henry.
Regraded Unclassified
this to Mr. 246 Bill
THE SECRETARY OF STATE
Whit-
WASHINGTON
December 18, 1942
Dear Henry:
Yesterday afternoon you and I spoke on the
phone about the program for international monetary
cooperation and agreed that there would be a further
meeting of technical groups. After this has been
done, we can get together again on this matter.
Sincerely yours,
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury.
Regraded Unclassified
My dear Mr. President:
I have prepared for your signature the
enclosed letter to Mr. Julian Goldman which
you requested December 10, 1942. Copies of
Mr. Goldman's plan for Tontine Bonds are
being referred to members of the staff.
I am returning Mr. Goldman's letter and
his other material to you.
Faithfully yours,
(Bigned) R. Morgenthan, Jr.
The President
The White House
Enclosures
RISTA
12-18-48
JUBRIBITE Dub RB
MIX
area
ER
Regraded Unclassified
Dear Julian,
Your Tontine Plan of Insurance for the
sale of bonds, which you sent me with your
letter of December 10, 1942, is an interesting
idea. As a possible method of stimulating bond
sales, it surely merits consideration. I have
asked the people in the Treasury to look into
it, and they assure ne that your plan will be
given very careful study.
I greatly appreciate the time you have
devoted to this important subject.
Sincerely yours,
Mr. Julian Goldman
Goldman Stores Corporation
440 Fourth Avenue
New York, New York
pan
MM:kld
12-16-42
awer
nn
The If RB le
Regraded Unclassified
THE WHITE HOUSE
WASHINGTON
December 12, 1942
MEMORANDUM FOR
THE SECRETARY OF THE TREASURY
For preparation of reply for my
signature.
F. D. R.
Enclosures
Regraded Ur
250
COPY
GOLDMAN STORES CORPORATION
440 Fourth Avenue
New York
December 10, 1942
Office of
The President
Hon. Franklin D. Roosevelt
President of the United States
The White House
Washington, D. 0.
My dear Franklin:
For the past year and a half I have given 8. great
deal of By time to pioneer for the curbing of in-
flation and for the adoption of compulsory saving.
I find, however, that & moderate form of compulsory
saving will not be sufficient to adequately finance
the war and prevent inflation, and therefore, I pro-
pose the adoption of the Tontine Plan of Insurance
for the sale of additional bonds. It is all ex-
plained in the attached paper. Dr. Frank D. Graham
of Princeton University has worked with no on this
plan.
I firaly believe that if this plan is properly ex-
ploited, sufficient bonds will be sold and enough
civilian buying power will be syphoned off to
positively curb inflation.
I hope you can find some time to read this plan
because I believe it has real value.
It has been ages since I have seen you last, but
I hope that notwithstanding your great burden of
responsibility that you are enjoying excellent health.
With best wishes, I remain
Sincerely yours,
(Signed)
JULIAN GOLDMAN
JG.HM
Encl.
Regraded Unclassified
TONTINE BONDS
The lack of a comprehensive fiscal program, for
financing the war without resort to inflation, is a major
defect in our planning of the war effort. An impartial
observer gets the impression that the "program", 80 far, is
to raise a certain more or less arbitrary amount by taxation,
to sell, by traditional methods, as many bonds outside the
banks, as may be, and, for the rest, to hope for the best - -
which means, of course, inflation.
Success in the attack on the "inflationary gap" is
dependent upon a triple assault involving (1) taxation, (2)
compulsory saving, and (3) voluntary lending. Taxation must
be pushed much farther than it has yet gone, and compulsory
saving, on a great scale, will be required. But, in addition,
every device likely to promote the sale of bonds on a voluntary
basis should be explored.
Passing over taxation and compulsory saving, as
already thoroughly discussed, it is the purpose of this paper
to call attention to the use of the tontine principle as a
potentially important device in tapping, in the government's
behalf, the sources of voluntary savings. The tontine, as is
well known, is an arrangement under which only the surviving
members of a group of subscribers to a long-term obligation
receive any benefits under the agreement. The tontine is the
counterpart of ordinary term-insurance since, under term-insur-
ance, it is only the members who die during the term of the
contract who receive any benefits under the agreement.
Regraded Unclassified
PAGE TWO
Now, for large numbers of people, it is at least as important
to be insured for living as it is to be insured against dying.
This is the basis, for instance, of old-age pension systems.
The relevance of this consideration to the sale of government
bonds is clear. If long-term government obligations were
offered to groups of persons of a given age-class, with the
proviso that, at the due date of the loan, the total subsorip-
tions, plus accrued interest, would be divided among the sur-
vivors pro rata with their subscriptions, we might confidently
expect a very large sale. Depending upon the length of the
term of the contract, the age-class to which it applied, and
the rate of interest involved, the "pay-off" might be several
times as great as that which is involved in the classes of
securities now being offered by the government. To those who
are unlikely to have any natural dependents at the due date of
the contract, but would, otherwise, be themselves dependent,
such a security would be extremoly attractive. It would fill
a long-felt gap in our insurance structure as well as furnish
a brisk market for government securities.
The tontine has fallen into a wholly undesorved
obscurity. It was well-known to our forefathers, and Alexander
Hamilton, in his famous report on tho Public Crodit, recommend-
ed to Congress its uso in the refunding of the public debt of
that time.* Hamilton was 80 taken with its possibilities that he
Works of Alexander Hamilton, Report of the Secrotary of the
Troasury on Public Credit (Jan.9, 1790) Williams and Whiting,
New York, 1810, pp. 38 et seq.
Regraded Unclassified
PAGE THREE
presented its virtues with enthusiasm, and in detail, along
with actuarial illustrations of its operation. So far as it
is known, however, his recommendations, for no good reason,
completely failed of adoption. It is not yet too late for us
to profit from Hamilton's intelligence.
In the field of private insurance, where it would
seem so have obvious application, the principle of the tontine
has been nullified on the ground, we believe, that one may not,
under an insurance contract, be a beneficiary from the death
of another person unless he has an "insurable interest" in that
person. It seems very doubtful that this prohibition would apply
to an issue of government bonds and, if it did, it could be
eliminated by very simple legislation. It would, in any event,
seem to be fatuous in this case since the alleged reason for
the rule -- that it might promote murder -- would be obviated
by the fact that no member of the group need ever know who his
fellows were.
The bonds would be sold by ago-classes, each of which
might, perhaps, cover five years. (On this point Hamilton has
suggestions which might, or might not, be followed to the
letter). For the younger age-classes the bonds could be made
of relatively long term, with the ultimate payments greatly
increased as a consequence. Thus, for an age-class of 30-35, for
instance, a thirty-year-term bond might be appropriate, though
there is no reason why buyers in any age-class might not be
given options as to the term of the security, all the buyers of
any one option being grouped in a sub-class under a given contract.
Regraded Unclassified
PAGE FOUR
The bonds would not, of course, be negotiable, which
is an advantage in the circumstances, but the bonds might be
given a cash surrender value according to the term which they
had still to run.
The same means of identification of the holders, and
beneficiaries, that is used with regard to social security
contracts would be apposite.
It seems very probable that an issue of bonds of this
type would prove immensely popular and that a much larger volume
of voluntary savings could thus be induced, and diverted to
our present urgent needs, than we are likely to get under the
methods now being used for the sale of government securities.
This is, it is true, only one or a number of expedients
by which the voluntary purchase of government securities might
be stimulated but it seems likely to be as effective as any,
and other devices might well be kept in temporary abeyance while
trial was made of that which is here proposed.
Regraded Unclassified
255 12/18/42
Sank Dank funds -
Treasury bills
$500A
7/8 % c/do (Est.allat.)
2.042
13/4% Treasury honds
2.058
4,600
now-bank funds- -
#1,207 #
7/8% e/os
13/4% J. bonds
770
2½% J. bonds
2.480
425
Tox notes
Savings fonds
497
5,379
Total
$ 9.979 #
TREASURY DEPARTMENT
256
INTER OFFICE COMMUNICATION
DATE December 18,
1942
TO
FROM
Mr. Hass
Secretary M Morgenthau
Subject: Recent Securities Changes in Prices and Yields of Government
During the week ended last night, there was little move-
ment in the prices of Government securities, most issues
showing no change. Some strength was displayed by taxable
bonds with maturities in the early fifties, while a weak tone
prevailed in the short- and medium-term tax-exempt area.
Certificates of indebtedness showed some improvement
during the week. The regular offering of Treasury bills,
which was increased to $600 millions, was awarded at an aver-
age rate of 0.364 percent, as compared with 0.367 percent for
last week's issue.
A comparison of present prices and yields of Government
securities with those prevailing on September 1 1s shown in
Table II. It will be observed that prices of all but 6
Government notes and bonds outstanding on September 1 are
now below their levels of that date, while yield changes
are almost evenly divided between rises and declines. The
difference is due to the amortization factor previously dis-
cussed in a number of memoranda of this series.
Table III, which compares yields on the basis of the
September 1 pattern of rates, gives the best comparison of
the actual change in the market since that date. Reference
to the last column of this table will show that the market,
as a whole, has risen in yield (lost ground) since that
date -- the average adjusted increase in yield amounting to
about .03 percent.
Purchases of Government securities by the Federal Reserve
System totaled $103 millione during the week. This amount
oonsisted of $35 millions of bills, $8 millions of certifi-
cates, $8 millions of other taxable issues, and $52 millions
of partially tax-exempt securities. Sales, confined entirely
to bills, aggregated $43 millions, and bill and note matur-
ities totaled $52 millions, with the result that the net
increase in the System's holdings was $8 millions. These
figures do not include the special one-day certificates issued
directly to the Federal Reserve System.
Attachments
Regraded Unclassified
Table I
257
Price and Yield Changes of United States Securities
December 10, 1942 to December 17, 1942
(Based on man of closing bid and asked quotations)
Prices
Yields
Security
Dec. 10, 1942
Dec. 17, 1942
Change
Deo. 10, 1942
Dea. 17, 1942
Change
(Decimals are thirty-seconds)
(Percent)
TAXABLE SECURITIES
Bills
Average rate last issue
-
1
1
-37
.36
-.01
Certificates
5/8%
2/1/43
,
-
-
.34
5/1/43
.30
.65
-,04
-
-
-
8/1/43
.53
7/8
-50
-,03
-
-
-
.68
7/8
11/1/43
.67
-.01
-
-
-
.79
7/8
12/1/43
-78
-.01
-
-
-
n.q.
0.9.
1-1
Taxable Notes
3/4%
3/15/43
100.02
100.02
.00
.51
3/4
9/15/44
.49
99.20
-.02
99.20
,00
.97
1-1/4
3/15/45
100.04
-97
.00
100.04
.00
1.19
3/4
12/15/45
1.19
99.01
.00
99.00
-.01
1.08
1
3/15/46
99.04
1.09
+.01
99.04
.00
1.28
1.28
1-1/2
12/15/46
100.02
.00
100.02
.00
1.48
1.48
.00
Taxable Bonds
26
3/15/48-50
101.07
101.07
.00
1.76
1.76
.00
1-3/4
6/15/48
100.01*
100.01*
.00
1.74
1.74
«00
2.
6/15/49-51
100.13
100.16
+.03
1.93
1.92
-.01
2
9/15/49-51
100.10
100.12
+.02
1.95
1.94
-.01
2
12/15/49-51
100.07
100.10
+.03
1.97
1.95
-.02
2
3/15/50-52
100.04
100.06
+.02
1.98
1,97
-.01
2
12/15/51-55
100.02
100.03
+,01
1,99
1.99
,00
2-1/2
3/15/52-54
103.15
103.16
+.01
2,09
2.08
-.01
2-1/4
6/15/52-55
101.05
101.04
-.01
2.12
2.12
.00
2-1/2
3/15/56-58
102.29
102.29
.00
2.25
2.25
.00
2-1/2
6/15/62-67
100.03
100.03
.00
2,49
2.49
.00
2-1/2
12/15/63-68
100,01*
100.01*
.00
2.50
2.50
.00
2-1/2
9/15/67-72
100.16
100.15
-,01
2.47
2.47
.00
TAX-EXEMPT SECURITIES
Wholly Tax-exempt Notes
1-1/81
6/15/43
100.13
100.12
-,01
.33
.36
+.03
1
9/15/43
100.16
100.15
-,01
.34
-37
+.03
1-1/8
12/15/43
100.26
100.25
-.01
.32
.34
+,02
1
3/15/44
100,24
100.24
.00
.40
-39
-,01
3/4
6/15/44
100.13
100.13
.00
.48
.48
.00
1
9/15/44
100.29
100.29
.00
.48
,48
.00
3/4
3/15/45
100.16
100.15
-.01
-53
.54
4,01
Partially Tax-exempt Bonds
3-3/86
6/15/43-47
101.16
101.14
-,02
.43
.45
+.02
3-1/4
10/15/43-45
102.06
102.06
.00
.64
-59
-.05
3-1/4
4/15/44-46
103.12
103.12
.00
.72
.69
-,03
1
12/15/44-54
106.08
106.08
.00
.86
.53
-.03
2-3/4
9/15/45-47
104.27
104.26
-.01
.97
-97
,00
2-1/2
12/15/45
104.14
104.14
.00
1,00
-99
-.01
3-3/4
3/15/46-56
108.18
105.17
-,01
1,07
1,06
-,01
6/15/46-48
106.21
106,21
.00
1.06
1,05
-,01
3-1/8
6/15/46-49
107.01
107.01
.00
1.08
1.07
-,01
4-1/4
10/15/47-52
114.01
113.31
-.02
1.26
1,26
,00
2
103.27
.00
1,21
12/15/47
103.27
1,20
-.01
2-3/4
107.06
.00
1.33
3/15/48-51
107.06
1.33
.00
2-1/2
9/15/48
106.16
106.14
-.02
1.32
1.33
+,01
2
12/15/48-50
103.22
103.20
-.02
1.36
1.37
+,01
3-1/8
12/15/49-52
110.11
110.11
.00
1.56
1.56
.00
2-1/2
12/15/49-53
105.30
105.30
.00
1.60
1,60
.00
2-1/2
9/15/50-52
106.10
.00
1.63
106,10
1,63
.00
2-3/4
6/15/51-54
107.30
.00
1.74
107.30
1.74
.00
3
9/15/51-55
110.01
,00
1.76
110.01
1,76
.00
.00
1.71
2-1/4
12/15/51-53
104.17
104.17
1,70
-,01
1.68
2
6/15/53-55
103.03
103.03
,00
1.66
.00
2-1/4
6/15/54-56
104,23
104,23
,00
1.79
1.79
.00
B-7/8
3/15/55-60
.00
2.04
109.02
109.02
2.03
-,01
2-3/4
9/15/56-59
106.09
108.09
.00
2,06
2.06
.00
2-3/4
6/15/58-63
108.12
,00
2.11
108.12
2,11
.00
2-3/4
12/15/60-65
108.31
.00
2.15
108.31
2,15
,00
December 17, 1942.
Treasury Department, Division of Research and Statistics.
-
100.00 bid, 100.02 asked.
Regraded Unclassified
II
250
Price and Yield Changes of United States Securities
September 1, 1942 to December 17, 1942
Issues outstanding on both dates only
Based on mean of closing bid and asked quotations)
:
Prices
:
Yielde
Security
:
Sept. 1, 1942
:
:
Dec. 17, 1942
1
Change
Sept. 1, 1942
Deo. 17. 1942
Change
(Decimals are thirty-esconde)
(Percent)
TAXABLE SECURITIES
Bills
Average rate last issue
-
-
-
-37
.36
-,01
Certificates
5/8%
2/1/43
-
-
-
.52
.30
-.22
7/8
8/1/43
-
-
-
.76
.67
-.09
Taxable Notes
3/45
3/15/43
100.03
100.02
-.01
-57
.49
-.08
3/4
9/15/44
99.17
99.20
+.03
.98
.97
-.01
3/4
12/15/45
99.01
99.00
-.01
1.05
1.09
+.04
1
3/15/46
99.05
99.04
-.01
1.24
1.28
+.04
1-1/2
12/15/46
100.05
100.02
-.03
1.46
1.48
*.02
Taxable Bonds
2%
3/15/48-50
101.05
101.07
+.02
1.78
1.76
-.02
2
6/15/49-51
100.11
100.16
+.05
1.95
1.92
-.03
2
9/15/49-51
100.08
100.12
+.04
1.96
1,94
-.02
2
12/15/49-51
100.06
100.10
+.04
1.97
1.95
-.02%
2
12/15/51-55
100.02
100.03
+.01
1.99
1.99
.00
2-1/2
3/15/52-54
103.23
103.16
-.07
2.07
2.08
+.01
2-1/4
6/15/52-55
101.06
101.04
-.02
2.12
2.12
.00
2-1/2
3/15/56-58
103.03
102.29
-.06
2.23
2.25
4.02
2-1/2
6/15/62-67
100.13
100.03
-.10
2.47
2.49
+.02
2-1/2
9/15/67-72
101.06
100.15
-.23
2.44
2.47
+.03
TAX-EXEMPT SECURITIES
Wholly Tax-exempt Notes
1-1/8%
6/15/43
100.20
100.12
-.08
-33
36
+.03
1
9/15/43
100.22
100.15
-.07
-33
-37
+.04
1-1/8
12/15/43
100.30
100.25
-.05
.39
.34
-.05
1
3/15/44
100.25
100.24
-.01
49
-39
-.10
3/4
6/15/44
100.14
100.13
-.01
.50
.48
-.02
9/15/44
101.01
100.29
-.04
.49
.48
-.01
1
3/4
3/15/45
100.16
100.15
-.01
-55
.54
-.01
Partially Tax-exempt Bonde
3-3/8%
6/15/43-47
102.08
101.14
-.26
.50
.45
-.05
3-1/4
10/15/43-45
102.28
102.06
-.22
.66
-59
-.07
3-1/4
4/15/44-46
103.28
103.12
-.16
.83
.69
-.14
&
12/15/44-54
106.29
106.08
-.21
-94
.83
-.11
2-3/4
9/15/45-47
105.08
104.26
-,14
.99
.97
-.02
104.14
-.17
.96
.99
+.03
2-1/2
12/15/45
104.31
3-3/4
3/15/46-56
109.00
108.17
-,15
1.15
1.06
-.09
3
6/15/46-48
106.31
106.21
-.10
1.11
1.05
90°-
3-1/8
6/15/46-49
107.13
107.01
-.12
1.12
1.07
-.05
4-1/4
10/15/47-52
114.28
113.31
-,29
1.24
1.26
+.02
2
12/15/47
104.09
103.27
-.14
1.16
1.20
+.04
2-3/4
3/15/48-51
107.10
107.06
-.04
1.37
1.33
-.04
-.14
1.31
1.33
+.02
2-1/2
9/15/48
106.28
106.14
2
12/15/48-50
104.06
103.20
-.18
1.30
1.37
+.07
3-1/8
12/15/49-52
110.19
110.11
-.08
1.56
1.56
-.02
2-1/2
12/15/49-53
105.30
-.11
1.58
1.60
+.02
106.09
2-1/2
106.20
106.10
-.10
1.62
1.63
+.01
9/15/50-52
2-3/4
6/15/51-54
108.12
107.30
-.14
1.72
1.74
*.02
3
9/15/51-55
110.01
-.14
1.74
1.76
+.02
110.15
1.66
1.70
+,04
2-1/4
12/15/51-53
105.01
104.17
-.16
2
6/15/53-55
103.15
103.03
-.12
1.65
1.68
+.03
2-1/4
6/15/54-56
105.13
104.23
-.22
1.74
1.79
+.05
2-7/8
109.02
-1.00
1.97
2.03
+.06
3/15/55-60
110.02
2-3/4
9/15/56-59
109.10
108.09
-1.01
1.99
2.06
+.07
2-3/4
6/15/58-63
109.15
108.12
-1.03
2.05
2.11
+.06
110.02
108.31
-1.03
2.09
2.15
+.06
2-3/4 12/15/60-65
Treasury. Department, Division of Research and Statistics.
December 17, 1942.
Regraded Unclassified
Table III
259
Yield Changes of Government Securities Relative to September 1, 1942 Pattern of Rates
September 1, 1942-December 17, 1942
Issues with 3 months or more torun outstanding on both dates
(Based on mean of closing bid and asked quotations)
:
Estimated
Estimated
Actual yield
Actual yield
Security
Change in
change in yield
change in yield
as of Sept. 1
ne of Dec. 17
actual yield
required to
relative to
maintain Sept. 1
Sept. 1
pattern of rates
pattern of rates
TAXABLE SECURITIES
Billa
Average rate last lesue
-37
.36
-.01
.00
-.01
Certificates
7/8%
8/1/43
.76
.67
-,09
-.11
+.02
Taxable Notes
3/4%
9/15/44
.98
-97
-.01
-.07
+.06
3/4
12/15/45
1.05
1.09
+,04
-.06
+.10
1
3/15/46
1.24
1.28
+.04
-.06
+.10
1-1/2
12/15/46
1.46
1.48
+.02
-.05
+.07
Taxable Bonde
2%
3/15/48-50
1.78
1,76
-.02
-.04
+.02
2
6/15/49-51
1.95
1.92
-.03
-.02
-.01
2
9/15/49-51
1.96
1.94
-.02
-.02
.00
2
12/15/49-51
1.97
1.95
-.02
-.02
.00
2
12/15/51-55
1.99
1,99
.00
-.01
+,01
2-1/2
3/15/52-54
2.07
2.08
+.01
-.01
+,02
2-1/4
6/15/52-55
2.12
2.12
.00
-.01
+.01
2-1/2
3/15/56-58
2.23
2.25
+.02
-.01
+,03
2-1/2
6/15/62-67
2.47
2.49
+.02
-.01
+.03
2-1/2
9/15/67-72
2,44
2.47
+.03
.00
4.03
TAX-EXEMPT SECURITIES
Wholly Tex-exempt Notes
1-1/8%
6/15/43
-33
.36
*.03
-.06
4.09
1
9/15/43
.33
.37
+.04
-.06
+.10
1-1/8
12/15/43
-39
:
-.05
-.05
.00
1
3/15/44
.49
.39
-,10
-.04
-.06
3/4
6/15/44
.50
.48
-,02
-.04
+.02
1
9/15/44
.49
.48
-.01
-.03
+.02
3/4
3/15/45
-55
.54
-.01
-.03
+.02
Partially Tex-exempt Bonde
6/15/43-47
.50
.45
-.05
-.08
+.03
3-3/8%
10/15/43-45
.66
.59
-.07
-.05
+.01
3-1/4
3-1/4
4/15/44-46
.83
.69
-.14
-.06
-.08
II
12/15/44-54
.94
.83
-.11
-,05
-.06
2-3/4
9/15/45-47
.99
.97
-.02
-.05
+.03
2-1/2
12/15/45
.96
.99
+.03
-.05
+.08
1.15
1.06
-.09
-.04
-.05
3-3/4
3/15/46-56
1.05
-.06
-.04
--02
3
6/15/46-48
1.11
1.07
-.05
-.04
-.01
3-1/8
6/15/46-49
1.12
4-1/4
10/15/47-52
1.26
+.02
1.24
-.04
+.06
1.20
+.04
-.04
+.08
2
12/15/47
1,16
1.37
1.33
-.04
-.04
.00
2-3/4
3/15/48-51
9/15/48
1.31
1.33
+.02
-.03
+.05
2-1/2
1.37
+.07
-.03
+.10
2
12/15/48-50
1.30
+.01
3-1/8
12/15/49-52
1.58
1.56
-.02
-.03
1,60
+,02
-.03
+.05
2-1/2
12/15/49-53
1.58
1.63
+.01
-.03
+.04
2-1/2
9/15/50-52
1.62
1.74
+,02
-.02
+.04
2-3/4
6/15/51-54
1.72
1.76
+.02
-.02
+.04
3
9/15/51-55
1.74
1.70
+.04
-.02
+.06
2-1/4
12/15/51-53
1.66
1.68
+.03
-.02
+.05
2
6/15/53-55
1.65
2-1/4
6/15/54-56
1.74
1.79
+,05
-.01
+.06
2.03
+.06
-.01
+.07
2-7/8
3/15/55-60
1.97
9/15/56-59
2.06
+.07
-.01
+.06
2-3/4
1.99
2.11
+.06
-.01
+.07
2-3/4
6/15/58-63
2.05
2-3/4
12/15/60-65
2.09
2.15
+.06
-.01
+.07
Treasury Department, Division of Research and Statistics.
December 17, 1942.
Regraded Unclassified
260
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE 12/18/42
TO
Secretary Morgenthau
FROM R. D. Welch
12.0.m
I am sending the copy of the Australian version
of "Any Bonds Today" to the New York office with
a recommendation that it be considered for use
on a radio program.
T
261
Professor Welch
December 17, 1942
Secretary Morgenthau
I think it would be interesting to do the
Australian version of "Any Bonds Today" on one of our
radio programs soon. Please let me know if and when it
will be done.
TREASURY department
262
INTER OFFICE COMMUNICATION
DATE December 15, 1942
TO
Secretary Morgenthau
FROM
Mr. White
Subject: The Treasury Song
We have Just received word that the Treasury
of the Commonwealth of Australia has written to
the American Minister to express its appreciation
of the assistance of the United States Treasury
Department in permitting the use of this song. A
copy of the Australian version of the song is
attached.
You will note that full credit is given to
the United States Treasury on the cover of the
song.
Regraded Unclassified
ADDRESS OFFICIAL COMMUNICATIONS TO
263
THE SECRETARY OF STATE
WASHINGTON, D. c.
DEPARTMENT OF STATE
WASHINGTON
December 14, 1942
In reply refer to
FD 847.51/468
The Secretary of State presents his compliments to
the Honorable the Secretary of the Treasury and encloses a
copy of despatch no. 288, dated November 27, 1942, from
the American Legation, Canberra, Australia, transmitting
the Australian edition of "Any Bonds Today".
Enclosure:
From Legation, Canberra,
despatch no. 288,
November 27, 1942,
with enclosure.
FOP VICTORY
BUY
UNITED
STATES
SAVINGS
BONDS
AND
STAMPS
264
No. 288
Regraded Unclassified
AIR MAIL
Camberra, Australia, November 27, 1942.
Subject: Transmission of Australian
Edition of "Any Bonds Today".
The Honorable
The Secretary of State,
Washington.
Sir:
I have the honor to refer to the Department's
telegram no. 390 of September 30, 1942 which re-
lates to permission for the Commonwealth Treasury
to print and publish and to manufacture devices
serving to reproduce mechanically or electrically
the words and music of Irving Berlin's musical com-
position "Any Bonds Today".
The Commonwealth Treasury was informed through
the Department of External Affairs in the sense of
the Department's telegram and steps were taken to
publish and to broudcast the song as amended for
use in Australia in a manner permitted by the owner
of the copyright.
The Department of External Affairs has written
no to express on behalf of the Commonwealth Treasury
its appreciation of the assistance which has
been forthcoming from the United States Treasury De-
partment in connection with this matter.
As of possible interest, I am enclosing in
single copy the Australian publication of the piece.
It will be noted that on the cover full credit is
given to the United States Treasury and a statement
is made regarding the use of the proceeds in behalf
of the Australian armed forces, as requested by the
United States Treasury.
Respectfully yours,
for the Minister:
John R. Minter
First Secretary of Legation
Enclosure:
Song.
File no. 102.1
RAK/emn
A true copy
To the Department in triplicate.
of the signed
original
82
you vary freedom loday?
ANY
BONDS TODAY ?
Published for use in the Commonwealth War Loans Campaign
by the Commonwealth Treasury, by permission of the United
States Treasury Department.
WORDS AND MUSIC
BY
IRVING BERLIN
At the request of the U.S. Treasury Department
ANY PROCEEDS DERIVED FROM THE SALE OF THIS
COMPOSITION WILL BE USED FOR THE BENEFIT OF
THE ARMED FORCES OF THE COMMONWEALTH AT
THE DISCRETION OF THE FEDERAL TREASURY.
266
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE Dec. 18, 1942
TO
THE SECRETARY
FROM
PETER H. ODEGARD
Mr. Houghteling reported to me this afternoon
concerning the difficulty that seemed to be brewing
among the Consolidated Aircraft workers at San
Diego, California.
Mr. Charles West our A.F.L. representative
from the War Savings Staff in California, is now
in San Diego working on this problem
Eric Peterson, Acting President of the Inter-
national Association of Machinists, is sending a
telegram to the President of the San Diego local,
Harvey Brown, urging him to make sure that nothing
be done which would in any way affect adversely the
participation of the union members in payroll
savings plans.
Regraded Unclassified
267
SUPPLEMENTAL REPORT
Christmas Poster - THE PRESENT WITH
A FUTURE.
Shipments to State Administrators
STATE
QUANTITY
QUANTITY
REMARKS
RECEIVED
DISTRIBUTED
Alabama
6000
6000
(wire 12/14,-15
Arizona
2500
2500
(wire 12/12;letter 12/15)
California
Les Angeles
15,000
15,000
(wire 12/15)
Indiana
12,500
12,500
(wire 12/15)
Oklahoma
10,000
10,000
(wire 12/14)
Oregon
3,000
2,700
(wire 12/14;)
10% retained for
stock)
Pennsylvania
20,000
12,375
(wire 12/14)
Balance utilised
shortly.
Utah
1,500
1,500
(wire 12/15)
Virginia
6,200
6,200
(wire 12/15)
(letter to Mr.
Coyne 12/14)
NOTE- Flerida and Maryland have not yet received their shipments.
These are being traced.
John John M. M. Delehanty Delationty
11.0.18.1942
Regraded Unclassified
268
101h
Analysis of Exposure to Payroll Savings Plans
December 12, 1942
Number exposed
Total number
Percent
to payroll
in the
of total
savings plans
country
(estimated)
exposed
Part A - Summary by Number of Organizations Exposed
I. Business organizations
(1) Firms with 5,000 employees or more
470
473
99
(2) Firms with 500 to 4,999 employees
5,655
5,792
98
(3) Firms with 100 to 499 employees
25,217
29,120
87
(4) Subtotal - large firms
31,342
35,385
89
(5) Firms with less than 100 employees
132,532
#
*
(6) Total business organizations
163,874
*
#
II. Governmental organizations
#
*
#
III. Grand Total
163,874
#
#
Part B - Summary by Number of Employees Exposed
I. Business organizations
(1) Firms with 5,000 employees or more
8,645,091
*
#
(2) Firms with 500 to 4,999 employees
7,416,802
#
#
(3) Firms with 100 to 499 employees
5,712,341
*
*
21,774,234
#
*
(4) Subtotal - large firms
(5) Firms with less than 100 employee:
3,221,545
#
#
(6) Total business organizations
24,995,779
32,900,000
76
II. Governmental organizations
(1) Federal Government
2,376,067
2,800,000
85
(2) State and local governments
1,408,894
2,900,000
49
(3) Total governmental organizations
3,784,961
5,700,000
66
III. Grand Total
28,780,740
38,600,000
75
Treasury Department
December 18, 1942.
Excludes agricultural employees, military personnel, employees on WPA or NYA or CCC projects,
proprietors, firm members, self-employed, casual workers and persons in domestic service.
# Data not available.
Regraded Unclassified
269
Firms Employing 100 to 499 Persons Participating in Payroll Savings Plans
(As reported by the War Savings Staff's State Administrators)
:
Number of firms with payroll
:
Total
:
=
savings plans
Percent of total having payroll
:
number
State
:
savings plans
#
Apr. 18
:
Dec. 5
:
Dec. 12
:
of firms
:
:
(estimated)
Apr. 18
:
Dec. 5
:
:
Dec. 12
:
:
Alabama
149
256
256⑉
347
43
74
Arizona
74
43
71
71
71
61
100
100
Arkansas
44
54
54°
100
44
54
Northern California
54
512
720
722
793
65
91
91
Southern California
756
1,072
1,086
1,256
60
85
86
pc
Colorado
113
137
137
142
8o
96
96
Connecticut
277
576
579
701
40
82
83
Delaware
21
59
59
65
32
91
91
District of Columbia
52
166
170
212
25
78
8o
Florida
147
214
214
214
69
100
100
Georgia
133
392
392»
419
32
94
94
Idaho
31
33
33
33
94
100
100
Illinois
1,300
2,081
2,086
2,253
58
92
93
Indiana
415
691
699
864
48
8o
81
Iowa
160
176
176
263
61
67
67
Kansas
276
288
288
299
92
96
96
Kentucky
136
226
226»
303
45
75
75
Louisiana
179
286
291
321
56
89
91
Maine
60
160
160»
168
36
95
95
Maryland
177
347
347
405
44
86
86
Massachusetts
639
1,155
1,173
1,553
41
74
76
Michigan
689
1,010
1,013
1,309
53
77
77
Minnesota
376
440
440⑉
446
84
99
99
Mississippi
59
96
98
113
52
85
87
Missouri
472
715
719
966
49
74
74
Montana
40
49
49
49
82
100
100
Nebraska
103
137
137
143
72
96
96
Nevada
14
21
21
27
52
78
78
New Hampshire
89
145
146
169
53
86
86
New Jersey
463
986
989
1,185
39
83
83
New Mexico
33
41
41
42
79
98
98
New York
2,060
3,929
3,938
4,257
48
92
93
North Carolina
282
485
486
552
51
88
BB
North Dakota
14
20
20
20
70
100
100
Ohio
1,126
1,743
1,752
2,039
55
85
86
Oklahoma
166
301
301
323
51
93
93
Oregon
211
295
297
309
68
95
96
Pennsylvania
1,682
2,285
2,300
2,300
73
99
100
Rhode Island
154
292
294
348
44
84
84
South Carolina
71
158
158
172
41
92
92
South Dakota
21
26
26
26
81
100
100
Tennessee
199
411
418
512
39
80
82
Texas
326
712
726
1,001
33
71
73
Utah
36
lake
44
44
82
100
100
Vermont
59
68
69
74
8o
92
93
Virginia
281
364
364
382
74
95
95
78
Bo
Washington
234
358
366
459
51
West Virginia
134
220
220#
314
43
70
70
Wisconsin
278
491
492
680
41
72
72
Wyoming
17
23
23
23
74
100
100
2
2
2a
2
100
100
100
Alaska
49
49
49
52
94
94
94
Railroads
Total
15,360
25,076
25,217
29,120
53
86
87
December 18, 1942.
Treasury Department
o Data are for December 5, insemuch as no December 12 report was received,
Regraded Unclassified
270
Firms Employing 500 Persons or More Participating in Payroll Savings Plans
(As reported by the War Savings Staff's State Administrators)
:
Number of firms with payroll
:
Total
:
:
State
savings plans
Percent of total having payroll
:
number
:
savings plans
:
Apr. 18
:
:
:
of firms
:
Dec. 5
Dec. 12
:
:
:
(estimated)
I
Apr. 18
:
:
Dec. 5
:
Dec. 12
Alabama
41
67
67*
68
60
99
Arizona
9
14
99
14
14
64
100
Arkansas
16
100
17
17*
17
94
100
Northern California
122
100
130
130
131
93
99
Southern California
121
99
151
152
155
78
97
98
Colorado
25
31
31
31
81
100
100
Connecticut
114
154
154
165
69
93
Delaware
93
15
23
23
23
65
100
100
District of Columbia
32
50
50
51
63
98
98
Florida
28
F
F
48
58
92
92
Georgia
86
126
126#
126
68
100
100
Idaho
11
11
11
11
100
100
100
Illinois
391
494
495
500
78
99
99
Indiana
88
148
148
165
53
90
90
Iowa
22
40
40
47
47
85
85
Kansas
23
25
25
25
92
100
100
Kentucky
38
49
49*
51
75
96
96
Louisiana
29
52
52
52
56
100
100
Maine
48
55
55#
55
87
100
100
Maryland
84
111
111
111
76
100
100
Massachusetts
237
320
321
331
72
97
97
Michigan
265
287
287
287
92
100
100
Minnesota
79
81
81*
81
98
100
100
Mississippi
26
36
36
36
72
100
100
Missouri
103
138
138
140
74
99
99
Montana
3
4
4
4
75
100
100
Nebraska
23
28
28
28
82
100
100
Novada
4
5
5
5
8o
100
100
New Hampshire
29
32
32
32
91
100
100
New Jersey
142
196
197
198
72
99
99
New Mexico
5
5
5
5
100
100
100
New York
759
908
908
931
82
98
98
North Carolina
103
137
137
140
74
98
98
North Dakota
o
o
o
o
-
-
-
Ohio
412
484
484
502
82
96
96
Oklahoma
31
52
52
52
60
100
100
Oregon
48
55
55
55
87
100
100
Pennsylvania
551
623
625
638
86
98
98
Rhode Island
61
78
78
85
72
92
92
84
98
99
99
85
99
100
South Carolina
5
5
5
100
100
South Dakota
5
100
Tennessee
50
88
88
92
54
96
96
63
120
121
122
52
98
99
Texas
Utah
8
10
10
10
8o
100
100
Vermont
12
12
12
12
100
100
100
Virginia
93
102
102
102
91
100
100
74
66
Washington
49
73
74
99
100
West Virginie
36
77
77*
77
47
100
100
Wisconsin
127
154
154
154
82
100
100
Wyoming
1
4
4
4
25
100
100
3
3
30
3
100
100
100
Alaska
Railroads
109
109
109
115
95
95
95
Total
4,864
6,116
6,125
6,265
78
98
98
December 18, 1942.
Treasury Department
4 Data are for December 5, insamuch as no December 12 report was received.
Regraded Unclassified
271
December 18, 1942.
Dear Mr. Landier
Thank you for sending no a copy of your
"Handbook for the United States Citizens'
Service Corps". Your thought in calling my
attention to the pages allotted to the sale
of Var Stamps and Bonds is such appreciated.
with cerdial regards,
Sincerely,
(Signed) H. Morgenthau, Jr.
Homorable James N. Landis,
Director, Office of Civilian Defense,
Vashington, D. c.
GEF/dbs
Regraded Unclassified
272
OFFICE OF CIVILIAN DEFENSE
WASHINGTON, D. C
DEC 15 1942
Mr. Henry Morgenthau, Jr.
Secretary
Department of the Treasury
Washington, D. C.
Dear Mr. Morgenthaus
I am sending you a copy of our "Handbook for
the United States Citizens' Service Corps."
On page 11 is a quotation attributed to you.
I thought you would be interested in seeing
this.
With warm personal regards, I an,
Faithfully yours,
James N Landis
Director
Enclosure-
273
The
U.S. CITIZENS
SERVICE CORPS
IIII
.......
rrr
DEFENSE
CVD
U.S. OFFICE OF CIVILIAN DEFENSE
Washington, D.C.
OCD Publication 3601
Regraded Unclassified
V
Every man, woman, and child must battle on the home front if we are to
win this war. Already millions of these fighters are salvage chairmen,
HANDBOOK
child care workers, war bond salesmen, hospital assistants. These and
other volunteers in the civilian war services are the U.S. Citizens Service
FOR THE UNITED STATES
Corps. Their vigor, determination, and unRagging devotion will hasten
our victory.
CITIZENS SERVICE CORPS
-James M. Landis, Director
Office of Civilian Defense
November 2, 1942.
Illustrated by Xavier Gonzalez
UNITED STATES OFFICE OF CIVILIAN DEFENSE
30
2
WASHINGTON, D. C., NOVEMBER 1942
Regraded Unclassified
Regraded Unclassified
THE UNITED STATES CITIZENS SERVICE CORPS
The United States Citizens Service Corps is on army of unpaid civilian workers, mobilized
cations. But all Councils will ask that candidates be qualified in one of these three ways:
to do the many civilian wor jobs that must be done to keep the home front strong. As the
1. By completing o prescribed training course, officially approved by the Council,
Citizens Defense Corps comprises a force trained in protection against enemy air attack, so
in preparation for o volunteer work assignment.
the Citizens Service Corps is charged with responsibility of leading the Rght against ineffi-
2. By completing a prescribed period of apprenticeship, mutually agreed upon by
ciency, insecurity, and poor health within the community, and thus of increasing the total
the agency using the volunteer and by the local Civilian Defense Volunteer Office.
striking power of the nation.
3. By completing 50 hours of work, for which no specific training course is required, in
WHO MAY JOIN. Anyone may join provided he is willing to give his spare time
o volunteer position approved by the local Defense Council through its Volunteer Office.
to volunteer war work on the home front. All persons in the United States, its territories
and possessions, without distinction as to race, color, sex, or religion, are eligible for mem-
Some persons in the community will already have completed the required amount of
benhip, once they have fulfilled the requirements. A person may belong to the Service
work in on approved position and will thus immediately be eligible for membership.
Corps as well as the Defense Carps. His assignment in either must not, however, interfere
The only type of training course which qualifies a person for membership In the Service
with his satisfactory performance in both. Many of the volunteers will be eligible to
Corps is one which prepares that person for community wor service. Housewives who take
membership because of their service in established agencies engaged in activities impor-
nutrition courses solely for the purpose of feeding their families better, and other persons
tant to the war effort. It is the policy of the Citizens Service Corps to encourage to the
assisting in the war effort by saving needed materials, by buying war bonds and stamps, or
fullest extent the work of established agencies. For existing volunteer groups working with
by cooperating in similar ways, are not thereby eligible for membenhip in the Service
such agencies, membership in the Citizens Service Corps is o recognition of the service
Corps. A person who enters the Corps by completing on approved training course will not
which they are already rendering. In addition, just as the Citizens Defense Corps includes
be allowed to continue in membenhip if be fails to give community war service. Hence,
new protective services as needed, the Citizens Service Corps may include volunteers
the Corps is not merely o training school, it is, in the best sense, o service corps.
organized directly under committees of the local Defense Council when new activities are
An introductory course in the Community's War Program should be organized and
required which cannot satisfactorily be performed through existing agencies.
conducted under the auspices of the Defense Council. This coune should deal with the
HOW TO JOIN. Persons sixteen or over may register with the Volunteer Office of
meaning of total war, the impact of the war on the community, the Defense Council as o
their local Defense Council, or, if a Volunteer Office has not yet been established, with
unit for mobilizing community resources, including manpower, and the regulations and
the Defense Council directly. Boys and girls under sixteen should inquire of their teachers
activities of the Defense Corps and the Service Corps.
or club leaders how they may join the Service Corps.
Basic training courses in preparation for volunteer service in the Service Corps
The local Defense Council, through its Service Corps executive, has the power to decide
should be drawn up and conducted by the agencies engaged in the specific field of work.
who should be admitted to the Service Corps in its community. Not all communities will
Such courses must be approved by the Defense Council. Certain agencies, both public and
need the same services, therefore, not all Councils will demand exactly the same qualifi-
private, will already have training programs recognized as adequate by the community.
5
4
Regraded Unclassified
In such cases, the entrance requirements, training courses, and performance schedules for
Existing agencies, using organized groups of volunteers in the extension of well-estab-
volunteers used by these agencies have often been carefully worked out and should, there-
lished programs in support of the war effort, will often have adequate training and service
fore, be accepted by the Defense Council.
requirements. The executive of the Service Corps, with the approval of the Defense Council,
Some jobs in the Service Corps do not require formal training. Volunteers serving in
should make arrangements to accept for membership volunteers whose names have been
such jobs will ordinarily attain membership in the Corps through a period of apprenticeship
certified to the executive by the agencies using their services, on the basis of the established
or the giving of 50 hours of service.
training and service requirements of the agencies.
Service opportunities for the Corps are many and varied. In general, they include
Each appointee shall take on oath to defend and uphold the Constitution of the
whatever volunteer work-outside of civilian protection-the community needs to prepare
United States and to perform properly all duties as a member of the Service Corps. The
itself for war. Members of the Service Corps receive instruction from, and work under, the
appointee shall then be entitled to wear the insigne of the Corps until his membership is
supervision of the community agency or committee of the Defense Council to which they are
terminated. Membership of any person who willfully fails to perform the volunteer duties
assigned. Working instructions are not issued directly to them by the head of the Defense
to which he is assigned as a member of the Service Corps may be terminated by the executive
Council or the executive of the Service Corps.
of the Service Corps upon recommendation of the agency, organization, or committee of
the local Defense Council which is supervising and using the services of the member.
Clerical workers are needed in virtually all division of the Corps. They may take the
training course for the unit in which they are serving, but are not required to do so.
A Certificate of Membership may be furnished by the local Defense Council to all
Service opportunities and training courses for professional volunteers are not described
persons appointed to the Corps. A sample certificate is shown in this booklet. These
in the following pages, since it is assumed that the volunteer work which professionals will
Certificates of Membership are official articles and must be manufactured and distributed
In accordance with Regulations No. 2 of the Office of Civilian Defense, except that per-
perform will parallel professional service in that field. Their training, if any, will be of o
mission has been granted to manufacture and sell these Certificates of Membership without
refresher nature.
o License.
The insigne of the Corps is o red block V placed in the center of o white equilateral
Identification cards bearing the official insigne may also be issued to members of the
triangle, a red C and o red D placed respectively to the left and the right of the V and
Corps.
half its size, and the white triangle embossed on a circular field of blue.
This handbook is for the use of persons desiring to volunteer in the community war
How o member is appointed. The local Defense Council should appoint on executive
services, Defense Councils and their Volunteer Offices, and agencies using the services of
of the Citizens Service Corps to keep records and control admissions to the Corps, in accord-
volunteers. It is not intended as o guide for Defense Council organization and operation,
ance with the general requirements set forth above. The executive may delegate responsi-
nor as a comprehensive statement on the use of volunteers. Defense Councils and agencies
bility for record keeping to the Volunteer Office. This executive or his representative will
using volunteers should consult other publications of the Office of Civilian Defense and
appoint qualified persons who have applied for membership.
publications of other Federal agencies engaged in particular aspects of the war program.
6
7
SALVAGE FOR VICTORY PROGRAMS
"The only way we can meet the requirements of war production is to collect every last bit
of scrap from every farm and home, and from every commercial enterprise and industry in
the country."-Donald M. Nelson, Chairman, War Production Board.
PERSONNEL. Adults and young people, boys and girls-energetic, willing workers.
SERVICE OPPORTUNITIES. Under supervision of the Salvage Committee of the local
Defense Council:
Assist in organization and promotion of the community's salvage campaign.
Help organize and conduct the salvage drive in organizations and neighborhoods.
Assist in listing agencies, schools, and other organizations now engaged in salvage or
desiring to take part.
COME
Arrange for pick-up of collections by waste-materials dealers, social agencies, or others.
RECOMMENDED TRAINING. In addition to general introductory training in the
community's wor program, o basic course to prepare volunteers for work in the salvage-for-
WEAPONSLOF VICTORY
victory program should be developed by the Salvage Committee of the Defense Council
and formally approved by the Defense Council. The course should deal with such subjects
as industry's needs for waste materials, methods of organizing and promoting the Salvage
Campaign, local agencies engaged in collection and conversion of salvage, and responsi-
bilities of volunteers.
RECOMMENDED READING. "War on Waste" series. American Junior Red
Cross, 1942.
"Salvage-for-Victory Program." War Production Board, Bureau of Industrial Conservo-
tion, 1942.
"War Against Waste." War Production Board, Bureau of Industrial Conservation, 1942.
9
Regraded Unclassified
WAR STAMP AND WAR BOND SALES
Buying a war bond is buying a share in America's future."
-Henry Morgenthau, Jr., Secretary of the Treasury.
PERSONNEL. Good salesmen, young and old; experienced persons who can
organize sales campaigns or promote sales; teachers who can train salesmen.
SERVICE OPPORTUNITIES. Selling bonds and stamps and taking pledges for bonds
and stamps.
Organizing sales campaigns.
Training other salesmen.
RECOMMENDED TRAINING. The prospective salesman should have all technical
information about war savings bonds and stamps, and the general aims and methods of the
war savings program. If he is not on experienced salesman, he should have some training or
guidance in salesmanship.
RECOMMENDED READING. "Help Win the War With the Money You Save."
Treasury Department, 1942.
"How to Install and Successfully Operate a Payroll War Savings Plan." Treasury
Department, 1942.
"Madame Chairman-Mr. Chairman." Treasury Department, 1942.
"Mrs. Brown Buys a Bond." Treasury Department, 1942.
"Questions and Answers about U.S. War Savings Bonds (Series E) and Stamps."
BUY WAR BONDS
Treasury Department, 1942.
"Questions and Answers about U.S. War Savings Bonds (Series F and G)." Treasury
Department, 1942.
"A Wartime Program for United States Farmers." Treasury Department, 1942.
11
Regraded Unclassified
FAMILY SECURITY SERVICES
"The most insidious threats to our way of life are not enemy agents or saboteun, but the
breaking down of services which uphold the security of homes and families."
Paul V. McNutt, Director, Office of Defense Health and Welfare Services.
PERSONNEL. Adults and young people of mature judgment, objective viewpoint,
and ability to safeguard confidential information.
SERVICE TO-Families broken up because of military service or employment in war
industry, families needing assistance because of military casualties; families needing assist-
once because of displacement unemployment; families having difficulty in adjusting to new
communities, new schools, new jobs, and new home conditions, to which they have been
brought by war.
SERVICE OPPORTUNITIES. Assist staffs of family welfare agencies in making
Selective Service investigations, inquiry into the possibility of suitable employment for
applicants and recipients of public assistance, serving os receptionist in the office, making
visits to newcomers in o war industry community, assisting with inquiries from agencies in
other cities, and checking records to verify essential information such os birth dates, property
ownership, and school attendance.
Assist Traveler's Aid Societies in giving information in railway, bus, and airline
terminols.
Assist Legal Aid Societies in giving advice to families in connection with Soldiers
and Sailors' Civil Relief Act and other matters.
Serve OF member of Red Cross Staff Assistants Corps and Home Service Corps.
Assist the Civilian Evacuation Service.
RECOMMENDED TRAINING. In addition to general introductory training in the
community's war program, o basic course to prepare volunteers for work in family security
programs should be developed locally by family welfare agencies in the community and
approved by the local Defense Council. This course should deal with such subjects as
TO FIGHT, TO WIN, HE MUST
family problems, agencies serving families, casework principles, the purpose and confidential
nature of records, and volunteer-agency relationships.
KNOW THEY'RE SAFE
RECOMMENDED READING. "Volunteers in Family Security." Office of Civilian
Defense with the cooperation of the Office of Defense Health and Welfare Services, 1942.
"Volunteers in Family Service." Family Welfare Association of America, 1942.
13
Regraded Unclassified
CHILD CARE SERVICES
"For children whose mothers are employed
it is the responsibility of the community
to see that parents have assistance in planning for their needs and that the children have
the best possible care.
Children must be safeguarded-and they can be safeguarded-
in the midst of this total war
so that they will be strong to carry forward o just and
lasting peace."-A Children's Charter in Wartime.
PERSONNEL. Adults and young people who like and understand children.
SERVICE TO-Children whose parents are mobilized for war or wor production;
children subject to neglect, exploitation, or undue strain because of the war.
SERVICE OPPORTUNITIES. Assist in day nurseries, nursery schools, and play groups,
and in organizing neighborhood nurseries, where necessary.
Aid in the organization of care for children left homeless by war; help locate possible
foster homes for investigation.
Assist in wartime health education programs for parents; organize health study groups
and plan programs to meet the unusual drains on health in wartime; supervise sewing
projects and the making of home equipment for care of children.
Assist in the daily care of children in hospitals, convalescent homes, or other institu-
tions left short-handed by war; help in diet kitchens, domitories, and supply rooms) super-
vise play periods, rest periods, and occupational therapy.
Assist in securing facts about wartime needs of children in the community; aid in organiz-
ing groups to study these needs and ways of meeting them, participate in planning and
securing community support for essential child care programs.
Assist in care of children for the Civilian Evacuation Service.
RECOMMENDED TRAINING. In addition to general introductory training in the
community's war program, a basic course to prepare volunteers for work in child-care program
should be developed locally by agencies working in this field, and approved by the Defense
Council. The course should include a background of information conceming the normal
development and every-day care of children, their problems and special needs, and the
community services available. This may be supplemented by study and practice in a specific
field of child care. For suggestions as to the nature of this course, see "Volunteers in Child
Care," listed below.
RECOMMENDED READING. "Volunteers in Child Care." Office of Civilian Defense
with the cooperation of the U.S. Children's Bureau, Department of Labor, and the Office of
Defense Health and Welfare Services, 1942.
"Children Bear the Promise of o Better World." Children's Bureau, 1941, 1942. A
series of pamphlets under above general title, discussing such subjects as child health, proper
food, and safeguarding of children whose mothers work.
TODAY'S MADONNA WORKS
"Community Program of Day Care for Children of Mothers Employed in Defense
Areas." Children's Bureau, 1942.
FOR VICTORY
"To Parents in Wartime." Children's Bureau, 1942.
15
Regraded Unclassified
HEALTH AND HOSPITAL SERVICE
the strength of any nation does not exceed the strength and health of In people."
-Surgeon General Thomas Panan, U.S. Public Health Service.
PERSONNEL. Adults and young people who meet special requirements for the field
of health service.
SERVICE TO-III and injured persons in areas where professional medical service has
been reduced due to requirements of the Armed Forces, or to increasing demands on
peacetime facilities.
SERVICE OPPORTUNITIES. In clinics and hospitals, convalescent homes, institutions
for the handicapped, in health associations, in tuberculosis, cancer and social hygiene
societies, in public health nursing programs, in local health departments, and in the Civilian
Evacuation Service.
Serve as First Aid teacher and Home Nursing teacher.
Serve as health denartment assistant-receptionist, messenger, clinic assistant, research
assistant, statistical assistant, or information center clerk for health department buildings.
Serve as hospital word assistant for such duties as directing visitors, keeping bedside
tables in order, delivering mail and books to patients, making telephone calls for patients; as
clinic assistant for such duties as directing patients to proper rooms, putting clinic rooms in
order, cleaning equipment trays, helping patients to dress, weighing and measuring patients.
Serve as laboratory assistant-general laboratory helper to care for equipment, techni-
cian's assistant to prepare equipment for specific procedure.
Serve as medical social service assistant-receptionist, interpreter, operator of clothing
storeroom, making arrangements for convalescent care and appliances.
Serve as occupational therapy assistant-assisting with craft instructor, assisting patients
from wards to occupational therapy department, helping patients obtain work materials,
putting rooms in order after work periods.
Serve as physiotherapy assistant-assisting patients from wards to physiotherapy
department, helping patients dress and undress, putting treatment rooms in order, assisting
with baths or other simple treatments under supervision.
Serve as member of American Red Cross Hospital and Recreation Corps-to assist in
maintaining morale of service and ex-service men in hospitals, providing recreational work
for patients, receptionist.
RECOMMENDED TRAINING. In addition to the general introductory training in
the community's war program, specific training courses are available from hospitals and
A HEALTHY NATION IS
health agencies to prepare volunteers for work in some of the fields of health and hospital
services. For suggestions as to these courses, see "Volunteers in Health, Medical Care and
A STRONG NATION; WE
Nursing," listed below.
RECOMMENDED READING, "Volunteers in Health, Medical Care and Nursing."
MUST KEEP OUR STRENGTH
Office of Civilian Defense with the cooperation of the Office of Defense Health and Welfare
Services, 1942.
Community Health Series Folder No. I. "Wake Up Moin Street." Public Health Service,
1941.
17
Regraded Unclassified
NUTRITION SERVICES
"We are pledged to the proposition that no one in this great democracy shall starve, even
with hidden hunger."-M. L. Wilson, Assistant Directorgin Charge of Nutrition,
Office of Defense Health and Welfare Services.
PERSONNEL. Adults and young people who are interested in nutrition.
SERVICE TO-Workers in war industries, farmers and farm workers, school children,
and housewives faced with war scarcities.
SERVICE OPPORTUNITIES. Work with local Nutrition Committee of the Defense
Council and in related programs or agencies devoted primarily to nutrition; participate in
group-feeding projects in war-production factories, defense areas, and civilian evacuation;
advise on food buying and preparation; assist in planning nutrition institutes and conferences;
serve as member of American Red Cross Canteen Corps.
RECOMMENDED TRAINING. In addition to general introductory training in the
community's war program, o basic course to prepare volunteers for work in nutrition programs
should be developed locally by agencies authorized by the State Nutrition Committee,
such os local Red Cross Chapters, Extension Service of the Department of Agriculture, public
schools and universities, and colleges offering courses in food and nutrition. The basic
training course must be approved by the Defense Council. It should deal with such subjects
as the purpose of the National Nutrition Program, fundamentals of nutrition and food
preparation, and their application to problems such as provision of school lunches, use of
available food surpluses, and industrial feeding programs.
RECOMMENDED READING. "Volunteers in Nutrition." Office of Civilian Defense
with the cooperation of the Office of Defense Health and Welfare Services, 1942.
"Are We Well Fed?" Department of Agriculture, 1941.
KNOWLEDGE OF NUTRITION MAKES
"Consumers" Guide." Department of Agriculture. Monthly.
The National Nutrition Conference for .Defense, June 13, 1941. Vol. 56, No. 24,
FOODSTUFF AN ARMAMENT OF WAR
of Public Health Reports, U.S. Public Health Service.
"Nutrition Education in the School Program." Office of Education, Federal Security
Agency, 1941.
19
Regraded Unclassified
CONSUMER PROGRAMS
"We must produce more than we have produced before we must learn to live on less."
-Leon Henderson, Director, Office of Price Administration.
PERSONNEL. Adults and young people who are interested in consumer problems.
SERVICE TO-Consumers.
SERVICE OPPORTUNITIES. Serve on War Price and Rationing Boards, assist in
issuing ration cards, and in other special activities of these boards; assist in arranging
meetings for discussion and explanation of price control and rationing programs.
Work with Consumer Committee of the Defense Council to assemble and distribute
information on supplies, substitutes, careful buying, and other consumer problems, analyze
and summarize consumer reports; promote the setting up of exchanges for necessary articles
made scarce by war; promote projects for sharing automobiles and other limited equip-
ment; take part in food conservation programs which arrange for the collection of local food
STATE
and vegetable surpluses and their distribution in fresh and preserved forms through school
lunches and community kitchens.
Assist in arranging and holding consumer classes and discussions, assist in promoting
The
such consumer projects as low cost and repaired furniture demonstrations, clothing clinics,
and
and group buying plans.
Home
RECOMMENDED TRAINING. In addition to the general introductory training in
the community's war program, o basic course to prepare volunteers for work in consumer
programs should be developed locally by the Consumer Committee of the local Defense
Council. It should include a general orientation in consumer problems, the why and how
of price control, maximum price regulations, and rationing, the methods of operation of the
local war price and rationing boards, and special consideration to each commodity as it is
rationed.
RECOMMENDED READING. "Volunteers in Consumer Programs." Office of
Civilian Defense with the cooperation of the Consumer Division, Office of Price Admin-
istration, 1942.
"What War Time Price Control Means to You." Consumer Division, Office of Price
Administration, 1942.
"Economics of the Home Front." Consumer Division, Office of Price Adminis-
WISE PLANNING AND
tration, 1942.
"Basic Speech on Price Contol." Consumer Division, Office of Price Administration,
USE WILL SPEED THE
1942.
"The ABC of Ceiling Prices." Consumer Division, Office of Price Administration,
SMASHING OF THE AXIS
1942.
21
Regraded Unclassified
HOUSING PROGRAMS
"To bring our war production to its maximum level, all war worken must be housed, and to
conserve critical materials, existing housing must be utilized to the fullest possible extent."
-National Housing Agency.
PERSONNEL. Adults and young people who are interested in housing.
SERVICE TO-Workers in war production industries and their families, families of
men in the armed forces, form workers in migratory labor camps, families in war production
or military comp communities.
SERVICE OPPORTUNITIES. In Homes Registration Offices: Aid in convassing for
and maintaining file of housing vacancies; interview persons desiring housing accommo-
dations; inspect reported housing vacancies to ascertain whether conditions and facilities
meet necessary standards; assist in making housing surveys.
In municipal housing authorities or the Housing Committee of the Defense Council:
Assist in making surveys to determine housing needs, assist in the preparation of special
reports; assist in housing aspects of civilian evocuation.
In public housing projects and migratory labor camps: Assist in recreation and social
activities, conduct demonstrations in low-cost home fumishing and food preparation and
service, assist in eduational activities and child care services.
In housing associations: Inspect housing and prepare reports on violations of local housing
ordinances, assist in making surveys of housing conditions and needs.
RECOMMENDED TRAINING. In addition to general introductory training in the
community's war program, o basic course to prepare volunteers for work in housing programs
should be developed locally by the Housing Committee of the Defense Council and local
housing agencies and approved by the Defense Council. The course should consist of lec-
tures, discussions, and field observation under supervision, and should deal with such subjects
as the national housing problem, federal agencies in the housing field, the local housing
situation, minimum housing standards for health and safety, and local ordinances governing
housing, health, billeting, and safety standards.
For work in a specific activity in the housing field special training may be required.
For example, volunteers preparing for work in nursery schools in housing projects should be
required to take the Child Care course and may substitute this course for the basic course
in housing.
RECOMMENDED READING. "War Production Board and National Housing Agency
WAR WORKERS MUST
Policy for War Housing." National Housing Agency, 1942.
HAVE DECENT HOMES
"Introduction to Housing-Facts and Principles." Edith Elmer Wood, 1939.
"Housing for Health." Committee on the Hygiene of Housing of the American Public
Health Association, New Haven, Connecticut, 1941.
23
Regraded Unclassified
RECREATION AND YOUTH GROUP SERVICES
"The recreation services being provided for the armed forces, for the workers in war indus-
tries, and for the morale of civilian groups are very definitely contributing to our war effort."
President Roosevelt.
PERSONNEL. Adults and young people with leadership ability and on interest in
working with groups.
SERVICE TO-Soldiers on leave, war industry workers and their families, form workers
and their families, groups of young people in need of leadenhip for participation in the war
effort or for their own development as responsible citizens in our democracy.
SERVICE OPPORTUNITIES. With Recreation Committees of local Defense Councils
and with such agencies as public recreation departments, the Civilian Evacuation Service,
public school recreation centers, settlement houses, libraries, community centers, 4-H Clubs,
Future Farmers of America, Boy Scouts, Girl Scouts, Campfire Girls, Junior Red Cross,
YWCA, YMCA, and church groups; organize social events for men in the armed forces,
supervise playgrounds; serve as game leader, athletic coach, or referee, conduct classes
in swimming, tennis, gymnastics; make simple playground equipment; lead and instruct
groups in woodwork, sewing, weaving, corpentry; provide and direct entertainment; lead
club projects devoted to war effort; lead forum discussions and lecture groups.
RECOMMENDED TRAINING. In addition to general introductory training in the
community's war program, a basic course to prepare volunteers for work in recreation and
group work should be developed by the Recreation Committee of the Defense Council and
local recreation and group work agencies, and approved by the Defense Council. The course
should deal with the aims and philosophy of recreation and group work, with particular
stress on their wartime application various types of programs for all-age levels; and leader-
ships and personal relationships involved in group work programs. If possible, training should
be given in the minor skills of some of the program activities.
For work in a specific held of recreation or group work, special training may be required.
For example, volunteers preparing to work in community center libraries should be required
to take the library training course, and may substitute this for the basic course in Recreation
and Group Work.
RECOMMENDED READING. "Volunteers in Recreation." Office of Civilian Defense
with the cooperation of the Office of Defense Health and Welfare Services, 1942.
"Handbook for Recreation Leaders." Ella Gardner, 1936.
"Neighborhood Activities in Country Communities." Alfred G. Amold-Extension
RECREATION RELIEVES THE
Service, North Dakota Agricultural College, 1940.
"The Home Front in National Defense." Office of Defense Health and Welfare
STRESS AND STRAIN OF WAR
Services, 1941.
"Training Volunteers for Recreation Service." National Recreation Association, 1942.
25
Regraded Unclassified
SCHOOL AND EDUCATION PROGRAMS
"
we must begin now to prepare both youth and adults to help form that public opin-
ion which will insure the organization of the peace upon on enduring basis."
-John W. Studebaker, Commissioner, U.S. Office of Education.
PERSONNEL. Adults and young people who are interested in working in education.
SERVICE TO-School children, foreign-bom adults desiring citizenship and Ameri-
canization training.
SERVICE OPPORTUNITIES. In public schools: Help make up wartime shortage of
teachers by assisting in record keeping, assist home economics and agriculture teachers with
supervision of home projects; coach handicapped or retarded children, assist with visiting
homes of school children, assist in organizing and leading children's clubs and events; assist
attendance officers in checking on reasons for children's absence from school; assist in school
health department, assist in wartime activities for children, such as the Salvage for Victory
program; assist in gardening projects; assist nutritionists in school lunch program; assist in
nursery schools.
In groups and organizations: Assist in organizing and teaching classes for foreign-bom
adults; assist in organizing and teaching special war subjects to adults.
RECOMMENDED TRAINING. In addition to general introductory training in the
community's war program, o basic training course to prepare volunteers for work in schools and
education programs should be developed by local leaders in the educational field, and
approved by the Defense Council. The course should deal with subjects such as the wartime
programs of the schools and the role of the schools in o democracy.
For work in some aspects of school programs, the basic course should be supplemented
by special training. For example, volunteers preparing to work with after-school clubs,
should be required to take the Recreation and Group Work course, modified as necessary to
adapt it to after-school-age groups.
RECOMMENDED READING. "Morale." Civilian Morale Service, Office of Educa-
tion, 1941.
"The Use of Volunteen-A Collection of Suggestions." National Citizenship Educa-
tion Program, Office of Education, with the cooperation of the Department of Justice, and the
NEVER TOO OLD TO LEARN
Federal Works Agency, 1941.
"Education for Victory." Office of Education, Federal Security Agency. Bi-weekly.
"What the Schools Can Do." No. 4 of Education and National Defense Series, Office
of Education, 1941.
27
Regraded Unclassified
LIBRARY SERVICES
"In this war, we know books are weapons."-President Roosevelt.
PERSONNEL. Adults and young people interested in books.
SERVICE TO-Families living in housing projects and in trailer or farm workers' camps,
men in the armed forces on leave, war workers needing technical and vocational book
service, community leaders needing current war information.
SERVICE OPPORTUNITIES. In public school, college, university, and special libraries;
assist in reference service at wor information centers; assist in reading guidance in school and
public libraries; assist in extending library service to war industries and outlying communities
without such facilities; act as custodian of books in outlying communities; prepare books,
pamphlets, and materials for wartime emergency use, prepare clippings and other materials
for war information centers; assemble and arrange book exhibits on subjects pertinent to the
war; give expert advice on book selection in specialized fields such as aviation, civilian
protection, nutrition; assist in Victory Book Drives; serve as port time librarians at hospitals,
health centers, and institutions.
RECOMMENDED TRAINING. In addition to the general introductory training in the
community's war program, o basic course to prepare volunteers for work in library programs
should be developed locally by representatives of libraries, and approved by the local
Defense Council. It should deal with the war program of the library, the policies and func-
tions, the procedures and routines of the library. This course may be supplemented by
additional preparation for work in a specific aspect of library service.
RECOMMENDED READING. "Volunteers in Library Service." Office of Civilian
Defense with the cooperation of the Library Service Division of the Office of Education and
AMERICA READS BOOKS;
the Office of Defense Health and Welfare Services, 1942.
THE AXIS BURNS THEM
"The Public Library-A Peoples' University." Alvin S. Johnson, American Associa-
lion for Adult Education, 1938.
"Books, Libraries and You." Jesse Boyd, Leo B. Blaisden, Carolyn Mott, and
Gertrude Memmler, 1941.
"Morale." Civilian Morale Service, Office of Education, 1941.
29
Regraded Unclassified
INFORMATION SERVICE
"This is o people's war, and to win it the people should know as much about is or
they can."-Elmer Davis, Director, Office of War Information.
PERSONNEL. Writers, speakers, artists, editors, radiomen, photographers, and other
*Dults and young people.
SERVICE TO-Men in the armed forces, newcomers to wor plant or military comp
areas, civilians in general.
SERVICE OPPORTUNITIES. In the Speakers Bureau of the Defense Council: Serve as
director of Victory Speakers Bureau, serve os V Speaker.
On the Information Committee of the Defense Council: Assist in publicizing the Nation's
and the community's war program through writing, making exhibits and posters, organizing
Town Meetings for War, showing films, arranging radio programs.
In Information Centers: Assemble information on community facilities, recreation facili-
ties, current amusements, restaurants and lodging, conduct information service for men on
leave f.om the armed forces and newcomers to the community.
Organize and conduct discussion groups on war subjects.
RECOMMENDED TRAINING. General introductory training in the community's
war program should be provided for all volunteers in information services. A special
institute or training session for speakers should be prepared. For volunteers who will work in
Information Centers a basic training course should also be developed locally, and approved
by the Defense Council. This course should deal with such subjects as techniques of inter-
viewing, meeting various types of people, use of the telephone, and community resources
and agencies.
RECOMMENDED READING. "Local Civilian Defense Information Committeer-A
Suggested Plan of Organization." Office of Civilian Defense.
"Victory." Published monthly by the Office of War Information.
"OCD News Letter." Published by the Office of Civilian Defense.
"Divide and Conquer." Office of War Information, 1942.
"A Manual for Speakers." Office of Civilian Defense, 1942.
"The Four Freedoms." Office of War Information, 1942.
"The Thousand Million." Office of War Information, 1942.
"The Unconquered People." Office of War Information, 1942.
FACTS ARE FISTS TO SMASH THE AXIS
"Toward New Horizons." Office of War Information, 1942.
31
Regraded Unclassified
III
NEIGHBORHOOD OR BLOCK LEADERS
"The Block Plan of community organization is beyond doubt the best mechanism yet
devised to enroll every household in the war effort."
-James M. Landis, Director, Office of Civilian Defense.
PERSONNEL. Adults and young people who have satisfactorily completed the basic
training course.
SERVICE TO-Civilians on the home front, urban or rural.
SERVICE OPPORTUNITIES. Serve as Neighborhood or Block Leader-helping to
keep neighbors informed about the war and stimulating neighbors to participate in the war
effort, direct neighborhood contact in promoting and assisting special war programs such
as salvage, sale of war bonds and stamps, car-sharing clubs, and other civilian war
services. Collect information from households for planning of civilian war service programs.
RECOMMENDED TRAINING. In addition to on introductory training course in
the community's war program, o basic course to prepare volunteers to serve effectively as
neighborhood or block leaders should be developed locally by agencies such as the
Extension Service of the Department of Agriculture, local group work agencies or the Defense
Council directly. The basic training course must be approved by the Defense Council.
It should deal with such subjects as the techniques of democratic leadership and participa-
tion, the general duties and responsibilities of block leaders, and the organizational plan
of the block system. Training also should be provided for specific projects undertaken
through the block plan of organization.
GOOD NEIGHBORS UNITE
RECOMMENDED READING. Report of National Conference of Voluntary Local
Leadership, March 19 to 21, 1942, Division of Field Studies and Training, Extension Service,
TO FIGHT FOR VICTORY
U.S. Department of Agriculture.
"The Block Plan of Organization for Civilian War Services in Local Defense Councils."
Office of Civilian Defense, 1942.
33
Regraded Unclassified
OTHER WAR SERVICES
"There can be no half measures. North, South, East, West, and Middle West-the will
of the American people is for complete victory."-Vice President Wallace.
The jobs outlined in the preceding pages are those likely to be needed in every community
and those in which relatively large numbers of volunteers will be engaged. They do not
cover the whole front of civilian war activity. There is other work to do now and as time
goes on additional types of work will undoubtedly be needed. In the group of essential
civilian war services needed now and not outlined in the previous pages, the following
stand out:
TRANSPORTATION. Furnish volunteer help in connection with the various projects
related to transportation which have already been undertaken by the local Defense Council,
by the Highway Traffic Advisory Committee, and by the Local Administrator appointed
by the mayor. Assist with such undertakings as:
Promotion of car-sharing and car-pooling groups;
Surveys to assist the school officials to increase the effective use of existing school busses;
Promotion of truck and private car maintenance programs;
Promotion of car-pooling among housewives on shopping trips;
Promoting programs for safe driving;
Selling the need for conservation with special emphasis on less frequent retail delivery
services.
VICTORY GARDENS. Assist Agriculture Committee of Defense Council: In organi-
OUR NATION BACKS ITS FIGHTERS
zation and supervision of victory gardens; in helping with o community victory garden; in
helping with harvesting, storing or preserving of vegetables and fruits for school and com-
munity uses.
WAR CHESTS. Assist local war chests or united community compaign for essential
local services by helping with organization, soliciting, assisting with publicity.
RED CROSS PRODUCTION CORPS. Assist in this corps or other local production
units by knitting and sewing or making surgical dressings and supplies.
OTHER VOLUNTEER CIVILIAN WAR SERVICES. Perform volunteer services
approved by the local Defense Council as contributing to the war effort and not included
in any of the preceding units of the Citizens Service Corps.
35
Regraded Unclassified
THIS CHART SHOWS the organization of the
civilian war services and the Citizens Service Corps.
It does not show the organization for civilian pro-
tection.
LOCAL DEFENSE
COUNCIL
INFORMATION
COMMITTEE
SPEAKERS
BUREAU
(Civilion Protection
not albowes)
CIVILIAN WAR SERVICES
EXECUTIVE COMMITTEE
SALVAGE
COMMITTEE
TRANSPORTATION
COMMITTEE
NUTRITION
COMMITTEE
RECREATION
COMMITTEE
CONSUMER
COMMITTEE
SERVICES FOR
SERVICE MEN
HEALTH AND MEDICAL
COMMITTEE
WELFARE AND CHILD
CARE COMMITTEE
HOUSING
COMMITTEE
EDUCATION
COMMITTEE
WAR SAVINGS
COMMITTEE
AGRICULTURE
COMMITTEE
PLANT UTILIZATION
COMMITTEE
LABOR SUPPLY AND
TRAINING COMMITTEE
THE CITIZENS SERVICE CORPS
AND THE LOCAL DEFENSE COUNCIL
The local Defense Council is the central planning and coordinating body for all programs
relating to community and civilian war effort. As such, it has the responsibility of mobilizing
all forces in the community which can help to protect the community and to prosecute the
OVILIAN DEFENSE
EXECUTIVE
VOLUNTEER OFFICE
U.S.
war, This responsibility extends to the mobilization of civilian volunteers.
Defense Come
CITIZENS SERVICE
- shows)
CORPS
The defense council carries out its charge with respect to volunteers through the estab-
lishment of a Volunteer Office and through the appointment of a Commander of the Citizens
Defense Corps and on Executive of the Citizens Service Corps. The Volunteer Office is the
central place to which all requests for volunteers come and where volunteers register for
CHILD CARE
CONSUMER
FAMILY
HEALTH AND
SECURITY
HOSPITAL
HOUSING
INFORMATION
LIMARY
referral either to the Citizens Defense Corps or the Citizens Service Corps.
VOLUNTEERS
VOLUNTEERS
VOLUNTEERS
VOLUNTEERS
VOLUNTEERS
VOLUNTEERS
VOLUNTEERS
The following chart pictures the relationship of the Citizens Service Corps to the local
defense council. The defense council appoints on Executive of the Citizens Service Corps
who acts as leader of the Corps. The members serve in the war programs planned by the
various committees of the defense council which operate under the civilian wor services
NEIGHBORHOOD
OR BLOCK
NUTRITION
RECREATION
SALVAGE
SCHOOL AND
WAR SAVINGS
OTHER
VOLUNTEERS
VOLUNTEERS
EDUCATION
WAR
LEADERS
VOLUNTEERS
VOLUNTEERS
VOLUNTEERS
SERVICES
executive committee. They are responsible to the agencies, organizations, or defense
council committees directing these programs.
36
37
Regraded Unclassified
SAMPLE CERTIFICATE
SAMPLE IDENTIFICATION CARD
UNITED STATES OF AMERICA
ENROLLMENT NO.
U. S. CITIZENS SERVICE CORPS OF
Certificate of Membership
INSTRUCTURE FOR IDENTIFICATION
(cm)
(stame)
THIS CERTIFIES THAT
(MAME)
(ADDRESS)
(FIELD OF SERVICE-USE OPTIONAL)
is EMBOLLED - THE u. = CITIZENS SERVICE CORPS OF THE OFFICE
This certifies that
OF CIVILIAN DEFENSE AND ENTITLED TO WEAR AND USE ma INSPINA,
SIGNATURE OF EXECUTIVE OF CITIZENS
000 FORM NO. -
SERVICE CORPS - - REPRESENTATIVE
(Actual size)
has fulfilled the necessary requirements, and
by reason of service to bis country
This identification card may be printed in one color,
black, or in two colors, red and blue.
is hereby designated
a member of the
UNITED STATES CITIZENS SERVICE CORPS
of
* - 4. - -
Dated
AD
(Authorized Official)
OCD Form No. 700
This form should be strictly followed except that:
a. The name of the State and/or community may be added under the heading "United
States of America."
b. The Certificates may be printed in one color (either black or blue) or in two colors
(red and blue).
c. The size may be varied from 8 X 12 inches to 9 x 12 inches to accommodate stock
frames.
d. Provision may be made for signature by such person or persons as shall be approved
by the local Defense Council.
38
Regraded Unclassified
Job
274
December 18, 1942
Secretary Morgenthau
Ferdinand Kuhn, Jr.
You asked me yesterday to describe in writing the
work I have been doing, and to make any suggestions that
I might have about the handling of this work after January 1.
The work has grown to be so miscellaneous that I think I had
better itemize it, building up from the routine details,
which are relatively easy to dispose of, to the more important
jobs and the intangibles that are hard to classify.
1. Secretary's correspondence: A small but steady
correspondence has been coming almost every day from
Miss Chauncey's office, with 8 few letters to be prepared
for your signature and a larger number that I have written
and signed on your behalf. Many of these are requests for
speeches, articles, messages and the like. Other letters
for your signature are submitted to me in draft form by
members of the War Savings Staff and others at the Treasury,
for me to rewrite and put into shape.
I would suggest that Mrs. Forbush be brought to this
floor of the building, and relieved of enough of her present
routine duties to handle this corresponsence, with whatever
new title would enable her to sign letters on your behalf.
She is a most capable, discreet and courteous writer, with
good judgment at all times, and she knows your style and
your wishes from long service at the Treasury. The job here
is to make the letters simple and sincere, to say "no" without
giving offense, and to build up the feeling of friendliness
toward you.
Regraded Unclassified
- 2 -
275
2. Secretary's public messages: This involves the
writing of the telegrams, or in some cases the letter-
messages, which go out over your name to individuals or
groups. More than 90 percent of these relate to the War
Bond campaign. I now have a carbon-copy file of scores of
such messages suitable for almost all occasions, and this
file should be useful to anyone who does this work in the
future.
I would suggest that Emerson Waldman, one of the best
writers on the War Savings Staff, should take over this
work. He should show the finished messages to Peter Odegard
and Harold Graves 88 I have been doing, and then send them
to you except in cases of the routine messages such as
those to factories on Payroll Savings. It might help Peter
to bring Waldman to this building as his assistant, to take
some of the burden of reading radio scripts and printed
promotion material.
3. Visitors: A small number of visitors are sent
to me, as 8 buffer for you. Some of them are sent by
Mr. Fitzgerald and some of them by War Savings people who
feel that special courtesies are needed. This could be
split among Odegard, Gamble and others of the staff.
4. Public information on taxes and inflation: You
will remember that two or three months ago, following a
meeting at your house, we started a program of public
speeches, magazine articles, and the like, to show (a) the
need of higher taxes, (b) the merit of the spendings tax,
and (c) the importance of saving to help fight inflation.
This has been hard uphill work, held together by Mr. Crampton
under my supervision, with the help of 8 weekly committee
meeting attended by Messrs. Paul, Gaston, Odegard, Schwarz,
Street and Ecker-Racz.
One product of this program has been the new Disney
film, which will be ready in mid-January. Another is that
R good deal of anti-spending propaganda is now in full swing.
The speeches of Mr. Paul, Miss Newcomer and others have also
helped to revive interest in the spendings tax, to combat
the sales tax and the Ruml plan, and generally to create
better understanding of the Treasury's position.
Regraded Unclassified
- 3 -
276
I feel that the work of this committee should be
continued, with Mr. Crampton as 8 kind of executive
secretary, but that the subject-matter of the speeches
should be altered to take account of the attitude of
Congress and the imminence of the March 15 tax collection
date. Our emphasis until March 15 should be placed on
(a) the reasons for the present heavy taxes, (b) the steps
the Treasury has taken to help the taxpayer, and (c) the
need of saving to meet tax payments when they come due.
Where future policies are concerned, the speeches could
be on the safe side by taking the President's coming
Budget Message as their guide.
Another reason for the continuance of our committee
is what you and I call the "HMJr. Department" -- the
quiet effort to build you up for the sake of the Treasury's
effectiveness and prestige. Harold Mager's New Republic
article was the first result of this work; Herbert Gaston
has been working on Marquis Childs, and Peter Odegard has
put a lot of effort into the John Nesbitt film.
5. Reports: Almost every day John Shea, of the
Legislative Counsel's office, brings me 8 marked copy of
the Congressional Record with items which need correction
or which you would like to see. There are not many of
these. In future I suggest that whichever member of the
staff handles your relations on the Hill should be responsible
for getting these items to you. Otherwise I have been getting
no reports for you except the O.W.I. Intelligence Reports
(public opinion surveys). Peter Odegard gets these and
reads them every week, and could easily mark them for you.
They are not always worth sending to you.
6. Clearance with O.W.I: This involves (a) getting
Treasury speeches cleared with other Government agencies
through O.W.I., and (b) gettingTreasury clearance for speeches
from other Government agencies, or for over-all O.W.I.
documents which bear on the Treasury's problems. This is
not just 8. mechanical operation, but needs judgment and
tact, and 8. knowledge of Treasury policies. One man ought
to be responsible, maybe Mr. Crampton or Mr. Ecker-Racz of
Roy Blough's shop, whom I have found to be a crackerjack
Regraded Unclassified
- 4 -
277
on public relations in economic fields. Both men are
painstakin and competent, and both have a real interest
in the information and education of the public.
Allied to this clearance work is the job of liaison
with O.W.I., which has grown to be a real problem in the
last few months. Long ago you appointed me as your
representative on the Committee on War Information, which
has gone out of existence as far as the Treasury is concerned,
but I have continued to do the liaison job wherever necessary.
We are now being crowded by the rest of the Government in
the field of public campaigns, and the O.W.I. has collided
with our War Bond people repeatedly in radio and retailers'
activities. Many of these collisions have come to me in
the first instance, and lately to Peter Odegard. Since
most of these difficulties involve War Bonds, I think Peter
should handle all such Treasury relations with the O.W.I.
7. Secretary's speeches: Now we are coming to the
more important and difficult items on the list. The
problem is smaller than it used to be; in the last half
of 1941 you made four big, major speeches and two important
statements to Congress, whereas in the last half of 1942
you have made only two short public speeches, (both on War
Bonds) and two important tax statements to Congress.
I think that Harold Mager can do very well in preparing
the drafts of your general speeches. But a speech cannot
be written in 8. committee, least of all when there are
economists around. The committee procedure is unfair to
you, maddening to the writer, and detrimental to the quality
of the finished product.
The system that has worked so well with you and me
in the past is (1) for you to "talk" your ideas with the
writer, (2) have him discuss the problem with people like
Peter Odegard and Herbert Gaston, who can contribute further
ideas, (3) let him write a first draft and submit it to
you, to see whether it comes close to your ideas and your
wishes, and (4) then circulate 8 second draft to all the
sharpshooters for their comments and suggestions. This
takes the burden off your shoulders and puts it squarely
where it belongs -- on the writer himself.
Regraded Unclassified
- 5 -
278
After that, the committee system can be followed
for successive drafts, either in your office or outside.
Incidentally, it might be helpful to bring Huntington Cairns
in on these discussions. When you have such 8. good writer
and scholar on the staff it seems a shame not to get his
help on speeches as a regular thing.
8. Other Treasury speeches: Speeches by other Treasury
officials are usually brought to me for editing. This is
becoming increasingly important, not only for style but for
content, and someone with sure judgment and sure knowledge
of Treasury policy should do it as 8 standing assignment.
Nobody else would fill the bill 88 well as Herbert Gaston,
acting with the fullest authority from you.
9. Coordinating Bond Campaigns: Assuming that the
Victory Fund and War Savings campaigns continue on the
present basis, I think it will be important to continue
the procedure you started with me in October and November.
Someone should sit in as a kind of reporter and messenger
at all possible meetings that deal with financing or with
the planning of a bond drive -- primarily to keep others
in the Treasury informed, but also to act as your eyes
and ears at such times. I felt that this device was useful
to you in the October and November financings; it was still
more useful, I think, to the War Savings people and the
Victory Fund people, who knew from me what was happening at
all stages. You need someone here who is not identified
with either group, but who enjoys the easy confidence of both.
10. New talent: This brings me to one other subject
which I should like to discuss orally with you for five or
ten minutes soon. In the last few months I have found
excellent people right here in the Treasury whom you do not
know well and who might easily become more useful to you.
Three or four of these are comparative newcomers; others
can be found, for example, in George Heas's shop, where there
is 80 much ability to the square inch that it seems a pity
to keep it all in research fields. Let's talk about it soon.
Regraded Unclassified
279
MEMORANDUM FOR THE SECRETARY.
December 18, 1942.
Mail Report
Into this week's mail, slightly less in volume
than for the last two weeks, entered one new note --
a strong protest against the salary stabilization
ruling which precludes the giving of War Bonds as
bonuses, if such gifts constitute an increase over
the remuneration received by the employee during the
preceding year. Such ruling, it was said, jeopardizes
employee morale, as well as the campaign for the sale
of Bonds. With the approach of Christmas, most of
the communications concerning the auspiciousness of
the occasion for increased Bond sales were limited
to suggestions for Stamps on cards, often accompanied
by samples of the personal cards that will be sent
this season. Other ideas concerning Bonds were rather
stereotyped except that one person advised that Bonds
be made negotiable at the close of the War in order
to avoid the necessity for refinancing, and another
wanted a Bond at 6% interest, redeemable only at the
will of the Government.
There was a slight increase in the number of
Bonds submitted for redemption; however, only 3 or 4
letters reported particular instances of excessive
cashing of Bonds. Of the 50 personal complaints re-
garding delays in the several stages of handling Bonds,
about 30 came from employees of the War Department,
and nearly all of these stated that they were writing
in behalf of fellow employees as well.
Taxes were of no great import to our correspondents.
The occasional letters in favor of the new Tax Bill
were usually offset by an equal number of letters in
opposition. Occasionally a conscientious objector
was opposed to payment of the Victory Tax, or a member
Regraded Unclassified
200
- 2 -
Memorandum for the Secretary.
December 18, 1942.
of the Clergy expressed disapproval of the system
which required churches to withhold this tax from
the salaries of their employees. Aside from the
usual questions in regard to the particular applica-
tion of the new tax measure, interest W&S chiefly
centered on some kind of pay-as-you-go plan, the
Ruml Plan still finding greatest favor. The advan-
tages of smaller Tax Saving Stamps were several times
pointed out, and scattered endorsements of 8 Sales
Tax, or of a Savings Sales Tax, continued to arrive.
Publicity regarding the shortage of coins has
resulted in numerous suggestions 8.8 to new denomina-
tions, new designs, and substitutes. Pieces worth
2 , a design which carries the head of Benjamin
Franklin, and stamps -- either postage or War -- as
8. temporary medium of exchange are typical suggestions.
Anti-labor letters were noticeably few. Pleas
for Government economy showed a decided drop from
the high peak reached last week, and the problem of
inflation was usually incidental to the subject of
Bonds or taxes. Charges for cashing checks, Bond
coupons, and Bonds again provoked several letters of
protest. In this connection, a few persons asked
for additional Government-sponsored facilities, and
one suggested, as a defense economy, that banks be
kept open one evening a week for the benefit of war
workers who should stay on the job during the hours
that banks are open.
by key Peanon
Regraded Unclassified
281
General Comments
R. E. Heinl, Manhasset, N. Y. " + # Up to this time
I have been buying Government Bonds with any surplus
funds that I have had and the purchases exceed the 10%
customarily referred to by a wide margin. My income,
because of an increased volume of business has also
increased, and I am in a position to pay off the mort-
gage on my home. This mortgage, incidentally, bears
an interest rate of 42%. I am advised by the insurance
company holding this mortgage that they will not take
any additional payments of principal because I have
reached my limit, which is one-fifth of the principal
sum payable under the terms of our agreement. The war
has necessitated many changes in my business and we have
gladly conformed to the Government's stipulations and
directions. The Government is appealing to its citi-
zens to buy War Bonds and reduce indebtedness. This
I want to do, but the agreement in existence on my
mortgage won't permit it. What I would like to know
from you is whether in the face of our nation's crisis
the insurance company holding the mortgage on my home
is justified in enforcing such 8 stipulation made be-
fore this country was involved in war.
C. S. Hampton, Vice President, Cashier, The Craig
County Bank, Vinita, Oklahoma. We are just in receipt
of your pamphlet picturing a farm with two children
surrounded by golden grain with the words, "Our good
earth, keep it ours". This circular I think is very
attractive and carries an impression, but on the other
hand, there is a great change taking place in the farm
population of our country at this time. In our small
county, which is not so heavily populated, there have
been over 125 good farmers retire this year. They claim
that the draft board has cleaned them of all available
farm help and that they aren't able to carry on them-
selves. We have posted in our windows at various times
8 large number of sale bills like the one enclosed.
Now these farmers have sold out, lock, stock and barrel,
Regraded Unclassified
282
- 3 -
of this Union urgently request the Management of the
Company, if and when it becomes necessary to work on
either or all of these holidays, (New Year's Day,
Washington's Birthday, Patriot's Day, Memorial Day,
Fourth of July, Labor Day, Armistice, Thanksgiving
and Christmas), that the money so saved between time
and one-half and double time shall be sent by check
to Henry Morgenthau, Jr., Secretary of the Treasury
of the United States, to assist in defeating the
enemies of our country. " 48 +
F. L. Smith, Beverly Hills, Calif. 42 # % I have con-
ducted 8. personal "poll", merely asking what was
happening to this or that small tradesman (grocers,
butchers, etc.). The unanimous complaint is over the
delayed action in rationing and the unbalanced price
regulations. No blame, naturally, is being laid at
your door, but there is no doubt that it has already
reacted unfavorably in the matter of "small business"
continuing to buy Bonds. # # * The writer is a
congenital Democrat, vintage of 1870, a competent
appraiser of the great work you are doing.
Regraded Unclassified
283
4 -
Favorable Comments on Bonds
Karl W. G. Hiller, Pastor, First Methodist Church,
Newell, Iowa. I have just had occasion to secure one
of the new style ten-cent Stamp albums and am greatly
pleased with the improvement.
#
C. C. Whittlelsey, Project Manager, Defense Plant
Corporation, Charleston, W. Va. # # # The employees
on this project put on a special "Pearl Harbor Day"
Bond campaign in which over 95% of the employees sub-
scribed at least a full day's pay beyond their regular
10% deductions. Our payroll on this construction job
for the last week will be $301,000, and the Bond sub-
scriptions during that week are as follows:
"Pearl Harbor Day"
$45,000
Regular Weekly Deductions
37,300
Total deductions for week
$82,300.
Brigadier General Isaiah Davies, Office of the Command-
ing Officer, Army Air Forces Bombardier School, Midland,
Tex. On the first anniversary of Pearl Harbor, the
officers, cadets and men of this world's largest
bombardier college sponsored a War Bond drive in the
neighboring cities of Midland and Odessa which resulted
in $1,024,000 in a single day. Since the two West Texas
towns have a combined population of only 20,000, we
believe the local per capita of about $51 stands a
chance of setting a record for the nation. I would ap-
preciate your having someone check this figure and
advise me of the national per capita record.
Joseph R. Levene, Board of Education, Brooklyn, N.Y.
I am the proud owner of 11 Defense Bonds which I bought
in my name, payable on death to a young lady whom I
expected to marry some day soon. She was at one time
Regraded Unclassified
284
- 5 -
my wife and we were divorced. We then started to go
together again, but it seems we can't make a go of
it and have decided to go our separate ways. My
question is this -- may I have the right to change
my beneficiary to my brother who is now serving in
the Armed Forces, or will I have to leave same to the
young lady in question? # The Federal Reserve Bank
told me this a.m. that I'd have to get the permission
of my beneficiary if I wanted her name withdrawn.
I don't think it fair to me in view of the circumstances
to be compelled to get my beneficiary's consent, which
I don't think she'll give me. I have the Bonds in my
possession -- she returned them to me last week.
I shall continue buying Bonds religiously if this mat-
ter is adjusted for me without any trouble with the
Government concerning present 11 Bonds.
David Phillips, President, Granada Hotel Corporation,
Brooklyn, N. Y. We have a deposit of $1,000 with the
New York Telephone Company. * # We believe that if
most of the corporations having a sizeable deposit in
public utility corporations would change their deposit
into Bonds, it would be a great help to our Government.
Regraded Unclassified
285
- 6 -
Unfavorable Comments on Bonds
W. Bruce Earl, Jr., Treasurer, Local #365, UAW-CIO,
United Automobile, Aircraft, and Agricultural
Implements, Hatboro, Pa. We are acquainted with
your letter of congratulations to the Brewster
Aeronautical Corporation on the success of the Bond
drive instituted there. In view of the fact that
this drive was instituted and carried through to 8.
successful conclusion by Local #365, UAW-CIO, the
accredited representative of all the employees, we
feel that the congratulatory letter was misaddressed.
# + # We regret to enter a note of disharmony, but
the fact should be recorded that it was among the
executive staff, those who are not members of our
Local Union, that the success of the drive was seri-
ously curtailed. It was their poor showing in the
amount of Bonds purchased that seriously affected
our total percentage. To be specific, according to
the company's latest payroll records, the total Bond
deductions for Union employees was 14.2%; that of the
executive staff being only 6.1%. #
Miss Marion L. Sherman, Altadena, Calif. # # Last
week when your elaborate appeal came, to buy more War
Bonds, I was so angry I threw the bunch of stuff into
the fire. What use have I for the President's picture?
I felt as though I never wanted to buy another War
Bond if the money was to be wasted in clogging the
mails with such trash. Of course I shall buy more,
when I can spare the money, but why don't you spend
the money for guns, tanks and planes to really help
our brave boys overseas? This Administration is the
very acme of wasteful extravagance and inefficiency.
Chas. D. Ammon, General Manager, Cushman Motor Works,
Lincoln, Neb. We believe that we spend not less than
$50 a week, in the time of our employees, in keeping
up the sale of Defense Bonds and Stamps to our employees.
# # # We have been glad to do this, up to thirty minutes
Regraded Unclassified
- 7 -
286
ago. The writer took B. check to the Post Office for
$130 worth of Defense Stamps, and the man at the window
would not accept the check, stating it could only be
accepted for collection. We have paid this Post Office
hundreds of thousands of dollars, we believe, in checks,
and there has never been one turned down. The man at
the window said, "Sure, we know it is good, only we
just got this ruling recently". This is B. case of
monkeying and red tape that is most disgusting, under
the circumstances, and it makes one wonder what kind
of Government and what sort of Administration we are
fighting and working for. The burden of carrying this
war through to a successful conclusion is certainly on
the Administration, and it cannot be successful unless
they get the cooperation of the people, and you cannot
get it by kicking them around this way.
Senator John H. Bankhead (Alabama) sends letter he has
received from Russell D. Lanier, Monro-Warrior Coal &
Coke Company, Birmingham, Ala., which reads in part:
We were much interested in reading in Birmingham papers
yesterday that Augustis D. Zanzing, consulting expert
on music for the War Savings Staff of the U. S. Treasury,
arrived in Alabama Monday for a visit to higher institu-
tions of learning in the state.
We
have
received
the impression from press dispatches that the Administra-
tion takes exception to criticisms of expenditures not
connected with the war effort. # # Needless to say,
those who are paying the taxes do not agree with this
position and resent bitterly any expenditures now made
which are not absolutely essential for the functioning
of the Government and the furtherance of the war effort.
It is hoped that you will exert your influence to sepa-
rate from the payroll of the Government such consulting
experts on music, fan dancing, and others who may be
thought by some to represent social gains, but do not
seem so to the "man on the street", who pays the bills,
as they are simply looked upon as evidence of incom-
petence in Government.
Regraded Unclassified
- 8 -
287
William J. Beard, Allura Farm Dairy, Upland, California.
I have read your pamphlet, "A Wartime Program for U. S.
Farmers". It sounds good. I am paying off my debts
while my kids are buying War Stamps and Bonds. Besides
this pamphlet I read in the papers how necessary it is
for the farmers to produce to the utmost, to get along
with what machinery they have, and with what labor is
available. I am beginning to believe it is all propa-
ganda because the action of the Government does not
even half match their words. # # # The OPA puts ceil-
ings on farm products that prohibits production. *
It rations rubber without regard to need; it allocates
passenger car rubber in one quota and in another in-
cludes tractor tires with trucks. Besides my dairy
here in California, I have a farm in Niangua, Webster
County, Missouri. On this Missouri farm I have a
tractor and all its equipment laying useless because
this tractor is short one tire. How well can we think
of 8. Government that will make 8. new tractor stay idle
when this same Government allows its Bureaus and al-
phabets to make rulings that virtually condemn a piece
of farm machinery to uselessness. * * * The local
rationing board doesn't have a farmer on it. It is
made up of a lawyer, 8. telephone man, and & preacher.
Grace Hodgson, Phoenix, Arizona. I should like to know
if it is legal for a bank to charge for issuing War
Savings Bonds? A well-known bank here in Phoenix
charges 10¢ per $18.75 Bond because they say they have
been forced to put on more clerks to take care of it.
This charge is made when B. big trucking company pur-
chases its Bonds for its employees in a payroll deduc-
tion plan. I have never been charged when I buy my
Bonds at the banks or at the Post Office. One em-
ployee that I know of cancelled his future orders for
Bonds because it seemed to him unfair for him to pay
that 10¢ per Bond when he wouldn't need to if he pur-
chased it directly.
Regraded Unclassified
288
- 9 -
Copy of letter from C. L. Boston, President, The First
National Bank, Angleton, Texas, to Mr. Coyne. I acknowl-
edge receipt of your card requesting that I advise you
whether or not I wish to continue receiving the publica-
tion, "The Minute Man". In my opinion, this publication
belongs in the same category with a large number of
other pamphlets and cheap advertising which comes to
my desk almost every day from not only the War Savings
Staff, but from other Federal Agencies. # # #
The following are comments contained in B. letter written
by Mrs. Paul B. Metzger, Akron, Ohio, to the President,
and forwarded to the Treasury for handling: *** I also
would like to ask you the reason the Bond buyers at
the Portage Ordnance Depot in Ravenna, Ohio, have not
received any of their Bonds up to this writing. My
husband has bought an $18.75 Bond every week since
May 22, 1942, through December 4, 1942, but has not
received one Bond. # # # Last week we cancelled them
with the War Department and are buying from our Church
8.5 we paid for 27 and have not received any. Yesterday
an order came through that it was mandatory to take
10% out of their pay. I think if you will have it
checked, the reason for the cancellations is no Bonds
to show you the pay deductions. My utmost mission in
writing this is we cannot buy a Bond a week and also
the 10%, as my husband only has $34 left, and trans-
portation 70 miles per day comes out of that, besides
other obligations. I always buy $2 worth of Stamps
from my paper boy. I almost have 4 Bonds that way.
So they claim its 10% or a lay-off. It seems unfair
to make it mandatory in B. case like ours. I wrote
Henry Morgenthau, Jr.'s office; he referred me to the
Chief of Finance, but we still have no Bonds. Please
do not mention my husband's name in any communication
you may send to the Portage Ordnance Depot as they
might lay him off and cause trouble between Major Kafar
and he. ***
Regraded Unclassified
289
- 10 -
Favorable Comments on Taxation
Moe Weintraub, Los Angeles, Calif. Mr. Morgenthau,
let me thank you for this simplified form. It is
the most accurate calculation yet issued from the
tax office of the Federal Government for the greatest
number of taxpayers. Wish such a form could be
established for the small business man whose gross
income does not exceed $12,000 a year. # # # Thank
you again, and God bless you and our beloved President.
Regraded Unclassified
290
- 11 -
Unfavorable Comments on Taxation
Victor J. Veatch, Climax, Colo. # # # We have had a
little argument out here about Defense and War Bonds.
Several men here say that by buying" Bonds, one does
not have to pay income tax. One man said that he
knows a very wealthy man in Missouri and that person
buys Bonds and does not have to pay any income tax
by doing so. Another man stated that his wife works
in Washington, D. C., and has for ten years, and he is
positive you do not have to pay income tax if you buy
Bonds. Another said he bought several $100 Bonds and
did not have to pay income tax by doing so. I still
say that if one buys Bonds 98%, he still has to pay
income tax. If one could turn his money into Bonds
every person would then do this and avoid paying the
tax. Please enlighten me in this matter.
Henry P. Benson, Boston, Mass. Yesterday I sent suf-
ficient Tax Saving Notes to pay my final installment
on my wife's and my Federal income tax, together with
a small check to the Collector of Internal Revenue.
My secretary brought them all back with the informa-
tion that payment was not acceptable because none of
the notes were in my wife's name. If I am contented
to surrender these notes in payment of my wife's tax,
the payment should certainly be as acceptable to the
Government as my personal check, with which I am ac-
customed to pay her tax as well as my own. The Col-
lector was inclined to apologize for this stupid regu-
lation he was obliged to follow, but I think one of
your Assistant Secretaries could find time to remedy
this situation, even if it is a small but unnecessary
annoyance.
Maurice J. Sopp, Chevrolet Sales and Service, Hunting-
ton Park, Calif. # I have just returned from the
Office of the Collector of Internal Revenue in Los
Angeles, attempting to pay my December 15 installment
Regraded Unclassified
291
- 12 -
of income tax, using Treasury Tax Saving Notes which
I purchased in September of 1941. I went in prepared
to pay 8. total of $7,466.50; $800 of which was on
Mrs. Sopp's return. I was told that I could not use
the notes to pay her tax. There is possibly & justi-
fiable reason for this. I then asked to pay my own
return of $6,666.50 with the seven $1,000 notes, and
was advised that it was not possible for them to pay
out any cash in change where Government Notes were
accepted; regardless of how small the amount might be.
This seems so ridiculous to me that I think it should
be called to the attention of the proper authority.
Of course, I may be all wrong; but I can see no reason
why a Government Note for $1,000 should be any different
than tendering payment with & $1,000 bill and expect-
ing to get change back. In my case I can mail them a
check for the difference, but thousands of small tax-
payers are certainly going to be inconvenienced and
are going to be obliged to make unnecessary trips to
the tax office because of this rule. I dare say
thousands of miles of additional driving will be
caused by just such an experience as I had today,
which certainly does not accomplish the purpose of
mileage rationing. We are urged, and strongly, to buy
Bonds and Tax Notes, which we are willing to do; but
when we run into this sort of petty red tape, we are
not only disgusted and discouraged from buying more,
but we begin to wonder just how good they are when the
Government itself refuses to accept them in lieu of
cash. It would seem that when the Government needs
tax money so badly, and people are being taxed so
heavily, that the taxpayer might be entitled to a
little accommodation and consideration.
John A. Plumer, Swarthmore, Pa. * # # I am a defense
worker. I have worked for a shipyard for the last four
years and have worked my way to a reasonably good job.
We have always made 8. living but never much more until
292
- 13 -
the last two years when I started making more per hour
and quite 8. bit overtime. I realize that it will
not continue to come in like that for long, however,
I have not been able to buy everything for my family
that I wanted to before the war, and now that I am in
the position to do all those things that I wanted to
do for them, I must admit that I have spent an awful
lot this year. However, I have not wasted it. I have
spent it on items that we really were in need of.
Our plant has a payroll deduction for buying Bonds,
and I have subscribed to that for 30% of my pay. By
the end of the year I will have about $1,500 safe in
Bonds. I have paid off quite a few debts that I owed
before this year started. I have only about $100 in
the bank at the present time. # Now, I must pay
about $700 in taxes this year and the only way I can
do it is to cash in 50% of my Bonds. I do not want
to do that. I have worked hard for those Bonds and
I know that if I had not bought them, and millions of
others like me, that we would be in a pretty sad state
as far as this war is concerned. # # What I can't
understand is why a plan like one suggested by that
New York gentleman (sorry I cannot remember his name)
that was the plan of paying as we earn, cannot be put
into effect. I would welcome a plan like that for it
would allow me to keep my Bonds which I hoped would
give me some security when this war is over. I would
have about $15 a week deducted from my salary, but be-
lieve me, it would be 8. lot easier than that $700 at
one crack. You certainly do not want all those Bonds
turned back to you, but if I know anything at all about
the situation, they all will have to redeem their Bonds
to pay their tax. I can't see the objections to such a
plan. However, I don't pretend to know all the wrinkles
to the plan, but I just can't see how the Government can
gain by paying off Bonds in order to receive taxes. ***
293
treasury DEPARTMENT
PROCUREMENT DIVISION
OFFICE OF THE DIRECTOR
WASHINGTON
December 18, 1942
MATTERS TO DISCUSS WITH THE SECRETARY
(Items 1 and 2 brought forward)
1. Determination of Requirements:
The Procurement Division is undertaking a program to
develop material standards for the determination of require-
ments whereby guessing the needs for an agency will be
substituted by specific standards based on experience
avoiding waste and promoting efficiency.
2. Elimination of Paper Work:
Emphasis is being placed upon reviews of paper work
within the Procurement Division both as to regular and
special activities to keep paper work at 8 minimum.
As to the regular activities, we have made real progress
and have streamlined the procedures material. Concerning
Lend-Lease, a simplified purchase procedure eliminating
use of contracts except in special cases, is being in-
augurated. We are now working on a plan to simplify the
paper work in connection with transportation which
presents certain problems because there are so many
agencies requiring copies of all papers, likewise the
foreign governments which in turn need numerous copies
of all documents; the total of which places 8. heavy
load on suppliers of Lend-Lease goods.
We have closed up our bid room and practically all
purchases are now being negotiated rather than using the
statutory or formal methods of purchase.
PORVICTORY
BUY
UNITED
STATES
garanes
SONDS
AND
STAMPS
Regraded Unclassified
-2-
294
I am attaching a photostatic copy of a letter from
8. supplier which is very pleasing in that it contains in
part 8.8 follows: "The writer has been in the lumber
business 40 years and I have always maintained that any
inquiry sent out by the Government calling for lumber
could be put on one page such as you have done.
*** I congratulate you.
3. North African and Relief Clothing Programs:
(a) North African Clothing Program
$40 million has been allocated for these
purchases. Thus far the following have been
requisitioned and purchases are now being made
to meet current sailing dates. It is expected
that themost part of the items will be purchased
and delivered to docks within the specified
loading dates.
Used clothing
500 tons
Cotton pc. goods
* 5,000 tons
Matches
100 tons
Cotton ready-made clothing
500 tons
Cotton knitted wear and
hosiery
400 tons
Cotton thread
200 tons
Shoes
200,000 pairs
Lamp chimneys
80,000 each
Phonograph records
1,000 each
Std. flat newsprint
10 tons
Std. printers' ink
200 lbs.
Book paper
2 tons
Rolled newsprint
1 ton
Soap
1,000 tons
Cordage (1/8 string, 1/4
twine bal. 1/2")
300 tons
*To relieve market of pressure 25% of
this quantity is being transferred from
W.P.A.
-3-
295
(b) Relief and Rehabilitation Clothing Program
$100 million has been allocated for these
purchases and detailed lists of requirements are
being prepared in order that we may be authorized
by OLLA to make purchase accordingly. It is
expected that purchasing will start on this program
within the next few days.
(c) Transfer of Vichy French supplies seized by
Foreign Funds Control
Supplies originally purchased for the Vichy
French Government have been acquired under Lend-
Lease for use in North Africa.
4. Use of Treasury guards rather than PBA guards
for Procurement Division:
Arrangements are being made with the Public
Buildings Administration to transfer the necessary
funds to the Treasury Department in order that their
guards now assigned to duty guarding the Procurement
building, Seventh and D Streets, S. W., may be relieved
and Treasury guards substituted. Since the Public
Buildings Administration moved from this building
we have the entire use of it and because of the confi-
dential nature of the work now being done in connection
with war procurements it is believed that it will be
decidedly advantageous to have Treasury guards rather
than continue to use the present guards.
5. Discuss possibility of BEW buying.
The testimony offered by Vice President Wallace
and Milo Perkins before Congress recently indicates
the possibility that BEW may be given funds to develop
strategic materials and acquire them for use in this
country. Milo Perkins has recently indicated to me
that if funds were appropriated to the BEW he would
prefer to look to us for the buying rather than RFC.
I will keep in touch with this matter.
Regraded Unclassified
296
-4-
6. Liquidation of WPA procurement or curtailment
of WPA procurement activities:
In view of the President's recent order to
liquidate the WPA, we are advised that they propose
to close certain of their state offices by February
1st and progressively curtail their remaining activi-
ties in accordance with the President's directive.
We are keeping in close touch with these changes
so that we may curtail accordingly, subject however
to the necessity for processing the records relating
to purchases and incidental to payment which follows
the making of purchase commitments.
Clifton E. Mack
Director of Procurement
BEW-140
Board of Economic Warfare 297
Executive Director's Office
MEMORANDUM
December 18, 1942.
To be attached to report
entitled, "Importation of Strategic
Materials by Air" which was part of
the Agenda of the meeting of the
Board of Economic Warfare held on
December 17, 1942.
Re
298
BEW: AIR-4
SECRETT
ADDENDUM
to
"IMPORTATION OF STRATEGIC MATERIALS BY AIR"
Prepared in the Office of Economic Warfare Analysis
December 1, 1942
In connection with the figures of anticipated capacities of Air Transport
Command lines presented in Exhibit II, on page 5, the reference to "the present
program" (capacity figures given for December 1942) is to be understood as
reference to the program projected in October, based on estimates of planes,
ground facilities, and operating personnel which it was hoped at the time
would be available from December 1942 on.
The program has in fact lagged substantially primarily through the shortage
of aircraft deliveries to the Air Transport Command. For purposes of compari-
son, daily capacities in terms of actual operations at the beginning of December
1942, set opposite the estimates made last October for December operations, are
as follows:
DAILY CAPACITIES IN POUNDS, ATC OPERATIONS
Route
(ctober Estimates for
Approximate Operating Capacities
December 1942
Week ending Dec 5 Week ending Nov.28
Miami Natal
60,000
42,000
42,000
Natal - Africa
60,000
27,000
38,000
Accra - Cairo
25,000
3,500
9,000
Accra-Habbardyeh 8 Fast)
25,000
ROO
1,400
Accra - Karachi
)
7,000
8,000
9,300
11,000
Edmonton Alaska)
55,000
26,000
17,400
Edmonton U. S. )
4,000
30,000
4,800
22,000
Hamilton Field-Australia
20,000
7,000
8,000
U.S.-United Kingdom
30,000
11,000
9,000
Panama - San Antonio
22,000
19,000
9,000
Guayaquil. - Panama
5,000
0
0
The Air Transport Command still feels that if its requests for aircraft, ground
facilities, and personnel are supplied, the capacity estimates indicated in
Exhibit II for the year 1943 can be substantially achieved.
Regraded Unclassified
NOT TO Be RE-TRANSMITTED
279
COPY NO. 13
BRITISH MOST SECRET
U.S. SECRET
OPTEL No. 437
Information received up to 7 A.M., 18th December, 1942.
1. NAVAL
Early on 17th one of H.M. Destroyers escorting an outward convoy
was torpedoed and sunk in mid-Atlantic. 26 survivors have been rescued. One
of H.M. Submarines probably torpedoed a ship off BIZERTA on the 14th and prob-
ably torpedoed another and a destroyer on 17th. Another of H.M. Submarines
patrolling off BIZERTA and TUNIS sank one ship and torpedoed another.
2. MILITARY
LIBYA. 16th. U.K. armoured elements continued advancing west-
ward to join up with our advanced formations. Enemy rearguards east of these
formations began withdrawing at dawn and at 0830 hours 1000 M.T. were reported
moving westwards past MARBLE ARCH. 51st Division advancing clong the coastal
road in spite of numerous mines and craters cleared the road forward through
EL AGREILA and by 1800 hours it WAS reported clear up to about 10 miles west of
EL AGHEILA.
RUSSIA. Still no information from other sources to support
German statement that Russians are continuing their attacks against the sector
STALINGRAD. of middle Don held by Italian forces. Hard fighting continues southwest of
3. AIR OPERATIONS
WESTERN FRONT. 17th. 4 Mosquitos successfully bombed railway
centres at GHENT, COURTRAI and ROOSENDAAL. 4 enemy fighters crossed our coast,
2 of which were shot down by 2 Typhoons. 17th/18th. 104 aircraft were sent
out - various objectives in northwest Germany 49, (17 missing), seamining 50
(1 missing), leaflets 5. About 6 enemy aircraft crossed the YORKSHIRE Coast.
Some bombs, mainly incendiary, were dropped on YORK and surrounding districts.
TUNISIA. 16th. 12 U.S. Bostons attacked MASSICAULT and 12
others obtained hits on the railway junction east of MATEUR. Spitfires des-
troyed 3 ME 109's at MATEUR Airfield. Hurricanes successfully bombed an ammuni-
tion depot southwest of PJEDEIDA.
MEDITERRANEAN. 17th. Malta Spitfires destroyed 4 Italian
bombers and damaged one ME 110 on the airfield at LAMPEDUSA. Other Malta
fighters shot down 3 JU 52's and 2 torpedo carrying JU 88's. 2 Spitfires
missing.
TRIPOLITANIA. 15th/16th. Hurricanes machine-gunned retreating
enemy in the NONILIA area throughout the night. 16th. Light bombers and
fighters continued to attack military objectives. Enemy casualties 2, nil, nil.
4.
Although there has been considerable activity amongat French me:
chant shipping at MARSEILLE since German occupation, so far only about 6 forme)
French ships have been moved to Italian ports in the Gulf of Genon.
Regraded Unclassified