The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
B
232
TUNGSTEN ORE AND CONCENTRATES (TUNGSTEN CONTENT)
IMPORTED FOR CONSUMPTION IN U.S.A.
1940
By Countries
Africa:
Br.South Africa (other)
1936
1937
1938
1939
Pounds
2.Mos.
Pounds
Pounds
Pounds
Pounds
-
-
-
76,524
56,639
135.763
29,282
96,164
123,682
109,932
2,912
13,786
11,597
135,195
104,582
47,011
436,871
Chile
-
27,740
54,041
138,225
306,770
42,197
74,878
975,786
8,677
China
2,559,254
3,794,440
42,224
29,120
95,815
30,341
1,815
40,996
37,686
17,472
59,560
48,734
12,502
Union of South Africa
Argentina
Australia
Belgium
Bolivia
Br. Malaya
Hong Kong
Japan
Mexico
23,233
-
705
67,460
-
-
69,986
899,806
-
459,160
1,360
146,637
--
5,455
--
-
-
-
527
-
-
43,514
-
-
-
-
-
--
3,586,293
5,561,022
162,744
Chicago
-
-
-
Buffalo
567.773
426,877
1,178,567
2,007,526
108,099
89,240
55,832
87,053
18,499
1,574,884
-
2,873,615
-
900
1,360
156,970
162,864
-
-
300,000
-
3,586,293
5,561,022
162,744
1,485,157
794,902
Sweden
France
Canada
Peru
Ecuador
Burna
French-Indo China
-
--
-
48,625
21,326
12,878
2,876
1,485,157
8,357
794,902
By Customs Districts
New York
Philadelphia
Pittsburgh
Arisona
Ohio
33,201
346,898
789.707
39,307
276,044
-
104,036
390,866
-
IMPORTS INTO FRANCE, GREAT BRITAIN AND GERMANY
TUNGSTEN CONCENTRATES
Metric Tons
Year 1938
France
(60% NO3)
Great Britain
(60% WOR)
Germany
(65% WO3)
2,500
12,000
14,200
TUNGSTEN IMPORTS OF GERMANY
Value in Gold Marks
From Great Britain
Portugal,
3766.4
2292000
4385.2
6113000
7881.0
11635000
8725.6
12256000
28.0
40.1
250.2
59.0
38.2
226.1
139.4
121.9
285.3
135.9
104.9
304.2
141.4
956.2
70.6
874.3
485.7
1765.4
406.8
107.7
8962.2
295.7
1229.0
154.4
121.5
8037.0
166.4
4019
18.7
Spain,
India and Burma
Malays
Siam,
China
Japan
Bolivia and Argentina
Australasia
Other countries (a)
1938
1936
1933
Total Imports (metric tons)65%
1937
1935
1934
11371.7
25093000
14200.2
39674000
1009
657.8
222.0
1906.8
2510.4
83.7
1081.0
391.6
20.1
4784.2
202.3
1275.3
87324
185.9
737.7
919.2
286.7
47.6
95.6
83.1
30.5
187.1
73.3
89.6
70.7
27.8
211.7
744.5
367.2
1397.7
34.7
9.9
5081.2
(a) Small amounts from minor producers and from nonproducing countries, by re-export.
36.3
A
234
World production of tungsten ores, 1936-38, by countries,
in metric tons of concentrates, containing 60 percent WO3
Country*
North America:
Mexico
United States (shipments)
South America:
Argentina
Bolivia
57
33
76
2,370
2,427
3,175
3,208
2,761
2,837
702
*1,063
1,741
1,802
Chile
Peru.
1938
1937
1936
2,530
5
3
92
30
2,538
2,900
221
148
170
Europe:
Germany (Saxony)
Great Britain (Cornwall)
Italy
Norway.
Portugal
Spain
Sweden,
Asia:
Burma,
China
Chosen,
India, British,
Indochina (Tonkin)
258
3
2
2,812
2,069
1,414
62
127
41,697
#2,349
5,382
7,638
1,849
5,924
17,895
2,058
***
3,410
13,387
15
503
...
61
648
Japan
Malay States:
Federated Malay States
Unfederated Malay States
Netherland India,
Siam.
279
325
#
1
257
82
17,553
Africa:
Egypt
Nigeria
Southern Rhodesia
South-West Africa
193
49
11
9
329
275
88
41
46
...
48
2
2
Tanganyika Territory
2
Uganda.
Union of South Africa
667
955
1,712
40
30
177
(Continued)
562
...
130
235
Country*
1936
1937
18
66
1938
Oceania:
Australia:
New South Wales
Northern Territory,
Queensland
Tasmania.
New Zealand.
141
345
22
110
167
245
345
390
49
28
57
475
894
24,867
###37,944
In addition to the countries listed, tungsten ore is produced in the
U.S.S.R., but no data of production are availabel for the period under
discussion.
Exports.
#
Data not available.
Exclusive of Spain.
Less than 1 ton.
Exclusive of Japan.
c
236
TUNGSTIN
Domestic Shipments, U. S. Imports, U. S. Exports, and apparent Consumption
in the U. S. A. in Pounds of Metal,
&
Year
1936
1937
1938
Shipments
Imports
Pounds
Pounds
2,486,000
3,331,000
2,897,000
Exports
U.S.A.
Apparent
Consumption
Pounds
3,767,000
5,696,000
104,000
449,307
256,185
162,000
Pounds
6,149,000
9,027,000
3,059,000
Concentrated Tungsten Ores Produced in U. S. A. (reduced to equivalent
of 60 per cent tungsten trioxide)
Tone of 2,000 lbs.
Arizona
California
Colorado
Idaho
Nevada
Washington
Other States
TOTAL
Year
Year
Year
1936
1937
1938
489
349
37
--
577
839
180
219
240
11
99
154
1631
2153
1461
48
64
303
253
39
10
2612
3500
3044
E
237
SELLERS OF TUNGSTEN ORES
Associated Metals & Minerals Corp., N. Y. C.
Charles Gitlan & Col, Inc., N. Y. C.
W. R. Grace & Co., N. Y. C.
International Minerals & Metals Corp., N.Y.C.
International Selling Corp., N. Y. C.
Mercantile Metal & Ore Corp., N. Y. C.
Metal & Ore Corporat ion, N. Y. C.
Metal Traders, Inc., N. Y. C.
Molybdenum Corp. of America, Pittsburgh, Pa.
Frank Samuel & Co., Inc., Philadelphia, Pa.
Wah Chang Trading Corp., N. Y. C.
Ore & Chemical Corporation,N. Y. C.
SELLERS OF FERROTUNGSTEN
Apex Smelting Co., Chicago, Ill.
Belmont Smelt. & Refg. Wice., Inc., Brooklyn, N. Y.
Electro Metallurgical Sales Corp., N.Y.C.
W. R. Grace & Co., N. Y. C.
International Minerals & Metals Corp., N. Y. C.
Metal & Ore Corporation, N. Y. C.
Molybdenum Corp. of America, Pittsburgh, Pa.
Frank Samuel & Co., Inc. Philadelphia, Pa.
Wah Chang Trading Corp. N. Y. C.
Ore & Chemical Corporation. N. Y. C.
TUNGSTEN METAL & ALLOYS
Electro Metallurgical Sales Corp., N.Y.C.
Mallory, P. R., & Co., Inc. Indianapolis, Ind.
Vanadium Corp. of Amer ica. N. Y. C.
C. Tennant Sons & Co., N. Y. C.
F
April 25, 1940
238
DAILY METAL TRADE - Cleveland
OBES
TUNGSTEN ORES
FEAROTUNOSTEN
(All prices quoted nominal)
(All prices nominal)
Dollars per Short Ton Unit, Duty Paid
Carlots per lb. contained
Chinese wolframite, spot., $23.80-24.00
Imported scheelite
fungsten cur
25.00
Donation scheelite, equiv.
$1.90-$2.00
duty paid occive 22.50-23.50
April 26, 1940
AMERICAN METAL MARKET - New York
TUNGSTEN ORES, about 65% grade,
per short ton unit WO:
Chinese Welframite spot (duty
Ferrotungsten
paid). delivered ...... $22.50-24.00
South American (duty paid) .... $22.00
(F.o.b. shipping point)
Per lb. wo. carloads, nom $1.80-2.00
Imported Scheelite (duty paid) .. $25.00
Domestic Scheelite, at raine
$322.00
Domestic hubnerite, at mine $18.00
. Nominal
April 9, 1940
THE METAL BULLETIN - London
Ferro-Tungsten.-The tone is firm, with
are
quotations at 5s Id per lb. of W for ferrotungsten and 5s 21d per lb. for 98/99*per
Tungsten about 50s per Current unit f.o.b. quotations producing here country.
Higher prices are mentioned abroad.
cent. powder.
April 27,1940
THE JOURNAL OF COMMERCE - New York
Metallic Ores
Tungsten, per unit, duty
paid:
Chinese wolframite duty
paid WARIO $23.00
Domestic scheettle $21.00-23.00
239
UNITED STATES DEPARTMENT OF THE INTERIOR
Harold L. Ickes, Secretary
BUREAU OF MINES
John W. Finch, Director
MOLYBDENUM, TUNGSTEN
AND VANADIUM
BY ROBERT H. RIDGWAY AND H. W. DAVIS
Chapter (preprint) from
MINERALS YEARBOOK 1939
REVIEW OF 1938
PLACE
APR
15
RECEIVED
a 1940
4
UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON , 1939
After this publication has served your purpose and if you have no further need for it,
please return it to the Bureau of Mines, using the official mailing label on the last page
For sale by the Superintendent of Documents, Washington, D.C.
Price 5 cents
MOLYBDENUM, TUNGSTEN, AND VANADIUM
By ROBERT H. RIDGWAY AND H. W. DAVIS 1
SUMMARY OUTLINE
Page
Page
Tungsten-Continued.
dybdenum
Domestic production
9
summary
Foreign trade
Salient statistics
Uses.
Prices
World production
Domestic production
Imports and exports
12
Vanadium
Summary
Uses
Salient statistics
Work production
Domestic production
Tungsten
Summary
Foreign trade
Uses.
Salient statistics
World production
Strategic reserve
Prices
MOLYBDENUM
This publication is a chapter from MINERALS YEARBOOK, 1939.
The output of molybdenum, unlike that of most other industrial
The complete volume, covering all mineral commodities, may be
metals, increased in 1938, thereby continuing its remarkable progress.
purchased from the Superintendent of Documents,
Although record production figures were established, consumption
was not as high as in 1937, when record steel output plus extensive
armament activities pressed production facilities to meet demand.
In consequence, some stocks accumulated at mines during 1938. In this
country, the predominant producer, output of molybdenum in the
form of concentrates exceeded shipments by 7,500,000 pounds-an
Washington, D. C., after August 1939
amount equivalent to about 30 percent of the total shipments.
Stocks at the beginning of 1938, however, were small.
Of the record world output of 36,000,000 pounds of molybdenum
in 1938. the United States supplied 33,297,000 pounds (92.5 percent);
thus, the United States furnishes the bulk of the world's molybdenum.
The relatively small amount produced by other countries came
mainly from Mexico and Norway: output in Mexico was less in 1938
than in 1937, but production in Norway increased. Molybdenum is
one of the few ferro-alloying elements of which this country has
ample supplies for its own needs.
Exports of molybdenum from the United States are not known
exactly, since they are not classified separately in trade statistics,
but they are believed to comprise 50 to 75 percent of the domestic
production
The Climax mine of the Climax Molybdenum Co. is the principal
producer of molybdenum, having furnished about 78 percent of the
world output and 85 percent of the domestic output in 1938. New
capacity added in 1937 permitted 12,000 short tons of ore to be
milled per day in 1938. Output of molybdenite concentrates from
the copper ores of the Utah Copper Co. at Bingham, Utah, and of
Figures on Imports and exports compiled by M. B. Price, of the Bureau of Mines, from records of the
Bureau of Foreign and Domestic Commerce
1
(
2
MINERALS YEARBOOK, 1939
MOLYBDENUM, TUNGSTEN, AND VANADIUM
3
the Nevada Consolidated Copper Corporation at Chino, N.
continued during the year. As this output is entirely Mex.
(
and depends on the rate of copper operation, production byproduct
1938. Of interest during the year were the initial dropped in
shipment
of molybdenite
concentrates
from the copper production
and
of
the Miami
Copper Co.,
Miami, Ariz.
operations
by Peterson.
The Miami Copper Co. reported the recovery and shipment in 1938
Activities
in the parts
search
for and
of molybdenum
deposits
in various
of the
worlddevelopment
continued in 1938.
of a small quantity of molybdenite concentrates resulting from the
re-treatment of copper sulfide concentrates at Miami, Gila County.
Colorado.-The Climax Molvbdenum Co., the world's largest producer of molybdenum, operated its mine and mill at capacity throughout 1938, having mined 4,344,734 short tons of ore containing 0.606
Salient statistics of the molybdenum industry in the United States, 1936-38
1936
1937
1908
Production:
percent MoS from which 27,591 short tons of concentrates containing
One
short tons
Concentrates
Molybdenum contained
do
2,269,000
17,686
Average
percent
Total
Shipments (molybdenum contained):
pounds
Pounds
Value
17,186,000
Pounds
Value
30,357
28,242,085 pounds of molybdenum were recovered. Production
14,002,000
exceeded shipments, permitting some stock of concentrates to be built
49
$213
at the mine. Output at this property has increased nearly six times
during the past 6 years, as shown in the following table.
48.46
29,419,000
17,959,000
$11,933,000
Imports (moly bdenum contained
13,638,000
36,102
48.59
recovered by selective flotation. The latter company also treats a
similar ore from its nearby Mammoth mine. In 1938, the mill produced 4,191 short tons of concentrates containing 481,156 pounds of
Mo. The geology and ore deposits of this area have been described
30,122,000
20,571,000
45.00
32,297,000
25,722,000
$17,977,000
Molybdenum (element) contained in
concentrates
produced from the Climar deposit,
Colorado,
1933-38
7.200
$13,493
Pounds
the
Pounds
1933
Figures for molybdenum exported not separately recorded
New and Utah in 1938
1934
Mexico.
copperof
cerMines
yielding molybdenite concentrates from New Mexico and Utah in 1937 and Arizona,
. Excludes
Estimated
by Buresu
PRICES
1935
1,028,65
1936
8,378,683
10,168,635
1938
1937
15,216,806
22,750,368
28,242,085
The building program, which included mill enlargement, hotel,
hospital, houses for employees, street work, and sewer and waterpipe installation, was completed early in 1938.3
Prices for molybdenite concentrates carrying 90 percent MoS, were
quoted nominally by the Engineering and Mining Journal at 42 cents
per pound of contained MoS, from January 1, 1938, until late in March,
when the quotation rose to 45 cents where it remained for the rest of
the year: however, London prices for the same grade of concentrates
decreased during the year. In January 1938 the quotations were 47s.
per long ton unit. Lower quotations reduced the figure to 41-42s.
late in December. This price drop was equivalent to a decrease from
52 cents per pound in January to 43 cents in October.
DOMESTIC PRODUCTION
Alaska.-The Kennecott Copper Corporation abandoned its development
workduring
on the1938.
molybdenum prospect near Valdez in the Copper
River Valley
Arizona.-Five mines in Arizona produced 4,784 short tons of concentrates containing 1,139,593 pounds of molybdenum in 1938.
The largest producer. the Arizona Molybdenum Corporation,
which operates a property near Mammoth, Pinal County, treated
79,333 short tons of ore during 1938, from which 537 tons of concentrates containing 607,605 pounds of molybdenum were recovered
The mine was shut down late in the year, but the mill continued to
operate on the tailings supply. The reopening of the mine will depend
on results of further exploration and development.
The Molybdenum Gold Mining Co., a subsidiary of the Molybdenum Corporation of America, continued to mine complex ore from
The the oxide zone in the Mohawk and New Year claims near Mammoth.
mine-run ore goes to the nearby mill of the Mammoth-St. Anthony, Ltd., where gold, silver, lead, molybdenum, and vanadium are
Other development work and discoveries were reported from
Colorado in 1938, but Climax was the only producer.
Idaho.-T International Molybdenum Co. made a small pro-
duction, but no shipments, in connection with the development of its
)
(
property near Porthill in Boundary County. Additional flotation
equipment was installed in 1938. The ore at this property also
contains values in nickel, cobalt, and platinum.
Nerada.- No production or shipment of molybdenum was recorded
for Nevada in 1938, but development work on several deposits was
reported.
New Mexico.- Molybdenum Corporation of America continued
to operate its mine and mill some 7 miles east of Questa along the
Red River. The ore is relatively high grade and the tonnage treated
comparatively low. Development work on lower levels is reported
to be giving encouraging results. The geology and ore deposit have
been described by Vanderwilt.
Molybdenite concentrates also were produced by the Nevada
Consolidated Copper Corporation at the Chino property in the
treatment of copper ores.
Utah All production in 1938 came from the Utah Copper Co.,
where molybdenite is recovered as a byproduct in the concentration
of copper ores and re-treatment of molybdenum-bearing concentrates.
As the molybdenum content of the ore is very low the molybdenite
Peterson N. P. Geology and Ore Deposits of the Mammoth Mining Camp Area, Pipal County. Arts.:
Richardson of Arizona, Aritina Bureau of Mines Bull vol. No April 1938, 1-63
November 1938 J. K.. A Modern Hospital Serves Climax Camp Eng and Min Jour. vol. 139 No. 11,
PP.
ColoradoSci.
"Vanderwilt,
of the
Soc.. vol. 13.Geology
No. 11. 1938,
pp. "Quests"
599-643 Molybdenite Deposit Taos County. N. Met. Proc.
MINERALS YEARBOOK, 1939
MOLYBDENUM, TUNGSTEN, AND VANADIUM
4
concentrates produced are entirely byproduct and fluctuate with the
output of copper, thus output was lower in 1938 than in 1937. A
material improvement in recoveries, however, explained in large
degree the smaller proportionate decline in the production of molybdenite compared with copper.
Washington.- Deertrail Monitor Mines Co. mined about 3,000
short tons of ore at its Monitor mine on Adams Mountain 6 miles
east of Fruitland, Stevens County. About 300 tons were milled in
the 50-ton flotation mill, from which 3 tons of concentrates were
recovered: 5 tons were shipped. Three other concerns the Copper
Mining Co., the Consolidated Mines & Smelting Co., Ltd., and the
American Rand Corporation-produced ore in connection with
development operations, but the ore was not concentrated, and
there were no shipments.
IMPORTS AND EXPORTS
5
denum oxide in briquets is also used in making molybdenum addi-
tions to iron and steel.
Improved processes of heat-treating and fabricating high-speed tool
steels, in which part of the tungsten has been replaced by molybdenum,
have increased the use of molybdenum in this field. Molybdenum
is also being employed more generally in stainless steels of the 18-8
type.
Molybdenum compounds find limited use in nonmetallics, but
consumption is not large.
WORLD PRODUCTION
World production of molybdenum comes from only a few mines.
Operations in Mexico, Norway, and the United States furnish the
bulk of the world requirements. The search for new sources continued during 1938; but, so far as is known, there were no significant
developments.
Exports of molybdenum, principally in the form of concentrates,
provide an important outlet for the domestic molvbdenum industry.
World production of molybdenum ores and concentrates, 1934-88, in metric tons
Data are not available, since molybdenum is not classified separately
in export statistics; but it appears that 50 to 75 percent of the domestic
(Complied by M. T. Latus]
Country
production is exported. Imports of molybdenum or molybdenum
compounds are small.
1934
1935
1936
New South Wales (concentrates)
China (ore containing 45 percent Mo)
(gre)
104
(1)
80
21
(1)
687
534
149
190
187
153
15
4,247
14
(1)
5. 222
7,795
18
In addition to the quantity shown in the above table 139,535
export in 1938 compared with none in 1937 Of the 1938 figure
136,200 pounds containing 90,442 pounds of Mo valued at $40,780
came from Turkey.
USES
Molybdenum is used principally in the iron and steel industry for
making special alloy steels. Continued research is broadening the
field of application both in new outlets and as a substitute for and an
addition to other alloying elements. Molybdenum may be used
alone to impart certain desired properties to iron and steel, but more
frequently it is used with one or more of the other ferro-alloying
elements
For most purposes molybdenite (MoS2), the principal mineral raw
material, is converted, before using, to ferromolybdenum (a product
carrying 60 to 65 percent molybdenum) or to calcium molybdate (a
compound resulting from the roasting of molybdenite with lime and
containing 35 to 45 percent molybdenum). The latter is the cheaper
method of preparing molybdenum for industrial applications Molyb-
453
258
146
Turkey (ore)
Yurosavia
pounds of ore and concentrates containing 91,905 pounds of molybdenum valued at $41,586 were imported for smelting, refining, and
625
Peru (concentrates)
Eumania(BI-Mo ore)
'nited States (Mo content)
49
40
(1)
467
6
$1.6
2,700
a
861
Japan (dressed are)
Mexiro Mo content)
Morocco French (concentrates)
Norway (Mo content)
(1)
(1)
106
a
content
(pounds)
36
(1)
Canada (concentrates)
2
Value
213
1935
Burma
,
1938
40,721
I
1937
23
31
$124,156
20
Italy (one)
denum
16
Value
213,928
68,758
1935
Year
(v)
11
14
denum
content
(pounds)
(1)
Queensland (concentrates)
Victoria (concentrates)
Chosen
Melvh
Molyb
1904
1938
Australia
Molybdenum are and concentrates, ferromolybdenum, molybdenum metal and pouder,
calcium molybdate, and other compounds and alloys of molybdenum imported for
consumption in the United States, 1934-38
Year
1937
13, 344
15, 103
84
Less than too
Data not available
Exports
Canada.-In 1938 the Zenith Molybdenite Corporation, formerly
the Phoenix Molybdenite Corporation, Ltd., Renfrew County,
Ontario, reported shipment to England and France of 7 metric tons
of concentrates valued at $4,500; these had been produced in 1937
Prospectors have been active recently both in prospecting and
developing molybdenite properties in Ontario.
Merico.-Output, which was lower in 1938 than in 1937, comes
principally from the Greene Cananea Copper Co., where molybdenite
concentrates are recovered as a byproduct in the treatment of copper
ores. Mine and reduction works at Cananea were closed by a strike
during the latter half of September; then a 2-year labor contract was
signed
Morocco, French.-French Morocco is the largest producer in
Africa. Much of the output comes from the mine of the Societe le
Molybdene near Azegour A discovery of deposits in the HautTifnout region near the Souss valley recently has been reported.
Metal Bulletin (London), The Tilocut Deposits: No. 2369, February 24, 1939 p. 16.
19
MINERALS YEARBOOK, 1939
MOLYBDENUM, TUNGSTEN, AND VANADIUM
Demestic shipments, imports, exports, and apparent consumption of tungsten in the
United States, 1910-38, in thousands of pounds of metal
trating plant was being installed at the Laxadalen Molybdangruber
at Gildeskal, northern Norway, but no output has yet been recorded.
Turkey. Production of molybdenum in Turkey is small, but shipments were made to the United States in 1938.
Yest
1,733
1915
1909
1947
1918
1919
1920
(2)
775
2,219
1,848
Ship-
Im
ments
ports
ent
Ex
con-
ports
sump
(1)
(1)
tion
3,585
1925
1,133
1,530
1926
1,315
884
2,808
1927
1,108
198
1,150
3,510
1928
1,717
1929
790
5,446
4,067
1930
668
3,998
4,175
3,290
969
4,106
7,154
13
82
24
4,642
4,304
615
9,326
1931
1,336
IND
846
679
5,054
2,489
K,412
1902
377
106
113
370
4,817
12,233
1,319
15,731
1933
853
379
set
10,658
1934
4,404
1935
311
10,388
206
2,203
1,950
is
1996
257
908
907
1997
229
79
304
1938
563
2.34
798
2,373
5,096
104
2,897
162
6,149
in
9,027
3,059
(1)
677
142
SSN
548
954
892
702
3,331
1922
1923
2,817
to
24
5,637
1921
1924
604
5,847
Partly estimsted
Figures not available
Complete data not available
Concentrated tungsten ores (reduced to equivalent of 60 percent of tungsten trioxide),
produced IN the United States, sold in 1910-38, by States, in short tons
Year
Arizona
Call-
Colo-
formis
rade
1900
50
Nevada
Idaho
South
Wash-
Dakota
ington
1,221
AND
17
1911
314
730
462
812
27
1913
541
953
689
667
942
953
20
14
16
1911
15
1915
127
32
Other
States
Total
1,821
100
(1)
22
22
1962
1,139
1,330
1,537
1917
2.
2,171
218
401
2,781
2,707
213
1,791
1,910
147
to
1920
2314
90
150
1919
GRO
101
270
143
2
19th
898
990
10
140
M
52
1918
Salient statistics of the lungsten industry in the United States, 1937-38
(4)
2,047
942
1914
(*)
1,542
1,467
1913
89
446
206
1912
As the year progressed, however, there was some curtailment in the
domestic industry.
sump
1,941
1,084
1911
activities around Bishop, Calif., attracted attention during 1938.
ports
ports
Year
con-
tion
1910
Interest in the tungsten industry in 1938 continued to be centered
chiefly on conditions in China, the principal source, but the effect of
hostilities was not as pronounced as in 1937. Japanese gains in 1938
did not give them control of the tungsten-producing areas; but the
railroad through South China to Canton and Hongkong, the main
route of flow after the capture of Shanghai in 1937, fell to the invaders
late in 1938. Tungsten concentrates in reduced quantities continued
to move out, however, principally through Swatow, and this movement together with supplies available from other sources and lessened
demand eased the tungsten situation in 1938.
Apparently the United States was the second largest producer in
1938, and domestic output was the highest of any before and since the
war years 1916-18, when exorbitant prices and shortage of supplies
stimulated a country-wide search for strategic minerals. Although
production from domestic mines increased over 1937, shipments
declined, resulting in some stock at mines or mills. The development
and reequipment of properties continued in the Western States, and
ments
Apper-
ent
Ex-
2,332
5,923
6,144
10
TUNGSTEN
ApparIm-
Ship-
a
(
I
in Norway in 1938. Output was larger than in 1937 A concen-
)
7
I
I
Norway.-The Knaben Mölybdan Gruber was the only producer
41
6
201
47
5,061
130
327
216
216
1921
1922
1938
1937
1923
241
1921
Value
Short tons
Value
P
Short tons
219
1925
1920
25
241
120
117
574
201
60C
420
232
545
565
100
1,191
1,382
90
1927
(1)
$4,004,000
3,073,612
3,500
2,848
to
428
1,154
1.20
1129
$3.
161,496
150
20
(7)
1900
138,690
(1)
47
(*)
1901
98
653
Kto
854
702
1,208
(7)
1,404
1932
707,350
401
4
Metal (W content)
141
(1)
us
Stocks in bonded warehouses Dec. 31
Ore (W content)
3,044
551
9,447
326
10
602,376
62
241
1983
M
26,182
1934
(4)
PWSS
394
PMP
I Figures not available
342
(*)
390
489
180
1902
349
1908
37
577
219
639
240
99
154
895
43
1,044
164
498
1,219
192
200
1,631
2,153
1,441
396
93
(1)
550
174
42
11
Imported for consumption W content
3,500
372
332
229
(1)
5
Production (60 percent WO2)
Concentrates shipped (60 percent WO2
307
2
1924
4,000
48
64
an
2,049
2,395
253
2,612
as
3,500
10
3,044
Strategic .-Tungsten is listed as a strategic commodity, but
the position of the United States with regard to this essential metal is
far less vulnerable than that with respect to manganese, tin, or chromium. Under the tariff the industry has continued, and this protection together with the high world prices maintained in recent years
have resulted in a large measure of self-sufficiency. No purchases for
strategic stock-pile purposes have been made by the Navy Depart
ment in connection with its limited program during the last 2 years.
The tungsten situation, however, is being studied thoroughly in connection with probable purchases should appropriations in legislation
now pending become available. The following tables present the historical background for consideration of the strategic nature of tungsten.
Alaska
Connecticut
Missouri, Montam New Mexico, Oregon and Utah and States indicated by
Less
than
Item.
Bureau of Mines not at liberty to publish figures.
The following information regarding domestic sources is quoted
from a Report upon Certain Deficient Strategic Minerals by the staffs
of the Geological Survey and the Bureau of Mines.
Sources Most tungsten deposits are tabular bodies that either persist downward to great depths in the earth (veins) or are localized and nearly horizontal
and (replaced beds) Two minerals, scheelite (containing 63.9 percent tungsten)
wolframite (containing 60.7 percent tungsten) are the source of almost all
tungsten Only a few ores treated to recover tungsten yield other metals, so that
tungsten is rarely a byproduct.
153873-39-2
MINERALS YEARBOOK, 1939
8
MOLYBDENUM, TUNGSTEN, AND VANADIUM
Tungsten minerals are rather widespread in the United States, but most of
attempts at commercial production are confined to 11 Western States, and the
(Nevada, California, and Colorado) currently yield more than 90 percent of the 3
production. As the prices offered for tungsten ores have fluctuated more widely
than those for the other strategic metals, the yield from the several districts,
declining to $16-$20 in May, with the closing quotation at $20. The
quantity of concentrates shipped from China on barter arrange-
ments was not without effect on the tungsten quotations.
well as the total for the United States, has also fluctuated widely. There can be M
hardly any doubt that some deposits have become exhausted at depths that range
from 500 to 1,000 feet, and that elsewhere, even though the tungsten mineral
persists, costs of production have increased.
Since 1900 the United States has imported some tungsten in the form of are or
alloys each year, and even though production has nearly equaled or even exceeded
apparent consumption during a few years, dependence on foreign sources has
tended to increase. A tariff was first imposed in 1909, and the latest act of 1930
provides for 50 cents per pound on the tungsten in ore and concentrate and as
much as 60 cents per pound plus 50 percent ad valorem on metallic tungsten.
This is higher than at any previous time. Most of the imported tungsten is in
the form of ore or concentrate, and 80 percent or more is derived from China,
which is the principal world source. During the past 5 years (1933-37) domestic
production has been about half of the apparent consumption
Production from domestic mines. Since 1926, production of tungsten in Nevada
has exceeded that of any other State, and one mine, discovered in 1917, is now
the principal source in the United States. This mine derives its ore from an
altered bed of limestone which contains about 11/2 percent of disseminated scheelite
This type deposit is now known to exist widely in western Nevada and southeastern California, and it is probable that other important deposits of similar
nature will be found. Although mine operations rarely explore such deposits far
in advance of mining and definite figures can rarely be assigned to reserves, the
number and widespread distribution of the deposits seem to assure current produetion for a decade or more.
DOMESTIC PRODUCTION
Higher prices in 1937 and early 1938 stimulated activities in the
domestic tungsten industry, particularly in California, but lower
prices later in the year curtailed operations, and a number of properties closed. Although production of concentrates increased shipments
declined, resulting in accumulation of some stocks at the mills.
Output-the highest recorded in peacetime- came from a rather large
number of widely scattered locations, and shipments were made from
nine States (Arizona, California, Colorado, Idaho, Missouri, Nevada,
New Mexico, Utah, and Washington). Developments in the domestic
tungsten-producing industry in recent years are tending to make the
United States more nearly self-sufficient in this strategic mineral
commodity at prices that have maintained This situation, however,
depends on tariff, which at present amounts to $7.931 per short-ton
unit of WO2 on ore and concentrates.
Concentrated lungsten ores (reduced to equivalent of 60 percent WO2 produced in
the United States, sold in 1934-38, and average price per unit
Numerous tungsten deposits have been explored in California, but one mine
(Atolia), near Randsburg, now mining 1,400 feet below the surface, has vielded
Tungaten-bearing veins have been explored in several parts of Colorado, but a
few mines in a single district (Nederland, Boulder County) have yielded nearly
Short
Year
from 60 to 95 percent of the tungsten output of the State since 1909. Nearby
placers have yielded considerable concentrate also. Promising, but low-grade,
deposits have been extensively explored near Bishop and elsewhere.
9
tons
1934
2,049
1935
2,395
1936
2,612
Average
Value
$1,791,316
1,921,017
2,323,818
price per
unit
Year
Short
tons
$14.57
1937
3,500
13.37
1938
3,044
-
Average
Value
$4,094,000
price -
$79.50
12.31
14.83
all of the output from the State. One mine has attained a depth of approxi-
mately 900 feet, but most of the product has been mined within 500 feet of the surface, because veins are narrow and costs increase rapidly with depth.
Even though many tungsten deposits have been explored in the eight other
western States, as well as in Missouri and Connecticut, existing records indicate
that shipments can be made only during times of high prices.
PRICES
The quotations on tungsten ore or concentrates continued the
decline that began in the last quarter of 1937. The low point was
reached in May, after which there was some recovery, but the market
was weak for the rest of 1938. The fear of stoppage of concentrates
from China due to Japanese control over the routes of transportation
was a bullish factor, but apparently this was counteracted by avail-
ability of supplies from other sources and by reduced demand.
London prices for Chinese wolframite concentrates containing 65
percent WO3. as given by the Mining Journal (London), were highest
at the beginning of the year, when the quotation was 78s.80s. The
quotations declined steadily until May, when the average for the
month was 37s. 1d. Subsequently the quotation rose until the last
quarter, when there were minor fluctuations. The average quotation
for December was 54s. 51/d. According to the Engineering and
Mining Journal domestic scheelite quotations, f. O. b. New York,
for concentrates containing 65 to 70 percent WO2, followed somewhat
the same pattern, opening the year at $22-$25 per short-ton unit
Gravity concentration generally is used in beneficiating tungsten
ores. In crushing ore for concentration there is considerable pulverization of friable scheelite, which results in abnormal losses in the
slimes. The use of flotation for the recovery of scheelite from slimed
material has been investigated by the Bureau of Mines. Ultraviolet
lamps for detecting scheelite by fluorescence have aided the prospector,
miner, and millman engaged in the search for and reduction of tungsten
ores
carrying it. The use of this equipment has been described by
Heizer
ona.-Shipments of tungsten concentrates from Arizona operations totaled only 35 short tons containing 63.09 percent WO2 in
1938 compared with 312 tons averaging 67.15 percent WO2 in 1937.
Output comprised scheelite, wolframite, huebnerite, and ferberite
concentrates and came from scattering small operations in Cochise,
Gila, Mohave, Pima, and Yavapai Counties. The mill at the Boriana
mine near Yucca, Mohave County, destroyed by fire in November
1937, was rebuilt but not operated in 1938.
difornia.-Shipments of tungsten concentrates (all scheelite)
from California amounted to 770 short tons containing 65.44 percent
WO2 in 1938 compared with 511 tons containing 67.68 percent WO2
Mines Leaver Tech E Paper1908,
8. and Royer,
M. B Flotation for Recovery of Scheelite from Stimed Material Bureau of
1-24
SAS
State Heizer, Ou Use of Ultraviolet Light in Prospecting for Scheelite California Joer Mines and Geal.
Mineralogist's Report 34, vol. 34, No. 3. July 1938, pp. 331 I-333
MINERALS YEARBOOK, 1939
10
in 1937. The largest producer, the Atolia Mining Co. near Atolia in
San Bernardino County, shipped 339 tons containing 59.71 percent
WO2 The company milled 13,289 tons of ore containing 1.82 percent WO2. Sixteen other producers-8 in San Bernardino County,
in Inyo, and 1 each in Kern, Mono, and Tulare Counties-contributed to the California total. The increased number of producers
17 in 1938 compared with 8 in 1937-attest to the increased interest
5
in tungsten in California, but as prices dropped later in 1938 a number
of operations were closed. Activities in recent years in the region
around Bishop have resulted in some significant developments that
may serve further to increase domestic output.
Colorado. Output of tungsten in Colorado was higher in 1938 than
in 1937. Total shipments were 360 short tons of concentrates averaging 40.05 percent WO3. Most of the output was ferberite from
Boulder County, but there were small shipments of huebnerite from
gold-mining operations in San Juan County. The principal shipments came from the mill of the Gold, Silver & Tungsten, Inc., at
Tungsten, Boulder County. The other large producer (the mine
of the Wolf Tongue Mining Co. near Nederland) was idle for 9 months
but is planning extensive underground development work in 1939
The mill treated 871 short tons of ore containing 2.8 percent WO2
A 50-ton concentration mill was built at the Conger mine in 1938
by the Vanadium Corporation of America
Idaho. The Ima mine on Patterson Creek about 11 miles east of
May operated during the last 10 months of 1938. The mill was
enlarged to 150 tons capacity; 26,823 short tons of ore containing
0.5 percent WO, were milled. yielding 139 short tons of huebnerite
concentrates averaging 66.54 percent WO3. The mill also makes a
sulfide concentrate carrying silver, copper, lead, and zinc.
Missouri.-A small shipment (less than 1 ton) of high-grade concentrates was reported from Missouri in 1938. The hand-picked ore
MOLYBDENUM, TUNGSTEN, AND VANADIUM
(
New Mexico.-A small shipment of huebnerite concentrates averaging 53.12 percent WO3 was made from Luna County in 1938.
ah.-Shipments from Utah in 1938 totaled only 16 short tons
(all scheelite) averaging 25.50 percent WO2 The bulk of the shipments came from the Star Dust mines near Gold Hill operated by Star
Dust Mines, Inc. Less than 1 ton of scheelite concentrates running
71.46 percent WO2 was shipped from Juab County.
Washington. Shipments of tungsten concentrates from Washington
in 1938 comprised 328 short tons averaging 55.39 percent WO2.
Virtually all the shipments (326 tons) came from the Germania mine
near Fruitland in Stevens County and were wolframite concentrates
containing 55 percent WO. Operations at the Germania mine were
curtailed at the close of 1938. The remaining shipments (2 tons)
came from another operator in Stevens County
FOREIGN TRADE
Domestic supplies of tungsten are supplemented by imports, principally of concentrates but also in other forms. Imports of ore and
concentrates for consumption (tungsten content) dropped sharply in
1938 and totaled only 162,744 pounds compared with 5,561.02 pounds
in 1937. Of the 1938 total, 43 percent came from China and 41 percent
from British Malaya. In addition, 828,660 pounds of tungsten in
concentrates were imported for smelting, refining, and export compared with 502,571 pounds in 1937. There is no record of any exports
of tungsten ore or concentrates from this country. Imports of tungsten and tungsten carbide, and of tungstic acid and other compounds
of tungsten, were lower in 1938.
Tungaten are and concentrates imported for consumption in the United States,
1937-38, by countries
came from the dump of the old Silver mine 10 miles west of Fredericktown. Madison County.
1937
Country
Nerada Nevada retained its position as the principal tungsten
reduced to equivalent 60 percent WO3. A large part of the output
Co. near Mill City and Mina. The company has sunk the Humboldt
and Stank shafts to the 1,350 level and is reopening and developing
the Sutton ore body. The new mill operating on tailings is working
successfully, and a good grade of concentrate (70 percent WO2) is
being produced. The Tungsten Metals Corporation at Ely, White
Pine County. produced from three mines and was the largest of
several other small operators that contributed to the Nevada total in
1938.
Development work continued. and new equipment was installed at
the Oreana mine in Pershing County by the Rare Metals Corporation.
The Oreana tungsten deposit is unique among American tungsten
deposits in that the scheelite mineralization is considered pegmatitic.
An addition to the mill at the Nightingale mine 50 miles west of Lovelock, Pershing County, was installed in 1938.
. Kerr. Paul F., Tungsten Mineralization at Oreans Nev. Eron Geol.. vol 33. No 4. June July 1938. PP
390-425
Gross
weight
(pounds)
producer in 1938; shipments of concentrates totaled 1,461 short tons
was scheelite concentrates from mines of the Nevada-Massachusetts
11
Tungsten
content
1938
weight
Tungsten
content
(pounds)
(pounds)
Gross
Value
(pounds)
Value
Africa
British South, other
Union of South Africa
Argentina
Australia
Belgium
Bolivia
53,000
102,603
257,797
566,522
95,200
143,763
27,740
54,041
138,225
306,770
42,197
$12,681
25,271
71,266
212.098
21,485
29,780
538,995
18,700
74,878
975,786
8,677
7,104,224
3,794,440
1,941,844
Hong Kong
33,600
17,472
14,511
Japan
111,152
89,763
59,560
34,078
48,734
27,086
22,418
12,502
6,616
10,189,625
5,561,022
2,940,088
British Malays
Chile
China
Mexico
Sweden
1,590,883
45,069
2.2M
23,233
705
$35,983
961
108,765
67,460
58,346
138,380
69,986
42,350
27,585
1,360
4,327
322,085
: Rhodesis (Northern and Southern). Bechuanaland and Nyasaland Protectorate
162,744
1,054
138,693
MINERALS YEARBOOK, 1939
12
MOLYBDENUM, TUNGSTEN, AND VANADIUM
Tungsten in metal and compounds
imported
for consumption in the United States,
1937-38,
by countries
Tungsten (metal) and tungsten
(
World production of tungsten orea. 1934-38, by countries, in metric tons of concer.
trates, containing 60 percent WO,
[Complied by M. T. Latus
Tungstic seld and other com
carhode
13
pounds of tungsten
Country
1937
1938
1934
1935
1936
1937
1938
1937
Country
1938
North America:
Tungsten
content
Value
Tungsten
content
Tungsten
Value
(pounds)
(pounda)
Austria
1,600
$6,174
Canada
France
1,046
1,044
220
content
Value
(pounds)
Tungsten
content
Mexico
Switzerland
United Kingdom
170
16,822
33
76
2,173
2,370
3,175
2,761
1,939
2,222
2,427
3,208
2,837
South America
$701
Argentina
30
1,565
53
1,859
492
1,586
302
Rolivia
Chile
$75
MID
702
1,063
1,743
(*)
1,802
1.530
(1)
Peru
169
579
1,423
794
12
92
57
30
170
44
21
54
(pounds)
28
Germany
Hungary
se
United States (shipments)
Value
9,819
12,538
121,473
111,987
21,029
23,994
133,959
131,913
22,814
31,517
1,198
2,066
2,538
2,900
(1)
Europe:
522
1,661
241
Germany (Saxony)
1,006
Great Britain (Cornwall)
(1)
223
Includes combinations containing either metal of carbide
: Austria included with Germany beginning May 6.
cemented tungsten carbide has been employed widely in the commercial field. Methods of manufacture, as well as properties and uses,
have been described by Sykes. A new alloy of tungsten with 4.
percent copper and 6-percent nickel is said to be a suitable material
for radium containers. A new process 10 for combining tungsten by
electrodeposition with other metals is said to be susceptible to close
control.
148
258
ES
Portugal
Spain.
610
1,140
2.00
1,414
812
49
(1)
(1)
Sweden
(1)
(1)
127
62
(1)
883
pigments; and in the tanning of white leather. In recent years
221
Norway
USES
The principal uses of tungsten are in the manufacture of high-speedtool steels, cemented tungsten carbides, stellites, and electric-light and
radio-tube filaments: in the preparation of various chemicals, such as
256
Italy
1,396
1,697
2,349
(')
Asia:
Burms
3,913
China
4,527
5,099
7.996
Chosen
India. British
Indochina (Tonkin)
399
5,382
5,924
7,638
17,895
949
1,849
2,056
417
503
648
3,410
13,387
(4)
(2)
15
300
Japan
(2)
70
Malay States
Federated Malay States
Unfederated Malay States
Netherland India
96
61
(1)
1,921
1,720
1,712
815
90
(1)
955
325
667
279
(1)
(1)
(')
Siam
36
82
257
82
(1)
11,829
16,105
17,553
28,031
(1)
Africa
Egypt
Nizeria
190
(4)
16
Rhodesis
South West Africa
11
117
26
18
*Sykes. W P. Cemented Tungsten Carbide Alloys Metals Technol Am. Inst. Min. and Met. Eng.,
vol.
1938
pp
1-11
Armstrong H H and Menefee, A. B. Electroplating Method and Product: U. 8. Patent 2,145,745
January 31, 1939
41
48
6
have reached 32,000 metric tons.
329
45
53
l'anganylka Territory
World output of tungsten was lower in 1938 than in 1937, when a
new peak was established Although complete figures are not available, preliminary data indicate that world production in 1938 may
275
as
Uganda
2
WORLD PRODUCTION
Union of South Africa
&
130
30
11
40
140
112
177
562
(1)
Oceania:
Australia
New South Wales
Northern Territory
Queensland
Pasmania
New Zealand
59
at
M
IS
126
41
141
27
22
230
39
458
16,447
275
61
M2
22,458
245
49
345
12
(1)
110
143
345
200
57
25
475
894
22,867
*37,944
(1)
(1)
In addition to the countries listed. tungsten are is produced in the U.S.S.R. but DO date of production
available for the period under discussion
Exports.
Data not available
Exclusive Spain.
than ton.
Exclusive of Japan.
Argentina.-Argentina is the second largest producer of tungsten in
South America. Output comes principally from the Provinces of San
Luis and Cordoba; much smaller amounts are produced in San Juan
MINERALS YEARBOOK, 1939
14
MOLYBDENUM, TUNGSTEN, AND VANADIUM
and Catamarca. Virtually all the yield is exported, a large part going
to Europe.
Bolicia.-Bolivia is the largest producer in South America The
largest deposits occur in the Department of Oruro, while smaller
deposits are found in Potosi, La Paz, and Cochabamba Bolivian
tungsten concentrates (wolframite and scheelite) are exported, largely
to Europe.
Burma Output in Burma comes principally from the Hermingyi
(
was the largest producer. The ore is low-grade, and it has been
stated that 300 tons of rock must be broken to produce 1 ton of
concentrates. Exports (2,450 metric tons in 1938) went to European
manufacturers of ferrotungsten.
Southern Rhodesia.-Th African Continent produces little tungsten;
the principal output comes from Southern Rhodesia, where production increased to 329 metric tons in 1938 from 275 tons in 1937.
mine near Tavoy and the Mawehi mine in the southern part of Karenni
State The ores from the Mawehi mine are said to be complex in
character and not easy to treat for their tin and tungsten contents,
but the ores from the Hermingyi are much simpler. The ore reserves
at the Mawehi mine are said to contain 3.24 percent tin and tungsten.
The proportion of tungsten to tin in the Hermingyi ores is about 2to1.
Most of the concentrates from India are shipped to the United Kingdom. Exports from Burma in 1938 were 10,598 metric tons.
China The Sino-Japanese hostilities continued their adverse effect
on the flow of tungsten ore from China. the largest world source
The principal production comes from Hunan, Kiangsi, and Kwangtung. where the tungsten-producing areas are not under Japanese
control. and the mines still are being worked extensively. Formerly
much of the exports moved out of Shanghai, coming from inland
through the river ports of Hankow. Hupeh Province: Kiukiang,
Kiangsi Province: and Changsha, Hunan Province With the closing
of the Yangtze and Whangpoo Rivers and exhaustion of the stocks on
hand in 1937. exports from Shanghai ceased. and Chinese concentrates
moved out via the Canton-Hankow Railroad for transshipment at
Hongkong In 1938 Canton fell to the Japanese, and the Chinese
Central Government endeavored to route all tungsten ore shipments
via South China ports (Swatow. Haiphong, and Macao) not under
Japanese control or through Indochina. Exports in 1938 were
13,387 metric tons (60 percent WO, basis) compared with 17,895
tons in 1937 There were no exports during the last 2 months of
1938 A large proportion of the exports in 1938, which went principally to Europe. was shipped under barter agreements
It was reported early in 1939 that the Chinese Government has
granted to the Peiping Syndicate. Ltd., exclusive selling rights for
Chinese tungsten ore. including the stocks in Honkong
India. British.- is little or no production of tungsten in
India. Production previously credited to India came from Burma,
which was split from India as a separate State as of April 1. 1937
Malay States The Kramat Pulai mine near Ipoh is the principal
producer in the Malay States. The ore is scheelite of good quality,
but the reserves are limited. Exports in 1938 amounted to 665
metric tons of concentrates of which 287 metric tons were scheelite
concentrates and the remainder wolframite concentrates The exportation of tungsten ore containing more than 1.5 percent tin has
been prohibited by the High Commissioner of the Federated Malay
States, except under written authorization by the Chief Inspector
of Mines,
Portuga' Output in Portugal, the largest European producer, in
1938 increased 36 percent over 1937 and nearly doubled the 1936
figure The Beralt Tin & Wolfram. Ltd. with properties at Panasqueira in the Province of Beira Baixa, district of Castello Branco,
15
VANADIUM
Vanadium output in 1938 maintained the high level reached in
1937 although there was a noticeable shift in sources. The world
supply comes from a limited number of operations, principally in four
countries, of which Peru normally is the most important. Production
in that country, all from the Minasragra mine, dropped abruptly in
1938. A striking feature of the year was the large increase in domestic
production (shipments from mines), and in 1938 the United States
became the largest producer. Greatly increased output in the Paradox
Valley region in Colorado swelled the domestic total. Production in
Northern Rhodesia was 59 percent above 1937. while output in the
Territory of South-West Africa dropped a little. World sources of
vanadium may be supplemented further in future by the recovery of
vanadium from the treatment of pig iron made from vanadium-bearing iron ores at ferrous smelters in Germany. A plant for the recovery of vanadium was completed in 1938 in Japan by the Japan
Iron Sand Industrial Co.
Despite the large increase in domestic production imports for consumption into this country increased Purely nominal quotations for
vanadium ore were unchanged throughout 1938 at 27% cents per
pound of contained V2O
Salient statistics of the vanadium industry in the United States, 1937-38
1937
Quantity
1934
Value
Quantity
Value
Production:
Carnotite ores
Vanadium contained
Vanadium and complex
short tons
1,708
pounds
73,788
Vanadium contained
short tons
pounds
129,372
1,012,337
Vanadium ores
Vanadium contained
short toms
pounds
1,258,880
Imports
7,460
$65,294
4,290
$156,779
173,450
227,397
740,000
1,439,296
538,799
9,941
491,475
1,384,320
Also contained radium and uranium as follows: Radium 1907. 3,141 milligrams; 1934, 7,421 milligrams
Figures
20,764 pounds; 1938. 51,705 pounds.
not
available
Bureau at liberty to publish figures
Estimated by Bureau of Mines
DOMESTIC PRODUCTION
Production in the United States of vanadium contained in all types
of ores from which it was recovered totaled 1,613,155 pounds in 1938
compared with 1,086,125 pounds in 1937. Output came from Arizona,
Colorado. Nevada, and Utah, Colorado supplying the largest quantity
Arizona.-Vanadium was produced from the operations of the
Molybdenum Gold Mining Co. and the Mammoth-St. Anthony, Ltd.,
MINERALS YEARBOOK, 1939
MOLYBDENUM, TUNGSTEN, AND VANADIUM
Peru comes from the Minasragra mine of the Vanadium Corporat
of America. Exports from Peru comprised 7,453 metric tons of
and 2,886 tons of concentrates, all of which moved to the Uni
near Mammoth, where complex ores containing recoverable values in
gold, silver, lead, molybdenum, and vanadium are treated in a flots.
tion mill operated by the latter company. The mill treated 165,465
short tons of ore, from which 4,191 tons of concentrates containing
States. Three mines the Abenab and Baltika of the South
Africa Co., Ltd., and the Nageib mine of the Otavi Minen and Eis
bahn Gesellschaft-contributed to the total in the Territory of Sou
West Africa. All the ore, which runs about 19.75 percent V2O,
exported to England and Europe. Production in Northern Rhode
was fused vanadic oxide from operations of the Rhodesian Bro
Hill Development Co., Ltd., which also produces zinc.
238,000 pounds of V2O5 were recovered. The geology and ore deposits
of the Mammoth mining camp area have been described by Peterson."
Development work was continued by the International Vanadium
Corporation at the Dripping Springs mine near Globe, but there was
no production.
Colorado.-The production of vanadium in Colorado in 1938
amounted to 1,382,736 pounds in vanadium and carnotite ores.
World production of canadium in orea and concentrates, 1984-38, in metric to
The largest output was from operations of the United States Vanadium
[Complied by R. B. Miller)
Corporation in Paradox Valley. The ore runs under 2 percent
V2O; and the vanadium is recovered as V2O2 by roasting the ore with
salt, leaching the sodium vanadate with water, and precipitating the
V2O2 with acid. The precipitate is then sintered to a product containing about 88 percent V2OA 20-ton mill was erected near Gateway, Mesa County, by the
Gateway Alloys, Inc., to treat ores mined from nearby claims.
Country
1937
45
Northern Rhodecia
173
Peru
75
South West Africa
I Shipments from stock
. Bureau of Mines not at liberty to publish figures.
Utah.-Vanadium-bearing ores were produced at a number of
rather widely scattered locations in Utah. Shipments totaling
172,194 pounds of contained V2O originated in Grand and San Juan
Counties in the southeastern part of the State. The largest output
was made by the Harbro mines near Cisco, Grand County, and
consisted of concentrates containing carnotite.
FOREIGN TRADE
Imports of vanadium ores in 1938, all from Peru, amounted to
9,981 short tons containing 1,384,320 pounds of vanadium. Data on
exports are not given by the Bureau of Foreign and Domestic Commerce, but in 1938 several hundred short tons of vanadium-bearing
ore or concentrates were exported to Japan.
USES
a
WORLD PRODUCTION
Despite the sharply reduced yield in Peru, one of the principal
sources, world output in 1938 exceeded that in 1937. owing principally
to the large increase in production in the United States. Output in
" Peterson, N. P., Work cited in footnote 2.
" Priestley, W J., Vanadium to Steel and Iron: Metals and Alloys, vol. Not and 9. August and
07
170
34
United States
Nerada.-Output in 1938-only 7 tons of vanadinite and des-
September 1938, pp. 193-197. 237-241.
1936
1935
Mexico
cloizite concentrates-came from operations at the Spelter mine near
Goodsprings, Clark County.
The principal use of vanadium is in the manufacture of special
alloy steels and irons. Minor quantities are employed as a catalyst
in the manufacture of sulfuric acid in the form of ammonia metavanadate, and in the nonferrous, glass, ceramic, and color industries.
Vanadium produces high-strength steel and iron with much less
exacting heat treatment than is necessary with other alloys, at
lower cost for both heat treating and machinery. 12
1934
19
16
204
235
161
583
547
63
(2)
(1)
591
493
After this publication has served your purpose and if you have
no further need for it, please return it to the Bureau of Mines.
The use of this mailing label to do so will be official business,
and no postage stamps will be required
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DEPARTMENT OF THE INTERIOR
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BUREAU OF MINES,
WASHINGTON, D.C.
240
quarter of 1939, and Russia also
bought a considerable amount of metal.
MINOR METALS
Unlike the 1914-18 period, the Brit-
ish Empire now finds itself in the
position of a heavy producer of copper, well in excess of 400,000 tons an-
nually. Moreover, it is known that the
Production and consumption are greatly stimulated. Prices
Franco-British economic acc. provides for eventual aid to France in
reverse their downward trend. Strategic commodities are
given special attention in the United States
respect to obtaining copper and other
raw materials. Apparent consumption
of copper outside of the United States
remains high, but just where actual
consumption stands must be left to
guesswork. Large tonnages have been
produced abroad in recent years and
undoubtedly some countries have ac-
METAL ECONOMICS DIVISION
cumulated sizable military reserves,
either in the form of raw copper or
as finished products. Copper authorities believe that Germany entered into
the war with large stocks. To what
extent aluminum will serve as a substitute cannot be stated.
The outlook in the world market for
Bureau of Mines,
Washington, D. C.
YEAR WAS EVENTFUL
for the minor metals. Improve-
ANTIMONY-Ne York quotations
for domestic antimony fell from
copper for 1940 is totally obseured
by the war. There may be a sudden
peace, or the war may spread to all
corners of the world. Whether price
ment in industrial activity in the
11.75c. per pound on Jan. 2 to a low
ward trend of prices and provided the
latter part of March prices moved upward, as activity rose to higher levels.
another perplexing question.
records for world production and con-
orders, has increased since June. Domestie consumption of copper rose
from a low of about 50,000 tons a
stances quotations at the end of
controls will be eased or not is
Industrial activity in the United
States, apart from increased war
month in April to approximately
80,000 tons a month for the last
quarter of the year. The monthly
average in consumption for 1939 was
about 63,000 tons, which contrasts
with 45,000 monthly for 1938.
The record for 1939 in automobile
production, housing and general construction utility expenditures, and in
other fields using copper was impressive, but the totals do not add up to
the peaks established in the 1929
period, when copper consumption in
the United States averaged slightly
more than 90,000 tons a month. This
is mentioned because production in the
United States was stepped up sharply
United States and the outbreak of
war in Europe reversed the down-
markets that made possible new
sumption in several minor-metal industries. Prices in general advanced
rapidly after Sept. 1, but in some inDecember were below the highs estab-
lished in preceding months Aver-
ages for the year will represent
moderate increases over 1938 despite
the many barriers to international
trade resulting from the war.
In the United States interest cen-
tered in the strategic commodities of
the minor-metal group-manganese,
chromium, tungsten, mercury, and
antimony. On June 7 the President
signed the Strategic Materials Act.
which authorized the expenditure of
$100,000,000 over a period of four
years for the purchase of stockpiles
and $500,000 to be expended annually
by the Bureau of Mines and the
Geological Survey in an investigation
toward the end of 1939 and output
for December, mine and scrap produetion, was probably in excess of
of domestic resources of deficient
Export business involving domestic
copper increased in the final quarter
of 1939, adding strength to the domestic market, but at the turn of the
year the foreign situation became
high-priority mineral commodities,
90,000 tons
clouded over
in the
to
minerals Only $10,000,000 was ap-
propriated for stockpile purposes,
and purchases were restricted to the
such as manganese, chromium, and
tungsten (of the minor-metal group),
and tin. A broad program of reconnaissance and exploration was inaugurated by the two Government
bureaus.
large sales to Japan and
Domestic consumers, anticipating
events that occurred in Europe later
Though the operating rate of pro-
in the year, have wisely improved
further minds of producers questions raised reference in
Russia.
copper be
to time
war has the
dueers the from unpredietable time of during conditions may 1940 that adjusted to meet the
the year as a whole to
European peefs fair for created, point prosa gain in domestic consumption
and a higher price level than the
average for last year.
their stock position in recent years in
some of the more vital strategie
minerals, stocks of which were well
above normal at the year end.
Published by permission of the Director.
Bureau of Mines U. S. Department of
the Interior Not subject to copyright.
February. 1940 Engineering and Mining Journal
of 11.25e. late in January. In the
The rise stopped at 14c. late in September, a quotation that was held for
the rest of the year. Prices in 1938
had ranged from 10.75 to 13.75e. and
averaged 12.35c. Chinese metal was
searce, owing to the Japanese block.
ade of the normal trade routes from
producing centers. Nominal quotations were unchanged at 14c. until
late October, when they were in-
creased to 16.50c. Imports for eleven
months included 8,286 short tons of
antimony ore (content). 212 tons of
needle or liquated, and 1,034 tons of
regulus, compared with 8,322, 90, and
821 tons, respectively, in 1938. Mexico
supplied 5,532 tons of antimony in
ore imported in eleven months and
Bolivia most of the remainder.
Receipts from China included 193
tons of liquated and 650 tons of
regulus in the latter period.
Oxide-production capacity at the
Laredo smelter was increased Announcement was made that antimony
oxide and electrolytic antimony would
be recovered early in 1940 from the
dry-belt ores treated at Bunker Hill
smelter. The latter involves use of a
new Lee-Muir process," which
separates the silver, copper, antimony,
and bismuth components of tetrahedrite. Yellow Pine Mining Company is preparing to double its mine
output at Stibnite, Idaho, The
Bureau of Mines and the Geological
Survey, under the Strategic Materials
Act, conducted extensive drilling.
trenching, and stripping operations in
the Yellow Pine district of central
Idaho.
No purchases of antimony were
made for stockpiling under the Strategic Materials Act, available funds
having been allocated to materials of
higher priority, such as tin, man-
ganese, tungsten, and chromite.
October the Texas Mining & Smeltin
Company was said to be including in
In
309,874
in
with
compared
lb.,
828,535
and
1938
COBALT
22,582
1937.
lb.
from
ARSENIC Advance in both
arsenic in 1939 indicates slight in
outbreak
than
about 10 cent. After
for
adequate
ported
ceased
after
France
July,
than
restricted the use of cadmium in
and
ten months 1939,
146,009
5,242,882
with
available on Belgian Congo and Fin
calcium
metallurgical
slightly
less
remained
Activi
the
extended by Federal and
the rate rose abruptly to 93
State agencies in the of sodium
London
the
October
increased
effect
the
of
demand
prices
sharp
arsenie from £10
long on
freight
ships
rates
due
sistance
the
to
C12
BISMUTH The general
smelter activity probably explained
the increase in
(several
bismuth
currently treated at Bunker Hill
CADMIUM The downward trend
prices evident in 1938 continued
the first half of 1939. The New York
lots, dropped from 60e. per
50c. on March
On 9 the announced price
to
subsequent
Alaska
it
the premium for platers' shapes
immereial sticks was cut from
1,801
short
Southern
Navy
at
toms
of
$20.74
per
short
ton.
eadmium for eleven months totaled by Lavino & Company.
103.940
1938
20.000
12.349
98.037
1937
19.917
15.355
122.335
the
of
tained Mo8, throughout the year
Platinum
Quicksilves
to 50a. per long-ton unit in December
36.748
PLATINUM METALS World pro-
75,469
35.901
90.180
51.773
ably
the record
output of 456,000 oz. in 1938 Pro
doction (exclusive of U.S.S.R.) prob-
1936
20.000
12.240
97.789
79.917
42.926
20.000
13.616
70,491
71.992
34.150
1934
8.901
55.000
73.865
36,465
is the first half of 1939
1933
6.528
$5.000
59.227
30.993
165,403 and 130,077 oz.
dortion from the Sudbury nickel
The output South
1932
23.300
5.592
$5.000
$7.925
36.455
1931
23.300
6.720
56.010
87.351
35.665
Africa the first nine months of
1939 and 1938 was 48,100 and 49,300
1930
23.787
7,667
(a)
115.009
45.358
1919
24,300
8.956
(a)
122.145
67.655
production in the United
from Colombia during the first six
1939, and the first award was made
to the Cuban American Manganese
Corporation for 25,000 long
61e. per unit Delivery
Under
Strategic
the
mercury in May Beginning with
Jan. 1, 1940, this metal was to have
On Jan 19 the price of refined
platinum was advanced 61 an ource
and Aug. 838 On
Belgian firm.
balk
of
quoted
larly the late months Political
declaration
slightly with the
Exportation
Kingdom
of
of
war
the
This
license
prohibited without
governments in September
platinum
during
of
by the Climax
227,481
operations at Bingham Chino,
Miami
United
Their
of
the
1939 were the largest re
TUNGSTEN Conditions is the Far
that
than
18 with both
compared
output
fourth
gains
into
first
platinum metals were
compared with 29,791 Im
byproduct
1939 continued to hamper the
industry, which normally
large
the
eleven
1930
ply
Major
part
of
the
world'
areas
still
reported
were
Kwangtung
37,372,912 lbs., of which the
Abnormally low im- U.S.S.R. took 35 per cent: Japan, 25: Chinese hands and being extensively
Anticipated war need was
286,859 tons of manganese, and
eight
1938, and exports of un
increase in the output of molybde
from
totaled 583,148 long tons
first
the
oz,
On
1939
remained
through
145,599 in the
Company, which produced 21,750,000
lbs. of metal. Of interest 1939
the
for the first eleven months of
Engineering and Mining Journel Fel.
the
Imports
by
General imports of
at
the
largely to
in
for
the Gold Coast and British
of
it
824
but of iridium
the
31,000,000 lbs. The drop
characterized by sharp fluetua
prices during 1939, partien
changes early in the year. and
The
where
$40,
to
#125
in Spain were responsible for
jumped
640
respectively, but on Oct 19
an
the policy of the Franco Govern
result
the
raised
was
MOLYBDENUM The
production
tension abroad and uncertainty over
country
from
by
MoS, were 45c. per pound con
1935
MERCURY The mercury situation
do
half
duty.
5c. per pound Imports of metallie are, delivered in June, was supplied
30
last
with
chromite
made
64.057
that are known to
large
Penin
purchase
Purely nominal demestic trade
States (Alaska) in 1939 probably will
be slightly less than in 1938 Exports
Developments in Europe during the
Kenaj
Rhodesia
Spanish
Domestic
market weakened further in the
Cumberland,
Pa.
undevel
An
Cadmium
12.359
by
quarter.
from
the
and
the beginning of the year. and the
other to Dorothea Reddy Moroney
properties
Antimony
20.000
North Atlantic ports, duty unpaid
for 25,000 tons, at $33.74 per
oped
Aluminum
Act
Mutual Chemica Company for
New
Italian
of
in 1938
for 50
20,000 long tons of Turkish
$26.50 per ton, f.o.b. Baltimore
at
selling
1939
30e. long-ton off
and
eurement Division of the Treasury
furnished
bined
Year
ore market in 1939
Two awards were made by the Pro-
be
in
months were somewhat greater than
from
restigated
metallurgical chromite for emergency
delivered
late
Mining Company is Chingehow Prov
in the Haut Tifneat region
resumed
The
the principal influences
stockpiles under the aforesaid Act
75c.
to the end of the year. In March
pound (prevailing since 1931)
March and to 27e. in August
MANGANESE War and ramors of
Of were the purchases of
to
Government
the
by
Europeo
of the Manchuria Lead
cent
also
grade magnesite
Day, Ore.).
sticks,
for
Mercurio
Yangehia
the
at
more
YEARLY AVERAGE PRICES MISCELLANEOUS METALS
United States producer, reduced the
price of magnesium from 30c.
Stillwater Counties, Mont. Can
that
one
in
Discoveries
journal
consump
eastings
expanded
of
Wyoming;
but
program on the direct thermal
of
in
Canada
London quotations increased from 43s
apparently
by
the
were
reported
be
November
in
copper
Chile. Activity in prospert
ten
2,200 fasks were reported entered
late
to
Strategie Materials Act. three
United Kingdom dropped slightly.
be recovered from the silver
Under
flanks,
612
Braden
the
Bureau of Mines expanded
and
cies.
only
to
first
the
compared with 25,321 tons in 1938
Dow Chemical Company,
known
tons),
examined
being
October Imports of metal during
the first ten
higher than in any
1922 Metal exports, chiefly
brought
thousand
October
compounds
increased substantially
two
the
of
tion Although output
$1.25
and
some
the development of domestic produc-
$1.10
55c.
from
Further attention WAS forused
bismath output Greater
raised
chromite
world sources.
abroad the
announced
restrictions
Export
placed
for
Purchases for strategie purposes
nesium alloys to provide better
the
of
appeared
molybdenite
of
average
ginning
Progress made in treating mag
searcity
March
Prices
die
of
toms,
for
September
the
amounted to 28,000 long tons in 1939,
started
the
1,499 flasks in 1938, but larger
ing purchases by the Government,
of magnesium alloys but the
Imports
eastings
price
foreign
both
in
and
Japan;
Quo
led
the
the
and
recovered
October
possibility of a shortag and impend
an important part Military
white
pound,
in
only slightly exceeded the 1,500 flasks
were stimular by higher prices,
built in the United King-
tations
October,
pests.
In
greater
in
of domestic mines in
Activities in the domestic industry
record
set
cent during November, and chromite
needed
first
at
MAGNESIUM World production
During the last five months,
1939 That of lead
probably
from the last quarter
at 823 to 824 per long ton
1,021,345 in 1938
Domestic
and British India, and slight decline
French Morocco No data are
price
this
imports higher Produe
South
from
Rhodesin, moderate gains is Canada
quotations
Nominal
exported, chiefly to South and Central
from
Shipments of ore (35 per cent or
increase in output in Northern
tens,
long
288,789 tons for the period
1,227,278 lb of lead
America,
Incomplete statistics indicate
eventful Imports for
in
The
situation
with
improved,
of
production was of little
pound.
per
tons
Africa
350-lb.
1938,
of 1939 chromite market
5,566,319 lb. of calcium and
and
from $1.36 per
respectively, to $1.50 and
CHROMIUM During the first
60c.
brought
up
metal
lots
needs. Germany is reported to
Metallie arsenie imports
and
18,424 of
5,340
building
the
prices
Cuba, 16; and British India. 14 In
Domestic
all
Despite
Gold
the
1939
in
the
Empire
Dec.
from France was curtailed,
but limited shipments from Sweden
portation
August
in
first
the
Cuba, and 14 from Brazil or
for
undoubtedly increased the record
from
took as much as 1,000,000 the
supplied 40 per cent: U.S.S.R.
Although United States
of
prices
of stocks Imports
ten
than during the record year 1937
dian Trade Agreement.
After
first
in
Cana
1938
the
Coast, 17 from British India 15 from
Imports
of 1939 were 64
slightly.
15e.
France, 7. and Italy, other
from the U.S.S.R. 24 from Gold and
and
the
1939,
1938
Germany
of
cent
of the metal shall be used
tie production and imports
ports for consumption were 543,168 in 1937 and the failure of domestic
production to make up for this
doubtedly drained
general imports 28 per cent
tons containing 268,785 tons. Of the
1938;
in
speculative
United
the
than doubled those of the
its contracts stipulation
from
into
Imports
States in the first ten months more
the United States since late
United Kingdom, 20; Netherlands, 7;
set
February, 1910 Engineering and Mining Journal
worked The tangsten area in the
10
.
hands of the Japanese is small and
not yet pacified. Adequate supplies
are reaching Hongkong by devious
the war began. On Dec. 1
ducer of Prime Western zine
price 3e. per pound to 6c. But
ZINC
(Continued from page 47)
supplies might be eut off has had a
real influence on the market. Sales
granted to the Pekin Syndicate, Ltd.,
a British corporation, by the Chinese
Government in 1939, and it was reported that the Japanese army had
granted the wolfram monopoly on
any ore under its control from South
China to three Japanese firms. Exports from China during nine months
were 7,069 metric tons, compared
with 12,354 tons for the same period
in 1938. Delivery on barter agreements with the U.S.S.R. formed part
of the movement in 1939.
London quotations declined during
the first nine months but were
stronger in the last quarter. Do.
mestic quotations followed the same
pattern and domestic scheelite was
quoted at $22 to $24 per short-ton
unit delivered at the year-end
Domestic consumption jumped
toward the end of the year, but
imports for consumption were 904
short tons during the first 11 months,
and general imports were 1,585 tons.
Forty-three per cent of the imports
came from China.
The domestic tungsten industry
continued to increase its activities.
Possible purchases by the Government in connection with the stockpile program enlarged the market
difficult to tell whether their look of
interest resulted from confide
the existence of an adequate apply
of zine for subsequent purchase as
market divorced from the London
quotations by the war, there has been
economic advantage for Latin-Ameri
can and Canadian producers to ship
at $25 per short ton unit and the
other by the Procurement Division of
the Treasury for 425 tons from China
at $15.82 per unit exclusive of duty.
VANADIUM-Apparent consumption
of vanadium was greater in 1939.
Imports in the first eleven months
totaled 12,667 short tons containing
3,264,715 lb. of V2O2, compared with
8,216 tons of ore for the same period
in 1938. As in the past, all imported
American supplies came from Peru.
Operations in the Paradox Valley,
now the principal domestie producing
area, continued at a high rate, with
the roasting and leaching plant of
the United States Vanadium Corpora-
tion at Uravan, Montrose County,
running at capacity and treating 240
tons of ore daily. Additional milling
facilities being installed include a
refining unit for recovery of uranium
from discarded material Output
continued from a number of smaller
operators in Utah, and it was re-
ported that activities were being revived in the Rifle district, Garfield
County, Colo.
Germany is said to have developed
a process for recovering vanadium
from converter slags that may make
52
in
required, or whether these consumers
of zine were expecting to use less
tonnage of the metal in coming
ore here, rather than to one of the
months,
European nations, for smelting. Furthermore, neutral nations with an ex-
Forecasting today is more than
cess of slab zine can sell it here to
best advantage. Although figures are
not yet available for the full year,
the statistics for the first three months
following the outbreak of the war
show accelerated imports of both ore
hazardous. In looking ahead it must
be borne in mind that developments,
some of which have been referred to,
are likely to emphasize unfavorable
situations when the industry is least
ready for them. Also, there is a
The rush to purchase subsided before October ended, but shipments remained an outstanding feature of the
threat in the new trade treaty contemplated with Belgium, wherein
reduction in the tariff on zine oxide
and zine sheets is under consideration. Despite temporary periods of
prosperity, the basie position of the
Lessened sales and increasing produe-
zine industry is not satisfactory. Gov.
erning the prospects of domestic business are the developments indirectly
associated with the intensity and un-
and slab zine.
market. Within three months, stocks
were eut in half. and on Dee. 1 were
less than the November shipments.
tion, and the large imports of foreign
slab zine and zine ore, then caused
the first reaction that took place in
predictable duration of the war in
Europe.
any important non-ferrous metal since
SILVER
On Oct. 21 it was officially announeed in London that the price of
silver would thenceforth be fixed at
12:15 a.m. instead of 2:15 p.m. This
(Continued from page 44)
change was necessitated by the earlier
and created further interest. Two
Government purchases were made.
one by the Navy for 245 short tons of
concentrates from domestic sources
the
there
was no rush to buy. With consumers'
inventory periods before them.
was
routes, but the fear that Chinese
rights on Chinese tungsten were
pro.
closing hours of the banks. Owing to
the wartime necessity of restricting
tions for fine silver, reportedly as a
direct result of the sharp contraction
in silver dealings in recent years. The
Exchange had resumed silver dealings
on May 1, 1935, after an earlier interruption of 25 years.
The outstanding effect of the war
on the silver market was the introduction of restrictions by the United
Kingdom and India, which have given
foreign-exchange allotments to essen-
tials, on Oct. 25 the British Board of
Trade subjected the importation of
silver bullion and foreign silver coin
to license. This restriction was an
important event in the history of the
London bullion market. The Indian
Government, also, prohibited the im-
portation of silver, except from
Burma.
greater artificiality than ever to the
During 1939 the government of
British India melted silver coin to
caused a wide spread in the price in
various markets. For example, on
Oet. 7 the dollar equivalent of the
London price was more than 40c.
and that of the Bombay price was
supply demand in the bazaars and
in the London market. Following the
world silver market. The war
more than 45e., as compared with the
New York price of only 353e. Within
two weeks the spread between Bombay and New York had inereased_tg
almost 13e.
Had speculative interest in silver
increased, a flight from sterling into
silver might have developed. This
the exchange-control authorities could
not countenance.
outbreak of war, the demand for
silver in India rose sharply and the
Bombay mint delivered fairly large
amounts to the market at a premium
of from 31 to 4 per cent over the
London price.
The Reserve Bank of India re-
ported that rupees returned from eir-
culation at an increasing rate in
1938-39. In that year the return
flow was 126,000,000 rupees, as compared with 1,305,500,000 net during
1919-39.
In December, India was reported
that country independent of foreign
supplies. Purely nominal quotations
for ore remained unchanged throughout the year at 27 e. per pound of
contained V2O.
to have purchased about 1,500,000 oz.
of silver in New York for the hazaar
trade.
RESEARCH-The past year wit-
nessed a substantial increase in the
Engineering and Mining Journal-Vol.jil.No.2
242
May a, 1940.
MEMORANDUM FOR THE PRESIDENT:
Holdings of refined gold at the New York Assay Office have
reached a total of approximately $7,400,000,000. Receipts during
the tea months ending April 30th have averaged $220,000,000 per
month and 11 is estimated that deposits during the resainder of
the calendar year will continue at a similar rate. On this basis,
the accumulated holdings at the end of December would be over
$9,000,000,000.
Aside from the fast that for fiscal purposes there is no
justifiestion for maintaining this large stock in New York, it is
the Treasury's epinion, is view of existing world disturbances,
that from the standpoint of strategic policy these enermous gold
holdings should not continue to be concentrated on our Atlantic
seabeard.
The Fort Knox Bullion Depository has a expecity of $15,500,000,000
in gold. Existing deposite at Fort Knox aggregate about $5,500,000,000,
leaving additional facilities available for the storage of
$16,000,000,000.
Appropriations are now available for the current and easuing
fiscal year is amounts which will enable the Treasury within a fee
weeks to move about $1,000,000,000 in gold from New York to
Fort Knox.
243
with the removal of this $1,000,000,000 shere will
remain is New York, es the basis of today's balance, over
$6,400,000,000, for the transportation of which no funds have
been appropriated. To this amount there should be added the
$1,760,000,000 estimated to be deposited from May through
December, making a total of ever $8,000,000,000 estimated to be
on head December 31, 1940, and which must be held is New Tork
until additional funds shall have been appropriated to provide for
the shipment of such stocks to Fort Knox.
The east of shipping $8,000,000,000 to Fort Knox is estimated
at $1,608,000, and on an expedited basis, with maximum utilization
of reilway and other facilities, the removal will require approxinately twenty-three weeks.
In this connection 18 night be pointed out that with respect
to the $2,220,000,000 in gold acquired during the ten months
period ending April 30th, the Government has collected approximately
85,500,000 is handling fees. This amount, 18 will be noted, 10
substantially more than the expenses which are estimated to be incurred is transporting the accumulated stocks to Fort Knox.
It is my recommendation that the Treasury be authorised to
proceed with the removal during the present calendar year of approxisately $9,000,000,000 in refined gold from New York to Fort Knox,
which will involve, is addition to funds already available, the
244
immediate submission to Congress, through the Director of the
Bareau of the Budget, of a supplemental estimate of appropriation
is the amount of $1,600,000.
(Signed) H. Morgenthan, Jr.
Secretary of the Treasury.
By Messenger + 15/pm 5/8/40
File to Mr. Thompson
-
245
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE
TO
Secretary Morgenthau
FROM
Mr. Haas
Subject:
Railroad freight movement for export.
May 8, 1940
Export freight receipts well maintained
Receipts of freight for export last week continued at a
well-maintained level. Receipts at New York were only slightly
below the previous week's increased volume, while receipts at
9 other North Atlantic ports showed a moderate gain. The net
result is that 183 more cars of freight for export were received at all ports in the North Atlantic area last week than
in the previous week. (See attached Chart 1 and table).
Exports hold steady
Actual exports from New York, as indicated by reported
freight movement data, were maintained during the week ended
May 4 close to the previous week's relatively high figure.
(See Chart 2)
The volume of lighterage freight in storage and on hand
for unloading in New York harbor remains about unchanged.
(See Chart 3)
246
RECEIPTS OF FREIGHT FOR EXPORT AT NEW YORK
AND AT 9 OTHER NORTH ATLANTIC PORTS
New York 1
9 other North
Atlantic ports 2
Total
1,548
1,658
In carloads
)
Week ended
1939-40
(
December 2
December 9
December 16
December 23
December 30
3,435
3,922
4,848
3,856
1,602
1,104
5,470
5,746
6,450
4,960
January 6
January 13
January 20
January 27
4,000
4,056
4,060
4,389
1,251
1,433
1,557
1,825
5,251
5,489
5,617
6,214
February 3
February 10
February 17
February 24
4,274
4,617
3,974
4,550
1,498
1,590
1,637
1,667
5,772
6,207
5,611
6,217
March 2
March 9
March 16
March 23
March 30
4,577
4,059
4,072
4,424
4,150
2,388
2,448
6,965
6,507
1,845
2,033
1,492
6,457
5,642
April 6
April 13
April 20
April 27
3,979
3,957
4,133
5,530
5,823
5,690
4,346
1,551
1,866
1,557
1,248
May 4
4,255
1,522
5,777
4,088
5,917
5,594
1 Source: General Managers' Association of New York, Daily
Report of Operating Conditions in New York Harbor
2 Source: Association of American Railroads, Car Service
Division, Report of Carload Freight for Export
and Coastal Vessel Movement. Includes Searsport,
Portland, Boston, Providence, Philadelphia,
Chester, Wilmington, Del., Baltimore, and Norfolk
(or Hampton Roads)
RECEIPTS OF FREIGHT FOR EXPORT AT NEW YORK
AND AT 9 OTHER NORTH ATLANTIC PORTS
1940
1 939
DEC.
NOV.
JAN.
FEB.
APR.
MAR.
JUNE
MAY
CARLOADS
THOUSANDS
CARLOADS
THOUSANDS
5.5
5.5
5.0
5.0
4.5
4.5
4.0
4.0
NEW YORK
3.5
3.5
3.0
3.0
2.5
2.5
9 OTHER PORTS
2.0
2.0
1.5
1.5
1.0
1.0
.5
.5
0
0
1939
23
9
DEC.
20
6
NOV.
25
JAN.
17
3
11
2
28
FEB.
16
MAR.
30
1940
13
APR.
27
25
11
MAY
22
8
2
JUNE
Office of the Secretary of the Treasury
Division of - - India
C - 304
.
CARLOADS OF FREIGHT EXPORTED FROM NEW YORK
1939
1940
FEB.
MAR.
APR.
MAY
JUNE
T
T
T
CARLOADS
JAN.
DEC.
NOV.
THOUSANDS
CARLOADS
THOUSANDS
5.5
5.5
5.0
5.0
4.5
4.5
4.0
4.0
3.5
3.5
3.0
3.0
2.5
2.5
23
9
20
6
25
11
3
28
17
2
DEC.
NOV.
1939
JAN.
FEB.
16
30
MAR.
13
27
APR.
1940
25
11
MAY
22
8
JUNE
2
.
- of - -
Office of the Secretary of the Treasury
w
AS ESTIMATED FROM DATA OF GENERAL MANAGERS' ASSOCIATION OF NEW YORK.
C. 308
LIGHTERAGE FREIGHT IN STORAGE
AND ON HAND FOR UNLOADING IN NEW YORK HARBOR
-
939
NOV.
DEC.
CARLOADS T
1940
JAN.
T
THOUSANDS
FEB.
MAR.
MAY
APR.
JUNE
CARLOADS
THOUSANDS
10
10
9
8
9
8
7
7
6
6
5
5
4
4
28
25
11
NOV.
1939
23
9
JAN.
DEC.
- of - - India
3
17
FEB.
2
16
30
MAR.
1940
LARGELY
Office of the Secretary of the Treasury
20
6
13
APR.
27
25
11
MAY
22
8
JUNE
2
EXPORT
3
AND COASTAL SHIPMENT. FREIGHT. FIGURES BUT ABOUT EXCLUDE 10% GRAIN. REPRESENTS FREIGHT FOR LOCAL
C - 303
250
The Secretary told Mrs. Klotz to
phone Mr. Young and tell him to
act as the go-between in this matter.
251
May 8. 1940
To:
The Secretary
From:
Mr. Young
Mr. Ballantyne informed me this afternoon
that Mr. Ziegler was very enthusiastic about the
prospect of going to Dayton and talking with the
Army.
As I understand it, the next step will be to
communicate Mr. Ziegler's enthusiasm to General Brett
and that specific details will be settled between the
two.
By
sul P. Young C
252
ITALIAN STOCK PRICES
(Milan)
Dec. 31, 1927 - 100
I
1 940
JAN,
FEB.
MAR.
APR
JUNE
MAY
JULY
CENT
2
DEC.
MARCH
PER
PER
CENT
CENT
9
NOV.
APRIL
23
16
30
6
OCT
11111
13
MAY
20
4
SEPT.
AUG.
1 940
27
1
PER
JULY
Daily
Weekly
1939
18
25
PER
CENT
210
210
185
185
200
200
180
180
190
190
175
180
175
180
170
170
170
170
160
160
165
165
150
150
160
160
140
140
SHARES
I
I
130
SHARES
Volume
THOUSANDS
THOUSANDS
200
200
100
100
130
120
120
1939
NOV.
DEC.
JAN.
FEB.
MAR.
APR.
MAY
JUNE
JULY
1 940
2
OCT.
0
110
SEPT.
9
AUG.
16
MARCH
23
30
6
JULY
13
APRIL
1940
20
27
4
w +
0
110
18
11
25
MAY
"DAILY FOR LATEST WEEK ONLY
Office of the Secretary of the Treasury
Division of Research and Statistics
FO 141
253..
TELEGRAM SENT
GRAY
CK
May 8, 1940
6 p.m.
AMERICAN CONSUL
ANSTERDAM (NETHERLANDS).
29.
Please deliver the following message to President Trip
of the Netherlands Bank as personal from the Secretary of
the Treasury.
QUOTE With reference to your cablegram to the Federal
RESERVE Bank at NEW York, I hasten to inform you that
the Treasury knew nothing of the matter under reference
until the itme was read in the NEW York Times this morning May Eighth. Thereafter Governor Harrison gave ME the
information contained in your cable 153. The Treasury
has been endeavoring to ascertain the source of this
publicity, which I assure you did not Emanate from this
Department, In all of these matters the Treasury desires
to cooperate most effectively with the authorities of the
Netherlands. END QUOTE.
HULL
(FL)
A:FL:MEG
254
May 8. 1940
Dr. Feis
Mr. Cochrea
will you kindly send the following eablegram to the American Consul,
Amsterdam:
Please deliver the following message to President Trip of
the Netherlands Bank as personal from the Secretary of the
Treasury
*With reference to your eablegram to the Federal
Reserve Bank at New York, I hasten to inform you that
the Treasury know nothing of the matter under reference
until the item was read in the New York Times this moreing May eighth. Thereafter Governor Harrison gave as
the information contained in your cable 153. The Treasury
has been enleavering to accortain the source of this publicity,
which I assure you did not emanate from this Department. In
all of those matters the Treasury desires to cooperate most
effectively with the authorities of the Netherlands.
HNO time - May 8/40
255
May 8, 1940.
MEMORANDUM FOR THE PRESIDENT:
I attach hereto for your signature merconda to
the Secretary of War and the Secretary of the Havy in
regard to proposed changes in the Vinson-freemell Act.
The Chairman of the House Naval Affairs Committee
while retaining his conviction that this Act should be
substantially changed at the next session, will be
content with only one present changes
An allowance of a four-year carry-over
of net losses for the benefit of shipbuilders.
I have instructed Treasury personnel to continue
their study of the reports made under this Act and keep
the data current.
JLS.kb
Ths
256
May 8, 1940.
MEMORANDUM TO THE SECRETARY OF WAR:
It is my understanding that Senate Bill 2464,
referred to in Assistant Secretary Johnson's memorandum
of April 26th, is being revised by the Treasury Depart-
ment at the request of Chairman Vinson of the House
Naval Affairs Committee to provide a four-year carry-over
of net losses. I am advised that no further present
changes in the Vinson-Trannell Act are contemplated.
Undoubtedly the proposal to reduce allowable
profit on aircraft from 12 to 10 percent, the elimination
of carry-over of deficiency of profit in the case of aircraft, and the discontinuance of the exemption in favor
of scientific instruments will be considered by the next
Congress.
In Assistant Secretary Johnson's memorandum be
outlined changes in the Act to be embodied in a proposed
substitute for Senate 2464. Paragraph B of this outline
spoke of shortening the period of carry-over from four
years to one year. I am assured that the Treasury Department and Chairman Vinson favor retention of the four-year
period for carry-over of net losses.
Hm.h.
May 8, 1940.
MEMORANDOM TO THE SECRETARY OF THE NAVY:
It is my understanding that Senate Bill 2466,
referred to in Admiral Stark's memorandum of May 4th,
is being revised by the Treasury Department at the
request of Chairman Vineon of the House Naval Affairs
Committee to provide a four-year carry-over of not
losses. I am advised that no further present changes
in the Vinson-Tranmell Act are contemplated.
Undoubtedly the proposal to reduce allowable
profit on aircraft from 12 to 10 percent, the elimination of carry-over of deficiency of profit in the case
of aircraft, and the discontinuance of the exemption in
favor of scientific instruments will be considered by
the next Congress.
THE WHITE HOUSE
WASHINGTON
May 3, 1940.
MEMORANDUM FOR
THE SECRETARY OF THE TREASURY
FOR PREPARATION OF REPLY
FOR MY SIGNATURE.
F. D. R.
WAR DEPARTMENT
OFFICE OF THE ASSISTANT SECRETARY
WASHINGTON, D.C.
April 26, 1940
MEMORANDUM for Mr. Stephen Early, Secretary to the President:
Senate Bill 2464, referred to in your memorandum of April
26, 1940, makes applicable to the manufacture of naval vessels
the provisions now in vogue as to aircraft, under which losses or
deficiencies in profit may be allowed as a credit in determining
excess profits during four income taxable years succeeding that in
which a particular contract is completed, with the proviso, however,
that the maximum profits shall be 10 percent rather than 12 percent
as is now allowed for aircraft. This original bill is primarily of
naval application and the War Department has little interest in it,
but does not object to its passage.
It is my understanding that as the proposed substitute for
S. 2464 above referred to, Treasury Department officials have, at
the instance of Mr. Vinson, Chairman of the House Naval Affairs
Committee, drafted proposed legislation, not yet introduced,
amendatory of the Vinson-Trammell Act, which includes the following
changes:
a. Maximum profit on aircr ft is lowered from 12 percent
of contract price to 10 percent of contract price (but not
in excess of 11.11 percent of contract cost).
44 canyone
b. The period of carryover is lessened from four years
following completion of contract to one year following
completion 01 contract.
c. Carryover of deficiency in profit is eliminated to
permit only losses being carried over.
₫. Authority to exempt scientific instruments from the
applicability of the act is eliminated.
The War Department is vitally interested in the proposed
substitute bill. In the event that the substitute is introduced in
the Congress, views opposing its passage will be submitted. The
provisions of the Vinson-Trannell Act applicable to the Army were
included in the so-called National Defense Act of 1939 (Public
No. 18 - 76th Congress) at the instance of the Congress, and not at
M
-2-
the instance of the liar Department, but have constituted a basis
on which industry has cooperated with the War Department in the
present expansion program, which it WGS intended should carry
through June 30, 1941. Under the new Government program for the
release of airplanes for foreign sale, the program has, in fact,
been continued for approximately an additional year. It is the
opinion, therefore, of this Department that the present legislation, insofar as it affects the Army, should remain in status quo
until the completion of the program, and that any material change
now made therein will bring charges of breach of faith and
redound neither to the interest of the Kar Department nor, in my
opinion, of the Administration.
I want to repeat that the provisions of the original
Senate 2464 do not aff'ect the War Department. It is the proposed
Treasury substitute to which objection is taken herein.
hows
Louis Johnson,
The Assistant Secretary of War.
(No. 243)
TO AMEND THE ACT OF MARCH 27. 1934 (48 STAT. 505), AS
AMENDED (49 STAT. 1926; 34 U. S. C., SUPP. IV. 496; SEC. 14 OF
PUBLIC, NO. 18. 76TH CONG.) TO ADJUST THE LIMITATIONS
ON THE PROFITS OF CERTAIN CONTRACTORS WITH THE UNITED
STATES (S. 2464)
NAVY DEPARTMENT
Washington, September 20, 1939.
The CHAIRMAN, COMMITTEE ON NAVAL AFFAIRS,
House of Representatives, Washington, D. C.
Mr DEAR MR. CHAIRMAN: The bill (S. 2464) to amend the act of
March 27. 1934 (48 Stat. 505), as amended (49 Stat. 1926; 34 U. C.,
Supp. IV, 496; sec. 14 of Public, No. 18, 76th Cong.), to adjust the
limitations on the profits of certain contractors with the United
States, was referred to the Navy Department by your committee with
a request for views and recommendation relative to the measure,
Under the act of March 27. 1934. those who contract for the con-
struction of ships for the Navy must return to the Treasury profits
in excess of 10 percent of the total contract prices. Such contractors
are permitted to allow net losses incurred during any income taxable
year as credits in determining the excess profit, if any, during the next
succeeding income taxable year.
It is the purpose of the bill S. 2464 to permit these contractors to
take credit for deficiencies in profit less than 10 percent. as well as net
losses, in determining excess profits, if any. during a period of the next
4
succeeding
taxable years, rather than during the next succeeding
year
only.
Enactment of the bill S. 2464 would place ship-construction contractors in a position similar to that enjoyed by aircraft contractors
by section 14 of the act of April 3. 1939 (Public, No. 18, 76th Cong.),
except that the limit of profit of 12 percent fixed by the act of April
3, 1939, for aircraft contracts would not apply to ship-construction
contracts. The original limit of profit of 10 percent for ship construction would be retained under the bill S. 2464.
The Navy Department favors the adoption of the principles contained in the bill S. 2464 as being equitable and as permitting to ship-
construction contractors a fair expectation of reasonable profit
without danger of disadvantage to the United States.
The Navy Department recommends enactment of the bill S. 2464.
Sincerely yours,
CHARLES EDISON.
174366-39-No.24
(1571)
O
Acting Secretary of the Nary.
Senate Bill S. 2464 wa3 passed by the Senate at the
last session of Congress and referred to the House Naval Com-
mittee, where it is now being held.
This Bill is an amendment to the Vinson-Trammel Naval
Authorization Act and permits the shipbuilding industry to use
any losses or deficiencies in profit sustained on contracts
during a four year period in computing the 10% profit permitted
under the law. The law no permits taking up losses for 8 one
year period only. An amendment with the above provisions was
passed by the last session of Congress but it applies only to
aircraft. The Navy is favorable to Bill S. 2464.
Several years ago an amendment was made to the Vinson-
Trammel Act exempting scientific instruments used for navigation,
fire-control and communication from profit limitation, the pur-
pose of which was to encourage development of these devices for
the Navy. Consequently, substantial progress has been made in
this field which otherwise would not have occurred had these
scientific instruments been restricted to the 10% limitation.
It is understood that S. 2464 is now being held in the Naval Com-
mittee because the Chairman has learned that a few companies
engaged in the development and manufacture of scientific instru-
ments, in a few instances have made high profits. During the
same period, however, these same contractors have sustained
heavy losses on contracts in carrying out development of important
devices for the national defense. The Chairman apparently feels
that the law, in 90 far as it relates to scientific apparatus,
should be modified to restrict profits. Any attempt along this
line at this time would open up the whole complex subject and
might not only prevent S. 2464 from passing, but would result
in serious impairment to the national defense.
Last December the Army and Navy requested the National
Academy of Science to have a study made of aircraft procurement
with particular reference to costs and production. As a result,
a committee was formed under the chairmanship of Colonel Leonard
Horner, known as the "Aircraft Procurement Committee", under the
auspices of the National Research Council to undertake the
problem. Since then it has been making a very thorough study of
the whole subject. This Committee is composed of several very
prominent, experienced engineers and production specialists. It
is expected that the Committee's report will be ready in about
two months. The expense of this Committee is being borne by the
Army and Navy. It would seem unwise to start any discussion of
this subject in Congress until this Committee has finished its
work and its report, which will cover all phases of the subject,
has been submitted.
DEPARTMENT OF THE NAVY
OFFICE OF THE SECRETARY
WASHINGTON
RANDUM FOR MR. STEPHEN EARLY, SECRETARY TO THE PRESIDENT
eject: Your memorandum of April 26, 1940 relative to Senate
Bill 2464.
Senate Bill 2464, if enacted, will permit ship contractors and their subcontractors to take credit for deficiencies in profit less than 10 percent, as well as net losses, in
determining excess profits, if any, during a period of the
1.
next 4 succeeding taxable years, rather than during the next
succeeding year only.
2.
This would place such contractors in a position sim-
ilar to that enjoyed by aircraft contractors by section 14 of
the act of April 3, 1939 (Public, No.18, 76th Cong.), except
that the limit of profit of 12 percent fixed by the act of
April 3, 1939, for aircraft contracts would not apply to shipconstruction contracts. The original limit of profit of 10
percent for ship construction would be retained under the bill
8.2464.
The shipbuilders reasonably contend that the carry
over of deficiencies and losses for a four-year period 18 even
3.
more justifiable in their case than in the case of the aircraft
mAnufacturers since the construction period of Naval vessele is
BO much longer, in some instances requiring a four or five year
building period.
The adoption of the same method of treatment for both
4.
and
aircraft contractors should tend to increase competiship
tion and bring better prices.
The carry over of deficiency and profit for a four
5. period will not in any way guarantee the contractor a
year profit but will only increase his opportunity of earning an
average profit not in excess of the 10 percent.
The intent of the original legislation WAS to prevent the
6. and unreasonable profits and there 18 nothing allow- in
proposed excessive revisions that would not continue to keep the
within the 10 percent limit.
able 7. profits sm attached stand comment
showing Navy Diff Supposed
NRSon
264
TREASURY DEPARTMENT
PROCUREMENT DIVISION
OFFICE OF THE DIRECTOR
WASHINGTON
May 8, 1940.
9/1/40
MEMORANDUM FOR THE SECRETARY.
In a conversation with Colonel Burns this afternoon concerning the capacity recently released by the Navy to the Dupont
Company, he stated that Dupont had consistently worked in
close cooperation with both the Army and Navy, that they
knew that the powder requirements of the Army would utilize
all capacity they had available, but that no orders would be
placed by the Army which would prevent the Allies from getting
the powder in question.
Colonel Burns suggested that a representative of the AngloFrench Purchasing Board conversant with the powder situation
come to Washington for a conference with him and representatives of the Ordnance Department of the War Department in
order that arrangements might be made with Dupont which would
not interfere with production of powders of certain granulation in which the War Department is interested.
I talked with Mr. Purvis and have made tentative arrangements
for a representative of his Mission to meet with Colonel
Burns at 3:00 P.M. tomorrow.
together
A
5/8/40
265
Mr. Purvis, in his own handwriting,
took off the information from the attached memorandum.
266
TREASURY DEPARTMENT
PROCUREMENT DIVISION
OFFICE OF THE DIRECTOR
WASHINGTON
May 8, 1940
MEMORANDUM FOR THE SECRETARY
There is transmitted herewith copy of a letter addressed by
Admiral Furlong, Chief of Bureau of Ordnance, Navy Department,
to E. I. du Pont de Nemours and Company, Inc., concerning a
diversion of powder from an existing contract the Bureau of
Ordnance has with that company.
att.
267
Photostat to
hal young
may 8.
NAVY DEPARTMENT
BUREAU OF ORDNANCE
WASHINGTON, D.C.
May 4, 1940
Subject:
Manufacture of Smokeless Powder.
Sirs:
The Navy Department is increasing production of
smokeless powder at the Naval Powder Factory, and therefore releases
capacity at E. I. du Pont de Nemours and Company, Incorporated, of approximately 2,500,000 pounds of smokeless powder per year for other orders.
It is desired to complete the current contract. Schedule
500-1620 for 700,000 pounds of smokeless powder, now pending, will be
cancelled. It is desired to place a contract for Schedule 500-1621 for
50,400 pounds of NH powder. The Navy Department also desires to reserve
capacity for approximately 400,000 pounds of NH powder, small caliber,
per year.
Very truly yours,
W. R. FURLONG,
Rear Admiral, U.S.N.,
Chief of Bureau of Ordnance.
B. I. du Pont de Nemours
and Company, Inc.,
Attn: Mr. F. W. Bradway,
Wilmington, Delaware.
C
MRG
0
P
Y
cc - Capt. Collins,
Procurement Divn., Treasury
268
May 8, 1940
2:30 p.m.
Present:
Mr. Purvis
Mr. Ballantyne
Mr. Young
Captain Collins
(Mr. Sullivan at the very end)
Bullitt:)(HM,J dictated the following cable to Mr.
"I have just been informed that the British
and French Governments intend to place all of their
orders for iron and steel through the British Iron
and Steel Federation in London without consultation
with Purvis and Bloch Laine. I do not know whe ther
they will use the funds on deposit with the Federal
Reserve of New York for this purpose. It is impossible for me to keep the President informed under
these circumstances what the British and French Governments are doing in regard to purchases of iron
and steel in the United States. Please use your
good offices to strongly protest this procedure and
say that I insist that all purchases in the United
States for the Brench and British Governments must
clear through Purvis and Bloch Laine."
(At this point, HM,Jr gave Mr. Purvis the
chart on orders and unfilled orders for airplanes. )
HM,Jr: Trying terribly hard to do the rest
of your purchases on the same basis, but poor Haas
is getting weaker. Now he is trying desperately
to get the other purchases. When we do we will do
it on the same basis.
Mr. Purvis: We must help. At least it can
be done on the other big things.
Captain Collins: That's in the course of
coming through.
269
-2-
HM,Jr: Harry, number one. Where do we
stand in regard to these extra engines for the
Bloch bombers?
Captain Collins: It will be after the end
of this week, Sir, before the Army will know whether
they can release those 240.
HM,Jr: Who are you working with on that?
Captain Collins: General Brett.
HM,Jr: Who's he working with? Is this Pratt
Whitney?
Captain Collins: He's presumably working with
hiw own force over there.
HM,Jr: Didn't you talk to someone?
Allison.
Captain Collins: I had quite a long talk with
HM,Jr: What's Allison's attitude?
Captain Collins: He would be very happy to
do it if he had them, but he said he simply does not
have the production.
HM,Jr: Do you find him cooperative?
Captain Collins: He seemed most cooperative
when he talked with me. Yes, sir. It comes back,
of course, to the reserve that was set up for the
Army and the 240 we have been discussing are in the
Army reserve and they come about by virtue of consolidation of the bombers.
HM,Jr: Incidentally, I have this to take up
Check Stettinius to see if they can place
steel orders in the centers where we have the greatest
unemployment. So therefore I would like to know where
you are placing your orders.
with you.
Mr. Purvis: That's very interesting.
270
-3-
HM,Jr: Because some of these plants are in
centers where employment is fairly high.
Mr. Purvis: That gives me my
HM,Jr:
cue.
Mr. Purvis: My cue.
HM,Jr: On the other thing that I had here,
on your orders, Allison P-40 they hope to give you
83 in August.
Mr. Purvis: Yes.
HM,Jr: And that's when they first begin.
Mr. Purvis: We are in May. They will have
to do pretty well to come to that.
HM,Jr: And on the P-46 they hope to give you
12 next February.
Mr. Purvis: Yes.
And then they come along
rapidly after that.
HM,Jr: Fairly rapidly. And on the -- I guess
this must be just engines -- this is 1150 h.p. engines.
Star to deliver 22 in February. That's for the P-46.
The 12 is for -- this says P-46. I don't know whether
they have them separate. N.A.A. 1150 h.p. The other
says Curtiss P-46.
Mr. Purvis: North American Aviation.
HM,Jr: Oh! They supply the two. That's it.
22 go in February to Curtiss for their P-46 and 22 for
the P-46 go to N.A.A. That's the way they have divided it up in February. In other words, you get
34 in February.
Mr. Purvis: I see.
HM,Jr: That's when they first start.
271
-4-
Mr. Purvis: Yes.
34 in all.
HM,Jr: They start 6 in June for Lockheed.
Mr. Purvis: Lockheed, 6.
HM,Jr: In June. And then, looks like September
1 for the Bell P-39, 3 in October. And then engines
spares, you get 15 unassigned.
Mr. Purvis: I see. Unassigned.
HM,Jr: That gives you an idea when they begin.
Mr. Purvis: Yes. Quite. That's going to
very vital.
be
HM,Jr: That's all I have.
Now you can unload yourself.
Captain Collins: May I make one note. The
engine figure in here will not jibe in your books
because we take two figures, where the planes are
bought with engines.
Mr. Purvis: This includes engines and engines
in planes.
HM,Jr: We have taken engines out of the planes.
Mr. Purvis: I see.
Alittle difficulty that arises in connection
with deciding what we can buy here when you are willing
to do something for us in which we tendThe
to get
into a
situation
vicious circle. Take my tip tank.
is that you are willing to let us get the tank provided a substantial order is placed. On the other
hand, we find ourselves, as a matter of practice, up
against the fact that people from the other side of
the water so "How can we place a substantial order for
the tank until we know what it will do?" I want to
know what is the answer. Is it send somebody over here?
272
-5-
HM,Jr: First time I have ever heard tank
mentioned.
Mr. Purvis: Somewhat to my surprise, my
people advise me they are interested in the tank,
and
apparently there has been something coming on
there.
Captain Collins: There was a query made
several months ago concerning tanks, with respect
to furnishing specifications and plans, taken up informally at one of the meetings, and they were told
that the Army would not release specifications or
plans, but if a material order were placed they would
furnish such orders and plans to the manufacturers
and itofdropped
right there. I have heard nothing
more
it.
Mr. Purvis: Apparently our people -- the
trouble is they don't quite know how to approach it
and I wondered if the proper thing would not be to
send
over --and would they be allowed to see the performance?
HM,Jr: Surely!
Mr. Purvis: It's definite they can't expect
to see the specifications, but they can expect to see
performance?
HM,Jr: I don't know. Get them over here.
Captain Collins: There will be no trouble.
Mr. Purvis: Well, fine! Has any difficulty
arisen, has that cleared up on the powder? I heard
some suspicion of powder that morning.
Mr. Young: Mr. Ballantyne was just telling me
outside that in a preliminary conversation with Du Pont
on the release of the Navy's 2,500,000 pounds, that
Du Pont says the naval release is all right with them,
but they don't see how they can give it to the British
because of the Army project which would command all the
Army capacity. Is that correct?
273
-6-
Mr. Ballantyne: Correct.
HM,Jr: Oh, dear! Well, you, Collins, can
handle that. If you don't get it cleared up in
24 hours, let me know. For gosh sake!
Mr. Purvis: Apparently the Army will block
it.
Captain Collins: They do have a letter and
Navy has released it.
Mr. Young: There are apparently no Army con-
tracts yet, so the way is still clear.
HM,Jr: Colonel Burns could gix that up.
Mr. Purvis: Alloys. If I could just come for
a moment to those.
First place, a new cable handed to me as I came
away, saying that negotiations for stocks lying in
Indo-China still proceeding between the Chinese Government and the Grench Government Agent who has now ar-
rived in Chungking -- in Paris, to handle to. Conclu-
sion may be somewhat delayed, owing to the fact there
seemed to be opposition between various Chinese political
groups. However, in no case will Chinese wolfram in
Indo-China be likely to come into the market because in
event the negotiations reach a deadlock, wolfram will
not be released for export by French authorities. That's
the first straight-out statement like that.
HM,Jr: And I told you about U.S. Steel and maybe
we will hear from Mr. Stettinius.
there?
Mr. Purvis: You still are open to the possibility
HM,Jr: Oh, yes! Definitely!
Mr. Purvis: Fine!
Cobalt. Seems to be a case of a desire to get
274
-7-
something arranged on the re-export clause, but 1f I
understood that correctly from you, we are held up
for a day
HM,Jr: And I wrote him a follow-up yesterday
on the re-export clause. I am writing him twice
week until he will do it.
Mr. Purvis: I have an idea that with all the
other things that we have talked about, that that pretty
well cleans me out.
a
HM,Jr: Don't you think creolite is terribly 1mportant? I am being funny. I had a 325 foot cutter
sailing in about a week. Don't you think you and I ought
to go up to Greenland? It's a very nice cutter. The
same one I was on. I really think it needs a first-hand
investigation. Get there about the 15th of June.
Mr. Purvis: Yes, I think it's splendid.
HM,Jr: They tell me 400 Danes are very hungry
and we can take condensed milk.
You think that's about everything?
(Mr. Purvis and Mr. Ballantyne left.)
HM,Jr: The thing I wanted to tell you fellows
in confidence is the thing he tells me. He says something has happened suddenly in Pratt Whitney. That
all bets are off on engines. Now, he said he does not
know what happened, but he thinks what happened is that
Wilson, President of the Pratt Whitney and Sir Henry
Self had a disagreement because he says he understands
that Wilson says Sir Henry called him a liar twice.
So I told him if Sir Henry Self conducted himself the
way he did in Collins' office with the Army officers,
I don't blame Wilson for getting sore. And Jacquin
said to him, "I want engines. I don't want excuses."
And he said, Don't let either Pleven or Self have anything to do with this in the future. He wanted to go
to Gordon Rentschler and get him to help him. I told
him no; he should go directly to Wilson. I said,
275
-8-
Gordon Rentschler thinks he has some influence, but
I don't think he has.
(Mr. Sullivan came in at this point.)
HM,Jr: Look, you told me (Sullivan) the other
day that one of the two engine companies -- I can't
remember -- Pratt Whitney or Curtiss that was going
along and giving you no trouble.
Mr. Sullivan: Allison.
HM,Jr: They are all right?
Mr. Sullivan: Yes. We have had only one dis-
cussion and they were splendid.
Whitney.
HM,Jr: The one I am interested in is Pratt
Mr. Sullivan: I have not seen them.
HM,Jr: Well, strictly in the room, there has
been a bust up between the Purchasing Board and Pratt
Whitney, of personalities, Wilson and Self have had a
row. But there has been no tax trouble ?
Mr. Sullivan: Not that I know of.
HM,Jr: The game is we are to do nothing. On
my recommendation Purvis is going to see Wilson himself
and have a talk and see if he can't get them to take the
matter up again. I am interested because I want to
see that plant expansion and if he can't get anywhere
he's going to talk to me and I am going to deal with
Wilson myself. So don't do anything or say anything,
but I wanted to make sure it wasn't a tax matter.
We are not to do anything, but if you hear anything why Pratt Whitney are sore at the Allies, let me
know and don't do anything on your own initiative because
Idoes
certainly
want to see their program go through and so
he.
000-000
276
May 8, 1940
My dear Mr. President:
I an inclosing herewith,
for your confidential information,
the latest report on orders, do-
liveries and unfilled orders for
airplanes and airplane engines of
the Allied Purchasing Commission.
Yours sincerely,
this report
The President,
The White House.
in safe in is not and
freder
kept only one carbon
all other cartons
destroyed m
by messenge
2pm
c
277
May 8, 1940
My dear Mr. Johnson:
X am inclosing herewith, for your
confidential information, the latest report
on orders, deliveries and unfilled orders
for airplanes and airplane engines of the
Allied Purchasing Commission.
Yours sincerely,
(Signed) H. Morgenthan, Jr.
The Honorable Louis Johnech,
Assistant Secretary of War,
War Department.
H Manager 3:50
pur
278
May 8, 1940.
The Honorable,
The Secretary of War
(Attention: General Arnold)
My dear Mr. Secretary:
I am inclosing herewith, for your confiden-
tial information, the latest report on orders,
deliveries and unfilled orders for airplanes and
airplane engines of the Allied Purchasing Commission.
Yours sincerely,
(Signed) H. Morgenthan, Jr.
By Memoural 3:50pm
279
May 8, 1940
My dear Mr. Comptons
I am inclosing herewith, for your
confidential information, the latest report
on orders, deliveries and unfilled orders
for airplanes and airplane engines of the
Allied Purchasing Commission.
Yours sincerely,
(Signat) H. n
The Honorable Louis Compton,
Assistant Secretary of Navy,
Navy Department. .
n Message 3:50 pm
280
May 8, 1940
The Honorable,
The Secretary of Navy
(Attentions Admiral Towers)
My dear Mr. Secretary:
I am inclosing herewith, for your confiden-
tial information, the latest report on orders,
deliveries and unfilled orders for airplanes and
airplane enginee of the Allied Purchasing Commission.
Yours sincerely,
(Signed) H. Morganthest.
By / 3:50gm
281
May 8, 1940
My dear Captain Collins:
I an inclosing herewith, for the
confidential information of yourself and the
other two members of the President's Liaison
Committee, three copies of the latest report
on orders, deliveries and unfilled orders
for airplanes and airplane enginee of the
Allied Purchasing Commission.
Yours sincerely,
(Signed) H. Morgenthau, Jr.
Captain Harry E. Collins,
Director of Procurement,
Treasury Department.
By Message 3:50pm
282
TREASURY DEPARTMENT
PROCUREMENT DIVISION
OFFICE OF THE DIRECTOR
WASHINGTON
May 8, 1940
MEMORANDUM FOR THE SECRETARY
meeting of the Interdepartmental Committee on Strategic Materials was held
in the office of Dr. Feis of the State Department yesterday afternoon, and
at this meeting it was developed that the President had approved a request
A
of the Secretary of State for the inclusion of an item of $12,500,000 in the
Treasury Department Deficiency Bill to be available immediately for the purchase of strategic materials.
This estimate has been submitted to the Bureau of the Budget through regular
channels.
Conferences will be held immediately with representatives of the Army & Navy
Munitions Board to determine what materials and in what quantities purchases
will be made if these funds are appropriated.
All
copy
m yours
5/11
283
THE UNDER SECRETARY OF STATE
WASHINGTON
May 8, 1940
Dear Henry:
I have been able to secure the following information on the question raised in your inquiry of May 7,
1940, namely, as to whether anything had been heard
from the Attorney General about the reexport of tin and
rubber:
I understand that the Tin Trade Association, the
Rubber Trade Association, and the Commodity Exchange,
dealing in tin and rubber, had had under consideration
the possibility of requiring clauses in contracts of
sale providing that the tin or rubber sold should not
be reexported in conflict with this Government's policy,
but that the membership of these organizations had
hesitated to adopt such a measure because of their fear
that it would be contrary to the provisions of the
Sherman Anti-Trust Act, and that, therefore, they would
be liable to either criminal or civil suits. This
matter was taken up informally with the Department of
Justice,
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury.
284
-2-
Justice, and not long ago Mr. Thurman Arnold, Assistant
Attorney General, advised that the Department of Justice
is not able to give in advance approval to any combination
or agreement in restraint of trade on the assumption that
it would be reasonable and therefore legal, but that it
recognizes that it is necessary to give whatever protection
can be given under the law to business men who act in good
faith, and he suggested procedure under which the proposed
action could be brought formally to the attention of the
Department of Justice.
This Department has transmitted to the three associations
mentioned above the information furnished by Mr. Thurman
Arnold and invited them to place the entire matter before
the Attorney General by letters transmitted through this
Department, so that supporting memoranda prepared in this
Department and in the War and Navy Departments might be
sent to the Attorney General at the same time. The matter
is now before the two trade associations and the Commodity
Exchange, and presumably they will submit letters to the
Attorney General shortly unless they find too much opposi-
tion to this action within their membership.
Officers in this Department who have been following
this matter closely advise me that discussions and correspondence with the interested parties have brought out
the
285
-3-
the fact that the formal inclusion in contracts of the
proposed clauses governing reexports will be relatively
ineffective as a deterrent to undesired exports, since
such action would be supported by no penalty which could
be enforced in the courts. Presumably, the main problem
18 still in securing the voluntary cooperation of all of
the private interests concerned in this country, and I am
told that very good progress has been made in that direction.
The large exports of tin and rubber which took place soon
after the outbreak of war are not continuing, and the
Amtorg Corporation in particular is now finding it difficult,
if not impossible to secure either commodity in this market.
Sincerely yours,
Miller
08
May 8, 1940
FOR:
AMBASSADOR BULLITT
PARIS FRANCE
FROM:
SECRETARY OF THE TREASURY
VIA U. S. NAVY MOST SECRET CODE
I HAVE JUST BEEN INFORMED THAT THE BRITISH AND
FRENCH GOVERNMENTS INTEND TO PLACE ALL THEIR
ORDERS FOR IRON AND STEEL THROUGH THE BRITISH
IRON AND STEEL FEDERATION IN LONDON WITHOUT
CONSULTATION WITH PURVIS AND BLOCH LAINE PERIOD
I DO NOT KNOW WHETHER THEY WILL USE THE FUNDS ON
DEPOSIT WITH THE FEDERAL RESERVE OF NEW YORK FOR
THIS PURPOSE PERIOD IT IS IMPOSSIBLE FOR ME TO
KEEP THE PRESIDENT INFORMED UNDER THESE CIRCUMSTANCES
WHAT THE BRITISH AND FRENCH GOVERNMENTS ARE DOING
IN REGARD TO PURCHASES OF IRON AND STEEL IN THE
UNITED STATES PERIOD PLEASE USE YOUR GOOD OFFICES
TO STRENUOUSLY PROTEST THIS PROCEDURE AND SAY THAT
I INSIST THAT ALL PURCHASES IN THE UNITED STATES
FOR THE FRENCH AND BRITISH GOVERNMENTS MUST CLEAR
THROUGH PURVIS AND BLOCH LAINE
HENRY MORGENTHAU JR
287
May 8, 1940
FOR:
AMBASSADOR BULLITT
PARIS FRANCE
FROM:
SECRETARY OF THE TREASURY
VIA U. 3. NAVY MOST SECRET CODE
I HAVE JUST BEEN INFORMED THAT THE BRITISH AND
FRENCH GOVERNMENTS INTEND TO PLACE ALL THEIR
ORDERS FOR IRON AND STEEL THROUGH THE BRITISH
IRON AND STEEL FEDERATION IN LONDON WITHOUT
CONSULTATION WITH PURVIS AND BLOCK LAINE PERIOD
I DO NOT KNOW WHETHER THEY WILL USE THE FUNDS ON
DEPOSIT WITH THE FEDERAL RESERVE OF NEW YORK FOR
THIS PURPOSE PERIOD IT IS IMPOSSIBLE FOR ME TO
KEEP THE PRESIDENT INFORMED UNDER THESE CIRCUMSTANCES
WHAT THE BRITISH AND FRENCH GOVERNMENTS ARE DOING
IN REGARD TO PURCHASES OF IRON AND STEEL IN THE
UNITED STATES PERIOD PLEASE USE YOUR GOOD OFFICES
TO STRENUOUSLY PROTEST THIS PROCEDURE AND SAY THAT
I INSIST THAT ALL PURCHASES IN THE UNITED STATES
FOR THE FRENCH AND BRITISH GOVERNMENTS MUST CLEAR
THROUGH PURVIS AND BLOCH LAINE
HENRY MOROKNTHAU JR
288
May 8, 1940
FOR:
AMBASSADOR BULLITY
PARIS FRANCE
FROM:
SECRETARY OF THE TREASURY
VIA U. 3. NAVY MOST SECRET CODE
I HAVE JUST BEEN INFORMED THAT THE BRITISH AND
FRENCH GOVERNMENTS INTEND TO PLACE ALL THEIR
ORDERS FOR IRON AND STEEL THROUGH THE BRITISH
IRON AND STEEL FEDERATION IN LONDON WITHOUT
CONSULTATION WITH PURVIS AND BLOCH LAINE PERIOD
I DO NOT KNOW WHETHER THEY WILL USE THE FUNDS ON
DEPOSIT WITH THE FEDERAL RESERVE OF NEW YORK FOR
THIS PURPOSE PERIOD IT IS IMPOSSIBLE FOR ME TO
KEEP THE PRESIDENT INFORMED UNDER THESE CIRCUMSTANCES
WHAT THE BRITISH AND FRENCH GOVERNMENTS ARE DOING
IN REGARD TO PURCHASES OF IRON AND STEEL IN THE
UNITED STATES PERIOD PLEASE USE YOUR GOOD OFFICES
TO STRENUOUSLY PROTEST THIS PROCEDURE AND SAY THAT
I INSIST THAT ALL PURCHASES IN THE UNITED STATES
FOR THE FRENCH AND BRITISH GOVERNMENTS MUST CLEAR
THROUGH PURVIS AND BLOCK LAINE
HENRY MORGENTHAU JR
289
May a, 1940
FOR
AMBASSADOR BULLETT
FROMS
SEGRETARY OF THE TREASURY
PARIS FRANCE
VIA U. 3. HAVE MOST SEGRET CODE
I HAVE JUST BEEN INFORMED THAT THE BRITISH AND
FREIGH GOVERNMENTS INTEND TO PLACE ALL THEIR
ORDERS FOR IRON AND STEEL THROUGH THE BRITISH
IRON AND STEEL FEDERATION IN LONDON WITHOUT
CONSULTATION WITH PURVIS AND BLOCK LAINE PERIOD
I DO NOT KNOW WHETHER THEY WILL USE THE FUNDS ON
DEPOSIT WITH THE FEDERAL RESERVE OF NEW YORK FOR
THIS PURPOSE PERIOD IT IS IMPOSSIBLE FOR ME TO
KEEP THE PRESIDENT IMPORMED UNDER THESE CIRCUMSTANCES
WHAT THE BRITISH AND FRENCH GOVERNMENTS ARE DOING
IN REGARD TO PURCHASES OF IRON AND STEEL IN THE
UNITED STATES PERIOD PLEASE USE YOUR GOOD OFFICES
TO STRENDOUSLY PROTEST THIS PROCEDURE AND BAY THAT
I INSIST THAT ALL PURCHASES IN THE UNITED STATES
FOR THE FRENCH AND BRITISH GOVERNMENTS MUST CLEAR
THROUGH PURVIS AND BLOCK LAINE
HENRY MORGENTHAN JR
290
May a, 1940
FORS
ANDASSADOR BULLITY
FROM
SEGRETARY OF THE TREASURY
PARIS FRANCE
VIA U. S. HAVE MOST SEGRET CODE
I HAVE JUST BEEN INFORMED THAT THE BRITISH AND
FRENCH GOVERNMENTS INTEND TO PLACE ALL THEIR
ORDERS FOR IRON AND STEEL THROUGH THE BRITISH
IRON AND STEEL FEDERATION IN LONDON WITHOUT
CONSULTATION WITH PURVIS AND BLOCK LATHE PERIOD
I DO NOT KNOW WHETHER THEY WILL USE THE FUNDS ON
DEPOSIT WITH THE FEDERAL RESERVE OF NEW YORK FOR
THIS PURPOSE PERIOD IT IS IMPOSSIBLE FOR NE TO
KEEP THE PRESIDENT INFORMED UNDER THESE CIRCUMSTANCES
WHAT THE BRITISH AND FRENCH GOVERNMENTS ARE DOING
IN REGARD TO PURCHASES OF IRON AND STEEL IN THE
UNITED STATES PERIOD PLEASE USE YOUR GOOD OFFICES
TO STREMBOUSLY PROTEST THIS PROCEDURE AND SAX THAT
I INSIST THAT ALL PURCHASES IN THE UNITED STATES
FOR THE FRENCH AND BRITISH GOVERNMENTS HUST CLEAR
THROUGH PURVIS AND BLOCH LAINE
HENRY MORGENTHAN JR
291
May s, 1940
EXTRA CONFIDENTIAL
My dear General:
I would appreciate 18 is you would
arrange to have the inclosed message to bassador Bulliss sent to him in most secret
Havy code via the United States Naval Attache
in Paris and also Instruct the Naval Attache
to handle the return message from Ambassador
Bullest to me.
Yours sincerely,
General Edwin M. Watson,
The White House.
292
May s, 1940
EXTRA CONFIDENTIAL
My dear Generals
I would appreciate as as you would
arrange to have the inclosed message to basender Bulliss sent to him in meet searet
Navy code via the United States Naval Attache
in Paris and also Struct the Naval Attache
to handle the return message from Ambassador
Bulless to me.
Yours sincerely,
General Edwin M. Watson,
The White House.
293
May 8, 1940
EXTRA CONFIDENTIAL
My dear General:
I would appreciate it if you would
arrange to have the inclosed message to Am-
bassador Bullitt sent to him in most secret
Navy code via the United States Naval Attache
in Paris and also #struet the Naval Attache
to handle the return message from Ambassador
Bullitt to me.
Yours sincerely,
General Edwin M. Watson,
The White House.
294
May s, 1940
EXTRA COMPIDENTIAL
My dear General:
I would appreciate it if you would
arrange to have the inclosed message to bassador Bulliss sent to him in most secret
Havy code via the United States Naval Attache
in Paris and also Struet the Naval Attache
to handle the return message from Ambassador
Bullest to no.
Yours sincerely,
General Edwin M. Watson,
The White House.
-295
May s, 1940
EXTRA CONFIDENTIAL
My dear General:
I would appreciate it if you would
arrange to have the inclosed message to bassador Bullies sent to his in most secret
Navy code via the United States Naval Attache
in Paris and also $ struet the Naval Attache
to handle the return message from Ambassador
Bullies to me.
Yours sincerely,
General Edwin M. Watson,
The White House.
296
CK
Tokyo
Dated liay 8, 1940
Rec'd 6:24 p.m.
Secretary of State
Washington
319, May 8, 10 p.m.
Japanese Press comment regarding the recent fall in
the Exchange value of the China dollar displays more
anxiety than jubilation. Opinion may be summorized as
follows;
(1) Depletion of the ten million pound stabilization
fund, of which there remains now only about one million
two hundred thousand pounds, is the primary reason for
the decline of the China dollar. Also, British support
which has been contributed to protect British interests
and investments is now being withdrown bEcausE necessary
adjustment and liquidation have been made. HOWEVER, there
are rumors that the American Government is in fact con-
sidering the USE of the stabilization fund to lend support
to the China dollar. Such action would create a problem.
By the purchase of Chinese silver and by the wheat and
cotton loans, the United States has already helped China
from the rear to fight Japan.
(2) Another
297
-2-#319, May 8, 10 p.m. FROM Tokyo,
(2) Another reason for the decline of the China
dollar is manipulation for anti-Jopenese purposes.
Suspension of the sale of Foreign exchange against the
China dollar may be regarded as one form of guerrilla
warfare waged by China against Japan because the yen
curings circulating in China suffer directly from depreciation of the China dollar. China dollar depreciation
creates a serious problem for the new Nanking regime and
therefore for Japan which supports that regime. Destruction
of the China dollar would bring Enormous Economic injury
to regions now under the jurisdiction of Nanking and would
CAUSE a serious objection to reconstruction plans. Sig-
nifienntly the China dollar has dropped in advance of the
rew cotton import season, just 00 happened in the two
preceding years, thereby lending CREDENCE to the VIEW that
artificial manipulations are being used to prevent Japanese
acquisition of foreign Exchange to obstruct operation of
Japanese cotton mills in centr 1 China and to hinder
Japanese political and Economic plans in China. It is also
significant that this latest drop of the China dollar
follows soon after the formation of the regime government
and the announcements concerning the proposed satiblishment
of a ne Central Bank of China.
(3) The preso reports that Mr. Kezuonoki, former
Finance
298
-3-#319, May 8, 10 P.M. from Tokyo.
Finance Minister and now Economic adviser to General
AbE, Japanese Ambassador to China, is to be despatched
to China shortly to devise counter measures against the
fall of the China dollar. Before his departure, the China
board of council will meet to discuss the situation.
Code text by airmail to Shanghai and Chungking.
GREY
REP
299
PLAIN
MA
London
Dated May 8, 1940
REC'D 2:30 p.m.
Secretary of State
Washington
1141, May 8.
FOR TREASURY FROM BUTTERWORTH.
Simon SEEMS to have been trying to temper the
budget lamb to the wind of public opinion in his
speech yesterday at the National Savings Association lunch,
when he said "WE will put no limit on that which WE have to
spend, because WE must at all costs put forward our maximum
possible Effort for the purpose of winning the war" and when
he also stated that "The voluntary method for savings is,
in a SENSE on trial. If WE found ourselves with our
backs to the wall and in danger of being over-run
and EnslavEd there is no limit to what WE would put upon
ourselves for the purpose of obtaining liberty -- compulsion
in EVERY form".
KENNEDY
CSB
300
GRAY
JR
Berlin
Dated May 8, 1940
Rec'd Noon
Secretary of State,
Washington.
1232, May 8, noon. (SECTION ONE)
My No. 832, April 5, 9 a.m.
FOR TREASURY FROE HEATH.
The Reichabank statement for April 30 shows a very
large monthend increase in assets and note circulation,
the latter having Expanded to a new all time record.
Total investments (commercial and treasury bills securities
and collateral loans) increased by 746 million marks during
the last WEEK of April but WERE at 12,803 million marks
still 6 million below the peak figure reached on March 30.
The figures for the End of March and April are not truly
comparable since on April 19 the annual meeting of the
Reichsbonk was held on which occasion dividendo of 7.5
million marks were voted and almost 100 million marks
paid to the Government C.O its share of the 1939 profits.
Had it not been for this special dEVELOpmEnt there would
presumably have been an increase of approximately 100 million
marks in the investment portfolio. NET changes in the
holdings
301
-2- #1232, Kay 8, noon (SECTION ONE) from Berlin.
holdings of individual investment items from March 30 to
April 30 WERE C.S follows: the portfolio of commercial and
treasury bills dECPERSED by 54 million marks to 12,188
million marks. Holdings of Eligible securities increased
by 77 million marks to c total of 221 million marks (still
continuing the upward trend noted since the beginning of
March). Collateral loans outstanding amounted to 31 million
marks on April 30 practically the SOME as on March 30.
Miscellaneous securities decreased during the month by
29 million marks to 364 million marks. THEREOS the Investment portfolio C.C above stated decreased slightly during
the month holdings of miscellaneous assets increased by
105 million marks to 1927 million marks.
KIRK
CSB
302
GRAY
MA
Berlin
Dated May 8, 1940
Rec'd 12: 48 p.m.
Secretary of State
Washington
1232, May 8, noon (SECTION TWO)
The annual meeting held in April also led to changes
in certain items on the liabilities side which are
normally constant. Legal reserves WERE increased by 12
million marks to 99 million marks. Other reserve funds WERE
increased by 52 million marks to a total of 546 million
marks. MiscEllaneous liabilities item decreased by
258 million marks to 537 million marks.
Circulation of Reichsbank notes reached a new
record high on April 30 standing at 12,480 million
marks as compared with 12,176 million marks on March 30
the previous peak figure. Since November 30 there has been
with the EXCEPTION of January a steady monthly increase
on note circulation totaling 1.5 billion marks for the five
months Ending April 30. This dEVELOPMENT contrasts
with the situation during the first three months of the
war when following the two million marks increase during
the last days of August note circulation remained relative
constant
303
MA -2- tel # 1232, May 8, noon (Section Two) from Berlin
constant from one month End statement to the next.
Sight deposits amounted to 1714 million marks on
April 30, 46 million marks under the March 30 figure.
The Reichabank's coin holdings decreased by 19 million
marks to 517 million marks and holdings of renten bank
notes increased during the month by 7 million marks to
a total of 207 million marks. (END MESSAGE)
KIRK
CSB
304
GRAY
EDA
MILAN
Dated May 8, 1940
RECEIVED 1:35 p.m.
Secretary of State
Washington
24, May 8, 5 p.m.
FOR TREASURY DEPARTMENT.
Today's prices as follows: 202,50; 348.50; 524;not
listed; 999; 214.50; 1720; 66.75; 235. Volune 93450.
Market opened firm but weakened in slow trading.
Tomorrow holiday Exchange closed.
SHOLES
RR
305
May 8, 1940
10:15 a.m.
H.M.Jr:
Hello.
Operator:
Mr. J. Edgar Hoover.
H.M.Jr:
Thank you.
0:
Go ahead please.
J. Edgar
Hoover:
Hello.
H.M.Jr:
Mr. Hoover
H:
Yes, Mr. Secretary.
H.M.Jr:
H:
H.M.Jr:
good morning.
Good morning.
There's a firm by the name of William H. Muller --
M-u-1-1-e-r.
H:
M-u-l-1-e-r, yes.
H.M.Jr:
122 East 42nd Street.
H:
122 East 42nd Street.
H.M.Jr:
They have recently -- last April they handled 340
H:
Yes.
H.M.Jr:
Which was bought by the Rumanian Legation here
tons of aluminum.
ostensibly for their Minister of Aviation in
Rumania.
H:
Yes.
H.M.Jr:
The State Department said they knew about it.
H:
Yes.
H.M.Jr:
We didn't. We understood there was not to be any
aluminum to go to Rumania.
H:
Yes.
308
-2H.M.Jr:
I just wondered if you could find out something
about
the firm of William H. Muller.
H:
Yes, indeed.
I can find out for you right away
about
that.
H.M.Jr:
Could you?
H:
Yes, indeed. I'll have some word today for you.
H.M.Jr:
Because here's the thing, the Aluminum Company of
America had a chance earlier in the year to make
a large sale of aluminum
H:
N.M.Jr:
H:
H.M.Jr:
Yes.
to Rumania, which they turned down at the
request of the government.
Yes.
Now this thing comes along and naturally they ask
themselves, "Well, if we get another chance why
shouldn't we take it?"
H:
Certainly. That's a perfectly plausible attitude.
H.M.Jr:
And I'd -- I'm curious about William H. Muller.
H:
I'll check on it right away and give you a ring
today, Mr. Secretary.
H.M.Jr:
Thank you so much.
H:
I'll be very glad to.
H.M.Jr:
Thank you.
H:
Thank you. Goodbye.
307
May 8, 1940
12:50 p.m.
H.M.Jr:
Hello.
Operator:
Mr. Berle.
H.M.Jr:
Hello.
Adolf
Berle:
Yes, Mr. Secretary.
H.M.Jr:
How are you?
B:
Well, I'm somewhat dizzy with the last couple of days,
H.M.Jr:
B:
H.M.Jr:
but still above water.
Look, I want to ask a little favor of you.
With pleasure.
I believe that you must have known yesterday that the
Dutch were going to send this money over here.
B:
I don't think we did, sir, 8.8 a matter of fact. I'll
H.M.Jr:
Well
B:
H.M.Jr:
find out but
......my candid opinion
Well, the only thing I'm using 8.8 an illustration,
because this morning when George Harrison called
me up at nine o'clock to tell me the money was here
I immediately called up Welles to tell him, within
five minutes, see?
B:
Well, I might say that I've seen nothing in the
cables that went across my desk that remotely
indicated that. Somebody around here may have
known it, but I -- the first I knew about it was
when our Dutch friend told us about it.
H.M.Jr:
Well, the President gave me the ha-ha this morning
B:
Well
H.M.Jr:
I mean, there are lots of things you've had over
there that I realize is none of my business, but
on it. He said he knew it yesterday.
I think this one is.
308
-2B:
H.M.Jr:
B:
Well, I think that might be interesting to know,
yes. I'd be interested to know that myself.
So -- I mean, if he knew it yesterday I kind of
thought if it was around your shop I could have
known it too, that's all.
Well, there's absolutely no reason, as .far as I
can see, why you shouldn't. I'll find that out
myself.
H.M.Jr:
3:
H.M.Jr:
Well, don't make an issue out of it.
No, I won't.
It's just -- this stuff -- we might have slapped
something on and not knowing it. We're all trying
to do the best we can and I'm just using this as a
point that I'm here -- I'm on twenty-four hours'
duty and if somebody over there does know it,
where it's financial, I'd like to know it. Now,
that's fair, isn't it?
B:
Well, I think that's perfectly fair. As you know,
that's been on my mind. Of course
H.M.Jr:
B:
And we try here to let you fellows know as -- just
as fast as I get it.
I note one other item, and that was the item that
appeared about our Dutch friend this morning in
the paper.
H.M.Jr:
Yeah.
B:
As you know, aside from some advance indications
that they had some such ideas, which I passed on
to -- passed on earlier -- that they were consider-
ing the matter, the first notice I had of it was
what I saw in the paper this morning and then that
was confirmed by our Dutch friend this after
H.M.Jr:
I talked to Welles earlier and I told him the
and -- 80 I've spoken to Welles, I've talked to
you -- I'm only doing it -- in these most difficult
times if I can get the stuff and if sometime I don't
give it to you, why It'11 be on me.
President said he knew it yesterday afternoon,
-3B:
309
Don't blame you at all, Henry. I'll gumshoe around
and try to find out. I will likewise try
H.M.Jr:
If it's a New York Times story because if -- if the
Dutch Legation knew it they might have told you
people.
B:
The fact of the matter so far as I get it, judging
from what happened this morning was that he brought
in a cablegram which he had not even yet had typed
out but had written out in his own handwriting.
I gather he had decoded it last night and he said
for
the last part of it was garbled and
further code -- further decode.
.v.Jr:
B:
Well
And he brought that in and read it to me this morning. Now, what he knew before that, or how early
he knew it, of course, I can't tell.
H.M.Jr:
Well, this Times story said that and authorized
Netherland's source said tonight, "this can be
taken as definite proof," and so forth and so on.
B:
Yeah.
H.M.Jr:
And that's Associated Press in Washington
B:
Well, I suppose that he probably said something
about it last night and when he got it last night
I don't know. I know that he called up yesterday
and asked to make a date with me early this morn-
H.M.Jr:
B:
H.M.Jr:
B:
ing and I told him as early as he pleased.
I don't suppose you like to be "scooped" at the
White House any more than I do on foreign affairs.
We -- (laughs) we hate it. We are a little bit
used to it but
That's all right. It's all right, we understand
each other.
I understand it perfectly and I'll endeavor to see
what can be done about it.
310
H.M.Jr:
Righto.
B:
All right, Henry.
H.M.Jr:
Thank you.
B:
Take care of yourself.
H.M.Jr:
I'm trying to.
B:
(Laughs) Me too. So do we all.
H.M.Jr:
That's -- I'll lose the argument every day though
-- I mean when it's a question of taking a walk
for a little fresh air or something, or getting
a haircut.
B:
(Hearty laughter) I haven't had a haircut for so
long I'm beginning to look like William Jennings
Bryan myself.
H.M.Jr:
Well, you can burst out with a silver speech.
B:
That's the idea. I've been thinking of that.
H.M.Jr:
B:
H.M.Jr:
All right.
All right.
Goodbye.
311
May 8, 1940
1:58 p.m.
H.M.Jr:
Sam
Hello.
Rayburn:
Yes. Hello.
H.M.Jr:
Mr. Rayburn.
R:
Yes.
H.M.Jr:
Henry.
R:
Yes.
H.M.Jr:
How in the hell are vou?
R:
Fine.
H.M.Jr:
Sam, I'd like to have a chance to talk to you.
I'll tell you what it's about. I'm very much
interested in slum-clearance.
R:
Yes.
H.M.Jr:
And I've seen quite a lot of it in the field
and I'd like to see some more of it go on.
Yes.
H.M.Jr:
Now, when could I talk to you about this bill that
R:
Well, I tell you what I can do. I can come by your
is going
office in the morning as I come down.
H.M.Jr:
It would be a great compliment to me.
R:
Well, I tell you, Henry, suppose I say I'll be at
H.M.Jr:
your office at ten-thirty. Will that be all right?
If you -- or I tell you -- it's the only appointment
I have. Twice a week I see the press -- Thursday
at 10:30. Now, I could either before or after.
R:
Well, I'll tell you what we'll do. I could be there
H.M.Jr:
Wonderful.
at ten o'clock.
312
2-
R:
Yes, I'll be there -- at your office in the morning
ten o'clock, Henry.
H.M.Jr:
R:
I'll be waiting
All right, that'll be fine.
with a bunch of roses.
H.M.Jr:
R:
All right, fine, Henry.
M.M.Jr:
Ten o'clock tomorrow.
R:
Ten o'clock tomorrow.
H.M.Jr:
Ever so much obliged.
R:
Fine.
313
May 8, 1940
2:56 p.m.
H.M.Jr:
Hello.
Berle's
Secretary:
Hello.
H.M.Jr:
Yes.
B's Sec:
Oh, Mr. Secretary, just a moment. Mr. Berle.
H.M.Jr:
Hello.
Adolf
Berle:
Hello.
H.M.Jr:
Yes.
B:
Oh, Henry.
H.M.Jr:
Yes.
B:
I've been checking around a little on this thing
and likewise checking my own records and memory.
Apparently Morgenstierne came into the department
yesterday morning quite early and he came down to
see me at a little after ten, and I recall that
he mentioned something about this to Mr. Cumming
who was with me and to me. It was wasn't very
definite. He came in about something else, it
was about the long letter that we wrote to the
Federal Reserve Bank. We then shipped him over
to your people and I'm not clear whether we may
not have slipped up here because we assumed that
he'd tell everything he was going to to Bernstein
and Cochran and White with whom he was working on
that Federal Reserve transfer.
H.M.Jr:
Yes.
B:
And all of that's -- that is the first knowledge,
I think, anybody had here, and it slips my mind
something and we just didn't pay a great deal of
attention to it because we weren't working on
that and it was none of our business. Now
because it wasn't in our bailiwick.He mentioned
H.M.Jr:
314
-2B:
it's possible -- my impression is that -then going to tell everything he had to tell about
that score and his financial affairs to the people
well, we assumed here at all events that he was
he was working with on this Federal Reserve transfer.
Whether he did or not, I don't know.
Morgenstierne knew about the Netherlands?
B:
No, I was talking about the transfer to him.
H.M.Jr:
Oh, that we knew all about.
B:
Well, the Dutch -- the Dutch -- that you knew about?
M.M.Jr:
Oh, yes.
B:
H.M.Jr:
B:
H.M.Jr:
Now, the Dutch Minister so far as that's
Oh, that -- that we knew about. The fact is the
night before last I talked to Welles and he
Well, I thought so.
No, that I was entirely up on.
Well, that's fine. Well, I was checking several
7:
of these things.
No, that was -- he brought me right un to the minute.
Now, the -- so far as the Dutch Minister is concerned, I can't find yet that he gave any definite
statement of that to any of us.
Yes.
He telephoned me at five-fifty last night but he
was interested in a couple of columns converging
and some other things of that kind.
on
He showed up well, he showed un this morning
as a matter of fact and discussed a variety of
things for about an hour, obviously pretty much
excited but I don't even recall that he mentioned
that. On the other hand, he as been in touch with
somebody in this Department pretty much every two
hours for the last four or five days so I'll have
to check back and see if he mentioned that to anyone.
315
-3If he did, I should imagine it was more likely
Welles, but I can't even be sure of that.
Well, I spoke to Welles and Welles said the first
he knew about it was when he came in this morning.
Well, I should imagine that was so. I can't imagine
why he should. Now, I'll check and see if he called
anyone here about it, because this particular
800 thousand credit, I don't -- I don't recall
Now wait a minute, there are two different things.
The 800 thousand is Norwegian.
800 thousand is the Norwegian.
And the Netherlands is 6 million, dollars.
Well, that -- that I haven't checked yet.
Well, that's -- the Norwegian thing is all clear.
You're clear out of Norway, are you?
Entirely clear.
What we're checking now is the 6 million.
M.M.Jr:
Everything was clear on Norway. Everything was regular.
Right.
Couldn't have asked for better cooperation, than we
got on Norway. On the -- it's the other thing, the
13 before I got it; the President's getting it
New York Times story -- the New York Times getting
yesterday.
Oh.
That's the thing that makes
One of these things I've got to do is gumshoe and
and see what they -- what they got from the White
House.
H.M.Jr:
(Laughs)
316
4
B:
-
I've -- quite frankly, because maybe we're scooped
on that too. Well, I've checked two of the three
items and I'll now go after the 6 million, Henry,
and see where that is, because I entirely agree
with your point of view. You ought to know and
H.M.Jr:
Fine.
oh
B:
H.M.Jr:
Everything is -- no one could have asked for better
cooperation on Norway.
B:
The Dutch end of it has only just filtered into my
immediate business. That is, from now on I'll have
to be working on Dutch finances. Prior to that it
was mainly politics and I am frank to confess that
I don't think any of us gave much of a damn about
the Dutch end of it until they asked about it.
H.M.Jr:
Yeah.
B:
The only thing that they did do, and that I told
your people about, was when they gave us the general
line that he was gunning for the kind of a power of
attorney, something like that which the Norwegian had
got, and that your people knew.
H.M.Jr:
B:
Right.
But there's no reason why it should be reported because it was just something to happen in a distant
future.
H.M.Jr:
0. K.
B:
I'll look for the 6 million and try to check you on
that. After that we're perhaps as near clear as
we can. Is there anything else while I have you?
H.M.Jr:
Not a thing. Not a thing.
B:
Anything else that ought to be cleared up?
317
-5H.M.Jr:
B:
H.M.Jr:
No, everything's lovely.
Because we're gonna have to be playing pretty close
together
pretty
soon.I think on this and - Hungar I think,
Well I haven't - the only other thing that I'm putting
pressure on Welles on that is this re-export of tin
and
rubber which they've been fooling around with now
for months.
B:
H.M.Jr:
B:
Huhhuh.
And you might put that - I mean that's why they don't
put on an embargo on the re-export of tin or rubber.
I mean I think Louis Johnson announced two months
ago they'd done it.
One of the things that I think we're going to have to
do a little later is regarding the general embargo
act. Oh, while I've got you on the telephone, I'd
like to say one other thing, the Dutch Minister was
in as I told you this morning and he had instructions
from his Government, which he showed me expressing
the hope that in the event of the invasion of Holland
we would not block exchange transactions with the
unoccupied area.
H.M.Jr:
Well, I heard -- but that's just plain silly.
B:
Well
H.M.Jr:
I mean, I can't get a war-map every day and find
B:
I understand that and I pointed that out to him.
I told him that in general it was not our policy
to impede transactions with free agents who are
not dominated by military occupation or something
of the kind.
H.M.Jr:
Yes.
B:
But that the technic of it WRE an entirely different
H.M.Jr:
matter and that would have to be worked out with
great care.
No -- I mean I can't ask every morning, "Where are
the Germans in Holland," and then apply it to another
county.
B:
Well, obviously not, but as I told him that while
the principle of what he wanted to do I thought
was entirely in line with the policy which we had
adopted
318
-6
H.M.Jr:
Right.
the technic would have to be worked out with
B:
the Treasury
H.M.Jr:
Right.
and how that would have to be done I couldn't
B:
then say. I suggested that he might wish to discuss it with you in the event -- if he thought the
thing was imminent as that. He also wished that
there'd be no blooking of transactions as between
the United States and the Dutch West Indies and so
far as it remained unoccupied, the Dutch East
Indies.
H.M.Jr:
Well, I told him
B:
Well, I told him as far as the Dutch West Indies
were concerned, I personally doubted whether
there would be any trouble on that score. The
Dutch East Indies, we'd have to wait and see what
the situation was.
H.M.Jr:
B:
That's right.
And I left it steering him over to see you and
telling him that the ultimate determination on
that had to be taken by the President
H.M.Jr:
B:
H.M.Jr:
B:
That's right.
after he had a consultation with the departments. I report, however, that the line which he
was driving at, which was that there would be no
unnecessary tieing un of balances where there was
no military occupation, probably was
That's reasonable, but to divide Holland into
provinces or counties, well that's -- that's silly.
Well, I pointed that out, but what you'd have to do
would be to filter out each account and find out
who in the name of God it really was.
H.M.Jr:
Yeah.
319
-7B:
But that in the sense of the principle of free
exchange we didn't object to that or the method
of
how
you did
that
worked
it. it was a technical job for the people
H.M.Jr:
O. K.
B:
Right.
H.M.Jr:
Thank you.
B:
Goodbye.
320
May 8, 1940
3:05 p.m.
Operator:
Go ahead, please.
H.M.Jr:
Hello.
Bill
Bullitt:
Hello.
H.M.Jr:
Hello, Bill.
B:
How are you?
H.M.Jr:
Hello.
B:
Hello, Henry. How are you?
H.M.Jr:
Can you hear me?
B:
I can hear you perfectly.
H.M.Jr:
I -- let me get my hearing adjusted. Bill, you got
a message, I think.
B:
I've got a message?
H.M.Jr:
Have you got a message from me?
B:
No, I haven't.
H.M.Jr:
B:
Well, it ought to be there.
Well, I haven't got it yet, Henry.
H.M.Jr:
Well, I'll look into that.
B:
Yes.
H.M.Jr:
Well, when you -- when you get it......
B:
Yes.
H.M.Jr:
you know you have a man who has a weakness for
a certain kind of a radio
B:
Yes.
H.M.Jr:
Do you know what I mean?
321
-2B:
Yes.
H.M.Jr:
He likes a little radio.
B:
A what?
H.M.Jr:
B:
He' crazy about a small radio.
Yes, that's correct.
H.M.Jr:
What?
B:
I understand.
H.M.Jr:
Well, in this message I'm asking for certain infor-
mation.
B:
Yes.
H.M.Jr:
Well, this man that so likes this little radio, you
sent him across to get some other information for
me once before.
B:
Yes.
H.M.Jr:
Well now, you see in this message I only ask for
information on the one country.
B:
Yes.
H.M.Jr:
And I was thinking that while we're at it to get
the whole picture I'd better get it on both countries.
B:
Yes. Well now, Henry
H.M.Jr:
Yeah.
B:
I have not yet received your message.
H.M.Jr:
Yes.
B:
And therefore I'm a little bit in the dark.
H.M.Jr:
Well
B:
Just 8.8 8000 as I get it if I need to call you up
again I will.
322
-3M.Jr:
I think when you get it you' 11 understand what I
have in mind.
All right. That's perfectly fine.
B:
H.M.Jr:
B:
H.M.Jr:
It's -- I'm sure -- the message went yesterday.
You ought to get it today.
Well, it should be here if it was coded and sent
I don't know why I haven't gotten it before this.
Well, it's coming a different way.
I see.
B:
H.M.Jr:
See?
3:
All right. Well that's that.
H.M.Jr:
O. K.
How are you, Henry?
B:
H.M.Jr:
I'm all right. How are you?
B:
How is Eleanor?
H.M.Jr:
There are two messages on the way to you, Bill.
B:
M.Jr:
3:
H.M.Jr:
B:
H.M.Jr:
3:
Two, both coming a different route.
I see. Now, you ought to have Matthews there I
should think tonight or tomorrow.
Well, I'll look forward to seeing him.
All right. Goodbye, Henry, and good luck, and if I
-- it's not perfectly clear -- if it isn't perfectly
clear I'll call you up.
Thank you.
Goodbye. Good luck.
323
May 8, 1940
3:10 p.m.
H.M.Jr:
Hello.
Hoover's
Secretary:
J. Edger
Just a moment, please.
Hoover:
Hello.
H.M.Jr:
Hello.
H:
This is Hoover talking, Mr. Secretary.
H.M.Jr:
Yes.
About that New York matter.
H.M.Jr:
Right.
Now, I have this picture of the thing. The personnel
of the company is made up of a man by the name of
Paul G. Leoni, who is President; Jake Freering, who
is Vice President, Archie -- Archibald D. Field, who
is Treasurer, and John I. Pearce, Secretary
H.M.Jr:
Yes.
Edward H. Clayton, Assistant Treasurer and
William Barsch, Assistant Secretary. The Board of
Directors consists of Archibald Field, Paul G. Leoni,
and John I. Pearce.
H.M.Jr:
Where's Muller, is he dead?
H:
Well, apparently that's merely a name they are using.
.M.Jr:
H:
(Laughs) I see.
Now, Leoni is a man 52 years of age; he's married;
he was formerly employed as manager of the Paris,
France, branch of the William H. Muller and Company.
H.M.Jr:
on.
H:
That is a Holland concern.
H.M. Jr:
oh.
-2-
324
H:
The entire company -- the Muller and Company is of
Holland,
which is the parent company of the American
Corporation.
H.M.Jr:
I see.
In 1914 Leon1 was appointed the American representative of the Holland Company. Then when the
American branch was later incorporated in 1917 as
the Iron and Ore Corporation of America, Leoni was
elected as President.
H.M.Jr:
Yes.
H:
He still holds that office. The Iron and Ore
Corporation is a subsidiary of the William H. Muller
and Company and is apparently the export company,
the parent organization being an importing company.
H.M.Jr:
Yeah.
Leoni became President at the inception of the
William H. Muller and Company in January, 1920,
when it acquired about 99 per cent of its stock
of the Iron and Ore Corporation.
.M.Jr:
Yeah.
Leoni resides at 77 Park Avenue, New York City,
paying $2600 a year rent. He is considered a
desirable tenant. He's represented as being with
William H. Muller and Company for the last thirty
years. He receives a salary of $23,700 a year.
He has substantial accounts with two New York Banks.
In addition to his connection with these two com-
panies he is also listed as the Director of the
Zeeland Steamship Company of Flushing, Holland.
Now, as to J. Freering, who is the Vice President,
he's 45 years old
H.M.Jr:
Look, Mr. Hoover
H:
Yes.
H.M.Jr:
H:
-
don't you want to send me this over?
Yes, I can send that over to you because it runs
quite long. I'll send it over to you by special
messenger.
325
-3H.M.Jr:
Would you?
H:
I'll be very glad to.
H.M.Jr:
Any
reason in there to believe that they have
German connections?
Now the only -- separate from this report, which
is a detailed report we got from various banks and
business concerns -- separate from that I got a -I got another report for which there is no substantiation, but from connections we have there
with some of the English people -- some of the
British in New York City and some of the Allies
groups there, the -- the suspicion is -- that is
all that they have -- that William H. Muller and
Company have been dealing in rubber and have been
buying rubber from Brazil through the Amtorg Corporation
H.M.Jr:
Uh-huh.
and then exporting that rubber to Germany.
H:
H.M.Jr:
Well, it looks as though we have something hot.
Yes, it does. Now, they have no proof of that but
they -- but they say that they are very much afraid
that the company is supplying Germany with materials.
H.M.Jr:
It looks as though we're on a hot trail.
It looks that way. Now, I told my New York office
to still continue to run this down because -- well
that is merely a suspicion, nevertheless the -the Anglo-French Purchasing people, they have that
very definite fear.
H.M.Jr:
I see.
H:
H.M.Jr:
B:
And I thought that angle looks as if you might be
running into something that really has got some-
thing to it.
Fine. Well, 1f you'd follow through I'd appreciate it.
I will, and I'll send you over this memorandum on
the company right away.
326
-4H.V.Jr:
Wonderful service !
Very glad to give it to you.
Thank you.
327
May 8, 1940
4:35 p.m.
H.M.Jr:
Mathen
Straus:
Hello.
Hello, Henry.
H.M.Jr:
S:
Yes.
H.M.Jr:
I called up Sam Rayburn
S:
Yes.
H.M.Jr:
And asked whether I could see him up there and he
S:
Yes.
H.M.Jr:
So he's coming down tomorrow morning at ten.
S:
Good.
H.M.Jr:
So I've done nothing until I've had a chance to
talk to him.
S:
said no, but when could he come down and see me.
Well, it sounds to me B.P though you've done it
pretty fast.
H.M.Jr:
So he's coming to see me at ten tomorrow morning.
S:
And
H.M.Jr:
After I see him I'll -- and I'll have Foley here.
S:
Good. That's good.
H.M.Jr:
So, 8.6 I understand it, Ed had lunch with your man.
S:
on, I'm glad to hear that.
H.M.Jr:
S:
So there's -- nothing different has happened since
I've seen you, has there?
I see, have you gotten any further word as to whether
Congressman Steagall has been re-elected or not?
328
-2H.M.Jr:
S:
H.M.Jr:
S:
Yes, I heard that this morning.
Is he, or not?
He is.
It was very close -- very close about two hours
ago.
H.M.Jr:
Well then -- my information was ten this morning.
I've heard nothing since ten.
S:
I see.
H.M.Jr:
Well, I am seeing Sam Rayburn -- Foley and I tomorrow
S:
Thank you.
morning at ten o'clock.
H.M.Jr:
And after he leaves I'll call you.
S:
Thank you very much.
H.M.Jr:
O. K.
S:
Good news. Good night, Henry.
329
CONFIDENTIAL
May 8, 1940
To:
The Secretary
From:
Mr. Young
Attached is an extract from the
Pratt-Whitney letter which Mr. Purvis
promised you at lunch time today.
P.
Just:
Hent has
sui
slave copy
P.
CONFIDENTIAL
Letter from United Aircraft to Sir "enry Self
May 2, 1940.
We have given earnest consideration to the
problem presented by the tentative draft letter
forwarded with your letter of April 5th and I regret
to advise that we are not prepared to proceed on the
basis of the letter of intention. In an undertaking
of this magnitude a complete contract seems to us
essential.
As I outlined to Captain Collins in my
into in this matter must carry all the necessary
factors of recent important contracts with the French,
such as payments, taxes, escalator clause, point of
delivery, force majeure, etc.
In connection with possible further plant
additions, may I recall to you that until the United
memorandum of January 12th any contract to be entered
States Treasury has acted upon our pending application
for closing agreement, we are not prepared to consider
further major plant additions.
330
331
Chungking, May 8, 1940
No. 523
Subject: Fall in Exchange Value of Chinese
Currency at the Beginning of May.
CONFIDENTIAL
AIR MAIL
The Honorable
The Secretary of State,
Washington, D. C.
Sir:
I have the honor to refer to recent telegraphic
reports of the sudden drop in the exchange value of Chinese
currency at the beginning of the current month and to enclose
a copy of a memorandum dated May 6, but handed to me on May 7.
prepared by Dr. Arthur N. Young, Financial Adviser to the
Ministry of Finance.
The memorandum describes recent efforts by the Chinese-
British Stabilization Fund to support the foreign exchange value
of the Chinese currency, the temporary cessation of such efforts
on the evening of May 1, 1940, and measures taken to resume
operations to support the market and to reduce fluctuations.
Dr. Young expressed the belief that the present depreciation
of the currency in terms of foreign exchange was likely to
stimulate a further rise in prices, with a serious threat to
the internal economy of the country and that this, in turn, would
inevitably diminish the effectiveness of China's military resist-
ance to Japanese aggression. He expressed the opinion that given
time the country would be able to absorb the shock to its price
structure and would be able to weather the storm, but that the
needed time was dependent upon external assistance which was very
much needed now.
Respectfully yours,
NELSON TRUSLER JOHNSON
-2 Enclosure:
Memorandum dated May 6, 1940
Original and two copies to the Department
by air mail.
Copy to the Embassy, Peiping.
Copy to the Consulate General, Shanghai.
851/851.5/851.51
WRP:tm
COPY
332
Enclosure to despatch no. 523 dated May 8, 1940 from
the American Embassy at Chungking on the subject of
"Fall in Exchange Value of Chinese Currency at the
Beginning of May."
COPY
STRICTLY CONFIDENTIAL
May 6, 1940
Since last August exchange has acted well most
of the time having depreciated less than sterling
vis-a-vis the American dollar. In recent weeks however the Stabilization Fund has had to contend with
various adverse developments in addition to the
normal seasonal adverse trade balance. The creation
of the Wang Ching-wei regime with its scheme for a
puppet bank of issue unsettled the market. European
events have been disturbing and especially the fall
of the London-New York cross rate which led to specu-
lative buying of U.S. dollars at Shanghai. Finally
Chinese note circulation has continually increased
and internal prices have been rising.
While realizing that readjustment of the exchange
level was inevitable before long it was desired to
hold rates as long as practicable because a break
would stimulate the price rise. Moreover for politi-
cal reasons it was specially important to avoid a
slump at the time of creation of the Wang Ching-wei
regime. Therefore beginning in February the greater
part of the exchange bought back at the time of out-
break of the European war had to be gradually paid
out for currency support. These operations made
money very tight in Shanghai and it was hoped to
squeeze the speculators at the end of April as was
done at the end of March and thus buy back substan-
tially. But the Fund proved insufficient for the more
aggressive operations necessary to that end. On May 1
it developed that the speculative position had been
largely carried over to the end of May, and the drain
of exchange began again, aggravated by the Mediterannean
situation and by a growing belief that the Fund was
approaching exhaustion. Therefore on the evening of
May 1 it was decided temporarily to withdraw support.
In order to meet the situation arrangements have
been made to augment the Fund so that operations to
support the market and reduce fluctuations may be
continued.
(True copy:
(Compared:
333
334
May 8, 1940
MEMORANDOM TO THE PRESIDENT:
In reply to your a of May 2,
1940, enclosing a semorandum of April 29 from
Mr. Currie regarding the refunding of the 3%
special obligations now held in the Federal
Old-Age and Survivors Insurance Trust Fund
into special obligations bearing a 2-1/2% rate,
I as transmitting herewith a memorandus from
Bell, who discussed this satter with you at
a cabinet meeting during ay absence in March.
If you have any further questions about
the matter I shall be glad to talk with you
about 10.
(Signed) H Morgenthea,Jr.
By Messenger
DEB:
File to Mr. Thompson
335
MAY 8TH 1940
KEMORANDUM TO THE SECURITARY:
In connection with the attached monorandum from the President
suggesting that the 3 per cent obligations held for account of the
Federal Old-Age and Survivors Insurance Trust Fund be refunded into
2b per cent obligations, the President asked you about this several
weeks age and at your request I discussed 10 with him at a cabinet
meeting during your absence in March. AS that time I told him that
at a meeting of the Board of Trustees of the Federal Old-Age and
Survivors Insurance Trust Fund early in December, the matter of
refunding these 3 per cont securities was discussed at some length,
and the Board agreed that 11 would be a good thing to refund these
obligations into the lever interest-bearing securities, but there
were certain questions involved which in the opinion of the Board
outweighed the desirability of refunding. To refund these securities
at this time would no doubt raise the question in the minds of the
beneficiaries of the Social Security System as to whether the
Government was not taking away from the Fund something to which 10
was entitled, and is would undoubtedly result in a great deal of
adverse criticism. Furthermore, the basis on which we are now
.2-
336
operating with a three-year reserve and with an eventual contribution
from the General Fund of the Treasury inevitable, it does not make a
great deal of difference is the long run as to what the rate of interest
is on these special securities. The 3 per cent notes have a redemption
provision for payment one year after date of issue. upon four months'
notice, but the Treasury has always considered this provision as a
right of the Fynd to ask for redemption, and not a right of the
Secretary of the Treasury to call the securities for redemption prior
to maturity. Therefore. we came to the conclusion that this would be
an inappropriate time to refund these securities. We did, however,
decide that all of the new funds caming into this trust would be
invested in 2) per cent securities and all of the funds required to
meet benefit and other payments would DO secured from the proceeds of
the redemption of the longest naturing 3 per cent securities, and as
any of the 3 per dent securities nature they would be refunded into
2) per cents. Under this procedure 11 is possible that the entire
amount of 3 per cent securities will be refunded into the lower
interest-bearing securities within approximately 2 to a) years.
As I explained this to the President he seemed satisfied with
this arrangement and he thought the Board was right in its conclusion
that there would be a question raised by the beneficiaries of the
System upon the announcement of the reduction in interest earnings.
He also said that as long as we eventually refund the 3 per sent
securities within a relatively short time 10 seemed to him to be the
337
-3wiser course to pursue. With this remark on his part, I assumed
that the matter was settled to his satisfaction. I feel, in view of
all the circumstances, that the Board has made the best decision, at
least for the time being.
DMB:WTH:ce:vf
May 8, 1940.
THE WHITE HOUSE
338
WASHINGTON
May 2, 1940.
MEMORANDUM FOR
THE SECRETARY OF THE TREASURY
What do you think of this?
F. D. R.
Dear Dan:
Please speak
to me on my ruturn.
MM.
THE WHITE HOUSE
WASHINGTON
April 29, 1940.
MEMORANDUM FOR THE PRESIDENT:
Re: Interest on Special Issues in 01 Age Fund.
At one of our recent meetings you stated
that you thought advantage should be taken of
the amendments to the Social Security Act last
year permitting an interest reduction on special
issues eligible for redemption in the Old Age
Fund. This would result in a budgetary saving
of over $7 million a year.
I have drafted appropriate instructions
to the Secretary of the Treasury or, if you
prefer, I should be glad to see the Secretary
and convey your mishes in the matter.
Lauchlin Currie
THE WHITE HOUSE
WASHINGTON
April 29, 1940.
MEMORANDUM FOR THE SECRETARY OF THE TREASURY:
Re: Investments of the Federal Old-age
and Survivors Insurance Trust Fund.
In your capacity as Managing Trustee of the
Board of Trustees of the Federal Old-age and
Survivors Insurance Trust Fund, the amendment of
August 10, 1939 to the Social Security Act author-
ized you, under certain conditions, to invest the
Trust Fund in special obligations of the United
States at the average rate or 1/8 of 1 per cent
next lower than the average rate of interest on
all interest-bearing obligations of the United
States which form a part of the Public Debt. At
the present time, the rate on such special obligations would be 2 1/2 per cent. It is my understanding that the securities formerly held by the
Old Age Reserve Account which were transferred to
the Trust Fund on January 1 of this year still
carry a rate of 3 per cent, although they may be
called for redemption and refunded into new special
obligations after one year from date of issue.
I suggest, therefore, that you consider refunding immediately at the lower interest rate those
securities which are presently eligible for redemption, and continue this practice for the remainder
of the securities as they become eligible for redemp-
tion each month between now and the end of this
calendar year.
341
THE WHITE HOUSE
WASHINGTON
April 29, 1940.
MEMORANDUM FOR THE SECRETARY OF THE TREASURY:
Re: Investments of the Federal Old-age
and Survivors Insurance Trust Fund.
In your capacity as Managing Trustee of the
Board of Trustees of the Federal Old-age and
Survivors Insurance Trust Fund, the amendment of
August 10, 1939 to the Social Security Act author-
ized you, under certain conditions, to invest the
Trust Fund in special obligations of the United
States at the average rate or 1/8 of 1 per cent
next lower than the average rate of interest on
all interest-bearing obligations of the United
States which form a part of the Public Debt. At
the present time, the rate on such special obligations would be 2 1/2 per cent. It is my understanding that the securities formerly held by the
Old Age Reserve Account which were transferred to
the Trust Fund on January 1 of this year still
carry a rate of 3 per cent, although they may be
called for redemption and refunded into new special
obligations after one year from date of issue.
I suggest, therefore, that you consider refunding immediately at the lower interest rate those
securities which are presently eligible for redemption, and continue this practice for the remainder
of the securities as they become eligible for redemp-
tion each month between now and the end of this
calendar year.
342
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE May 9. 1940.
Secretary Morgenthau
TO
FROM
Mr. Cochran
CONFIDENTIAL
A recovery in the sterling rate and further weakening of the belga were
today's features in the foreign exchange market. In Amsterdam, sterling rose
to 3.36-1/16. but then reacted to 3.33-1/2 prior to our opening. From an
initial quotation of 3.32-3/4 in New York, the pound moved steadily upward to
reach a high of 3.36-7/8 in the mid-afternoon. Demand slackened just before
the close, and the final rate was 3.35.
Sales of spot sterling by the six reporting banks totaled 4482,000, from
the following sources:
118,000
By commercial concerns
By foreign banks (Near East, Europe, Far East & So.
America) L364,000
Total
1482,000
Purchases of spot sterling amounted to 4525,000, as indicated below:
$210,000
1315,000
By commercial concerns
By foreign banks (Europe and South America)
555,000
The following reporting banks sold cotton bills totaling 110,000 to the
British Control on the basis of the official rate of 4.02-1/2:
L 4,000 by the Chase National Bank
2,000 by the Guaranty Trust Company
2,000 by the National City Bank
2,000 by the Irving Trust Company
L10,000 Total
The belga sustained a sharp drop in the first hour of trading, and touched
a low of .1650. A steadier tendency was in evidence during the afternoon and
at the close this currency was quoted at .1656.
The other important currencies closed as follows:
French france
Guilders
Swiss france
Canadian dollars
.0190
.5309
.2242-1/2
17% discount
The Swedish krona has remained steady in the past few days in a highly
nominal market. At present, it is quoted at .2380.
-2 -
343
The yuan improved in Shanghai today to 3-15/32d against sterling,
and 4-13/16 against dollars. These quotations represent gains of 1/8d
and 1/8# respectively.
We purchased the following amounts of gold from the earmarked accounts
of the banks indicated:
$4,000,000 from the Netherlands Bank
550,000 from the National Bank of Belgium
$4,550,000 Total
The Federal Reserve Bank of New York reported that Samuel Montagu &
Company, London, shipped $1,687,000 in gold from England to the Irving Trust
Company, New York, for sale to the U. S. Assay Office.
The State Department forwarded to us a cable stating that Samuel Montagu
& Company, London, shipped $129,000 in gold from England to the Chase National
Bank, New York, for sale to the U. S. Assay Office.
The Bombay spot silver quotation moved off 1/8 to the equivalent of
42.314.
The prices fixed in London for spot and forward silver both advanced
1/8d to 21d and 20-15/16d respectively. The U. S. equivalents were 31.70$
and 31.33
Handy and Harman's settlement price for foreign silver was unchanged at
34-3/44. The Treasury's purchase price for foreign silver was also unchanged
at 35$.
We made four purchases of silver totaling 630,000 ounces under the Silver
Purchase Act, all of which consisted of new production from foreign countries,
for forward delivery.
gm.
CONFIDENTIAL
TREASURY DEPARTMENT
344
INTER-OFFICE COMMUNICATION
DATE May 9. 1940
Secretary Morgenthau
TO
FROM
Mr. Cochran
STRICTLY CONFIDENTIAL
The Counselor of the Chinese Embassy telephoned me this noon. He stated
that he had received a reply to the message in which he had informed his
Government of our readiness to purchase their 4,300,000 ounces of silver on
American shipboard at Rangoon, and had let them know that the Federal Reserve
Bank of New York would cable our offer. The Counselor said that the Minister
of Finance of China had asked the Embassy to thank the Treasury Department
warmly for the assistance that it has rendered in this matter. The Minister
of Finance hoped, however, that the contract would not include an obligation
on the part of China to spend the proceeds of the silver sale in the United
States. It is the desire of the Chinese Government that this new money may be
used to support the Chinese currency.
I told the Chinese Counselor that the contract as cabled by the Federal
Reserve Bank contained no clause in regard to utilization of dollar proceeds
of the sale. I told him that I would look up, however, records of any agree-
ment that may have been made on this point in earlier contracts for Chinese
silver. Mr. Liu is coming in to see me Friday at 12 noon and hopes to have
our views on this point at that time.
In looking through the files of our transactions with China, I find that
we have stipulated in at least one case that funds obtained through the sale
of silver by China to us should be kept on deposit in New York with agents of
the Central Bank of China. I have not had an opportunity to check as to the
extent to which this provision has been carried out in all of our purchases of
silver from China.
Since the Chinese are sorely in need of funds to support their currency,
and since we have not deemed it advisable to render any direct assistance in
this direction through the Stabilization Fund, I am reluctant to impose any
restrictions upon the use of the dollar proceeds of this present silver sale.
Am I authorized to tell the Chinese Counselor tomorrow that we are imposing
no restrictions?
The Counselor called me late this afternoon when he learned that the
Townsend Bill had passed the Senate. I told him that this did not interfere
with our contract.
AM.
Hall has only
345
345
May 9, 1940
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
I am enclosing herewith, as of possible interest to you
and other departments of the Government, a copy. in duplicate,
of a report written by Ateman G. M. Semenoff to the Japanese
High Military Command in Shanghai on the possibility of conducting a war against the U.S.S.R. in the Far East.
Early in April the Japanese Military Command in Shanghai
invited Semenoff to come to Shanghai to discuss military affairs
in Manchuria. Samenoff spent several days in conference wi th
Japanese Military Officers and the old subject of the organization
of a "White" Russian Army for operations on the Siberian border
was discussed. Semenoff was requested by the Japanese to submit
a plan of possible operations of such a "White" Army in the event
the present European War was extended to the Near and Far East.
The enclosed is an English translation of his response,
the original of which was written in Russian of the Cosseck
patois.
The document is not of much importance in itself, but
might prove very interesting to military officers. It was ob-
tained from a close associate of Semenoff in Dairen and is, of
course, "secret". Its exposure or publication might endanger the
life of the associate in question.
Respectfully,
Treasury Attache
Enclosure
346
SHORT HISTORY or ATAMAN G. M. SIMENOFF
GRIGORY MICHAILOVITCH SEMENOFF, who is now about 50 years of
age, was born in the Transbuikalian District of Siberia. His parents
were well-to-do. The father, a retired Cosseek officer, had a very
good farm and traded in native ponies.
Grigory finished Provincial Middle School and Cossack Military
School and was commissioned to the rank of Horumji (Second Lieutenant
of Cossacks) just before the World War in 1914. Having Mongolian blood
in him he usually spent all his vacations from school on the Transbuikalian
steppes and in Mongolian grazing fields with droves of his father's ponies.
At that time he learned Buriat and Mongolian languages and became friendly
with various Mongolian Princes.
During the Great War Sensnoff was attached to the 1st Transbaikalian
Cossack Regiment, which saw action on the Causasian front. Being, undoubtedly, a man of personal courage, he was decorated several times and
finished the War with the rank of Assaul (Cossack Captain). At the and
of 1917 Semenoff returned to the Transbaikal, together with the reanants of
his Regiment, and found the whole District in chaos as its capital, Chita,
was in the hands of the Bolaheviks and the Cossacio generally and their
officers particularly were hunted, imprisoned and executed. Samenoff and
some of his friends fled to the territory of the Chinese Eastern Railway
where there was still some semblance of order.
Gathering together some officers and Cossacks, he disarmed a
Regiment of Bussian Reservists which was guarding the railway. He
established headquarters in Manchuli and began the organization of an
army of his our. When his detachment became 2,000 strong. Somenoff
--
347
advanced on the Transbaikalian District and soon seised Chita from the
Bolsheviks. A Congress of Transbaikalien Cossacks was called and they
elected Semenoff to be their Atamas (Fighting Leader of Cossacks) and
raised him to the reak of Colonel.
At this time the Civil War was in progress in Siberia and the
"whites", with the assistance of the Americans, English, Ozecho-Slovakians,
and Japanese, liberated Siberia from "red" control.
When the late Admiral Koltchak came into power, he reised Semenoff
to the rank of Major General and appointed him Governor General of Trans-
baikalian and Amur Districts. A general Congress of all Far Eastern Cossacks
was called and all Transbaikalian, Amur, and Ussuri Cossecks elected Same noff
to be their Ataman and again reised him to the rank of Lieut. General. It
was his last promotion and thus his present rank is: Lieut. General G. M.
Somenoff, Ataman of Far Eastern Cossacks.
In Ohite Somenoff organised an army 50,000 strong and was advised and
helped by Japanese Expeditionary Forces. But instead of sending it to the
assistance of Admiral Keltchak, who was at that time opposing the Bolahevike
in the Ural region, Semenoff kept his army in Transbaikal and, on advice of
the Japanese, delayed sending Koltchak any supplies. He even commandeered the
gold, which Koltchak seized from the Bolahevike, and was sending it abroad
for payment of arms and - supplied his by the Powers. It was at this
time that Sens off ordered as attack on an American Detachment which was
passing Chita.
In 1980 Ataman Samenoff received a letter allegedly signed by Koltchak,
who was at that time imprisoned by the Bolsheviks in Irkutak. In this letter
Koltchek, who was recognized by the Powers as Ruler of Rassia, conferred all
his authority on Ataman Samenoff. It was later said that the letter was a
forgery, but 18 was never proved.
348
In the same year Ataman Semenoff, himself, was forced to flee
Russian territory and traveled abroad. He had considerable money in his
possession. It was during his travels that he was arrested in the U.S.A.
for firing on the American Detachment near Chita, but was freed by the
Court as the crime charged was not committed on U. S. territory. He returned to the Far East and settled in Nagasaki, Japan.
Soon his money was gone and he entered the employ of the Japanese
military who were, and still are, using him for their own purposes. Lately
they made him nominal Head of all Russian emigrants residing in Manchukuo
and North China, with the rank of "Adviser on Russian Questions," attached
to the Manchukuo Government, for which he receives 1,000 Kuobi a month.
Usually he resides in Kakahashi, Dairen, and tries to keep in contact with
his followers by means of correspondence.
Apart from a few hundred Cossacks he has no following as he is
hated by all Russians, both "white" and "red", for atrocities he meted out
to them while in the Transbaikal. However, no one dares say anything against
Semenoff in Manchukmo and North China as the Japanese will not tolerate it.
Ataman Semenoff is a man without principles; he is a Deartless and
greedy individual whose greatest ambition is to return to Russian territory
as a Leader and Ruler, and in this ambition he is backed by his stupid
Japanese employers.
Any anti-Soviet uprising led by Ataman Samenoff will surely meet
with failure as it is well known to everybody in Russia and abroad that
he is a plain Japanese agent and not a Russian patriot.
349
Shanghai, China
April 15, 1940
OPINION AS TO THE POSSIBILITY or CONDUCTING A WAR
AGAINST SOVIET RUSSIA IN THE FAR EAST
Basic reasons which prompt me to appeal to the head organs which
are fighting now against Nazi Germany, and at the same time under cover
against Soviet Russia, are:
Firstly, my love for the Fatherland (Russia).
Secondly, my deep respect and devotion to the great principles of
Democracy.
I consider it my duty in this historical period of the world to
raise my Russian voice and direct all your attention to the fact that the
present war is one of democratic principles against the principles of
aggression and tyranny which for more than twenty years has been going on
is the territory of U.S.S.R.
Inheriting from the late Admiral Koltehak the leadership in the
Russian For East, I think it is my duty to give the following general
opinion of the possibility of war in the theater of the Near, Middle, and
Far East, and my idea of how it should be pleased and carried out against
U.S.S.R.
I, - . consider 18 important to point out that the tread of the
present war is toward the East and will involve sooner or later the comtries of the Far East, as it is a war against medieval Maxian and Utopian
tyrannical Communism, and therefore it is necessary to carry it to the
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350
bitter and in order to preserve Democracy. And so this "until the end"
war will be a real "World War" is which all democratic nations must take
part.
Various forms and methods will be used is the process of the great
struggle now going on, but will change from time to time according to eircunstances and the pressure of the moment. But Mankind, without any ex-
ception, will, by will of fate, take part in this human drens and is the
end, of course, will free themselves from this attempt to bring humanity
to the living conditions which prevailed in the middle ages. This attempt
to revert to the middle ages is against the Laws of Nature and will be
crushed by Life itself.
It is now clearly seen that the organized armies of the Great Democracies and the Nazi-Communists will not clash in any great battles is
the near future as many think. Future titanic battles will take place
only when armies, armanents, and all other necessities of war, as well as
all political, economic and strategical factors, will be ready on the world
fronts for a decisive struggle.
Long ago in ancient Rome it was said that was in all circumstances
is the weapon of policy and is not a factor born of itself. Thus one must
have a plan based on political aims to conduct a war in countries of the
East.
Germany has a military ally, although so far under cover, in a
country wherein the power of its government is based on principles of
tyranny heretofore never experienced by humanity. This country is U.S.S.R.
The High Military and Political Commands of the Great Democracies
at present are now preparing for decisive battles on land, on see and
under the sea, and one of the weapons consists of an economic blockade.
This weapon, if used intensively, may bring the desired result only is
351
the distant future, and it is my opinion undue optimism regarding this
method must not prevail for the following reasons
Soviet Russia is a unique structure governed by a monstrous
slave-owner having at his disposal 180 million human beings, which, at
a moderate expense for feeding and upkeep, will become a colossal economic force whose power can not be estimated in advance.
Thus 11 is more than likely that Soviet Russia, owing to this
unique structure and its still untouched reserves of raw materials,
might aid its German ally to continue the struggle for several years.
Hitler's Germany also is not very eager to start active military
operations as they, like the Allies, are taking into account the element
of time by trying to delay major operations in order that they may send
their expert technicians into Soviet Russia to improve industrial methods
there.
But the question arises: Will any blockade prevent the proposed
industrial progress of U.S.S.R., and will German experts be able to
organize production in U.S.S.R. on a sufficiently large scale in time to
make a blockade of Siberian ports useless? The talent of the German
race for organization is fully recognized.
Therefore, it is necessary to immediately start certain steps of
a military character in the Far East designed to hasten and strengthen
the blockade against all Naxi-Communist fronts that will bring the
desired results. Such steps need not necessarily be the only action
against U.S.S.R.
of course, such action would involve great sacrifices both in
men and money. but according to the Eternal Law nothing can be gained
without secrifiee.
In the present state of world affairs only quiek action will be
352
successful in stopping the soming progress of U.S.S.R. In order to crush
Soviet Russia by quick and strong action, one must remember that the
present day internal life of the country is quite different from that of
the former Ozarist Russia. The old Russia was a country of natural and
rather primitive agricultural methods and to conquer her it was necessary
to seize the whole of her enormous territory in order to paralyse her in-
ternal life.
In present Bussia (U.S.S.R.), however, although still basically agricultural country, farming methods have been modernized and mechanised,
and the whole industry has been organised on a mass production basis. There-
fore, is any present day struggle against U.S.S.R., methods entirely different
from those used against the old Imperial Russia will have to be adopted.
General Duval, a military authority, has stated that, "The fate of
the war between the Allies and Germany will be decided in the East," but
did not indicate at what point is the East. The "East" covers a good deal
of territory.
In the Near East the Seviet Union has about 8400 kilometers of
territory bordering on Turkey, and about 3000 kilometers on Iran, and is
addition the entire Soviet shores of the Black Sea which must be guarded
by the Soviet Navy.
The world's press, during the last two months, has said a great
deal about the alleged preparation of the Allies for attacking Soviet
Russia is the Cancasus for the purpose of stopping the supply of fuel oil
from the Baku and Greanen Districts.
The Press even mentions the number of forces which are at the dis-
posal of the Allies - British (Australian and New Zeeland), and French
Syrian under General Weigand with headquarters in Beirut. According to
their information, General Weigand has is Syria, Palestine and Egypt about
353
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400,000 troops, besides which Turkey will produce not less than 30 divisions.
However, we must take into consideration the hugh territory covered
by these troops, the lack of communications and transport, mountains on
Soviet borders, and terrible climatic conditions (it is said that 25 kilometers of muslin is necessary for the purpose of protecting the food for
English troops from mosquitos and flies); then we have a picture of the
conditions under which the above mentioned troops must operate.
Besides, to paralyze Baku oil wells by airforce and naval units
from the Black Sea will, of course, be impossible, because the Soviet Union
is prepared for such eventualities. Therefore, the "Eastern Army", under
General Weigen, together with the Turkish Army, will be forced to attack
by land in order to seize Baku and North Caucasus.
To meet this attack Soviet Command could easily bring to Georgia and
Armenia not less than 600,000 troops. As this theater of military operations is close to the center of the country, this Soviet Army could be fed
locally, i.e., from the North-Caneasian Military District.
As the Soviets are fully prepared to defend this district, it will
be necessary for the attackers to bring into action at least double the
amount of manpower, i.e., not less than 1,000,000 men. Further, if it becomes known that the Allies are concentrating so many troops in the Near
East, Germany, using their own means of communication, would be able to
bring to the Causasus enough troops to meet the danger.
In this case all efforts of the Allies will not bring the desired
success; and even partial success, resulting in seizure of Baka, will only
bring on major military operations in the North Caucasus. Would it be
good military tacties to start such operations considering the inadequate
means of communications in the rear, and the long distance through poorly
populated territory to their supply depote?
354
Under the circumstances it would be better for the Allies to CORduct a defensive campaign in the Near East by blockeding the Turkey-Iran
border, defend the oil districts of Mosul and Iraq from the Soviet airforce, and attack Baku only when the Red Aray is occupied elsewhere.
It would also be better for the Allies to defend Hanadas from the
Tabris side and cover it from the Ennelli (Pahlevi) side. This plan of
campaign would mean the safety of the Kermanshahen and Kirkuk regions and
at the same time if Soviet Russia is aiming at active operations in the Near
East, would bring a large number of Germano-Soviet forces into the regions
east of Lake Urmia, where they will be is a very uncomfortable position.
The actions of the Allies must be suited to the character of the
countries of the Near East, where they will encounter wide waterless
steppes with a very scanty population along the reilroad and caravan lines,
as well as a concentrated population now gathering in the foothills of
the mountains in the districts of Tashkent, Samarkand, Kholand, Forghama,
and Sevenriver Districts. All these districts, although connected with the
central districts of U.S.S.R. by rail, are novertheless very easy of approach
by small expeditionary detachments and by partisan (guerrille) parties of
natives who hate the Soviet regises. These small detachments and guerrilia
tribes must be placed under one "Saered Authority" who would rule with as
"Iron Hand" in order to avoid half measures, indecisive actions, disobedience
or insubordination, which would involve loss of money and manpower.
Native tribes who inhabit the northern side of Horosan, near the
northern borders of Afghanistan, and along the great Tien-Shan mountains,
are imbued with the spirit of the East; a spirit which can neither understand nor accept the teachings of Communism in short a spirit which is
against anything likely to interfere with their age-old habits and customs.
Here it will be necessary, in order to divert the attention of the Seviet
Command, to send a mall Allied force to start uprisings among the natives.
355
It must be remembered that in the Near East it is not a question of
a force, but rather personality of the "Supreme Commander" who
should be a leader with influence - the tribes and with ability to
wis the sympathy of the natives. (See footnote).
without a leader with powerful influence over the native masses, a
war in the Near East would be costly and probably unsuccessful and night
overflow the borders of Afghanistan and involve that buffer Kingdom.
Thus in the great semi-sirele bounded by Ester-Abad on the west,
on the south center with Heret, and Kashgar on the east, it would be possi-
ble to create a "slow war" without great expense to the Allies, which could
eventually be extended to the northeast Kuznetak (Stalinsk) District; thence
to Nove-Sibirsk, cutting off the main line of communication of the Soviet
Union - the Trans-Siberian Railway.
It is conceded that all the above-described operations in the Near
East are only important to the extent that they will aid in main operations
elsewhere in the Far East where, in our opinion, only a crushing blow to
the U.S.S.R. can be struck. At this point we wish to say that it is
doubtful that the Seviet Union will ever attack Afghanistan and thus bring
the war to the borders of Northwest India.
The idea of attacking India via Afghanistan was inherited by the Red
General Staff from the Osarist General Staff, but the U.S.S.R. will never
risk sending their politically unsettled Red Army along such a difficult
route. This idea is only useful in the propaganda work the U.S.S.R. is
intensively carrying on is British India.
of course, if the U.S.S.R. is allowed to carry on their Communistic
propaganda in India, then it is possible that the moment will come when
Red detachments will march from the Merv to the southeast - not for the
purpose of fighting but to fraternize with the tribes of Punjab and
Baluchistan.
356
&
However, I hope that my suggestion of appointing the proper
person to the Middle East, to arouse the natives and organize a first
line defense against the Communists, will be given careful consideration.
Generally speaking. my opinion is that military operations in the
Middle east should be limited as follows:
1. Organization of defense operations along the eastern shores
of the Caspian Sea on the lines:
(a) Ester-Abad - Krasnovodsk
(b) Herat - Marv - Xhive, towards the source of the Emba River.
(c) Howdjent (9) - Tashkent - Kazeliesk - Orek (7).
2. Organization of uprisings among the natives in Semirek (Seven-
river) District and to extend such uprisings in a northern direction
towards Semipalatinak - Barnal and onward to the Trans-Siberian Railway.
From a study of the map of the U.S.S.R. and the neighboring middle
Asiatic countries, it can be clearly seen that neither the Near East nor
the middle Asiatic districts of Seviet Russia are places where the U.S.S.R.
can be given a blow sufficiently crushing to cause the downfall of the
Soviet Government.
The keenest military statistical research will show that even if all
the above-mentioned borders are blockaded, it will neither cause desperate
economic conditions, nor even make a dent in the economic system of the
U.S.S.R. Blockade will simply change some routine arrangements, but living
conditions in U.S.S.R. will go OR as usual. Imports ever these borders are
negligible and the little that is imported could easily be handled over
other routes.
However, this can not be said of the For East. Here on the shores
of the Pacific Ocean, owing to the war in Europe, are the main gates to
the Seviet House. Through these gates, from North and South America, the
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35,
U.S.S.R. is now intensively importing everything necessary for increasing the military power of Communism.
It is a fact that German engineers and transportation experts are
employed at all main stations along the Trans-Siberian Railway for the
purpose of improving transport and unloading cargoes.
The Germans are losing no time. They believe that "The secret of
victory is in the feet of the soldier", and they are injecting this belief
into the Soviet Union to induce them to move fast. Already on the High
Seas many steamers are afloat with cargoes of naphtha, metals, and other
raw products necessary for military purposes. In Soviet ports slaves of
the Soviet Government are unloading these cargoes onto trucks and reload-
ing them into railway freight cars, while German engineers are doing their
best to keep these cers moving fast towards Nazi-Germany.
All this would not be so tragic if members of the British Parliament,
sometimes from Ministerial Seats, did not proclaim to the world that
Britain has no desire to war with the U.S.S.R. However, U.S.S.R. is pay-
ing very little attention to what the British Parliament is shouting - they
are already at war with England. Like the ostrich, England is hiding its
head in the send; otherwise they could hear the danger in the rumbling of
numerous cargo trains along the Trans-Siberian Railway.
England may not wish to fight against U.S.S.R., but the U.S.S.R.
is carrying on a tireless war against all nations of the world - mainly
against England. Every day, even every hour, the U.S.S.R. is winning some
economic, political, or strategical advantage. All that is now happening
in Soviet Far Eastern ports and along Trans-Siberian Railway is not only
preparation for war, but is WAR itself. We must discard our accustomed
views on the war and then we will understand that the SOVIET UNION IS
CARRYING ON AN INTENSIVE WAR AGAINST THE BRITISH EMPIRE IN ALL PARTS OF
THE WORLD.
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358
All attempts of British statement to hide this fast by their
official utterances is very bad for the prestige of the British Repire
and is weakening the influence of their representatives in the East.
It is necessary to remember that the people of the East are carefully
listening to what is said by British statesmen and are closely watching
their actions.
It is a dangerous thing to show to the people of the East one's
weakness or hisitation, and that is why, in my opinion, the time has some
in the For East when it is necessary to close the Soviet "gate" to the
Pacific Geeen by force.
Lenis, in his teachings, often pointed out that the many millions
comprising the Passes of the East must be invited and added to the Revo-
lution Movement, and that then the Proletariat will conquer the Bourgooise
class and the World's Revolution would be assured.
But here in the For East exists the Country of the Rising Sun - the
Japanese Repire - doing its historical duty for the benefit of makind.
Owing to the feet that the centers of the other powers are far, far any
the Japanese Impire is the one and only stabilising factor in Eastern
Asia which has stopped incoming Commiss in China in the past and which
is the only one with the power to stop its coming in the future.
Imagine what would happen to the people of the Far East if there
were no Japanese Impire; for instance, in the fateful years 1980 - 19871
This question no one can really answer because is is impossible to imagine
what would happen if the many millions of the Chinese masses because
Communistic.
So that with other powers busy with the European War, it is clear
that only the Japanese Impire is is a position to stabilise the general
situation in the Fax East, and that only with her aid can the Seviet "gate"
to the Pacific be closed.
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Decisive military actions on the Seviet borders of the Far East
will immediately bring a response in all Eastern Asia.
It has been mentioned many times that the actions of our "white"
Russian partisans on the Soviet borders were unsuccessful, and that the
Soviet population failed to help them. But no one has asked the reason
why.
How can the population of the Soviet Union take up arms against
their hated Government when they know that all other countries in the world
maintain friendly relations with this Government and are continually signing agreements with them?
Thus when it is said that anti-Soviet partisans are doomed because
the population of U.S.S.R. is supporting their Government, it is wrong.
Some are just honestly mistaken in this, but some are telling these lies
on purpose. It is the powers, themselves, who are supporting the Seviet
Government, and not the Soviet population. The truth of the above will
be clearly demonstrated just as soon as one of the powers declares a real
war against the Soviet Union.
In connection with this statement it must be emphasized that the
uprising of the Soviet population depends on a formal declaration of war,
and not on an undeclared war such as existed in the case of the Soviet-
Finnish conflict.
Knowing the psychology of the Russian masses, the Seviet Government
is afraid to make a formal declaration of a major war. There is a Russian
saying which roughly means: "Fight first - ary after." Following this
saying the population of Rassia will take up arms against the Communistic
Government with the alogan: "No have nothing to lose."
Thus there are TWO BASIC CONDITIONS which are necessary for the
closure of Far Eastern gates of the Soviet Union, namely:
360
1. It is necessary to persuade the Government of Japan to take
part in it, regardless of consequences.
2. To declare formal war against the U.S.B.R. as the enemy of
civilization. And the war must be to the end.
WITHOUT THESE THO BASIC CONDITIONS II WILL BE IMPOSSIBLE TO MAINTAIN A BLOCKADE IN THE FAR EAST AND NO MATTER WHAT THE SACRIFICE, IT WILL
MEET WITH NO SUCCESS.
During the last "five-year plan" the Seviets partially succeeded
is arranging transport facilities along their northern shores, 1.0., in
the mouth of the Lena River and in Nishne-Kolymak, but so for this route
has not proved important from a commercial point of view. However, trans-
portation there is increasing all the time and with the assistance of
Nazi experts it night also show good results in a short time.
Investigation as to the ability of the Soviet Pacific ports to
handle incoming earge, namely, Petropavlovsk, Okhotak, Ayan, Vladivostok, and
Soviet Port, shows that unlimited quantities of cargo could be brought into
these ports - the only question being its transportation overland to NasiGermany.
However, if we take into consideration that there is a compulsory
labor system in this country of slaves and that this labor system could be
efficiently organized by Nazi experts, then we must agree that we could
expect some striking results. And we must also agree that only a crushing
blow on the Pacific shores of U.S.S.R. will prevent these "results" which
might be very unpleasant for the Allies.
It is possible that the closure of Soviet ports on the Pacific will
not be enough even with the seisure of the Maritime Province; therefore
some other measures must be taken in order to once and for all finish the
U.S.S.R. as an ally of Germany. This night be done by a combined blow,
namely, a military diversion somewhere in the territory of the Soviet
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361
Maritime Province, and at the same time a military advance OR Outer
Mongolia in the direction of Uliassutei - Kebdo - Urunchi - Lanehow Hami - Chuguchak (8). These routes lead to Kusnetak (Staliask) District
and threaten the main industrial center of Western Siberia, namely, MoveSibirak.
If such combined operations in the Maritime Province and towards
Novo-Sibirsk be carried out, then the following results would be gained:
(a) Closure of Soviet ports in the Pacific.
(b) Interruption of Soviet railways.
(e) Liquidation of Kuznetak District.
(d) Liquidation of the industrial center of Western Siberia.
And what is most important:
(e) Massing of Soviet troops in the Far East.
The Seviet Government, during the past twenty years, has been treas-
forming Nove-Sibirsk into an industrial center, and the Soviet Union will
defend it by all means in their possession. At the same time they will do
whatever is possible to defend their gates to the Pacific. Those two com-
ditions, i.e., military operations in the Maritine Province and in Outer
Mongolia, as well as the threat to Baikal Lake from the west, will make it
necessary for the Soviete to concentrate an any of a million men in this
part of the world, and the cost and effort of maintaining this hugh army
will prevent them from sending supplies and cargoes to Germany.
For the above reasons I am in favor of taking the actions I am
recommending.
In case the Imperial Japanese Government looks with favor on the
above-mentioned plan of action, it could be carried out immediately by the
forces which are still at my disposal. These forces consist of a considerable number of former "white" armies in the East and partly of the young
generation of Transbeikalian and other Cossacks who have been educated and
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362
raised is the spirit of anti-Communism.
These forces make it possible to immediately start the organiza-
tion of a Russian National Army which, after being supplied with all
necessities, could be sent to fulfill the two operations we have mentioned
above.
It is expected that when these two operations are carried out, the
troops of Imperial Japan would also start action and thereby aid and increase the operations started by me for the liquidation of the Seviet
Government's authority in the Far East.
However, it is quite clear that if Imperial Japanese troops will
take part in this Russian question, it is necessary for the circles who
will sponsor it to decide on all questions regarding the financing and
supplying of all these operations.
At the disposal of the Russian anti-Soviet Command will also be the
troops of anti-Soviet Mongols and refugees from Outer Mongolia, as I have
a full understanding with the Mongolian Princes regarding the coordination
of all military operations. In addition, all Tunguses and Mohammodans of
Sinkiang will be subordinate to mo, for which I hold the solemn pledge of
their Chiefs and the Heads of Tribes and Clans.
The basis of this anti-Soviet Movement is an aspiration to aid the
Soviet population to throw off the Communistic yoke, and this will be the
only purpose of the Government which will be organized in the territory of
Russia - in the districts of the Maritime Province, Sakhalia and Amount Province. This Government will declare a blockade on the Seviet side and thus
automatically become a part of the Allied front and be a part of the
struggle against Germany.
We are not blind to the many difficulties before us, but we shall
maintain our part in the general actions in the Far East and we believe
that our part in it will be e VERY USEFUL PART OF THE GENERAL OPERATIONS
363
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of the High Command, and that it will be for the benefit of the Great
Democracies. The following points are in favor of my plan:
(1) The main stabilizing force in Eastern Asia - Great Japan will
take her part in it and thus will become one of the Allies.
(2) The Nevy of the British Empire will be free from action in the
Pacific as the blockade will be taken over by Japan, which in the future will
prevent misunderstandings between England and Japan - mainly regarding any
British Naval activities in the Western Pacific.
(3) Interruption of Soviet-German transport, i.e., the beginning of
an actual blockade in the Far East.
(4) Division of the main Soviet forces, as about 30% of the whole
Soviet Army will be sent to Eastern Asia.
(5) A hugh quantity of various military supplies and raw products,
which should be on its way to Germany, would be intercepted and sent to
various fronts in the East, which naturally will weaken Germany.
(6) The circle around Germany will automatically be strengthened and
at the same time no Allied reserves (of manpower) will be touched, as local
Far Eastern contingents will be used.
(7) The propaganda which will be carried out by a newly established
Russian National Government will cause an uprising of the Red Army and the
population of U.S.S.R., which will weaken the German rear.
All these plans and ideas, which I hereby submit for your decision
and approval, are only my general opinion regarding the possible actions
which could be carried out in the countries of the East.
I purposely have not mentioned anything about various accounts, in-
quiries and documents giving details of military possibilities in Eastern
countries. All this, together with operative plans of my Staff, can be
submitted when necessary.
The purpose of this memorandum is to bring attention to actions
JOY
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364
which could be taken in the territories of Eastern countries. It is
written not only for military experts, but for all persons who can influence the course of events.
IN CONCLUSION, I ONCE MORE INSIST THAT IN ORDER TO HELP GERMANY
THE SOVIET GOVERNMENT WILL DENY THE PEOPLE OF THEIR COUNTRY ALL THE
NECESSITIES OF LIFE, AND, IN SPITE OF THEIR SUFFERING, COMMANDEER AND
USE ALL ENGINES, COACHES, GARS, AND RAILS TO SUPPLY GERMANY WITH NAPHTHA
AND OTHER RAW PRODUCTS. I HAVE NO DOUBT ABOUT THIS.
Referring to the proposed actions which could be taken in the
Near East, they may be of only a defensive nature, while in the Middle
East such actions might be of only a secondary character to aid major
activities in the Far East.
And here (Far East) the question is clear. It is the struggle
against Bolshevik aid to Germany and the coordination of Allied actions
with the Government of Imperial Japan.
At the suitable moment it will be necessary to organize Russian
anti-Soviet Government in the territory of the Far East - former Russian
Empire. And then, without loss of time, military detachments of the
said Russian National Far Eastern Government will start an advance movement in Eastern Asia toward the west of Baikal Lake and the Maritime
Province. Such land blockade will bring Russian National forces further
and further to the west.
As my last suggestion, I think it is necessary to establish an
anti-Commnistic center in the Far East which would work against the
Third International in China and British India.
It is my strong opinion that if my suggestions are taken into
consideration and put into operation, the necessary financing will
easily be found by the Great Democracies.
365
-17-
When I started to write this memorandum I was under the in-
fluence of the old saying, namely, "The Present, whatever it is, is in
reality the fruit of the Past, and is at the same time the grain of the
Future."
FOOTNOTE: Atensa Semenoff, himself, is of course the potential
"Supreme Commander" referred to.
FRANCO-BRITISH AEROPLANE ENGINES
A.
may 9 ) 366
NEW ORDERS PLACED SINCE APRIL 1, 1940
1. General Motors - Order placed April 8, 1940.
a.
Capital expansion
b.
Training of
$5,548,087.00
600,000.00
personnel
Total
$6,148,087.00
Production created
3,500 Allison engines for delivery prior
to September 30, 1941
300 Allison engines monthly thereafter
2. Curtiss Wright - Order placed April 15, 1940.
$6,558,200.00
a.
Capital expansion
b.
Training of personnel
and other items
Total
4,684,000.00
$11,242,200.00
Production created
1,824 R2600A engines for delivery from
January to September 1941
260 R2600A engines monthly thereafter
3. Curtiss Wright - Order placed May 9, 1940.
a.
Capital expansion
b.
Training of personnel
and other items
Total
$ 7,892,000.00
3,630,000.00
$11,522,000.00
Production created
1,030 1820 G-200
270 R2600
engines for delivery from
}
160 1820 G-200
40 R2600
January to September 1941
engines monthly thereafter
}
367
Curtiss Wright
1800 R2600 engines for delivery between January
and September 1941
(The contract covering this is just
ready for execution)
Pratt & Whitney
for delivery between
758 Twin Wasp engines
908 Double Wasp engines
January and September
}
)
1941
(This contract was signed on
April 24, 1940)
monday
Statement of Expenciture incurred by the French and British
Governments for expansion of capacity of the United States
aircraft industry
may 9
368
As of March 31, 1940
Amount
Company
$10,372,000.00
Wright Aeronautical
Purpose
Allocation
Aero engines
French Government
Pratt & Whitney
Aero engines
French Government
: 940,000.00
Curtiss Wright
Air frames
French Government
$ 3,292,000.00
Glenn Martin
Air frames
French Government
3 940,000.00
Consolidated Aircraft
Air frames
French Government
Curtiss and Hamilton
Fropellers
French Government
Wright Aeronautical
Aero engines
Corporation
7,255,000.00
500,000.00
&
1,360,000.00
Corporation
$ 137,000.00
24,796,000.00
Allison Division
General Motors
British Government 7/11
French Government 4/11
Aero engines
Approximately 1/2
French Government and
1/2 British Government
Inapril
AB Of May 1, 1940
6,558,200.00
Wright Aeronautical
Aero engines
Approximately 7/11
British Government and
4/11 French Government
Aero engines
Approximately 1/2
British Government and
Corporation
Allison Division
5,548,087.00
General Motors
1/2 French Government
$ 500,000.00
Curtiss Wright
Propellers
Approximately 1/2
British Government and
1/2 French Government
$ 200,000.00
Gienn Martin
Air frames
$ 851,000.00
Bendix Corporation
Eclipse Starters Not yet decided.
Approximately 2/3
British Government and
1/3 French Government
13,657,287
38,453,287
x
Subject to reduction should cost be less.
Subject to increase not exceeding 15% or to decrease depending
upon cost.
Anglo-French Purchasing Board
May 9, 1940
369
Airplanes and Airplane Engines Purchased by
British and French Governments in April 1940,
Classified by Companies
::
::
British: French
Joint
Total
::
I. Airplanes
Value (In millions of dollars)
Glenn L. Martin Co.
Curtiss-Wright Corp.
Bell Aircraft Corp.
Consolidated Aircraft
67.8
30.8
8.0
Grumman Aircraft
Douglas Aircraft Co.
Total
10.9
3.7
19.0
22.7
10.9
67.8
30.8
8.0
10.9
3.7
19.0
106.6
140.2
600
800
200
600
Number
Glenn L. Martin Co.
Curtiss-Wright Corp.
Bell Aircraft Corp.
Consolidated Aircraft
Grumman Aircraft
Douglas Aircraft Co.
Total
81
800
200
81
24
24
180
180
204
81
.6
34.4
48
1,666
1,600
1,885
II. Airplane Engines
Value (In millions of dollars)
Pratt & Whitney
-
35.0
Number
Pratt & Whitney
-
1,714
May 9, 1940
370
May 9, 1940
10:07 a.m.
H.M.Jr:
Hello.
Operator:
Colonel Dasher.
H.M.Jr:
Hello.
Col. Chas.
Dasher:
Yes, Mr. Secretary.
H.M.Jr:
Do you suppose that you gentlemen could have that
D:
thing on the Army inventory ready for me by nine
tomorrow, because I may see the President early.
Why, we have got it going and they promised to
endeavor to get it to us this afternoon.
M.M.Jr:
Do you think you could
D:
And if they couldn't they would have it here by
nine-thirty tomorrow morning because you had told
us that you would like to have it by ten-thirty
Friday morning.
H.M.Jr:
Well, do you think you could advance it so that you
could get it here by nine?
D:
Tomorrow morning?
H.M.Jr:
Yeah.
D:
I'll make an inquiry, sir, and do our level best and
call back.
H.M.Jr:
Will you let Lieutenant McKay know in my office?
D:
Yes, I will.
H.M.Jr:
Call Lieutenant McKay.
D:
Yes, sir, I will.
H.M.Jr:
I'd like very much if I could to have it by nine in
D:
Yes, sir, I will, sir.
the morning.
371
-2H.M.Jr:
You'll bring it over with Mr. Martin.
D:
Yes, sir. Yes, sir. All right, sir.
372
May 9, 1940
11:32 a.m.
H.M.Jr:
Hello.
Operator:
Preston Delano.
H.M.Jr:
Hello.
0:
There you are.
H.M.Jr:
Delano.
Preston
Delano:
Yes.
H.M.Jr:
D:
I sent you down a copy of my statement. Did you
get it?
Yes, I did.
H.M.Jr:
How do you like it?
D:
I think it's all right.
H.M.Jr:
Too strong?
D:
(Laughingly) No, I think it's all right. The only
thing I was trying to do -- I hope you appreciate
what I was trying to do there in possibly putting
it on the grounds of new banking legislation, I
really was trying to kill two birds with one stone.
Because I did want to head off if we could, any
opening up of this damn banking thing. I'm scared
to death of it.
H.M.Jr:
D:
H.M.Jr:
Well, you can take that side, you see?
Yeah, I'll take that.
But -- you could take that view, but I didn't want
to do it because I didn't know where this thing of
small loans to business 18.
D:
Well, I -- that's the thing that I wasn't informed
on. I was going to talk to you about that and find
out if we -- if we had made up our minds on that
particular thing.
373
2-
H.M.Jr:
Well, I haven't but if I came out and said, "No
banking legislation, "
Yeah, I see your point.
D:
H.M.Jr:
Then my Senator from New York might say, "Well now,
D:
That's right.
H.M.Jr:
D:
H.M.Jr:
you've got no right to say that because
!......We're going through with small loans to business.
Well, that's
But this thing just tells Jones -- let him run the
lending agencies and we'll do the best job we can
on banking.
I tell you what I did to make sure of our position
on this thing. I talked to Lee Wighams and I talked
D:
to Tom K. Smith
H.M.Jr:
Yeah.
on that thing and they both agree with me.
D:
H.M.Jr:
Good.
And with you that we shouldn't do that, so that I've
got a pretty re-inforced position. Now what Jesse
D:
is trying to do, I think, is open that thing wide
enough for some of his own operations down in Texas.
Jr:
D:
Uh-huh.
You know he's -- he's pretty heavy in the real
estate case
H.M.Jr:
D:
H.M.Jr:
D:
No, I -- well, I didn't know.
Well, I -- maybe that's just a suspicion. I suppose -this would have to be off the record, but I mean that's
just a suspicion.
Well, I guess it's a good one.
(Laughs)
374
-3 - H.M.Jr:
But I'm sure the boys will come down there. When
I told them -- talked to them I said that you and
Iaccord.
had discussed this thing and we were in complete
D:
Right ! That's absolutely correct. Now, it's all
right for me, if I'm hailed up there, to say --
to place it on the grounds that I mentioned in there
that I -- I just think we shouldn't have any bank.
H.M.Jr:
Well, that's all right. You just say that.
D:
Right. One other thing while I have you here. I
did some work yesterday afternoon on that matter you
mentioned to me
H.M.Jr:
D:
You mean public housing.
Yes. And of course you're familiar, aren't you, with
the exact status of the thing. You know that there's
a rule to come out now
H.M.Jr:
Well, Sam Rayburn was down here this morning
D:
Yeah.
H.M.Jr:
and he told me that if Straus could get a bill
out on the floor he'll take care of it and pass it.
D:
Well, I was going to say I have the same information.
Now, I talked with a number of people that I know and
I got -- too some of these chaps up there that -- I
don't know them personally but I get to them pretty
well, and they all assured me that if the thing got
out it would pass.
H.M.Jr:
Well, that's what Rayburn said this morning. He was
kind enough to come down.
D:
Well, I think this, I think the thing hangs pretty
much in Steagall's hands at the moment.
H.M.Jr:
Well, I've asked to see Steagall as soon as he gets
back.
D:
Steagall, you know, has to ask for a rule. If he
asks for this rule from the Rules Committee, the
Rules Committee would give it to him I think.
-4H.M.Jr:
D:
H.M.Jr:
375
That's right.
Now, if it gets out on the floor
Yeah.
my information is it will pass all right.
D:
H.M.Jr:
Well
D:
And we lined up yesterday afternoon about eight
definite votes for the thing.
H.M.Jr:
Wonderful.
D:
And I think that will help.
H.M.Jr:
Would you send me in a little memo on it because
D:
Fine.
H.M.Jr:
D:
H.M.Jr:
D:
Straus is coming in at three-thirty.
Will you get me a memo before three-thirty?
Now what -- what will you want in the memo?
Just what you did yesterday so I can tell him.
O. K. I can't give you names but I -- it's all right
to state them in numbers.
H.M.Jr:
Numbers?
D:
Numbers, yes.
H.M.Jr:
Yes.
D:
Righto. I'll do that.
H.M.Jr:
D:
H.M.Jr:
D:
And I can tell him that.
O. K. I'll do that.
But keep after it, will you?
Yes, I will. Right away.
376
May 9, 1940
12:12 p.m.
H.M.Jr:
Hello.
Cant.
Collins:
Good morning, sir.
H.M.Jr:
Good morning.
C:
I've just had a conversation with General Brett,
Mr. Secretary.
H.M.Jr:
Yeah.
C:
And he is extending through us to Mr. Ziegler an
invitation to be present at -- for the firing test
on the leak-proof tanks, on the 13th of May. Shall
I handle that?
H.M.Jr:
If you please.
C:
Thank you, air.
H.M.Jr:
C:
Right.
And he said to tell you please also that as soon as
the -- those engine and airplane production charts
which they prepare are brought up-to-date why he
will give you copies of the same information he
gives Secretary Johnson or General Arnold.
H.M.Jr:
C:
Wonderful.
And he also said, and I brought the question about
the motors, that -- I couldn't mention this yesterday in front of Purvis -- he said they are making
some very definite estimates against another building program and the airplane -- from the airplene
side of it for the Army.
H.M.Jr:
C:
Yeah.
That until they know what the reaction may be on
Congress he'd prefer to make no further statement
concerning the release of the capacity for those
240 engines we've been discussing because they
may not be available at all.
H.M.Jr:
O. K.
377
-2C:
And I told him I would explain that likewise.
H.M.Jr:
Thank you.
C:
You're welcome, sir. Goodbye.
378
May 9, 1940
3:10 p.m.
Operator:
Mr.
Thompson
call him
there? is in Mr. Bell's office. Shall I
H.M.Jr:
Yeah, that's right.
0:
H.M.Jr:
All right.
He's in Bell's office.
0:
Operator.
H.M.Jr:
Where is Bell?
0:
In Mr. Thompson's
H.M.Jr:
Is Thompson in Bell's office.
0:
Just a minute.
(Brief pause.)
0:
Yes, sir. He's coming to the telephone now, Mr.
Thompson. There you are.
Norman
Thompson:
Hello.
H.M.Jr:
Norman
T:
Yes, sir.
Is Dan Bell in town?
H.M.Jr:
T:
He expected to be in town today.
H.M.Jr:
Oh, they mean -- they said you were in Bell's
office.
T:
They said -- no, I'm in Charlie Bell's office.
H.M.Jr:
Oh.
T:
Charlie Bell.
H.M.Jr:
Look, will you get somebody from Bell's office and
somebody from Foley's office together on this
379
-2-
T:
H.M.Jr:
question of Finnish payments, see?
Yes, sir.
I was under the impression that we had taken the
check from Finland on their last interest payment
and
into the Treasury because Dan told
me he had to do it.
T:
Yes.
H.M.Jr:
But evidently he hadn't. Now, the President of the
United States says he was going to give it back
to them.
T:
Uh-huh.
H.M.Jr:
Bell's office -- somebody there ought to know some-
T:
thing about it.
Yes, I understood that they were holding it in a
suspense account.
H.M.Jr:
Yeah, well that's right, but Bell told me that
the time has been up and he had to put it in the
general account but I find he hasn't done that.
T:
H.M.Jr:
T:
H.M.Jr:
I see.
Now, I also find that we've never written to the
Director of the Budget or anybody, or Congress,
asking them to do it. There's a lot of memoranda
on this thing.
Yes. Yeah.
And evidently -- I thought that Bell or I had
written to the Director of the Budget or the President carrying out the President's wishes.
I see.
H.M.Jr:
Namely, that they be given back -- or something or
other. I forget, my mind isn't fresh on it, but
wish you'd dig into it. And I'd like to do two
I
things: one, carry out the President's wishes, or
at least his public statement that the last check
380
-3Yeah.
H.M.Jr:
be given back to them, see?
Yeah, I see.
H.M.Jr:
You've got to get legislation.
Yeah, that's right.
T:
H.M.Jr:
And number two, as I remember it -- oh, I don't know
-part of their loan to be re-financed or cancelled
or something.
T:
H.M.Jr:
Oh, yes.
But in Dan Bell's office there must be something.
Oh, I'm sure they know all about it, and I'll check
right
into it.
M.M.Jr:
For the President's sake
T:
Yes.
H.M.Jr:
.....I
went to have him keep faith.
Surely.
H.M.Jr:
So if we haven't taken the steps of putting it up
through the Budget Office to Congress, I'd like to
have it prepared so that I could take it over to
Cabinet tomorrow and bring it to the President's
attention, and get him to approve it and have him
send it up on the Hill on Monday.
I see.
H.M.Jr:
Now, maybe it has been done. My thought is that
T:
That's right. All right, I'll get right at it.
H.M.Jr:
If you could have that for me in the morning.
Yes, sir.
T:
H.M.Jr:
it was done. If it was done once let's have a
follow-up on it.
Thank you.
All right. Goodbye.
381
May 9, 1940
3:30 p.m.
H.M.Jr:
Hello.
Operator:
I have Mr. Harold Smith.
H.M.Jr:
Hello.
0:
Hello.
H.M.Jr:
Hello. Hello.
Harold
Smith:
Hello.
H.M.Jr:
Morgenthau, speaking.
S:
Yes, Mr. Secretary.
H.M.Jr:
How are you?
H.M.Jr:
Well, I'm a little weary.
Me too. I tried to get you this morning before my
press conference to tell you what I had in mind
about this so-called R.F.C. bill.
S:
Yeah.
H.M.Jr:
You know, Jones came over to see us last week
S:
Yes.
S:
H.M.Jr:
S:
Yes.
H.M.Jr:
And before we had a chance to write you a letter he
had it introduced.
S:
Yeah.
H.M.Jr:
I signed a letter to you yesterday
That's right.
......in which we pointed out that the two banking
S:
H.M.Jr:
features we were opposed to.
382
2-
S:
H.M.Jr:
S:
H.M.Jr:
S:
H.M.Jr:
S:
Yes.
And I said so at my press conference today. I
said the other features we were heartily in favor
of.
Yes.
But before I -- I mean, I said it two or three times,
that we approved the part of 300 million entirely
but where it got into banking legislation the two
things he asked for I was opposed to them. Well,
of course, he sent his bill up, 8.8 I understand it,
with a -- without ever getting the approval of the
Budget. Isn't that right?
That's right. That was an embarrassing situation.
I don't know whether he'd done something, made some
deal with Glass down there or not.
Uh-huh.
But he kept calling me and wanting to know what the
Treasury had reported. He seemed quite anxious about
getting something done and threatened to put this
bill in.
H.M.Jr:
S:
Threatened?
And I told him that -- of course the other thing he
didn't do, you sec. He wouldn't even write us a
letter formally submitting it.
H.M.Jr:
He did not?
S:
No.
H.M.Jr:
Well, that's what I understood.
S:
He didn't write us a letter formally submitting it.
Just a little difficult situation. I told him that
we had an executive order here under which these
things were done and apparently Jesse isn't used to
doing that.
H.M.Jr:
No, he
333
- 3S:
And he called me up at ten o'clock at the house. I
don't know whether it was Tuesday night
S:
Well, the bill was dropped in the hopper Tuesday night.
Yeah. Well, that's when -- that's when he called me
then. He said, "I've stuck the bill in."
Yeah.
S:
Well, of course, it hasn't got one of the provisions
in there that we -- that we need in there -- I think
it's Federal -- Federal Farm Mortgage, I guess it is.
Well, the point is I don't want any banking legisla-
tion at this time. Hello?
S:
Yes.
H.M.Jr:
And the two things that he is asking for is purely
personal and selfish on his part.
Well, he never -- he wouldn't seem to justify it.
He had some vague reason for it and he would -- would
say to me that -- well, he was willing to make any
adjustments that were reasonable. And he would send
over Hamilton, his appropriation -- or his counsel,
to work with the boys here and the boys here told
me that Hamilton said that Jones was very determined
about that when the boys would tackle Hamilton to
try to get adjustments. And all I hope is that it
doesn't get -- doesn't get snarled un and I -- Jones
seemed to be, whenever things were said, willing to
go along and yet there was some feeling in the back
of our minds -- well, some of the boys began to get
a little suspicious and say, "Well now, maybe he's
just tacking on these things to stymie it."
Well
S:
Of course, I -- I don't think that's true.
H.M.Jr:
Well, he's a very determined person, as you know,
and a very selfish person and we here, Bell and I,
felt that he absolutely double-crossed us on this
thing, and we didn't know anything about it until
we saw it in the paper, and we moved on it just
384
-4
as fast as we could. Well, before I sounded off
at the press I wanted to talk to you.
S:
H.M.Jr:
Yes.
S:
But I hope on those two banking features quite
frankly that you're going to back the Treasury up.
Well, they -- Lawton -- I asked Lawton to check with
the Committee and the Committee is going to ask us
for reports, you see, right away.
H.M.Jr:
Yes.
S:
That means that we get these things down to the
Committee. Now, I've been working on the Civil
Aeronautics thing and we were here until four
o'clock this morning.
H.M.Jr:
Oh, heavens !
S:
Went home and got two and a half hours' sleep and
H.M.Jr:
S:
back at seven-thirty, so I suppose that's the
reason we didn't get together.
Well, I wanted
It's all right, I hope, that -- I hope we can work
it out in some way that
H.M.Jr:
S:
Well, the banking features don't belong in the bill.
Well, I didn't think so and they were a great
surprise to me, you know. He never mentioned any
of this stuff when I talked to him about it. We
mentioned the other provisions. He just said,
"Well," I want some legislation that maybe I'll
submit, and was apparently thinking, as far as I
could see, he was thinking in terms of maybe some
amendments to his act that would stabilize the
loan authority and so on and of course we could
H.M.Jr:
have no objections to that. Then these other
things come popping in out of clear sky.
Well, they don't belong in there and the Comptroller
of the Currency definitely does not want them.
-5S:
Yes. Yes.
H.M.Jr:
Yes.
S:
Yes. Well, we'll -- we'll get -- we'll get those
reports
either back to you so it can go to the
Committee.
H.M.Jr:
O. K.
S:
All right. Thank you.
335
386
May 9, 1940
3:36 p.m.
Summer
Welles:
Henry
H.M.Jr:
Yes, Sumner.
W:
Sorry to bother you.
H.M.Jr:
No bother.
W:
H.M.Jr:
They tell me that Dan Bell is away.
Right.
And the Rumanian Minister called to see me this
morning.
H.M.Jr:
Right.
I wanted to talk over with your department the
same kind of arrangement that has been made with
Norway and Denmark*tentatively with the Netherlands.
H.M.Jr:
W:
Right.
And wanted me to call up Den Bell to tell him that
he wanted to see him and telk about that.
Right.
Now, since Dan Bell is away until the 20th, they tell
me,
would it be possible for you to see the Minister
instead?
H.M.Jr:
W:
Well, Gaston is going to handle that end of it while
Bell is away.
I see, well, then I'll ask the Minister to get in
touch with Gaston.
H.M.Jr:
I'll tell Gaston that he'll hear from Rumania.
W:
All right. Thank you very much, Henry.
H.M.Jr:
I'll tell Gaston that he'll expect a call from the
Rumanians.
W:
Right. Many thanks to you.
H.M.Jr:
You're welcome.
W:
Goodbye.
May 9, 1940
3:38 p.m.
Operator:
Operator.
H.M.Jr:
Herbert Gaston.
0:
Herbert Geston.
(Brief pause)
0:
Mr. Gaston.
H.M.Jr:
Herbert
Herbert
Gaston:
Yes.
H.M.Jr:
Herbert
G:
Yes, sir.
H.M.Jr:
Welles just called -- hello?
G:
Yes.
H.M.Jr:
Can you hear me?
GL
I can hear you.
H.M.Jr:
G:
And will you see the Rumanian Minister. He wants
us to make a similar deal as Norway and Finland.
He'll call you.
Yes, all right.
H.M.Jr:
Rumania.
G:
Rumania. He's coming in, huh?
H.M.Jr:
G:
H.M.Jr:
G:
Yeah, Welles wanted to know who should see him. He
wanted me to see him. I said, no you'd see him.
All right.
And I think when he comes in if you could have
Cochran there with you.
Yes. Yes.
387
-2
H.M.Jr:
If you will.
G:
All right, I'll do that.
H.M.Jr:
Have Cochran with you.
G:
Yeah. He's coming in today?
H.M.Jr:
Well, he'll contact you.
G:
Yes. Very good.
H.M.Jr:
Thank you.
G:
Goodbye.
388
389
May 9, 1940
5:05 p.m.
Operator;
H.M.Jr:
Go ahead, please.
Hello.
Gene
Duffield: Yes.
H.M.Jr:
Yes, Gene.
D:
Have you seen anything on the ticker?
Not a thing.
H.M.Jr:
D:
Jesse says that -- well, he doesn't care much
about the preferred stock thing and he wasn't
trying to take anything away from you, he was
just trying to get equal powers.
H.M.Jr:
I see.
D:
And he said
H.M.Jr:
Damn?
D:
Ah
H.M.Jr:
Did he say "damn"?
D:
No.
H.M.Jr:
Oh, I thought you said "damn".
D:
No, I said and.
H.M.Jr:
Oh.
D:
And he said that the original law was backwards.
That should have been the R.F.C. anyway because
the R.F.C. does all the work. That's because he
arranged it that way, of course.
H.M.Jr:
Yeah.
D:
He said though that he thought the most important
part of the bill was the real estate loans.
390
-2That he thought there had been too much reluctance
on the part of banks to make such loans and that
they needed this sort of encouragement.
H.M.Jr:
Uh-huh. Hello.
D:
Yes.
H.M.Jr:
Yeah.
D:
And he said that he thought that was the most
important part of the bill, and he evidently talked
at length about that but didn't say so terribly
much about the preferred stock.
H.M.Jr:
Was he nasty?
D:
A little bit nasty on this real estate business.
I think he made one remark according to Wilson
that -- well, maybe you were a better banker than
he was but he thought that they ought to do more
of this.
H.M.Jr:
D:
Well, maybe I am because I don't practice banking.
(Laughs) Maybe so.
H.M.Jr:
What?
D:
Maybe so.
H.M.Jr:
Of course -- what's his name said, and I don't
know whether there's any truth, it's just -- strictly
personal off-the-record.
D:
Yeah.
H.M.Jr:
Preston Delano tells me that Jesse has quite a few
real estate loans down on his bank.
D:
Well, I think that's true. It has always been
rumored anyway.
H.M.Jr:
Well, I don't know -- I can't -- I'm just giving you
shere gossip.
D:
Sure.
391
- -3
Jr:
But outside of that he wasn't nasty?
D:
Not terribly nasty except the tone of this business
-- oh well, he wasn't trying to take anything away
from you, I don't think is quite frank, on the
preferred stock thing.
H.M.Jr:
Well,
D:
I don't think if he had equal power with you that
he'd ever send anything over to you.
H.M.Jr:
Well, of course he wouldn't. And you and I -- you
having been here through the whole -- where would
we have been in December '38 on this thing?
H.M.Jr:
Absolutely. Absolutely.
And the fact that I wouldn't sign that letter on
that preferred stock this year until I got what
I wanted
D:
Yeah.
D:
M.M.Jr:
I never would have gotten what I wanted.
D:
It's absolutely a good thing to have you go over
those things and you -- it ought to go on that way.
H.M.Jr:
Well, I think it will.
D:
Yeah, I think so too. I hope it will.
H.M.Jr:
Harold Smith is awful sore over the whole thing.
D:
Well, of course, that's just like Jesse. He does
it his own way. The only danger is that I see -that I can see is that he has always cultivated
those two banking committees on both sides of
the Capitol.
H.M.Jr:
True, but I understand from Delano that the A.B.A.
is with us on both of these.
D:
Oh, good ! That'll help a lot.
H.M.Jr:
I understand-- he says the A.B.A. is with us on
both of them. They don't want -- they'11 back us
up on both.
-4D:
Fine, fine. Did -- Did I ever get to you through
Ed Foley this afternoon a copy of Jerry Frank's
speech?
H.M.Jr:
No, I haven't gotten it yet.
D:
Well, I -- it may be my fault but I tried to get
it to Ed -- oh, well, an hour ago. I don't know
whether I succeeded or not.
H.M.Jr:
Yeah.
D:
But I will get it to him when
H.M.Jr:
O. K.
D:
Fine.
H.M.Jr:
Good night.
D:
Good night.
392
5/9/40
39
Memorandum for the Secretary's Diary
A conference was held on Thursday, May 9, 1940, at 10 a.m. in the
Secretary's office. It was attended by Secretary Morgenthau, Congressman
Rayburn and Ed Foley. The purpose of the conference was to discuss ways
and means of securing passage of the U.S.H.A. amendments pending before
the House Banking and Currency Committee.
Congressman Rayburn explained that he was willing to clear the track
for passage on the Floor once a reasonable bill had been approved by the
House Banking and Currency Committee. He said by a reasonable bill he
meant one that provided for an amount for loans somewhere between 250 and
400 million dollars. He was of the opinion that the House would pass a
measure of this kind, but would be unalterably opposed, as it was last year
when the rule was rejected, to a bill providing for loans in the amount of
300 million dollars. He pointed out that Congressman Martin had said to
him that he thought some Housing measure should be adopted and might go
along if the amount were reasonable.
Congressman Rayburn explained that Nathan Straus had failed to sell
himself and his organization to the Banking and Currency Committee and had
told this to Mr. Straus. Apparently Straus had antagonized influential
members of the Committee such as Clyde Williams and Albert Gore, and the
personality complication was very much present. Mr. Rayburn thought that
if someone other than Mr. Straus should explain the measure to Mr. Steagall's
Committee, it would help. While he liked Mr. Straus personally, Mr. Rayburn
added that he was much disliked on the Hill.
Secretary Morgenthau S tated that he was interested only in getting the
bill through and he was willing to do whatever he could to help. In the
event there should be a sudden cessation of war orders in the early Fall,
Mr. Morgenthau pointed out that a Housing program would be very much needed.
He said that he had been in Chicago and other places and had seen the work
which the U.S.H.A. had accomplished and was very much impressed with the
necessity for its continuance.
Congressman Rayburn thought that Secretary Morgenthau should see Mr.
Steagall as soon as he returns from Alabama. Mr. Rayburn pointed out that
Congressman Clyde Williams was a key man on the Banking and Currency Committee
as was Congressman Cox on the Rules Committee, and they should be spoken to
as well. Secretary Morgenthau said that he would leave the Rules Committee talk
and the Republican leaders to Mr. Rayburn, but would be very glad to
to Mr. Steagall, Mr. Williams and others on the Banking and Currency
Committee.
TO
Miss Chauncey
394
,
5/9/40
Mr. Foley carried the original of
this in to the Secretary at 3:30 today.
S
MR. FOLEY
Memorandus for the Secretary's Diary
A conference was held on Thursday, May 9, 1940, at 10 a.m. in the
Secretary's office. It was attended by Secretary Morgenthau, Congressman
Rayburn and Ed Folay. The purpose of the conference was to discuss ways
and means of securing passage of the U.S.H.A. amendments pending before
the House Banking and Currency Committee.
Congressman Rayburn explained that he was willing to clear the track
for passage on the Floor once a reasonable bill had been approved by the
House Banking and Currency Committee. He said by a reasonable bill he
meant one that provided for an amount for loans somewhere between 250 and
400 million dollars. He was of the opinion that the House would pass a
measure of this kind, but would be unalterably opposed, as it was last year
when the rule was rejected, to a bill providing for loans in the amount of
800 million dollars. He pointed out that Congressman Martin had said to
his that he thought some Housing measure should be adopted and might go
along if the amount were reasonable.
Congressman Rayburn explained that Mathan Straus had failed to sell
himself and his organisation to the Banking and Currency Committee and had
told this to Mr. Straus. Apparently Straus had antagonised influential
members of the Committee such as Clyde Williams and Albert Gore, and the
personality complication was very such present. Mr. Rayburn thought that
if someone other than Mr. Streus should explain the measure to Mr. Steagall's
Committee, it would help. While he liked Mr. Straus personally, Mr. Rayburn
added that he was such disliked on the Hill.
Secretary Morgenthan a tated that he was interested only in getting the
bill through and he was willing to do whatever he could to help. In the
event there should be a sudden cessation of war orders in the early Fall,
Mr. Morgenthau pointed out that a Housing program would be very such needed.
He said that he had been in Chicago and other places and had seen the work
which the U.S.H.A. had accomplished and was very much impressed with the
necessity for its continuance.
Congressman Rayburn thought that Secretary Morgenthau should see Mr.
Steagall as soon as he returns from Alabama. Mr. Rayburn pointed out. that
Congressman Clyde Williams was a key man on the Banking and Currency Committee
as was Congressman Cox on the Rules Committee, and they should be spoken to
as well, Secretary Morgentimu said that he would leave the Rules Committee
and the Republican leaders to Mr. Bayburn, but would be very glad to talk
to Mr. Steagall, Mr. Williams and others on the Banking and Currency
Committee.
EHF:8 5/9/40
396
May 9, 1940
MEMORANDUM FOR THE SECRETARY:
The situation in regard to Bill S.591 is briefly
this:
The bill passed the Senate in June of 1939. It
was referred to the Committee on Banking and Currency of
the House during the same month and on July 18, 1939 was
reported out favorably by that Committee. The House re-
fused to "accept the rule", thus throwing it back into the
Rules Committee where it is at the moment. There is every
indication that when Chairman Steagall of the Banking and
Currency Commit tee returns and asks for a rule it will be
granted. This should insure consideration by the House
at this session.
I have discussed the matter with several
influential members of the House and Senate and am con-
vinced that if it is presented to the House it will pass.
In the course of these conversations I personally received
assurance of at least eight votes in favor of the measure.
Preston Delano
397
GROUP MEETING
Present:
Mr. Sullivan
May 9, 1940
9:30 a.m.
Mr. Haas
Mr. Young
Mr. Cochran
Mr. Gaston
Mr. Thompson
Mr. Harris
Mr. Cotton
Mr. Foley
Mr. Schwarz
Mr. Graves
Mr. White
Mrs Klotz
H.M.Jr:
Can you (Foley) get that for me informally, or
would you ask for it formally (handing teletype
message to Mr. Foley)? It is an amazing statement.
Who, during Bell's absence, would check a statement by Woodrum that the debt limit has been
passed? Who would check that?
Thompson:
H.M.Jr:
Hefflefinger.
Phil, I wonder if you could get for me another
statement for the President by 9:00 o'clock to-
morrow morning on what the Allies have done on
orders given for planes and engines sent the
first of April, to bring me up to date? Now,
don't have them confuse me again with exercising
options. As far as I am concerned, that is a
new order. What orders did they place for planes
and engines since the first of April and with
whom, and in each case how much money they agreed
to put up for a plant. I would like to have it
by 9:00 o'clock tomorrow morning.
Young:
H.M.Jr:
Do you want it broken down by British and French?
Yes. Planes and engines, and you know they always
talk about exercising options. As far as I am
concerned, that is an order. Do I make myself
clear?
Young:
Yes, sir.
398
-2Young:
Yes, sir.
H.M.Jr:
What have you got, Norman?
Thompson:
I have nothing.
H.M.Jr:
Harold?
Harry?
White:
I would like a few minutes either today or
H.M.Jr:
Will you tell McKay?
White:
Yes.
H.M.Jr:
I can put you down for 11:00 o'clock.
White:
All right.
Harris:
That bill passed the House and the Senate on
tomorrow.
the release of those 112 laid-up ships. It
went through very speedily, as a matter of
fact.
H.M.Jr:
Does that mean they can sell them to anybody?
Harris:
Well, they have got to go a little carefully
on that. I think probably they will try and
sell 50-50, fifty foreign and fifty domestic.
H.M.Jr:
They will have trouble selling the domestic
and they will end up selling them all foreign.
But they will be sold?
Harris:
Yes.
H.M.Jr:
Put into use?
Harris:
That is right. They will be turned into cash,
H.M.Jr:
George?
Haas:
I have nothing this morning.
too.
399
3H.M.Jr:
Chick, I read your memorandum. Now, what have
you done about it? It is very nice for Mr. Foley
to have a friendly suit and the paper reads that
I am personally keeping 86 cents a day.
Schwarz:
I talked with Mr. Foley --
H.M.Jr:
It is all very nice, it is a friendly suit, but I
Schwarz:
have got to take in what the paper says.
We have had a few queries and explained what the
basis of the thing is and you undoubtedly will
have more questions at your press conference.
H.M.Jr:
Did Mr. Foley just want some exercise for his
lawyers? Do you (Foley) know what I am talking
about?
Foley:
Yes, I know what you are talking about. We are
H.M.Jr:
Department of Justice.
This memorandum of Chick's says you agreed to it.
Foley:
He and Acheson came over and saw Basil Harris.
Harris:
It is a very friendly affair, Mr. Secretary.
It doesn't read friendly.
Well, it will get the question settled. I wasn't
H.M.Jr:
Foley:
not handling it, it is being handled by the
present when Dean came over and saw Basil, but
he wanted to be assured on two counts; one, that
we wouldn't discriminate against these employees
when they engaged Acheson and brought this action
and we would go along and --
Harris:
Yes, we want the answer to it as much as the
other fellows, really, because it has always
been a moot point.
H.M.Jr:
If they ask me at 10:30, to whom shall I refer
Harris:
Refer them to Customs or Mr. Foley, if you want
them?
to.
400
-4H.M.Jr:
It is a Customs matter, isn't it?
Harris:
Yes. It is a very friendly suit.
Schwarz:
Time Magazine was over to see Dean Acheson yesterday. involved. They liked the idea of 86 cents being
Harris:
That would indicate friendliness.
H.M.Jr:
Send them around to see either Harris or Foley,
I don't care which. Seriously.
Anything else, Chick?
Schwarz:
That is all.
H.M.Jr:
Phil?
Young:
This Pratt & Whitney letter from Purvis --
H.M.Jr:
It is meaningless to me. You had better see me
later about it, will you? Do you understand what
it means?
Young:
Well, I will find out more about it. I wouldn't
attempt to explain it at this time.
H.M.Jr:
The way it is written, it is meaningless to me.
Cochran:
I have this Canadian matter if you want me to
summarize that.
H.M.Jr:
I wish you would.
Cochran:
On April 3, the Secretary of the Canadian Legation
delivered over to the State Department, and then
in this Department, a memorandum reporting an
order in council which they Cabinet had decided
on that day, calling in foreign exchange held by
Canadian residents. There are certain exceptions
made and one would be in the case of foreign residents in Canada whose governments might consummate
before the time limit, which is about a month,
an arrangement for reciprocal treatment in exchange
control matters.
401
-5I called Livesey to see whether the Department
had had any negotiations, because the release
which the Canadians gave out suggested that
there had been negotiations between the United
States and Canada and Livesey said this matter
had come up in Canada when Berle and Jack Hickerson were up there some weeks ago and that a
proposition had been put up telegraphically
hadn't been acceptable to the State Department
or rather to the Legation after they left which
and which the State Department hadn't even
replied to. That would have called for an
exchange of notes or an agreement between Canada
and the United States whereby we would agree to
give reciprocal treatment and exemptions in ex-
change control if we might at some later date
put on exchange control. I told Livesey I
brought it to your attention, so a couple of
days later Mr. Berle wrote a letter to you -
would like to have all the background before I
yes, addressed to you the day you went away,
and enclosed a copy of a conversation which he
had had with Mr. Christie, the Minister, the
day after this council order came out. Christie
had the appointment for some days before, so
Berle brought this subject up and told him how
shocked he was to have this thing come out ithout any advance notice and giving the impression
that negotiations have been underway and practically that an agreement had been reached with
us, when no such agreement had been reached. He
said he didn't like to have to negotiate against
time with a pistol to his head, as it was put.
So he asked that negotiations be transferred
from Ottawa to Washington and we acknowledged
his letter, just stating that Bernstein and I
would be available to sit in any conversations
that they wanted us in.
Day before yesterday Berle asked that we come
and Jack Hickerson and Wailes and Livesey, and
they seemed to be in agreement that the weapon
they should use or at least have available is
this Executive Order, which we used in the
over. When we got over there, there was Moffatt
case of Norway and Denmark.
402
-6In his memorandum of conversation with the
Canadian Minister, Berle stated that he had
told the Canadian Minister that we would
easily offset their action, make it really
null, by exercising this right under the
Executive Order to stop payments out of this
country to Canada.
Berle said, "I want to have this power available. I want to know that the Treasury
Department would stand with us if we have to
use it," and I said - Bernstein said, "Is there
any alternative?" And he said, "Any alternative
would be even more drastic.' I said, "Well, I
don't think it was the idea when we got out
this Executive Order that it would be used in
cases such as this. This would seem to be a
case of diplomatic negotiation and we have used
the Executive Order in a case where it was
aggression by European powers and certainly
not in a case of a friendly neighbor." He said,
"Well, we probably wouldn't have to use it, but
I should like to have it available and know how
you people stand," and I said, "Well, the Secretary, I think, in his press conferences or in
one press conference stated that this was for
cases of aggression," and he said, "Well, we
can't limit the law by interpretation in one
of our departments." He said, "The law is to
protect American interests," and I said, "Well,
some of the people, as I recall it, wanted even
an amendment put in __"
H.M.Jr:
Didn't you tell him how I felt?
Cochran:
Yes.
H.M.Jr:
When?
Cochran:
I told him we would have to think this over very
carefully and I wanted all the background to
report to the Secretary, but the meeting there
was unanimously the other way.
H.M.Jr:
When did you report to them that I was actually
opposed to it?
403
-7Cochran:
I wouldn'ttosay
opposed
it. that I said you were positively
H.M.Jr:
Cochran:
That is what I told you to say.
I told you I would go over and get their views.
H.M.Jr:
But you wanted my views. You said that you were
absolutely opposed to it and I told you I was
too, and did I tell it to you before that meeting
or after that meeting?
Co chran:
Part of it was after and part of it before.
H.M.Jr:
Have you informed Berle that I was absolutely
opposed to it?
Cochran:
No, sir, I was going to draw up a letter. I
H.M.Jr:
letter.
I want to go on record that certainly in this
Cochran:
H.M.Jr:
told you I thought we ought to draw up a letter
on a thing this important, because I wanted to
make a full report to you and then draw up the
connection with the Canadian thing I positively
will not be a part to using these powers for that
purpose. The sooner Mr. Berle knows it, the better.
I planned to draw up the letter this morning. I
think it should be a letter or memorandum to be
signed by you and not just a statement from me.
Then supposing you have Foley and Gaston initial
it before it comes to me, and Bernstein, will
you please?
Cochran:
H.M.Jr:
Yes, sir.
And if you can get it to me this afternoon, I
will sign it. The sooner Berle knows how I feel
on that, the better. I just won't be party to
it. They are about the best customer we have
got, aren't they?
White:
They are one of the most important trading customers.
404
-8H.M.Jr:
You were very emphatic on this thing yourself.
Cochran:
Yes, but I didn't want to commit you until I
had given you all the information and their
viewpoints on it.
H.M.Jr:
Well, the sooner they know how I feel, the better
and then they can use the other methods.
Cochran:
H.M.Jr:
Co chran:
There are no end of other methods.
That is what I wanted to get over. Will you fix
me up a letter and let Gaston, Foley and Bernstein
see it before it comes to me this afternoon? The
sooner Berle knows they can handle it that way is it usual for them to handle negotiations of
that kind and not for us to handle them?
No, we should certainly be consulted on matters
of exchange control. That is what I told Livesey
the first day I mentioned it to him. I said,
"While the protection of the rights of American
citizens is in your province," I said, "before
in exchange control you will have to talk to us.'
"
you make any commitments on reciprocal treatment
H.M.Jr:
Let White initial it, too, before it comes to me.
Cochran:
All right.
H.M.Jr:
O. K.
Sullivan:
Mr. Harris and I would like to see you this morn-
H.M.Jr:
O. K., 11:30.
Foley:
This (teletype message) is partly in writing and
partly not. Do you want me to call Jerry and see
what I can get on that?
H.M.Jr:
Yes. Do you want me to do that?
Yes. Dan and I are going down at 11:00 o'clock
to see Pat Harrison.
Foley:
ing on that amendment to the Merchant Marine bill.
405
-9H.M.Jr:
Dan?
Foley:
Dan Bell.
Gaston:
Isn't he gone?
Foley:
No, we made the date yesterday. He is going to
be in town today. He couldn't get hold of
Harrison
yesterday afternoon, so he made it for
11:00 o'clock.
H.M.Jr:
I gave strict orders to Dan when he leaves town
that nobody should call him but me. Now he is
Foley:
going up to the Hill today.
Yes. It will only take about ten minutes. We
are going to see Pat Harrison at 11:00 o'clock
and see if we can get a complete exemption from
the Walter-Logan bill for the Treasury.
Gaston:
I will tell the guards not to let him in the
building.
H.M.Jr:
What else?
Herbert?
Gaston:
I sat in on one of these Norwegian-Danish meetings
last night. It seemed to be very well in hand.
It was very interesting.
H.M.Jr:
Who wants to hold my hand while - wait a minute.
Maybe, Harry, you can find out when the Finnish
Minister is coming in. I have been trying for
three days to see him.
(Mr. McKay entered the conference)
Is Procope coming in this morning?
McKay:
Yes, sir, at 11:00 ' clock.
H.M.Jr:
Harry, you are out of luck. Supposing you and
Cochran be here at 11:00. I tell you what we
will do, White. You can stay behind and we
will give Sullivan and Harris 11:45. Is that
all right?
406
- 10 Sullivan:
Certainly, sir.
H.M.Jr:
What else, Herbert?
Gaston:
I haven't anything else.
H.M.Jr:
O. K.
407
May 9, 1940
My dear Mr. President:
Through strictly confidential
sources, I have learned that the
Russian Government has stopped ex-
porting copper from this country,
for the time being, and has negotiated a lean with the Chase Bank for
$2,000,000 for two months, putting
up as collateral 10,000 tons of copper
that they hold in the United States.
Yours sincerely,
The President,
The White House.
I des troyed the
other two carbons
of there letters
May 9, 1940
my - Mr. Secretary
Through strictly confidential
convers, I have that the
Russian Government stopped -
parking copper this country,
for
the time has mageti-
ated a Loan with the Chass Bank for
$2,000,000 for two months, putting
- as collateral 10,000 tems of copper
that they hold in the United States.
Years sincerely,
Menorable Gordell Hall,
Secretary of State.
408
May 9, 1940
My dear Mr. Secretary:
Through strictly confidential
courees, I have learned that the
Russian Government has stopped porting copper from this country,
for the time being, and has negoti-
ated a loan with the Chase Bank for
$2,000,000 for two months, putting
up as collateral 10,000 tone of copper
that they hold in the United States.
Youre sincerely,
The Honorable
The Secretary of War.
403
410
May 9, 1940
My dear Mr. Secretary:
Through strictly confidential
sources, I have learned that the
Russian Government has stopped -
porting copper from this country,
for the time being, and has negettated a loan with the Chase Bank for
$2,000,000 for two months, pussing
up as collateral 10,000 tons of copper
that they hold in the United States.
Yours sincerely,
The Honorable,
The Secretary of the Nevy.
411
May 9, 1940
To:
The Secretary
From:
Mr. Young
I talked with General Brett at 4:50 this
afternoon with respect to the invitation issued
to Captain Ziegler to be present at the firing
test on the 13th of May.
General Brett informed me that he had been
called on the telephone by Captain Ziegler and
that General Brett explained to him that he would
receive an invitation from you to be present at
Wright Field at that time.
Captain Ziegler is acquainted with the
specific details and the only unfinished business
is a message of thanks from Captain Ziegler to
you for the invitation.
Ry
TREASURY DEPARTMENT
412
PROCUREMENT DIVISION
OFFICE OF THE DIRECTOR
WASHINGTON
May 9, 1940
My dear Mr. Secretary:
Please accept my thanks for your letter of May 8th with which
was enclosed for confidential use three copies of the latest
report on orders, deliveries and unfilled orders for airplanes
and airplane engines of the Allied Purchasing Commission.
The copies intended for the other members of the Liaison Committee
have been transmitted to them by hand.
Sincerely yours
After
Honorable Henry Morgenthau, Jr.
The Secretary of the Treasury
TREASURY DEPARTMENT
413
PROCUREMENT DIVISION
OFFICE OF THE DIRECTOR
WASHINGTON
May 9, 1940
MEMORANDUM FOR THE SECRETARY
to
There is attached hereto two copies of note from one the State 5/13/40
a
Department forwarding assurances from the French and British
Ambassadors that they will keep this government informed of
the performance of all American-made aircraft under combat
conditions.
atts.
414
May 9. 1940.
Ky dear Mr. Comptens
I have your letter of May 3rd, in which
you tell - of the procedure that has been
worked out in order to assist with inspection
for the Universal Trading Corporation.
I weat to thank you very much for your
cooperation in this matter, and I am very glad
that suck a satisfactory arrangement has been
made. I also appreciate your letting - know
se promptly about it.
with certial regards,
Sincerely,
(Signed) H. Morgenthau, Jr.
Honorable Lewis Compton,
Special Assistant to the
Assistant Secretary of the Havy,
Washington, D. 0.
By Messenger 5"per
415
May 9, 1940.
My dear Mr. Comptons
I have your letter of May 3rd, in which
you tell - of the procedure that has been
worked out in order to assist with inspection
for the Universal Trading Corporation.
I want to thank you very much for your
cooperation in this matter, and I am very glad
that such a satisfactory arrangement has been
made.
I alsoabout
appreciate
your letting me know
so promptly
it.
With cordial regards,
Sincerely,
(Signed) H. Morgenthan, Jr.
Honorable Lewis Compton,
Special Assistant to the
Assistant Secretary of the Navy,
Washington, D. C.
By Messense
"form
416
May 9, 1940.
By door Mr. Comptoms
I have your letter of May 3rd, in which
you tell - of the preceiure that has been
worked out in order to assist with inspection
for the Universal Trading Corporation.
I went to thank you very mach for your
cooperation in this matter, and I - very clad
that such a satisfastory arrangement has been
mas I also appreciate your letting me know
00 promptly about 11.
with certial regards,
Sincerely,
(Signed) H. Monjeathan Jr.
Nenerable Levis Comptom,
Special Assistant to the
Assistant Secretary of the Havy,
Washington, D. G.
By Messenger
pain
417
May 9. 1940.
Ky dear Mr. Comptems
I have your letter of May 3rd, in which
you tell - of the procedure that has been
worked out in order to assist with inspection
for the Universal Trading Corporation.
I went to thank you very wish for your
cooperation in this matter, and I - very glad
that such a satisfactory arrangement has been
made. I also appreciate your letting - know
se promptly about it.
with certial regards,
Sincerely,
(Signed) H Morgenthan Jr.
Henorable Levis Compton,
Special Assistant to the
Assistant Secretary of the Herry.
Washington, D. G.
By Messanger 50 / pm
418
DEPARTMENT OF THE NAVY
OFFICE OF THE SECRETARY
WASHINGTON
3 May 1940
My dear Mr. Secretary:
Referring to your inquiry as to whether the
Naval Inspection Service could inspect about $500,000
worth of automatic telephone equipment being purchased
from the Automatic Electric Sales Company, Limited, of
Chicago, by the Universal Trading Corporation, I have
to inform you that inasmuch as the Universal Trading
Corporation has no legal status as a Federal agency, we
do
not consider that we can officially inspect material
for them.
The following procedure, now being placed in
effect, has met the hearty approval of the Universal
Trading Corporation: Captain James Bull, U.S.N.R., of
the Universal Trading Corporation, is in Chicago making
arrangements with certain civilian inspectors attached
to the Office of the Inspector of Naval Material, Chicago,
under which they will inspect for the Universal Trading
Corporation, either out of hours or while they are on a
leave status. Instructions in regard to inspecting and
the expense thereof will be handled directly by the Corporation.
Sincerely yours,
from comprom
Hon. Henry Morgenthau, Jr.,
Secretary of the Treasury.
419
TREASURY DEPARTMENT
WASHINGTON
May 9. 1940.
MEMORANDUM FOR MR. COCHRAN:
The December 15, 1939. payment by Finland on its
indebtedness was taken up in the accounts of the Treasurer
of the United States as a receipt. The law requires all
receipts to be covered into the Treasury by warrant of the
Secretary of the Treasury, countersigned by the Comptroller
General. Under the administrative direction of the
Secretary the Finnish payment, after receipt by the
Treasurer, has been held in suspense as uncovered receipts,
and no warrant formally covering the money into the Treasury
has been issued.
It has been the Treasury's policy for many years to
have all items received by the Treasurer within the fiscal
year formally covered into the Treasury by warrant during
that same fiscal year. Under this practice the cash
accounts of the Treasurer of the United States are
in balance with the warrant accounts maintained by the
Secretary of the Treasury.
While it might be possible to delay the formal covering
of the money into the Treasury over the end of a fiscal year,
since the law only requires that the money be covered into
the Treasury but fixes no time limit when this must be done
although it is reasonable to assume that what the law intends
is a prompt covering, this action would cause a number of
differences in the various accounts of the Government,- the
accounts of the Treasurer of the United States, the accounts
of the Secretary of the Treasury and the accounts of the
General Accounting Office.
wit
420
ITALIAN STOCK PRICES
(Milan)
1 I- Dec. 31, 1927 - 100
pcc.
JAN,
FEB.
MAR.
APR
JUNE
MAY
JULY
CENT
210
2
NOV
PER
PER
CENT
CENT
23
30
APRIL
13
MAY
20
27
18
25
PER
CENT
210
200
185
185
180
180
175
175
170
170
165
165
160
160
200
190
190
180
180
170
170
160
160
150
150
SHARES
SHARES
Volume
THOUSANDS
120
120
w
JULY
UN
AUG.
1111
SEPT.
OCT.
1939
NOV.
DEC.
JAN.
FEB.
MAR.
APR.
JUNE
MAY
w
110
JULY
1940
200
200
100
100
0
130
2
130
THOUSANDS
9 16 23 30 6 13 20 27 4 11 18 25
MARCH
APRIL
1940
0
140
140
110
16
9
OCT
6
SEPT
940
4
AUG.
MARCH
11
JULY
1 940
:
PER
Daily*
Weekly
1939
MAY
.
"DAILY FOR LATEST WEEK ONLY
Office of the Secretary of the Treasury
Division of Research and Statistics
FO 141 - 1
421
PLAIN
JR
London
Dated May 9, 1940
Rec'd 11:38 a.m.
Secretary of State,
Washington.
1149, May 9.
FOR TREASURY FROM BUTTERFORTH.
1. The FINANCIAL PRESS reports that rumors of
possible additions to the list of commodities affected
by new regulation 5 B reported in my No. 594 of April 9,
noon have played a part in causing the weakness of
sterling on the free market this WEEK. The British
Treasury however stated in confidence that no changes in
the regulations are being considered at present, though
tightening up of acministration is being studied with a
view to reducing Evasions and imposing penalties where
appropriate.
2. The stock Exchange was relatively quiet
again today, with prices irregular, but gilt-edged continue
strong because of pressure of funds and lack of interest
in Equities.
KENNEDY
CSB
422
May 9, 1940
My dear Mr. Hoovers
Thank you very much for your
letter of May 4th, outlining in detail the program of the Federal Bureau
of Investigation in regard to the protection of plants and industrial units
engaged in the production and maufaeture of supplies, equipment and material
for our War and Havy Departments.
I also wish to thank you for
sending me the confidential report pertaining to Dr. Gerhart Alois Westrick,
which I have read with great interest.
I would appreciate your keeping
me informed of any subsequent develop-
ments.
Yours sincerely,
(Signed) H. Morgenthan, Jr.
Mr. J. Edgar Hoover, Director
Federal Bureau of Investigation,
Department of Justice,
Washington, D. C.
By Messenger 2 15 for
423
May 9, 1940
My dear Mr. Hoovert
Thank you very such for your
letter of May 4th, outlining in detail the program of the Federal Bureau
of Investigation in regard to the protection of plants and industrial units
engaged in the production and manufac-
ture of supplies, equipment and material
for our War and Navy Departments.
I also wish to thank you for
sending me the confidential report pertaining to Dr. Gerhart Alois Vestrick,
which I have read with great interest.
I would appreciate your keeping
me informed of any subsequent developments.
Yours sincerely,
(Signed) H. Morgenthau, Jr.
Mr. J. Edgar Hoover, Director
Federal Bureau of Investigation,
Department of Justice,
Washington, D. C.
By Messenger
2
pm
424
May 9, 1940
My dear Mr. Noovers
Thank you very such for your
letter of May 4th, outlining in detail the pregram of the Federal Bureau
of Investigation in regard to the protection of plants and industrial units
engaged in the production and manufacture of supplies, equipment and material
for our War and Navy Departments.
I also wish to thank you for
sending no the confidential report pertaining to Dr. Gerhart Alois Westrick,
which I have read with great interest.
I would appreciate your keeping
me informed of any subsequent develop-
ments.
Yours sincerely,
(highed)
H.
Mr. J. Edgar Hoover, Director
Federal Bureau of Investigation,
Department of Justice,
Washington, D. C.
4 Messenger 2 form
JOHN EDGAR HOOVER
DIRECTOR
mus ans and thank of
Federal
of of
Investigation
United
StatesBureau
Department
keep it in425
Washington, D.C. Justice your office
Personal and
confidential
May 4, 1940
1mg
The Honorable
The Secretary of the Treasury
Washington, D. C.
My dear Mr. Secretary:
Apropos of our recent discussion concerning the protection of plants and industrial units engaged in the production
and manufacture of supplies, equipment and material for our
War and Navy Departments, I wanted to advise you for your
confidential information of the action being taken by the
Bureau in this field.
Late last summer I undertook a program of assigning
Agents of the Bureau with special qualifications to those
plants which are engaged in the manufacture of materials
of primary interest and importance to the Army and the Navy.
These men, each of whom has experience of a professional
nature relating to the industry in which he is working,
are assigned to the key plants without the knowledge of
the plant management or fellow employees that the man is
in fact a Special Agent of the Federal Bureau of Investi-
gation. It has been possible, because of the high qualifi-
cations of these men, for them to work themselves into key
positions which enable them to keep in close personal touch
with actual conditions within the plant in so far as they
pertain to the constant output of materials in which the War
and Navy Departments are interested. For example, a Special
Agent of the Bureau has been employed by the Electric Boat
Company of Groton, Connecticut, since late last summer in
various capacities and he is presently assigned to the post
of electrical inspector for the entire submarine building
project. This man, who has been in the service of the FBI
as a Special Agent for a number of years, is preeminently
qualified in the field of electrical engineering. The
nature of his duties in the Electric Boat Company enable
him to have the complete run of the yard at all times and
he is in constant daily touch with not only the construction
work in the submarines presently being built, but participates
in a professional capacity in the test runs, experimental
dives and other projects carried on in the interest of the
426
The Secretary of the Treasury
-2-
Navy Department. Needless to say, his identity as a Special
Agent
of the Federal Bureau of Investigation is not known
to his co-workers.
Other Special Agents have been assigned to the more
important factories building aircraft for the War and Navy
Departments. Each of the men selected for these assignments
has extensive and diversified knowledge of airplane construction,
the majority of the men upon these assignments being licensed
pilots in addition to possessing technical training in construction and mechanical fields. Bureau Agents with mechanical
qualifications and training are assigned to the major plants
producing airplane engines. Other Agents having proper qualifications are assigned in a completely undercover capacity
to other key industries throughout the country.
Each of the men assigned to one of these undercover posts
Bureau of Investigation who has had diversified experience
is, of course, a fully qualified Special Agent of the Federal
in the investigative field. As I have indicated, they are
selected for these undercover posts primarily upon the basis
of their vocational background and experiences prior to entering the Bureau service. I have not employed any personnel
solely for use in undercover assignments.
All of the Special Agents assigned to undercover posts in
key industrial units confine their observations and reports
to matters which pertain to the constant production in the
plant of materials of interest to the War and Navy Departments.
All personnel so assigned is under strict prohibition from
participating in any union activities or becoming involved
in any disputes between employers and employees. The Agents
are also under strict instructions to avoid any activity or
conduct which could be construed to be or even contorted
into charges of labor spying or other unethical conduct.
At the request of the War and Navy Departments I initiated
early last September a program of plant inspections and surveys
to be applicable to those plants upon the allocated facilities
list which are considered of primary importance by the Technical and Ordnance divisions of the War and Navy Departments.
427
The Secretary of the Treasury
-3-
After extensive research in all known fields upon the
subject of plant protection, a specially selected group
of Bureau officials was sent into key industries in
various fields for the purpose of making a study of the
plant protection methods utilized by these units. Each
man was required to make a study of the protective facilities and operations of a plant engaged in the manufacture
of high explosives, of a steel mill, of a ship yard, of an
aircraft factory, and of several other types of factories.
Thereafter, consultation was had with the Bureau of
Standards, representatives of fire insurance companies,
explosive experts, technical experts of the War and Navy
Departments and other specialists in technical fields.
Predicated upon the voluminous information thus assembled
there was prepared a comprehensive monograph upon the sub-
ject of plant protection. A series of special schools
were then conducted in Washington to which were brought
approximately 500 of the Bureau's most experienced and
best qualified Special Agents. Each of these men was
given intensive training for a period of several weeks in
the matter of plant surveys and plant protection. Each
man was required to pass a comprehensive examination prior
to the time that he was placed on the list of men qualified
to make plant surveys.
Thereafter, and upon receiving from the War and Navy
Departments a list of the factories in the United States
which are considered of prior importance to the War and
Navy Departments, a program of plant surveys and inspections
was undertaken upon a national basis. At the present time
approximately 200 plants have been surveyed or are in the
process of being surveyed. While, of course, the length
of time consumed in making each survey varies with the
size of the plant, the average time required to conduct
a survey of the protective facilities of the plant
approximates three weeks. The Agent conducting a survey
submits a complete report covering the entire protective
facilities of the plant, extending from the type, kind
and location of the fences surrounding plant property to
the innermost recesses of the plant in which may be kept
highly confidential and restricted blue prints, formulas,
etc. Each report upon a plant survey is annotated with
428
The Secretary of the Treasury
-4-
diagrams, blue prints and photographs of those sections
of the plant which require comment in the survey report.
As each report is received in Washington it is carefully
reviewed by Bureau officials who have had extensive ez-
perience in this field and who, of course, call upon the
services of the staff of the Bureau's Technical Laboratory
in matters involving the protection of explosive materials,
inflammables and other factors requiring technical knowledge. After review of the report submitted by the field
Agent, a comprehensive letter of recommendations is forwarded from Washington to the plant management outlining
the suggestions for improvement of the plant's technical
facilities which have been disclosed by the Bureau's
survey. Copies of the reports and the letters of recommendations are sent to the War and Navy Departments for
their information and for transmittal to their inspectors
in the field.
The reaction to the Bureau's surveys of these key
facilities has been uniformly favorable and the manage-
ment of many plants has expressed both commendation and
appreciation for the Bureau's operations in this field.
While, of course, it is impossible for me to compel the
plant operators to adopt the recommendations made to them,
I have been pleased to observe that almost without exception
the Bureau's recommendations have been placed in effect.
Extraordinary caution has been exercised in connection
ith the plant protection work to avoid any implication
of the Bureau's participation in controversial matters.
Bureau Agents refrain from participating in or making
any recommendations or observations concerning ordinary
employer-employee relationships and refrain from any
conduct which could lead to charges that the Bureau is
either pro-labor or pro-capital in its surveys.
As a result of these surveys Bureau Agents have
established personal contacts within the majority of the
plants surveyed which will result in the Bureau's receiving information promptly of any matters which may be of
429
The Secretary of the Treasury
-5-
interest to the War and Navy Departments.
I thought you would be interested in being advised
of the details of the Bureau's program in this regard.
Sincerely yours,
John cogon Edgar Hoover Hoover
Director
JOHN EDGAR HOOVER
DIRECTOR
Personal and
confidential
Fereial Bureau of Investigation
United States Department of Justice
Washington, D.C.
May 4, 1940
430
The Honorable
The Secretary of the Treasury
Washington, D. C.
My dear Mr. Secretary:
Apropes of our recent discussion concerning the protection of plants and industrial units engaged in the production
and manufacture of supplies, equipment and material for our
Var and Navy Departments, I wanted to advise you for your
confidential information of the action being taken by the
Bureau in this field.
Late lost summer I undertook a program of assigning
Agents of the Bureau with special qualifications to those
plants which are engaged in the manufacture of materials
of primary interest and importance to the Army and the Navy.
These men, each of whom has experience of a professional
nature relating to the industry in which he is working,
are assigned to the key plants without the knowledge of
the plant management or fellow employees that the man is
in fact a Special Agent of the Federal Bureau of Investigation. It has been possible, because of the high qualifications of these men, for them to work themselves into key
positions which enable them to keep in close personal touch
with actual conditions within the plant in so far as they
pertain to the constant output of materials in which the for
and Navy Departments are interested. For example, a Special
Agent of the Bureau has been employed by the Electric Boat
Company of Groton, Connecticut, since late last summer in
various capacities and he is presently assigned to the post
electrical inspector for the entire submarine building
project. of This man, who has been in the service of the FBI
as a Special Agent for a number of years, is preeminently
qualified in the field of electrical engineering. The
nature of his duties in the Electric Boat Company enable
him to have the complete run of the yard at all times and
he is in constant daily touch with not only the construction
work in the submarines presently being built, but participates
in a professional capacity in the test runs, experimental the
dives and other projects carried on in the interest of
431
The Secretary of the Treasury
-2-
Navy Department. Needless to say, his identity as a Special
Agent
of the Federal Bureau of Investigation is not known
to his co-workers.
Other Special Agents have been assigned to the more
important factories building aircraft for the ar and Navy
Departments. Each of the men selected for these assignments
has extensive and diversified knowledge of airplane construction,
the majority of the men upon these assignments being licensed
pilots in addition to possessing technical training in construction and mechanical fields. Bureau Agents with mechanical
qualifications and training are assigned to the major plants
producing airplane engines. Other Agents having proper quali
fications are assigned in a completely undercover capacity
to other key industries throughout the country.
Each of the men assigned to one of these undercover posts
is, of course, a fully qualified Special Agent of the Federal
Bureau of Investigation who has had diversified experience
in the investigative field. As I have indicated, they are
selected for these undercover posts primarily upon the basis
of their vocational background and experiences prior to entering the Bureau service. I have not employed any personnel
solely for use in undercover assignments.
All of the Special Agents assigned to undercover posts in
key industrial units confine their observations and reports
to matters which pertain to the constant production in the
plant of materials of interest to the War and Navy Departments.
All personnel so assigned is under strict prohibition from
participating in any union activities or becoming involved
in any disputes between employers and employees. The Agents
are also under strict instructions to avoid any activity or
conduct which could be construed to be or even contorted
into charges of labor spying or other unethical conduct.
At the request of the Tar and Navy Departments I initiated
early last September a program of plant inspections and surveys
to be applicable to those plants upon the allocated facilities
list which are considered of primary importance by the Techni-
cal and Ordnance divisions of the War and Navy Departments.
432
The Secretary of the Treasury
-3-
After extensive research in all known fields upon the
subject of plant protection, a specially selected group
of Bureau officials was sent into key industries in
various fields for the purpose of making a study of the
plant protection methods utilized by these units. Each
man was required to make a study of the protective facilities and operations of a plant engaged in the manufacture
of high explosives, of a steel mill, of a ship yard, of an
aircraft factory, and of several other types of factories.
Thereafter, consultation was had with the Bureau of
standards, representative of fire insurance companies,
explosive experts, technical experts of the War and Navy
Departments and other specialists in technical fields.
Predicated upon the voluminous information thus assembled
there was prepared a comprehensive monograph upon the sub-
ject of plant protection. A series of special schools
were then conducted in Washington to which were brought
approximately 500 of the Bureau's most experienced and
best qualified Special Agents. Each of these men was
given intensive training for a period of several weeks in
the matter of plant surveys and plant protection. Each
man was required to pass a comprehensive examination prior
to the time that he was placed on the list of men qualified
to make plant surveys.
Thereafter, and upon receiving from the ar and Navy
Departments a list of the factories in the United States
which are considered of prior importance to the War and
Navy Departments, a program of plant surveys and inspections
was undertaken upon a national basis. At the present time
approximately 200 plants have been surveyed or are in the
process of being surveyed. While, of course, the length
of time consumed in making each survey varies with the
size of the plant, the average time required to conduct
a survey of the protective facilities of the plant
approximates three weeks. The Agent conducting a survey
submits a complete report covering the entire protective
facilities of the plant, extending from the type, kind
and location of the fences surrounding plant property to
the innermost receases of the plant in which may be kept
highly confidential and restricted blue prints, formulas,
etc. Each report upon a plant survey is annotated with
433
The Secretary of the Treasury
diagrams, blue prints and photographs of those sections
of the plant which require comment in the survey report.
is each report is received in Washington it is carefully
reviewed by Bureau officials who have had extensive ez-
perience in this field and who, of course, call upon the
services of the staff of the Bureau's Technical Laboratory
in matters involving the protection of explosive materials,
inflammables and other factors requiring technical knowledge. After review of the report submitted by the field
Agent, a comprehensive letter of recommendations is forwarded from Washington to the plant management outlining
the suggestions for improvement of the plant's technical
facilities which have been disclosed by the Bureau's
survey. Copies of the reports and the letters of recomtheir
and for transmittal to their inspectors
in theinformation
field.
mendations are sent to the ar and Navy Departments for
The reaction to the Bureau's surveys of these key
facilities has been uniformly favorable and the manage-
ment of many plants has expressed both commendation and
appreciation for the Bureau's operations in this field.
while, of course, it is impossible for RC to compel the
plant operators to adopt the recommendations made to them,
I have been pleased to observe that almost without exception
the Bureau's recommendations have been placed in effect.
Extraordinary caution has been exercised in connection
with the plant protection work to avoid any implication
of the Bureau's participation in controversial matters.
Bureau Agents refrain from participating in or making
any recommendations or observations concerning ordinary
employer-employee relationships and refrain from any
conduct which could lead to charges that the Bureau is
either pro-labor or pro-capital in its surveys.
As a result of these surveys Bureau Agents have
established personal contacts within the majority of the
plants surveyed which will result in the Bureau's receiving information promptly of any matters which may be of
434
The Secretary of the Treasury
interest to the Far and Navy Departments.
I thought you would be interested in being advised
of the details of the Bureau's program in this regard.
Sincerely yours,
John Edgar Hoover
Director
JOHN EDGAR HOOVER
DIRECTOR
435 0,
Federal Surran of Investigation
Anited States Department of Justice
Washington, D. C.
May 6, 1940
PERSONAL AND CONFIDENTIAL
The Honorable
The Secretary of the Treasury
Washington, D. C.
My dear Mr. Secretary:
As a matter of possible interest to you I
am transmitting herewith a copy of a memorandum under
date of May 4, 1940, pertaining to Dr. Gerhart Alois
Westrick, who recently arrived in the United States
and whose activities are somewhat suspicious.
Inquiry regarding this individual is being
continued and you will be apprized of subsequent
developments without delay.
Sincerely yours,
Enclosure
I edgar Hoover
this Klots Please
before and for my sig
Keep in your official
May 4, 1940
436
MEMORANDUM
RE: DR. GERHART ALOIS WESTRICK
Information has been received from a confidential but
reliable source at San Francisco, California, that Captain
Friedrich C. Mensing, Pacific Coast Manager of the HamburgAmerican and North German Lloyd Lines, made arrangements for the
entertainment in San Francisco of a group of prominent Germans
who arrived there aboard the S. S. Asama Maru on March 7. 1940.
This group included the Duke of Saxe-Coburg-Gotha and Gerhart
Westrick. Mensing is reported to have bluntly told Bemak Tobin
of the Hibernia Bank at San Francisco that he wished the Duke to
meet those people whose opinions counted most and desired every-
thing to appear non-political. Subsequently, Mr. Tobin issued
invitations to prominent San Francisco citizens to a dinner in
honor of the Duke. It is interesting to note that Captain Friedrich
C. Mensing, while not officially connected with the German Consulate
at San Francisco, is a close friend and contact of Captain Fritz
Wiedemann, German Consul General there.
Captain Mensing has been in the United States since 1923
and became a naturalized citizen of the United States on April 10,
1939. However, during the World War he served in the Imperial
German Navy as a Captain-Lieutenant. For a time he was one of the
leaders of the National Socialist German Labor Party members in
the United States, but contends that prior to his naturalization
he severed his connections with this political body.
Dr. Gerhart Alois Westrick arrived in New York City on
March 12, 1940, and registered at the Plaza Hotel where he remained
until April 18, 1940, on which date he moved to the Carlyle Hotel,
where he first registered under the name of Arthur Webster to
avoid publicity.
It is reported that Dr. Westrick is a noted German Supreme
Court lawyer who came to the United States in this instance in an
attempt to iron out possible difficulties in German-American trade
relations at the conclusion of the current war in Europe. Dr.
Westrick is the former legal partner of Dr. Heinrich Albert who was
German Minister of Finance and Chancellor of the Reich for some
seventy hours in 1932.
-2It was recently reported in the press that a spokesman
for the German Consulate General at New York City advised that
Dr. Westrick was in the United States on a special mission to
arrange for a resumption of trade relations between Germany and
the United States at the conclusion of the present war.
Dr. Westrick practiced law in Germany and, so he stated,
was one of the attorneys who represented American interests there
in connection with the failure of the late Ivar Kreuger's
$100,000,000 International Match Corporation. From one source it
was reported that Dr. Westrick at the time was responsible for
recovering possession for United States investors of some $21,000,000
worth of bonds which had been pledged by Kreuger for his personal
use with Swedish banks.
In a letter which appeared in the New York Times under
date of April 20, 1940, addressed to the editor of that publication
and signed by S. Stamwood Menken, counsel for certain holders of
International Match Corporation debentures, Mr. Menken stated that
he desired to correct any misapprehension resulting from statements
of Dr. Westrick regarding his recovery of $21,000,000 for United
States investors and his distinguished service for the benefit of
the Americans. Mr. Menken stated that the funds were recovered
through the Irving Trust Company as the result of the settlement
of a suit brought in 1932 in the United States District Court for
the Southern District of New York in which suit Rosenberg, Goldmark &
Colin were counsels. The settlement was made in January of 1933
as a result of negotiations personally initiated and conducted by
James N. Rosenberg as senior counsel both in the United States and
in Stockholm, Sweden. He stated that Dr. Westrick did not participate in the settlement but that after the commencement of the suit,
and in preparation for the trial, opinions were obtained from
several European lawyers on various legal aspects of the case which
would be affected by the laws of several foreign countries. Dr.
Westrick was one of the two counselors asked for opinions on the
German pre-Hitler laws in this regard.
Information has been reportedly received from abroad
indicating that in spite of the pressure of war plane production
the Dornier Works at Friedrichshafen. Germany, have just completed
a flying boat for trans-Atlantic service with a range of between
4000 and 5500 miles. It is alleged that Dr. Westrick intends to
ask for landing rights for mail and passenger service to the United
States if the new British Overseas Airways begins its announced
service to Montreal, Canada, and New York in June of 1940. It is
437
3-
further reported that the contemplated trip of Dr. Westrick by
Pan-American Airways to the United States was abandoned because
of the possibility of his being stopped by British authorities
and this undoubtedly was responsible for his journey to New York
City via Siberia, Japan and the West Coast.
About the same time of Dr. Westrick's journey to the
United States, British Contraband Control Officers and authorities
at Gibraltar are alleged to have held up the Conte di Savoia, on
which Assistant Secretary of State Summer Welles was a passenger,
for thirteen hours while a search was made for Dr. Hjalmar Schacht,
the German financial expert who was reported on his way to the
United States. In this regard it is interesting to note that
Dr. Westrick, in a press conference, advised that the British
had seized all mail and correspondence belonging to his wife and
sons at Gibraltar when the S. S. Rex was stopped there, and that
on this occasion the British authorities questioned his wife
relative to her trip to the United States. He admitted, however,
that she was treated with the utmost courtesy and politeness.
Dr. Westrick is reported to have made the statement that
he believes the war in Europe will be won on an economic rather than
a political front and that he expects the war to be of short duration.
During an interview with press representatives he admitted that
certain companies having branches in Germany, such as General Motors,
Ford, Gillette Razor Blade Company, Singer Sewing Machine, and many
others, have been unable to show profits from their investments
since 1937. He stated, however, that he hoped that these concerns
would be able to rectify this in the not distant future. He pointed
out that he intended to remain indefinitely in the United States
and recalled that his legal partner, Dr. Albert, had run into
difficulty in the United States during the last war because of his
propaganda activities on behalf of Germany and asserted that he
would profit by his friend and associate's mistake and would confine
his activities to economics.
The Hour Publication of April 20, 1940, carried an article
relative to Dr. Westrick which is of some interest. In an interview
by a representative of this publication, Dr. Westrick declared that
he was anxious to preserve the American trade at the conclusion of
the present war but did not disclose the fact that a large sum of
money had been deposited to his personal credit in a West Coast bank,
nor did he mention the purpose of his negotiations with the Japanese
Government which came to a conclusion shortly before Japan declared
that she would not tolerate an Allied naval blockade in the Sea of
Japan.
438
-4A confidential informant in New York City has advised
that Dr. Paul Schwarts, former German Consul in New York City,
stated confidentially he had received information from a contact
in Berlin three weeks ago that Dr. Westrick was to be in charge
of a German political, propaganda, espionage and sabotage network,
apparently in the United States. Schwartz is further alleged to
have stated that he would personally start a large press campaign
in the United States in order to bring Dr. Westrick into the open
and to call the attention of the American authorities to him in
this manner. He is alleged to have stated that he was responsible
for the newspaper articles concerning Westrick which appeared in
the New York Times on April 13 and April 14, 1940, and an article
in the New York Herald Tribune on April 12, 1940.
Dr. Westrick is not. by reputation, a diplomat, but a
professional lawyer and was a member of the law firm of Albert,
Westrick & Hauss of Berlin, Germany, and of which the senior
partner was the notorious Dr. Albert, who was involved in political
scandal in the United States during the World War. A few years
ago Karl Von Lewinski, former German Consul General at New York
City, was taken in as a partner; however, this association did
not last because of the numerous disputes and disagreements between
the parties concerned. It is reported that Westrick's reputation
in Berlin is that he is thoroughly unscrupulous.
From a confidential source it is also reported that Dr.
Westrick obtained his present assignment in the United States for
two purely personal reasons in addition, of course, to the fact
that he was an ideal man for the job. These personal reasons were
that Westrick had made considerable money and wanted to get his
money out of Germany and that he desired to have his family, to
which he is very much devoted, in a place of safety away from the
war zone. From the same source it has been ascertained that
Dr. Westrick is presently making his office at 17 Battery Place,
New York City, and his principal task is to reestablish contacts
with certain American firms which will be indispensable in supplying
materials to Germany, and which more or less were dropped due to
the fact that the former German Commercial Attache in the United
States, Dr. Walther Becker, made reports to Berlin concerning non-
Aryan partners. Dr. Westrick, it is alleged, was largely instrumental in placing Dr. Albert's son, Dr. Christian F. Albert,
temporarily in a New York City firm. ostensibly to acquire training
in American business methods. It has been reported, however, that
young Albert, during his stay in this country, was also engaged in
intelligence work for the Nazi Government. It is interesting to
note that the confidential informant alleged that Dr. Westrick is
439
440
reported to be working with an individual in charge of Gestapo matters
at the
German
Embassy in Washington, D. C., who is possibly identical
with
Baron
Von Geinanth.
Inquiry at the Plaza Hotel in New York City revealed that
Dr. Westrick registered there on March 12, 1940, from Washington,
D. C., and remained at the hotel until April 18, 1940. Reservations
for his stay were made by Colonel Sosthenes Behm, President of the
International Telephone and Telegraph Company, and it is reported
that Dr. Westrick represented this concern in Germany in 1937. Dr.
Westrick has previously stopped at the Plaza Hotel during visits
to the United States and on these occasions accommodations were
paid for by the International Telephone and Telegraph Company. The
Plaza Hotel records reflect that Dr. Westrick stopped at this
hostelry from January 31, 1936, to February 25, 1936; from February 29,
1936, to March 4, 1936; from October 25. 1937, to November 12, 1937;
and from February 2, 1939, until February 25, 1939.
While stopping at the Plaza Dr. Westrick is reported to
have received letters and telephone calls threatening his wife and
family who had joined him in New York City upon their arrival from
Europe. Because of the publicity received by Dr. Westrick and the
unfortunate circumstances relative to the threatening communications,
the officials of the Plaza Hotel suggested that Dr. Westrick might
find it more advantageous to leave the Plaza and find quarters
elsewhere. As a result, Dr. Westrick moved to the Carlyle Hotel,
where he is presently occupying Apartment 12-K with his wife,
while his secretary, Baroness von Wageman, occupies Apartment 11-C.
At the time of his arrival at the Carlyle Hotel the management inquired as to the length of his stay and was informed that no
accurate information could be furnished regarding this. Dr. Westrick
stated that perhaps he would be at the hotel for several months,
although it was possible that he would be transferred to San
Francisco, California. In spite of his moving, Dr. Westrick, who
originally registered under the name of Arthur Webster, continued
to receive anonymous communications. It has been ascertained that
his two children have left the hotel and are residing with some
family in Greenwich, Connecticut.
Mr. Ernest H. Kuhlman, Second Vice President of the Chase
National Bank in New York City, is reported to have traveled to
Germany some years ago for a short vacation but found it impossible
to leave that country for five years and has only recently returned
to the United States. He reports that Dr. Westrick is reputed to
be somewhat anti-Nasi in his ideas. It is, therefore, quite possible
-6that the German Government sent him to the United States for purposes
which, if any trouble arose, might serve as a means of liquidating
Dr. Westrick. Dr. Westrick, however, does not appear to have had
any contact with the Chase National Bank since his arrival here.
Information has been received from the Bankers Trust
Company, 16 Wall Street, New York City, that Dr. Westrick is person-
ally acquainted with several of the officers of this institution.
It appears that he handled some affairs for the bank in Germany
and through these business connections the officers are on friendly
terms with him. He recently had lunch with several of them but no
business transactions were discussed. Mr. Frank Shepard, Vice
President of this institution, stated that he had a great deal of
sympathy for Dr. Westrick and could not understand his being sent
to the United States in his present capacity and felt that the
assignment was probably forced upon him in view of his mild
attitude toward the Nazi regime.
It has been ascertained that Dr. Westrick called upon
Mr. R. Graham Heiner of the law firm of Wright, Gordon, Zachry &
Parlin, New York City, since his arrival in the United States.
The purpose of this contact was to inquire of Mr. Heiner the address
of some individual, which address was apparently unknown to Mr.
Heiner.
Mr. Otto C. Sommerich, senior partner of the law firm of
Katz & Sommerich, 120 Broadway, New York City, has stated that he
personally know Dr. Westrick for many years and handled legal work
for the firm of Albert & Westrick and also some personal legal
matters for Dr. Von Lewinski, formerly of the German firm mentioned,
and who was a representative of the German Government in the
settlement of claims arising from the World War. Mr. Sommerich
reported that while he is non-Aryan his partner is an Aryan and
that all German matters that the firm has been handling are gradually
being taken from them. He advised that Dr. Westrick has not been
in touch with his firm since his recent arrival in the United States
although this was his custom on previous occasions. Mr. Sommerich
was at a loss to understand Dr. Westrick's present position inasmuch
as Dr. Westrick was not in sympathy with the Nasi regime.
Since his arrival in New York City Dr. Westrick has been
in communication with Norris Darrell, 4 East 95th Street. Inquiry
revealed that Mr. Darrell is married and has two children, and is
a man in his middle thirties who formerly resided at the Kew Terrace,
Kew Gardens, Long Island, New York, at Berlin, Germany, and at New
441
442
Canaan, Connecticut. He is reported to be a lawyer connected with
the firm of Sullivan & Cromwell, 48 Wall Street, New York City.
He has been practicing with this firm for over ten years and was
formerly in their Berlin office. This law firm is one of the
largest in the United States and Darrell is reported to be receiving
a substantial income as a result of his connection with it.
Dr. Westrick has also contacted Mr. E. H. Milligan, 175
East 79th Street, New York City, who is apparently identical with
Ernest H. Milligan, approximately fifty years of age, married, and
residing at the address above noted. During the past two years
Mr. Milligan has spent his summers at Southport, Connecticut,
where his property is assessed to his wife, Mary B. Milligan, in
the amount of $6,150. Mr. Milligan has been identified for many
years with Lee Brothers, Inc., a large and well-known retail
furniture concern located at 2283 Third Avenue, New York City.
He is President and principal in this business, and the organization
also has control of a storage business and operates an office
building at 103 East 125th Street, New York City. Mr. Milligan
is reported to receive a substantial income from his business
connections.
It is noted that Dr. Westrick has contacted the Gladstone
Hotel in New York City, which is frequented by Germans visiting the
metropolis. It will be recalled that in the Adam Von Trott case
Baron Von Geinanth of the German Embassy, Washington, D. C., was
stopping at the Gladstone Hotel in December of 1939.
It is also noted that Dr. Westrick has been in touch with
the Empire Trust Company's Fifth Avenue Office, apparently by
telephone. The individuals contacted at this banking institution
had no knowledge of the contact in question and inquiry of other
officers and employees was deemed impractical at this time.
Since his arrival in New York City, Dr. Westrick has also
telephoned COlumbus 5-8487, which is the unlisted telephone issued
to Marilyn E. Maier, 150 East 58th Street, New York City. Further
information regarding this individual will be developed at a subsequent date.
Inquiry at the Navarro Hotel, 112 Central Park South,
New York City, failed to reveal any indication of the presence of
Dr. Hjalmar Schacht as rumored.
It has been ascertained that a Dr. G. A. Westrick,
Victoria St. 8, Berlin W. 10, Germany, appears on the 1936 mailing
443
list of Ferdinand Hanson, a known German propagandist, who arrived
in the United States in 1886 and became a naturalised citisen in
1891. Hansen is the proprietor of the Romanoff Caviar Company in
New York City and the Overseas Publishing Company in San Francisco,
California, the latter firm being used in connection with the
dissemination of his propaganda.
444
MAY 9 1940
My dear Mr. Secretary:
Mesers. Cochran and Bernstein have reported to me the
conversations in which they participated at Assistant
Secretary Berle's office on the evening of May 7. in regard
to the Order in Council issued by the Government of Canada
on April 30. 1940. constituting a foreign exchange acquisition order. The memerandum of Mr. Berle's conversation
with the Canadian Minister on May 1, and other documents
pertinent to this matter, have had the attention and study
of my Department.
While I as thoroughly in accord with your Department's
desire to protect the property in this country belonging to
American citizens temporarily resident in Canada, I feel
that it would be wholly inappropriate to threaten to invoke
against Ganada in these circumstances the powers used to
control Horvegian and Danish owned property in this country,
and I feel that I would have to oppose such use of the
powers.
I shall be pleased for my Department to be of any possible assistance to you whenever negotiations may be entered
into with the Government of Ganada in the premises, and in
canvassing any other methods of dealing with the problem
presented by the Ganadian Order in Council.
Sincerely yours,
(Signed) H. Morgenthan Jr.
Secretary of the Treasury.
The Honorable
Cordell Hull,
Secretary of State,
Washington.
By Messenger
1's pm.
445
MAY 9 1940
Honorable Summer Welles,
Assistant Secretary of State.
Dear Summer:
Please accept my thanks for your letter of May 8,
1940, concerning arrangements being made to ask Congress
immediately to increase appropriations for the building
up of reserve stocks of strategic raw materials.
An estimate of $12,500,000 has been included in
the Treasury Deficiency Bill, which will be presented to
the Budget in the near future. This estimate will be de-
fended before the Appropriations Committee by the Procurement Division of the Treasury and assistance will be given
in such defense by representatives of the Army, who are
thoroughly cognisant of the uses to which the raw materials
purchased will be put and the reasons for the kinds of
material that are acquired.
with you, I share the hopes that the combined
efforts that may be put behind this Deficiency Bill will
result in the appropriation by Congress of the funds sought.
Sincerely yours,
(Signed H. Morgenthau. Jr.
By Messenger 5 00 from
File to Mr. Thompson
HEC age
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
M
446
DATE May 9. 1940
Secretary Morgenthau
TO
Mr. Cochran
FROM
STRICTLY CONFIDENTIA
By appointment the Minister of Finland, Mr. Procope, called at the
Treasury at 11 o'clock this morning. When the Secretary received the Minister,
Messrs. White and Cochran were present. The Minister opened the conversation
by asking the Secretary what help he could give Finland. The Minister stressed
the dire situation in Finland, referring to starvation facing his countrymen.
The Secretary stated that there was nothing more that he could do. The
Minister had put him under pressure, but he had pushed the matter as far as
he, an appointive officer of the Government, could proceed. Procope stated
that he had seen Summer Welles. He had not mentioned to the Under Secretary
of State the conversation which he had had some weeks ago with Secretary
Morgenthau in regard to the possible coming to this country of Finnish officials
seeking financial assistance. He had not discussed this subject with anyone.
He had, however, spoken to Mr. Welles in regard to the need of Finland for
financial assistance, and Mr. Welles had referred him to Secretary Morgenthau.
The Finnish Minister then raised the question as to the installment of
the Finnish War Debt which is due June 15. The Secretary stated that upon the
advice of Mr. Bell it had been necessary to pay into the General Treasury Fund
the amount of the installment paid by Finland last December which the President
had desired to be held in suspense. The Secretary could not take further
initiative in regard to obtaining the repayment to Finland of past installments,
or the postponement of future payments.
The Secretary left Minister Procope quite free to take up with anyone in
Washington the matter of further financial assistance for Finland.
It developed in the conversation that Finland still had unused approximately
$16,000,000 of the $30,000,000 credits from the Export-Import Bank. Goods are
now being shipped from New York to Finland in Finnish ships via the northern port
of Petsamo.
After Minister Procope's departure the Secretary asked me to check with
Bell's office to see whether we had had any correspondence with the Director
of the Budget in regard to the Finnish War Debt installment, and as to whether
the last payment had actually been passed into the General Fund. I took this
matter up and submitted to the Secretary yesterday afternoon a memorandum from
Mr. Heffelfinger on the subject. When I presented this to the Secretary he in-
mediately telephoned Mr. Norman Thompson to look into the matter further. Subsequently, Mr. Thompson, Mr. Heffelfinger, and two of their associates came to
my room with pertinent documents and it was agreed that a draft communication
should be prepared for the Secretary's consideration, and for possible submission
to the President, on the matter of postponement of the Finnish debt payment.
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
WA
447
DATE May 9. 1940
TO
Secretary Morgenthan
FROM
Mr. Cochran
STRICTLY CONFIDENTIAL
At the request of the Department of State I have arranged for the purchase
of Danish kroner in New York for Consul Penfield who is embarking May 10 on a
Coast Guard vessel to proceed to Greenland where he is to establish an American
Consulate. Mr. Knoke in New York was to receive Mr. Penfield today to help
in obtaining the actual Danish currency, and to give him any advice or possible
assistance at his new post. The State Department has been appreciative of our
help in the premises.
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
H
448
DATE May 9, 1940
TO
FROM
Secretary Morgenthau
Mr. Cochran
STRICTLY CONFIDENTIAL
Vice-chairman Randolph Burgess of the National City Bank telephoned me at
11 o'clock on May 8. He referred to his visit to Washington last Monday, at
the time the Secretary was absent, when he planned to attend a meeting where
the Inter-American Bank was to be discussed. I had not seen Burgess after this
meeting. By telephone he told me that Mr. Cotton had been there, as well as
Messrs. Grady and Livesey of the Department of State, but that he had not seen
any other Treasury Department officers present. Mr. Burgess thought there were
two great weaknesses in the plan for the bank. The first was that it placed
the governments on a privileged basis in commercial business wherever the bank
might have offices. Some of these offices might be just across the street
from National City branches in Latin American capitals, and the competition
would perhaps be felt strongly by the latter. Secondly, Mr. Burgess thought
that with governments owning the stock, rather than the central banks, the
position of the Federal Reserve System and of Latin American Central Banks
would be undermined. He thought this would be evidence of a tendency toward
government socialisation of banking.
Mr. Burgess also made some comments on certain cases of frozen Danish
and Norwegian assets in which the National City was interested which were being
held up in the Treasury. I suggested that Mr. Burgess speak with Under Secretary
Bell if he had any complaint to make on this subject.
As for the Pan-American Bank plan, Burgess asked if I thought the Secretary
would be interested in having Burgess' views. I told him I would mention the
matter to the Secretary. I did this later in the day and called Mr. Burgess
back to let him know that the Secretary would be pleased to have a memorandum
from him on the subject. Burgess said he would prepare this within the next
day or two.
IMM.
TREASURY DEPARTMENT
Office of the Secretary
449
Techni Assistant to the Secretary
3
Date 5/10/40
TO:
Mail Journey
Room
For the
Suckery's
Files
MMS.
From: MR.
.
TREASURY DEPARTMENT
450
INTER-OFFICE COMMUNICATION
DATE May 9, 1940
TO
FROM
Secretary Morgenthau
Mr. Cochran
STRICTLY CONFIDENTIAL
On the evening of May 2 I mentioned to the Secretary the memorandum which
I had submitted to him under date of April 27 in regard to the chairmanship of
the B.I.S. The Secretary wanted the matter handled informally, without any
official commitment from the Treasury Department. He stated that he personally
had no objection to McKittrick's receiving the post of Director and of Chairman
of the Board of the B.I.S. The Secretary instructed me to discuss the matter
with Under Secretary Bell and then to talk to Chairman Eccles about it.
On the following morning I took this matter up with Under Secretary Bell
and he authorized me to proceed along the lines indicated. I consequently telephoned Mr. Eccles at 4 p.m. on May 6. He called me back at 4 p.m. on May 8.
The Chairman stated that if Mr. McKittrick is selected as a director and designated as Chairman of the B.I.S., and if the matter is presented to the Board of
Governors of the Federal Reserve System here, the Board would not object. When
I asked Mr. Eccles whether I should mention the matter to President Harrison of
the Federal Reserve Bank of New York, he said I was free to tell him what had
taken place. I was also free to let Pennachio know that I had informally ascertained the position of the Board, as indicated above.
I today telephoned President Harrison of the Federal Reserve Bank of New
York and told him of the receipt of the personal inquiry from Pennachio, and of
the manner in which I had handled it. Mr. Harrison then indicated to me his
position, and I consequently drafted the following cablegram which I telephoned
at 4 p.m. to Mr. Podesta, the representative at 70 Pine Street in New York
of the Bank of Italy, for cabling:
"Governor Azzolini,
Bank of Italy,
Rome.
For Pennachio from Cochran.
Your letter April 1st. Harrison would personally
have no objection to McKittrick being named but would
have to refer matter to Board in Washington. From
Eccles I have ascertained informally that if McKittrick
is selected and matter is presented to the Board here
there would be no objection. Treasury will certainly
not interfere."
Zim
451
10748
JR
PLAIN
Shanghai via N. R.
Dated May 9, 1940
Rec'd 9:08 a.m.
Secretary of State,
Washington.
402, May 9, 11 a.m.
FROM COMMERCIAL ATTACHE.
Special financial. In the May Eighth issue of the
FINANCE AND COMMERCE, Shanghai Financial and trade weekly
and unsigned comment Emphosizes two points: "One is
concerned with the impossibility of keeping a financial
secret in China and the other deals with the note issue.
It is perfectly naturel that rumors should follow a meeting
of bankers reported to be Engaged in deciding upon
financial policy, but it hrs yet to be Explained why orders
should be placed on the market which DEEM to suggest that
inside information is being used for personal gain. It is
stated that orders were received (in Shanghai open market)
from Hong Kong on Wednesday May first to buy substantial
amounts of Exchange. If that is true an Enquiry appears
to be called for." Article also points out that with the
withdrawal of support by the Stabilization Fund Committee
May second speculators are able to make a twenty-five
per cent
452
-2- #402, May 9, 11 a.m., from Shanghai.
per cent profit in SOME CASED involving fortuneo but that
the result is choos in trade, loss to the community and
hardship for the consumer such that Shanghai cannot pride
itsElf on its open market and that these conditions
moke c. mockery of Efforts to curb profitEEring of small
tradesman. As to note issue figures article comments
further that few bEliEVE official figures are correct,
also states that a long period of steady treding will be
needed to OVERCOME shattered confidence in the currency.
INFORM COMMERCE.
BUTRICK
KLP
453
JI
GRAY
Paris
Dated May 9, 1940
REC'D 3:30 p.m.
Secretary of State
Washington
598, May 9, 3 p.m. (SECTION ONE)
FOR TREASURY.
With a view to decreasing the consumption of
coffee and increasing the USE of substitutes a decree
published in today's Journal Official raises the
internal revenue tax on coffee and lowers those on
coffee substitutes.
The list of French commodities which cannot be
exported to certain neutral countries unless the
foreign importer si gns an agreement to the effect the t
the commodities will not be reexported to Germany
(please SEE Embassy's telegran No. 452, April 10,
6 p.m.) is increased by SOME 250 tariff items which
include live-stock, meat, dairy products, chemicals
and autonotive vehicles.
BULLITT
KLP
454
JI
GRAY
Paris
Dated May 9, 1940
Rec'd 2:50 p.m.
Secretary of State
Washington
598, May 9, 3 p.m. (SECTION THO)
Today's ACENCE ECONOTIQUE ET FINANCIERE points
out that certain international stocks which are
quoted on both the Paris Bourse and the London Stock
Exchange command a higher price in France than in
England and suggests that "limited arbitrage operations wi th London" be permitted so that these
"abnormal quotations" may be Erased.
The Bank of France statement for May 2 shows
further advances to the state in the amount of
700,000,000 francs, note circulati on increased by
2,600,000,000 francs to a record total of 158,900,000,000.
Market was slightly higher today EXCEPT for
internationals which sustained moderate losses.
(END OF MESSAGE)
BULLITE
KLP
455
COPY
AC
PLAIN
Stockholm
Dated May 9. 1940
Rec'd 8:10 p.m.
Secretary of State
Washington
470, ninth.
Telegrams 434, 449, 464 and following from Commercial
Attache. In millions crowns national debt April 30th was
thirty-two fifty-three up two ninety during April,
Riksbank's metallic reserve May 7th was seven sixty-four
point four, exchange reserve four forty-four point one,
note circulation fourteen thirty-nine point nine, domestic
loans and discounts new high nine fifty-three point eight
up seven fifty compared year ago. Government proposed
additional expenditure one hundred forty for purchase
imported raw materials for reserve storage bringing total
expenditure this purpose to four twenty. Minister Defense
states no preference given agricultural workers in calls to
service. Riksdag approved purchase private railways defense
a consideration (see telegram 440, May 4th). From May 14th
purchase kerosene and fuel oil for heating prohibited
and inventory demanded. Gasoline being rationed to
diplomatic and consular officers. Board of Trade approves
small
456
-2small sum for experimental shale oil extraction. Ways
and Means Committee, Riksdag, approved new surtax on
income payable during 1940-41 doubling previous defense
surtar (see Commercial Attache report 25, November 18th
last). Delegation proceeding Moscow May 10th to
negotiate under presidency Swedish Minister to Russia long
term trade treaty.
INFORM COMMERCE.
STERLING
EMB
457
STRICTLY CONFIDENTIAL
(Confidential)
PARAPHRASE
80 A confidential telegram (no. 211) of May 9, 1940,
from the American Ambassador at Chungking reads sub-
stentially as follows:
There are now being concluded between the Chinese
Government and the Soviet Government negotiations pro-
viding for the grant to China of a further Russian credit
of U.S.$150,000,000 to be used to purchase Russian mater-
ials. This information, which has not been confirmed,
was received by a member of the Embassy staff from Mr. L1
Jui who is associated with the Foreign Trade Commission
of the Chinese Government and who was formerly agent of
Herner G. Smith at Hankow and a prominent Chinese tung
oil merchant. Mr. L1 Jui said that an unestimated number
of Russian trucks which bring military supplies to China,
several hundred earts and 30,000 camels are being used for
the transportation to the Soviet Union of cowhides and
wool. According to Mr. L1 Jui, there continue to be sent
to Hong Kong, via Wenchow and Ningpo, considerable quanti-
ties of tea intended for the Soviet Union. This is ascomplished by payment of "aqueeze" to Japanese naval and
military officials.
458
telegritt SENT
RVR
PLAIN
May 9, 1940
SERICAN LEGITION, STOCKHOLD
FOR OSLO
387
Treasury requests Legation notify International
Evelstoffake Tsoelskap their cable April 27 and coble
May G received.
HULL
(FL)
E.:FL:/SG
459
TREASURY DEPARTMENT
PROCUREMENT DIVISION
OFFICE OF THE DIRECTOR
WASHINGTON
May 9, 1940
MEMORANDUM FOR THE SECRETARY
Two days ago M. Theunis, Ambassador Extraordinary in Special Mission
from Belgium, accompanied by M. Grosjean of the Mission, called con-
cerning an allocation of 40 Bell P-39 pursuits.
This matter was taken up with General Brett, and this afternoon he
informed me that, while their contract for 93 P-39s had been amended
to accept delay on a delivery of 60 improved ships, the question of
40 airplanes desired by the Belgian Government was one which should
be taken up directly by their representatives with the Bell Aircraft
Company.
M. Grosjean has been so advised.
has why
Phue 5/10/40 young
TREASURY DEPARTMENT
WASHINGTON
May 9, 1940.
MEMORANDUM FOR THE SECRETARY:
I thought you would be interested in the attached let-
ter that I received from the Italian Line.
Danil haris
Enol.
430
461
H+
Italian Line
FIFTH AVE AT 50TH STREET
NEW YORK CITY
May 8, 1940
THE GENERAL MANAGER
FOR NORTH AMERICA
Dear Mr. Harris:- 06m
I have been informed of the cancella-
tion of the various drug smuggling fines, for which I
am deeply appreciative.
More than for the sake of the money
involved, frankly I was very much worried because the
fact of the Italian Line being fined was sure to
besmirch our clean name and embitter our feeling of
defeat notwithstanding our earnest, persistent efforts
in fighting smuggling crimes by our crews.
I am glad to report that our people
on the other side, with the energetic help of the
Italian police, have taken drastic measures to purge
out of our navigating personnel, all men with doubtful record, while the Masters of our vessels have
received renewed strongly worded appeals to tighten
surveillance.
If there will ever be anything more
which may be in our power to do towards cooperating
with the U. S. A. fiscal authorities, please remember
that the Italian Line will always be eager to help.
Very sincerely yours,
Hon. Basil Harris
Commissioner of Customs
Washington, D.C.
(Italo E. Verrando)
thousand