The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
I
,.!
DIA!rl
Book 302
Sept ember 1 - 4 , 1940
t
~'
'
.. .
I
\ ''
I
-A-
Agri culture
Cotton : Subsidy for manufactured cotton goods ,
supported by Departnent o: Agriculture s.nd
opposed by State Department, discussed by ~Jr
and 9:30 group - 9/3/40 . . ....... ....... . . . ......... .
Air llarfRre
SE'e War Conditions
Allison Engineering Company
See T.ar Condition s : Airplanes
Book
302
?age
36
- B -
\
J
Bank for International Settlements
See Ylar Conditions
Business Conditions
Haas memorandum on situation for week ending 8/31/40 . .
46
- cCoast Guard
New Reserve bill, includi ng change of nace from
Reserve to Auxili ary , discussed in Gaston memorcndum 9/ 1./40.............. . .... • . .. •. .. . . . . . . .. • . . . . . . . . . . . .
(See also Book 1Q1, page 82)
a) Treasury informed Budget Bure!l.U turned down
pr oposal - 9/9/40: See B ook~ . page 97
l) HMJr and Gaston discuss : Book ~. page 235
Consol idated Ai rcr aft Corporation
See War Conditions: Airplanes
Cott on
See Agriculture
225
- EEst onia
See War Condit ions: Bank for I nternational Settlements
- F Financing, Government
National Defense Series of Obl igations , Retirement of:
Harrison (Federal Reserve Bank of New York) memorandum
on - 9/4/40 .. • . .•. .. .. . . . . .. . .. . . .. . . ••. . . . . . . . ...
France
See War Condit ions : Foreign Funds Contr ol; France
,
t
171
- GBook Page
Gold
See .. ur Conditions : Bank for Interneti,nal Settlements
Granik , Theodore (Town Hall of the Air)
31
~~r again refUses to participate - 9/3/40 . •. ....... •. 302
Gr ea ~ Sri til in
See .. ar Conditions: Export Control; iilitax-; 'l enning
- I -
International Labor Office
See League of Nations
- J -
J apan
See Y/ar Condi tiona: Export Control
- L -
Latvia
See r.ar Conditions : Bank for International Set tleme'lts
League of Nation s
Central Opiuc Board of the Drug Suporvisory &~ly of
the League of Nations and Interna~i onal wabor Office
wish to move t o United States: Brec ~enridge Lon5 and
HllJr discuss - 9/3/40 . . ........................ . ....
a) Gaston memorandum announcing St ate Deportment
agreement - 9/19/40: See Book 1Q2, pa6 e ~1
Lithuunit.
Conditions : Bank for International Settlements
Eee
76
,.ar
- M-
Mackenzie-King, Ylilliom Lyon (Prilllf' Minister , Canada)
Connection with John D. Rockefeller and Color!ldo fuel
and Iron strike discussed by 9:30 gr oup - 9/1./40 .. .
Merry-Go-Round, Wnshin6ton (Pearson ond Allen)
See Ylar Conditions: Air plt•nes (Plant Expnnsion)
Mexico
Hoohschild transmits report- 9/3/40....... . ..... .. ..
llailitsry ?lt.nnin£
See l•nr Condi tion &
Morgenthsu, Henry, III
Report on pilot truining prot:ram flB discus~ed by
Captain Balfour and Hl~r - 9/3/40 ...... • · . . · . · ·. · · ·
237
60
154
- NNarc otic::
Centr al Opi~• Board of the Drug Su?ervisory Body
of toe League of N~tions wis'l· s to move to
Uni':.ed St:.tes: Brec;.:enrid&e Long and H .Jr discuss -
Book
9/J/40 . •.••. •. •••• .•.• •.• .. . .. ..•. . . .... . ... .. . .. . . 302
a) Gaston memor andum announcing St:te Deportment
a~reement - 9/19/40: See Book '07, pabe 21
Page
76
- 0 -
Oil
See ·•ar Conditions : Export Control
- p -
Pear son and Allen (Viashington fAerry- Go-Rotmd)
See l1ar Conditions : Air;Jlanes (Plant Expt-nsion)
Plant Expansion
See \lar Conditions : Ai rplan es
- R -
Reconstruction Finrutce Corpor ation
For financL~b of plant expansion end t~ks ,
see \;ar Conditions : Airplanes (Plant Expulsion);
Tanks
-sSpain
See uar Conditions : Ex:>ort Control
Swed~n
See t.ar Conditions
- T Tanks
See War Condit ions
Town Hall of the Air (Granik , Theodore)
~.Jr again refuses to participate- 9/3/40 . ... . ••.. .
- uU. S . S . R.
See \oar Conditions : Export Control
United Kingdom
See Vier Conditions : Export Control; .lilitar:3 Planniog
31
- wBook
ltar Conditions
Air Warfare : Trend discus::;ec in Chle" o" Staff
me:!loro.ndum - 9/4/40 . . .. . ... . .. . . . ... . . . ....... . .. .
Airpl!'.IIes :
Consolideted Aircr!'"t CorporL-tion - wo(!el LB-30:
British Purc;1as.:.n., •. is•ion L&ks . rinrit.y on si.x
to be delivered dur:nb Se_ tP bPr LHrl OctobE>r -
?age
30?
q/3/40 . ...... . ... . ... . .. . . .. .. . . ......... . . . . .
119
Employment report by Raas - 9/3/40 .. ...... . ...... .
Allison Engineering Com,Y..ny: :Ochedule o"
En~;ines :
deliveries - 9/3/40 . . ..... .. ... . ... . ... . . . .. . .. .
R01tard Hughes plE-nt - visit to : Knu,•,en re.,ort -
lf-1
9/3/40 . ....... . .. . . . . . . . . ...... . ... . . ... ... . . .. .
158
Pilots: Train ln.; .•rot;r~m discussed in cor~f'er!>nCE'
v.ith Captain Belfour: P.enry Morgenthau, III,
r eport s on - 9/3/40 .. . ... . ... . . . . . ....... . . . ... .
Plant Expansion:
v~.rious "ays of financil1.; no11 under con~idcr~•ion
discussed by ~r and 9:30 group- 9/3/40 .. . . . .
(See a]_so Book 2Ql, pages 151 ~n ~ " )
a) Allison plant exf"'nsion discu.<r.ocl by
lt..Jr, rurvi~, Bal.rnt~'!le, Oei\Dr , Younr;,
end Buckley- q/3/40 . . . . .. ... . . . ..... . ... .
b) .atterson, Knudsen, Forre!tfl, Jp• e Jc.ne!:l,
and Sti cson invited to confPrence - q/1/40 ..
1) ~Jr discusses "ith Bell ... .. . . ..•... . .
r-urvis .. . ... .. .. .. .
?)
Pearson and Allen ( ..ashi.>gton •.err~ -Go-Rowu)
discus ion on amorth~:tlon: I!..:Jr aF~ s Sulliv~n
and llhite to ,repare nnst.er - 0/4/1.0 .. . . . . .. .. . . .
? r ogrnm disc u"sed by Br itish Purcru sin6 ission,
r'!pre!ent~>tlves of , a r DPrart"•Pnt, Trea::ur;,
Knudsen , end Llead - 9/4/'0 ............... . .... .. .. .
Bank for Inter=tional Settlec .ents: LithurullPn, Llitvi• n,
an F'stonian instructlone ret,td;nr cold held by
Bank for Intern&tional Settlem~ntf - oj:/40 .. ..... .. .
Exchan;;e n.nrl:et rP:.wnd - 9/~/1/) . . . ........ . . ...... . ... . .
Expor t Cont rol :
~pnrturE' per~o•lts t;rnnt.ed to ves~clr. Cllrr;. inc;
petrol eum pr oducts , scrap irou , aod t'crop ateel
to J apun , Russi-. , Sfl"ill , ~nd Gred Brit• in - 1/4/40 ..
Oil : Confer ence: W1Jr, Lothitn , Sir AndrCY. Abne1.,
nnd •hite - 'J/3/40 ... . ..... . .. ·· · · · · ··· · ···· · · · · · · · · ·
Sc rap Iron and 1'teel: Dr&"t of nc" ret;\<lctlon
exteudin, control to all ecru. iron nnd steel
di~cu,sed b;,· Gr·fton , i.laX" ell, ro1>rPsl'nt .. tl\·e
of Render.Hn 1 ~ Price ~t&bl h• tior, s...ct',on, etc. -
9/1/40 .. ......... . .. . ... ... .......... . . .. .. . . .. ... .
lJ.O
154
23
94, 105
6
41
171
147
- W - (Continued)
Book
Y.or Conditions (Continut>d)
For iDl FUnds Control:
France : Rele,.~e of fund~ to a~ ure ,llly!.lent of
the 4-t! 19:;7 French lo"n cou!)Ons ...uturi.u,; on
September lst
a) Cbcmberl£in ~emor~ndum- 9/4/40 .. ....... . . . . 30~
b) Conference; present : H..Jr, Cb&;.Jberla.in ,
Bell, Cochran, and lihite ................... .
c) Strte Depo.rtoent repl) aLTeeinv to 9/1~/40 : See Book 1Q2, page 125
d) Discu~~ion by !L.Jr, Chambcrlein, Gnston,
FoleJ, etc. - 9/12/40 : See Bco~ 2Q:, r~bP 155
France:
Bnak of Frunce : Bois£mger new Governor - Q/'?/1.,0 . ....
Ao~ets total 1} billion - half beloncs to Government -
9/2/40 . .. . . •..... ....... .. ... . .... .. . ....... . ..... . •
Military Plrnning:
Tentt.tive Lcsronz frora the RecE>nt /.ctive Ce.mp!> icn
in Europe: \oar Departr.1 ·nt bulletins - 9/3/40 . .. .... .
Reports from London t r ansmitted by Lothicn -
9/J- 4/40 ..•...•.... . ............................... .
Purchasing .'!i s• ion :
Vesting Order : Official sales of Briti&h-owned
dollar securities - 9/4/40 ......................... .
Strategic ~aterials :
Scrap Iron and Steel: See f.ar Conditions: Export Control
Sweden: Revocation of Licenses
inister sends meworandum to State De~rtw~nt accusing
Younb of being "undul) harsh " - 9/</40 . ........ . ... . .
a ) Cancellation of all outstandinb licenses
discussed by Hu.Jr and Serle . . ........ . .... . . . .. .
b) Yol.Dlt •emoranda - 9/J/40 . .. . . . ................. .
(S"c also Book 1Ql, p.:.6 e 17)
c) General Counsel ' s opinion sugLested by ILJr
to Young - 9/4/40 ..... ... ... .... .............. ..
Serle and ~4Jr discuss - 9/c/40 : ~eo Book lQl, paec 10?
Tanks :
Financing d i scussed by H..Jr , Purvis, Ballr.nt.yne, Dew~.or ,
Yount;, and Buckley - 9/3/40 ....... . . . · · · · · · · · · · · · · · · ·
a) Youne ·•enortondULJ - Q/3/40 .... . .. .. .. ......... ·. ·
Reconstruction Finance Corporlltion propO:;'l.l for
financlnl production - 9/</40 .. ... ............ .. .. . . .
\~ar
De pari. ~ent
For lillt~ry Intellicence Division bulletins ,
see Wsr Conditions: ~oilitury Plann ing
~oasbineton iJerry-Go-Round (Pearl'on and Allen)
See 1.or Conditions : Airplane:- (Plant Expansion)
Co.ge
169
174
5
35
62, 69
141,191,"0':1
208
105
loq
150
:?53
81
103
l
Panpbruo
et
Coc!o Cablegraa
Jleooi'ftd at the ar Iiepart.amt
at :ZtlO P. v •• oeptc=Wer 1, 1940
...
bCON FIDEN+h'\-+LcDclGD, file4 l8t45, Sept. 1, 1940.
About. 60o
a-n
ail'p:LaD., about balt of which wve
bollben, an1.e4 out dl;rli&ht r&1da crrv tQcliD4 diU'iJII .bault.
A
larao foroe Mde a •trolll attaok
OD ~outhtulptorl,
thea
·~at.ecl
ad at.taobcl D1De airti.elda. St.rq t1&hter pat.rola crrv \be
OOftJ'eCl tho withdranl. of thia foroe.
Mnioe, bvt there wwo aerS.w.
ten fl&hter
tie!M -
AU~
~
nn.
Q\aD.Qel
are nlll11l
to the 't>ld ldinp of VlrM
&1r'Cratt ..... deat.rclpl.
Dar1.al \be pu\ 24 boura Willeadell, lal.1abuz7 ad Liwrpool
._.. &lao tx.bod.
oae a..U. faotorT .mutact111'11lc ...u a1r'Cratta
)IU"ttl . . . ~od 8D4 tbaro . . . OOIIItidanbla .....,. to JIOD4SlttarJ'
obJooU~.
Dar1Dc the n1£bt
of AQ£11a\ )0-)1 about )00
auanl obJootift. lciiiN
_.. abrol4, with tho Mid'.,.,_
111"0& the
ot ftl'ioua t;rpoa won ropartocl
dr9ppocl 1ll
4lu1JW
t.bo 24 houre
OD41na
Iil&r1lll the • M
--r aSHraft
246 l.ooaliU.
In
Jncl.aDd
at 6100 1.. 11. toe!.,-.
period 85 Gonun airplaDoa ....,. oontsr.4
dee'""*' (et wh1oh 15 wor. by ut1.&.1rcratt fire), 34 _.. JII'Ob-
&!111 1•\ _.
pil.ote.
»
wor. dualod.
'Die lrUiah l.Ga\
lr1tJ.ab poomtd O&hllUoo wor. IJ) ltqral
killed 1114 21
illJur'odJ
Dur1rl&
.rr.. Ill~
the
IIDil
44 c1Yi.l1ana ld..llod -
Y1 aire"&ft a
.ur
Faroe )*'aoanel
250 11l,11nd.
IIOl'IWI8 ot J.uptt )lit Jeatboune
•OIU'M 'td.th
llli&ht
wu abeu.cl
eta.&•·
Tho Royal Air J'oroo ounUnutd ita
bollb1nc ot 111llt.arr
::: CON!:SDEN ~
12
attaoked the cu worb, the Heaacbel a1rcratt tact.c17, the 111-.na
taotorT,
dro-.
a1rdr-,
the Tupl ehot
oU tanb, lllld netcbborin& air-
!he Br1t1ah are eat1atie4 that cnat U.truction ruultecl.
In tbeaa and othe e1lllultanaoua attacb the Br1t1ah l011t two 'bollben
1D action, 1lh1la tour
cru~
Fiva Br1t1ah ehipe,
on t.ba nturn trip, two _.. ot wbiah
totalJ.i.Ds 19,000 toae, were nnlt.
'l'ha ~ adopted O.IIU aar1al tact1oa
baCi.a& haY&
UDdo~
'tlbolaJ 1lb1la tba ratio
creuiJaa.
a-
oaaaecl _..
ot w14e1.1 aoattarad
d.aMc• 1D th1e ooant.rT u a
ot Ovan to Br1t1ah airoratt loaaaa 1a cla-
The Air JI1Diat.l7 •t1Mtaa tbat the avarap Mldam
cla1.q a1r attart
500 tor the
~ate
ot 400
~· tflr
lliJ:r
ball s.n-&aecl to
M11ra, with t.ba abilit;r to pu\ 800
~
1D tba a1r eaah "" tor a ahflrt period. Due to the ~ ot
roroa 1a
~
DCIIf
operatillg a
CKID.Ii.Ur~
troa a1rt1alda 1D
partion ot tha1r loa& r&JW&
a.r.zv.
D1at.r1but1on a
Ge.Dar&l. l ateon
8Hr&tar7 ot lfar
Stat. Depart.Mnt
/
Saorat.ry ot Treaa1D7
J.an. 8acrat&r7 ot lfar
Chat ot Statt
War nan. D1'rl.a1on
omoa ot lual Intal.liaance
m
uan L!1••• osf!B'J?9<N7UJtl>
·rcil:Un p !l RQ~t.i&vel1 tLtbrarJ
'\~('··r ;~~·,·~
lbrar,
l>a'te-
1..... or- .? o
~- M#~
-2-
RV!R
GR..ol.Y
B'::aLIN
DatEd SEpt . 2. 1940
REc 1 d 4 p. m.
SEcrEta~ ~
of State: ,
•.:a S!lington .
3849, SE p t . 2 , 2 p. m.
FOR 'l':'!EAS•JRY FROM i·IEA'!'l-! AND FOR DEPARTMENTS
I NFOR:;tA'!'IO!{.
ThE .3<:rlin mo rning pre:ss gi ve:s promine:nc E to thE
spEEch
3
thE
y ~ste:rday
ope:nL1~
of REich Econor.1ics MinistEr Funk at
of thE 7ie:nna Fair .
Funk made: thE cus -
tomary assErtions of thE strEngth of thE GErman War timE e:co:1omy and thE inEffEctivEnEss of t hE English
blockadE insisting t!Jat large: imports from thE North ,
East and South compEnsatE " to a s ubsta ntial ExtEnt"
for lost imports from ovErsEas .
Funk dEclarEd that
for Eign tradE figurEs for rEcEnt months wErE not
much low£r than thE monthly, ave:rag e: of 1938 and that
rEcErtly Export re:sult,s have: EXCEEdEd ExpEctations .
Although J Ermany 1 s Exports havE rEcEntly shown a
gre:ate:r incrEasE than its imports this dEvElopmEnt
has not y Et bEEn rEflEctEd in its clEaring balancEs
duE to
th~
fact that crEdit tErms on GErmany ' s
ports arE much longEr than on its imports .
EX-
GErmany 1 s
-,
2, 2 p . m.
from
i3ERLIN
- 2- No . 3849,
S~pt .
tradE
hE assErtEd, was aiMEd at abolition of
n c,~c y,
thE sEns .:lEss autarchic policy of individual EuropEan
countriEs 3nd its rEplacEmEnt by a sound division of
labor among thE various countriEs .
F
~nin
"'~
s a id that thE Brit!.sh ha d had EvEn morE di s -
for thE GErman currEncy than for any othEr
fEaturE of t h E GErMan Economy but thE REichsrnark had
bEcomE thE most sElEct and SEcurE currEncy and was
wEll on thE v:ay to assumi ng tt:E position of thE ailing British pound .
ThE rEcEnt prohibition of imports
of pounc n otEs into Engla nd uhieh quarantinEs thE
pound no tE as an intErnational currEncy rEsultEd i n ··anothEr sE vErE loss of prE s ti g E for thE English.
If
this to kEn of thE British rEputa tion wa s dEalt i n on
thE bla ck markEts , for Exa mplE , in Asia at a fraction
of its
nomin ~ l
va luE thEn thE English monEtary a uthori -
tiEs could h!'.rdly havE sErvEd
this mE a surE .
GErm~.ny
GErman monEtary policy, Funk a ssErtEd,
had complEtEly fulfillE d its t a sks .
adv~.ntag E
bEttEr than by
It was to i ts
t.1". t thE mono polizEd policy which had bEEn
practicEd d urin g p eac Et i mt cwas a satisfactory basis
for wa r c onditions a nd h ad only to bE ExtEndEd .
Funk forEc a st a n improvEmEnt of thE clEaring
mEthods
11
wni ch a rE much in nEEd of rEform" Emphasizi ng
thE
- 3-
~o .
3849,
t hE nEEd of
SEp t . 2 , 2 p . o ,
s ~plific ~ tion
f rom
2ERLI N
o f thE o ftE n vEry compli-
c a tEd clE ~r ing tEchn i quE zh ortEni n£ or c t l E ~st complEtEly
Elimin ~ ting w~ iting
crEdi ts froc
of
cEntr ~ l b ~nks ,
Exch~ ng E ~nd
p Eriods by
stabl i z~t i on
of
of th E ratEs
thE crEa tion of multila t Er a l clEar-
ing pos s i b ili t iEs .
KffiK
KLP
m E ~ns
5
PARAPHRASE OF TELEGRAM RECEIVED
American Embassy, Vichy, France
UNCLASSI:IED
DATE:
September 2, 1940, noon
J.F. ~·: .
NO.:
473
FRm1:
FOR THE TREASURY DEPARTMENT FROH
MAR 20 '59
per-~
~1ATTHEWS.
The new Governor of the Bank of France, repla cing
Fournier, is Yvesmarie Breart de Boisanger.
Reference:
telegram of July 19, 9 p.m., No. 111 from the Embassy, the
first paragraph.
A change in governors was not unexpected.
Probably Governor Fournier was not willing to adapt himself
to the hard fact of the Germans supervising the operations
of the Bank of France; t here
~Tere
also indications that
the relations bet"I·Teen Bouthillier, the Finance Minister, and
Fournier were not of the best.
Furthermore, it is my
understanding that intimations that they
~nth
11
cannot work
Fournier 11 have been given by the Germans.
It is
presumed that the Germans will have a more amenable man
in Boisanger - you will remember that Boisanger was sent to
Wiesbaden soon after surrender to establish personal contact
•·:i th the Germans.
The place of Boisanger,ae first Under-Governor, has
been filled by Rene Villard, who was Under-Governor of the
Credit Foncier.
IUTTHE\1'8,
EA:LW\'7
COPY
6
BAliK FOR Ili':'L'U:.ATIOJ:AL smo:'LtlJ:.l;TS
llASLE
T!a P?...;SID!..;'l'
Teli!J)orary address:
Chateau d 1 0ex, Seotember 2, l94o .
H. ~erle Cochran, Esq. ,
Stat e Denartment,
WeshiDP,ton , D. C.
Dear Cochran,
Encloaed ie copy of a letter which I have addressed to the central
bank Governora who ait on the Eoard of the E. I. S. You will eee that it deale
with one of those questions of banking which 1a perhaps more inrportant pol1.ticall1'
than financially. When the instructions mentioned were received from the Balti c
states common sense indicated clearly the course of action which vas taken and you
can imagine how pleased I vas to learn subsequently that in thia case the law wit h
ita technlcalitiea upheld the conclusion we bad reached.
I leave it entirely to your judgment to decide to whom the info~t ion
herewith should be communicated in Washington. My one serious concern 1a that it
should not get into the press, After the damaging campaign of publici ty regarding
the Czech gold it ia of the greatest importance to the E. I. S. to reoain in the
background at this time.
J
You have proba bly heard that ve are going back to lle.ale about October l ,
firat because the reasons which p rompted our departure have disappeared and secondly
because the winter here in the mountains vould be difficult fro;n the point of view
of accomodation for the atnff and amenitiPs g enerally .
Our faciliti es for gathering neva are not what they were when you vere
still in Eurone. From what little ve do knov it eeeme clear that the countr ies
which have autfered defeat are being systema tically deiiJloiled of 1Uppl1es of all
aorta. The Swedish neviiJlapere announced a decree in Norway that the leaves of trees
ahould be collected for the purpose of feeding life-etock next winter. Denmark after
capitulating became in a few weeks cr editor tot he extend of aorae 100 million Danish
crovna in the German-Danish clearing. fhe economic aection has recently completed
a study of the European wheat situation which confirma t he general expectation of a
ser ioua ahortage next wint er and it shove further that some countries, parti cularl y
France and Eelgiwn , will probably suffer far more than othera .
We are having a rather difficult tiate with the license ayetem imposed
on ua by the Treasury and have not been able to gather what really lies behind this
move. I vant to cooperate fully and have dealt with our dollar accounts as if the
E. I . S. were an Araericnn bank.
Youra aincerely,
(Si gned)
~cla.
T. H. McKittrick.
COPY
7
BAllX FOR INT_,;mjAJ:'I OUAL 5ET':o:'Ll:I.£El:lTS, BASLE
(temporarily at Chateau d ' Oex)
28th
Dear
~:r
~t
l94o.
. .... .
I am writing to inform the governor s of central banks who sit on
the Board ot the Bank for International Settlements ot t he occurrences
recounted below.
On July 13th and 15th the B.I.S. received from the central banks of
Lithuania , latvia and Estonia almost identical telegraphic instructions to'
p l~ce the gold whi ch the B.l.S. held for them- except for amell balances on
postal cleari ng account for Lithuania and Estonia - at the disposal of the
State Rank of the U. S. S. R. I n two cases it was stated expresoly that the
gold in question had been sold to the latter bank, wherea s this information,
mission in the first wire from Lietuvos Bankes , wa s given i n a second telegram.
The politicalmd military events occurriJl€: at that time in the three
Baltic St at es, coupled with t he simultaneous arrivnl of the instructions, the
identity ot the transferee and the fact that the trnnsactions allegedly underlying the r equested trnnafers were also identical and, contrary to bankiz:g
p r actice, expres sly stated, could only aro~ae misgiving• in the minds of the
managers of t he B.I.S. r egarding t he necessity or advi sability of carrying
out the instructions received. Under the circumstance s, it was thoU«ht ~est
to obtain independent legel advice on the subject and Profeseor Schindler of
Zurich, a well-known authority on international law, who had once before
advised the B.I. S., was r equested to give an opinion. I now enclose a copy
of Pr ofessor Schindler's excellent statement as well as a short II\IJDJilary of it
in English. You will note t hat 1t advi ses def1n4t ely againat giving effect
to the instructions received and states that in doing so the Bank would fail
in its duty to observe the principle underlying Article 10 of the Constituent
Charter. The Swiss Courts would not, in Profeseor Schindler's view, compel
execution of the transfer requested.
The Lithuanian, Estonian end Latvian Legations in SwiherlMd have,
since the Ruesion occupation of their countries, sent to the B.l.S. formal
p rotest£ against p aying away a:ny balances or gold standing in the names of
their re spective centrel banks.
The three Baltic central banks as well es the Stat e :Bank of U.S.S.F.•
have been advi sed that t he B.I.S. cannot for the time being part with the
aBSets it holds for any of the former and I tru&t , Mr • • • , that you will
agree that i s the beet and wisest course under existing circumstances.
Yours faithfully ,
(Sgd.) T. H. McKittrick
President.
2 encl.
lap
8
Sumnary of Professor Schindl er 1 s opinion dated
19th ~st 194o
Professor Schindl er reviews the facta as recorded in
ne~spaper
cuttings and comes to the concl\tsion that the course of action taken
by Russia prior to the 13th July was directed toward tbe ultimate union
of the three Bel tic States with the U.S.S.R.
From the middle of June
on neither the Governments nor the Central Banks of these States were
any longer free agents.
The instructions to deliver to the Bnssian
St a te Bank the gold deposited With the B.I.S. were given at the very
last moment when it was s till possible to allege normal transactions
between these Banks and the Russian State Bank.
wore
apparent~
These instructions
not t he result of f ree volition on tbe part of the three
Banke but were probably due to the volition of organa of the Soviet
Russian Government or of the political party dominatill6 it.
Professor Schindler then cites Article 10 and states that coercive
measurea st;ainat depositors fall as 11111ch under t hia p rovhion as direct
action against deposits.
Article 10, of course , binds only Governments
which are parties thereto but it also forma an integral part of the
charter of the B. I.S .
As such it i mposes on those re sponsible for the
management of the B. I . S. the duty to re sist, as far as lieo in their
power, any Government interference with the nasets of the B.I .S. and
With the funds entrusted to it .
Articl e 10, however, cannot be invoked ae against Stete succession.
I f a State lo1e e ita identity, whether t hrough peaceful means or through
violence , Article 10 cannot be relied upon in order to resist the effect
I~
of such merging of one state in another .
9
- 2 In order, however, to produce effect abroed , State succession must
be final and recognised by third Governments.
As long as general
recognition of the union of the three :Baltic States with Ehlssia baa
not taken place, the wisest course for the B.I.S. is to keep the matter
in abeyance and take only such measures as tend to preserve the assets
Some of the European and American States have clearly
in question.
indicated thet they do not regard the incorporation of the three Baltic
States in the
U.s.s.R.
as lawful or final .
The diplomatic representatives
of all three states have expressly protested against the recognition of
the new Governments.
There are even indications that Russia i tael! ie
not contending thet the property of the former Baltic States, their bank
deposita and their gold, have ipso facto devolved upon it. The B.I.S.
should, therefore, regard the union of the Baltic States with Russia
as part and parcel of the great procen of transformation which Europe
is undergoing, a process which will continue until a new order hae finally
been established by peace treaties.
This being so for the B. I.S. to
carry aut the instructions given 1 t WCIU.\d expose the
B~
to latsr claims
by the true owners.
The Swiss Courts would , in the opinion of Profe5sor Schindler, protect
the B.I . S.
against a claim by the Ru@sian Government as the successor in
law of the three Central Banlcs.
It is even doubtful whether the Swiss
Courts could in any WIJ¥ entertain an action brought by the Russian
Government.
Aa to the merits of the case, Professor Schindler thinks
that the clatm would be regarded
E<S
contrary to public policy and abhorrent
to Swiao notions of justice and equity, and would therefore be dismissed.
___RESTRICTED-
-
1a
Paraphr:uso or Code Radiogrm
RAtceivod :1t tho -.ar Depm-tcent
at l0t4l A.!L. 1 Sep~r 2 1 1~
I think it probable that the JapaneM will, in the neut
or French capitulation to their demands, begin an advance 1'rOlll
llannine throu&h C&obanc on Xunnii'IB•
be conld.derabq
abnnce ot
it 1a
rJ(1
l~cal
di!fioult, due to the
I:IOUDtainoWI
terrain and
suppl1N1 than an adYance up the YUnnan Railroad,
opinion that the latter route wUl. be adopted onl;y in the
nett that LlmC
bable.
110re
lihUe the route epecified will
The
run*
desert.e Chiang ra1 Shek, 11hioh appeare impro-
Caoban£ advance
wUl. probab:cy not be begun until about
October 1 at which time the Haaonal rains ehould be over.
* Note
by ~~
Lung
run 1a
t he
covernor
ot Yunnan Prorlnce.
loyalty to Chiang 1a1 Shek baa at times been under IIUIIpioion.
Dietribution 1
General llataon
SecretarT ot
T.ar
State Department
SecretarT ot
'l'reuury '-
.A..t . Secretary ot war
Chi&r ot Stat!
war Plana D1vi.eion
O!fiee ot Nanl Intell1gence
&ESrRrCTEIJ-
His
Paraphraae or Code Radiogr11111 Received at the
War Department 1a55 &elle 1 Sept. 2 1 1940
lle:d.eo City, Filed 15:00, Sept. 3 1 1940
B.icharllll'athan Corporation In York and Kitlllli or
Japan active in errortB to purchaae 200 1 000 tone acrap iron all
grade• 'llbich Oonl'lllMnt or llexi.co i l preparing to aell.
It
Nathan Corporation aucceecla it wUl. probabl.T deal with Japan.
Ge~ 'lllq
be the dllatination or all or part or this scrap
JDIItal..
Copiel toa
State Dept.
secret&rT or 'l'reaaurr
Al.t. Saoret.&r7 or War
<Jli
12
ee-rtF-t ~ 'fti\ L
Paraphraao o! Code Cllblesrlllll
at the liar nep.rt::1mt
at 10&41 ! . .:.., Septel:lbor 2, 1940
Hcco1~
london, tilAd 09aS3 1 sept.ubw 2, 194£),
!loth night and dley
eeale durin& September
o.rman
air activity wu on a reduced
at. o.r.n a1rcratt
ouual.tiee nre 2S
deetro;,ed, l.O probab]¥ destroyed, and :.0 d.llllqoci.
rorce lolt
1' planle and ei% pilote.
rerdeNd one UD.IIl'Yieabll,
In add1tion Ool'IIUI
Br1 t1ah deetroyer md d.Dapd •
daJaged.
~air
The JlO)'IJ.
.ur
attaolal on airtillde
bcx:lbiDc
IUnk 0111
1n the Worth eea, and lllPtl¥
one battl.lahip UD:!er conetruction. ODe ll&ht eru1Nr wu
ellihtl¥ damaced bT a llina,
All pu11ngere on board the lhip .m-
t.ioned 1n rq celll•rr- or ~uat .)lit ( oareyi.rc
chil.d retue..-
G-.2) ba'nl been aaftd.
Duri!l£ the laat
-48
houra o1Tillan livee han been l.Det Cld
property da&aed by boab1na 1n a nurablr or plleee, iiicl.\ldinc Brietol,
.ATOmDOUth, 1'1l.bury, Qr.....lllld, Bradford, llaidltona and Wllitatable,
An
oil etorqe plant at Ll.andarcq (?) 1 a boep:1tel at Orp1nchaa1 and a
cuard depot at
C&terham were aleo duqed.
C1Tillan cuualtiee durinc
the 24 houre endillg at ~aOO All todq were 110 ldll.ed and
P'l' ll11klin D RoOfl&vel t Li brll'J
or: ~"" C"· . •
,..,
sa:>
U,ured.
Baaed upon reliable information, it
ehell1 qr
It
u
ot !utboUl"'l8 }rnioualJ' reported 1I'U
DISTRIBUTIOJf
ll
lb
13
(7e~JF! D ~ !A t"
aeu.r.J. W&taon
S.CJ"etar,r of 'lar
State Depart;meJt.
Secretary of haauy /
Ant. Seoretary ot 1'G'
swt
Ohief of
1rar Plana D1T1.111on
Ottioe of li&Yal. Dttelli6eDce
bel1eYed that tba
lroa 1'1118
ot about
14
JT
Gii.AY
CALCUTTA
DatEd SEptEmbEr 3, 1940
REc 1 d 6:07 p. m.
0
SEcrEtary of
St~tE,
rh sh ington.
SEptEmbEr 3, 4 p . m.
1
FOR THE SECRETARY OF THE TREASURY FROM BOMBAY:
FrEnch bank shippEd to ChasE National Bank, NEw
York by t hE stEamship PRES!TIENT
11 1 974 ouncEs of gold
val~Ed
AD~CG
sailEd on August 16th
at ruPEES 1,331,358 and by
thE stEamship PRESIDENT VAN BUREN sailEd on August 22nd,
14 , 563 ouncEs valuE d at rupEES 1,622,994.
~·ational
Bank shippEd to ChaSE National Bank, NEW
York by thE stEamship PRESIDENT VAN BUREN 7, 875 ouncES
valuEd at $265 , 860i
GROTH
NPL
AootiiSSTHECONICAHOAHT,U.S,co.,uy~
AHDRD'ERTOHI>.
TREASURY DEPARTMENT
UNITED STATES COAST GUARD
HEADQUARTERS
For Miss C!"!a.uncey
WASHINGTON
3 September. 1940.
Fran: Spagent, Shanghai, China.
To
The Secretary of the Treasury.
Message from Ur. Nicholson.
In spite of denials, the Japanese consul general in Hongkong is
quietly advising wives and children of Japanese nationals residing
therein to leave as soon as possible. Consequently they are evacuating
in small lots, ninety having left the colony 1m the past two days. There
is no apparent reason for the move except that the consul general
fears that the Chinese are about to start trouble on the Indo-China
border. Just what this has to do wit.ll Japanese wanen and children in
Hangkong, the consul ganeral did not explain. HOifever, an interesting
side light is the belief in local Japanese military circles that the
collapse of Great Britain is imminent and that signal Will soon be
~
~
-o
J>.
~
,...
,.
1'1
0
points south. No doubt this is part of a war of nerves being carried
(/1
C;J
on by German advisers in Tokyo1 of which there are many, against the
""'
0~
British and their colonies in the Far East. Hawever, the Hongkong
~0
Chinese, especially t he heads and staffs of t he four govermnent banks,
-<o
m<
"Vfll
,:t
~
N
given for the grab of Indo-China, Dutch East Indies, Singapore and all
%
~
are very nervous. A two thousand ton Philippine vessel naw in Rongkong
has been chartered by Bank of China officials and is now being held in
readiness for evacuati on. Some s eventy odd have obtained Manila visas
16
Travelers from Kuroning state that the British are keeping their
Bur:na agreement in strict. accordance With their promise to the
Japanese, but the problem of moving supplies is still being studied.
On September first Admiral De Cous, ranking French naval
authority in French Indo-China received instructions from the Vichy
goverrunent to negotiate With the Japanese in order to bring about
closer cooperation in oder to facilitate the transit through
Ind~
China of arms, soldiers, supplies, etc. On Monday a conference of
all French Indo-China councils decided not to obey t his order. The
next move is up to the Japanese and a blockade of Hongkong and
Indo-China shutting off route to Singapore and Dutch East Indies to
all ocean traffic is expected daily.
~ p
(Handed by l·!r . St opfor d of t he British EmbFssy to ~!r . Cochran i n t he
Treacury at 3:30p. m. , Sept eober 3 , l94o.)
y
" On August 29th Reich Bank COmQUnicated with
I r ving Truet , Schroeder, Chase, New Yor k Truat, Brown
Brothers, Harriman , Bankerc Trust , Central Hanover ,
Nat i onal City, Guarar.t y Trust and Manufacturers Trust
countermanding their communication of January 12th,
l 94o , and instructing them not to p~ money received
for their credit and proceeds of their coll ections any
longer to Federal F.eserve Bank, New Yor k , for credit
of B. I .
s.
I nstead such moneys are t o be credited to
thei r own account as formerly. "
(Initialed) R. J.
September 3rd, l 94o .
s.
17
G-2/2657-2ZJ
RESTRICTED
SITUATION REPORT
Uo , 184
M.I.D, , W,D.
September 3, 1940.
12:00 M.
This military situation report is issued by the Military
Intelligence Division, General Staff, In view of the occasional
inclusion of political information and of opinion it is classified
as Restricted,
I,
Western Theater of War.
1,
No ground operations,
2.
Air Force Operations .
There was no change in the pattern of German operations
Intensity of daylight operations was high on the 31st, relatively low on the 1st, and some~rhat
higher on the 2nd, Bombing attacks with strong pursuit protection
~rare primarily directed against airdromes and encountered strong
opposition, N1ght attacks uniformly involved about 300 bombers,
employed in detail against >-~idely scattered objectives--ports , munitions and aircraft plants and oil storage and airdromes. 1'/hile no
conaistent figures on losses are available , it is apparent thav the
proportions of British to German losses in the air has risen someHeavy fighting is continuing today.
~rhat,
in the period August 31-Septem~er 2.
The British sent approximately 100 bombers nightly
over Germany, Points attacked included airdromes, oil storage,
aircraft and munitions factories and docks, Raids were made in
the following vicinities among others : Berlin, Cologne, Magdeburg,
Hamm, Osnabruck, !4unich, Stuttgart, Hanover and Emden.
II.
!4editerranean and African Theaters of War .
1, The Italians announce the capture of Buna., Kenya, a
continuation of their advance into Dolo,
2. The Italian Air Force delivered an apparently strong
a tto.ck on British fleet units in the Medi terra.nean. Else~rhere in
the theaters only widely scattered minor air raids occurred,
RESTRICTED
19
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE
TO
Secre~:~~enthau
FROM
l.fr. H~
September 3,
•
<
Work Projects Administration employment, contrary to the
trend during the month of July, declined for the second successive week . During the week ended August 21, 19~0 1,699 , 000
persons were employed, compared with 1,70S,ooo uersons for the
previous week _
)
Attachments
19~0
~ORK PROJ~CTS ~MINISTRATION
Number or Woz·'.ters Employed United States
Week ending
1940
February 7
February 14
February 21
February 2g
)
~ieekly
Number or Workers
(In thousands)
2 ,2sg
2,306
2,314
2,32
March
Mllt'Ch
March
Mst'Oh
6
13
20
27
2 ,324
2,319
2,312
2,2gg
April
April
April
April
3
10
17
24
2 ,204
2,162
2, llg
2 ,092
May
May
Mo.y
M&.y
Kay
1
2,059
2 ,00S
1, 970
1 , 945
1,925
~
15
22
29
June
Jun11
June
J\lne
5
12
19
26
1,71
1,666
July
July
July
July
July
3
10
17
24
31
1,611
1,619
1,659
1,689
1,700
August 7
Augurt 1'~
August 21
Source:
Work ProJects Adc1n1strat1on.
l,g59
1,73~
1,709
1,705
1,699
21
\iORK PROJECTS ADIUNI 3TRATION
Number of Horkers Em?loyed - Monthly
United States
l931'l
January
February
March
April
May
June
July
August
September
October
November
December
1939
January
February
March
April
May
June
July
August
Seotember
Octol.>er
November
December
1940
January
February
March
April
May
Junf'
July
Source:
Number or Workers
( In thousands)
1,901
2,075
2 ,445
2 ,51'l2
2,b7!'l
2,1'l07
3,053
3,171
3,22!'l
3,346
3,21'l7
3,094
Work Projects Administration.
Monthly figures are weekly figures for the latest
week of the month.
They include certified and noncerti!ied workers .
1 .)
2,9!'l6
3,o43
2,9!'l0
2,751
2 , 600
2,551
2,200
l,!'l42
1 ,790
1,902
2,024
2, 152
2 , 266
2,324
2,2!'l!'l
2 ,092
1,925
1,666
1,700
.
• ORI
PII OJIC TI
AO"I" 1 8TIU T IOh
,...r o r • orQn a.p lo,-.d
"
UnltM S tat ••
Monthly • .P.A.
~t
t•.
I
"'"
10
~
10
~loy-.nt
.)
t
"
I j
...
,
••
)
9Mii:ll' . . . . ... . ,,. , _••
t
".
'·'
+
"'
...
,.
..•
+
~
J,Jt--
...
...
...
...
l
~~n
• t
++
...
t
+
......
'·'
+
...
.'·'..
'·'
,.
1.0
'·'
'·'
...
+
..
+
...
+
..
+
t-
+
+
..
+
7"'r;
' . ·, ; . i
i J I
lt)7
•
J
It j I
i
I~ j
t
''
';
•• , t..,.
It 4 0
'4 I
'·'
'·'
1.1
l
+ ..
..]-1::- ~u~0:'; ""g,L
J,O
+
'·'
t
1.1
I
...'·'
+
...
'·'
...
t-
+
lt 4 1
...'·'
.... ...
23
GROUP
~ZTING
Present :
September 3, 1940
9 :30 a.m.
1Lr . Haas
Mr. Bell
Mr . Thoopson
Mr . Gaston
1lr . Young
l:r . Cochran
Mr . Schnarz
Mr . Graves
Mr . Sullivan
Mr . Chamberlai n
Mr. \'/hi t e
Mr . Cairns
Mrs Klotz
•I•
Gaston :
I haven 't anything special . There are a coupl e
of political cases hanging fire .
H.M. Jr :
YJell, is there any hur ry?
Gaston :
No, no hurry.
H.JJ. Jr :
Will it take care of itself if I don' t do anything?
Gaston :
\'iell, t he Pr esident, I think, expected you to
speak to him at the first opportunity about the
Ohio case , the Coll ector of Internal Revenue at
Tol edo, but I think all he is going to say i s
to do not hing about it at present .
H.M.Jr :
I have a tentati ve date wi th him Thursday.
Gaston :
That will be soon enough.
H.M. Jr :
Huntington?
Cairns :
Not a thing. All quiet .
Sulli van:
Not much, nobody here but us chickens , boss.
They go on the roost at 10:00 o' clock .
~~
r
- 2 H.M. Jr :
\'/ell, do you want to stay behind and tell
me what you ar e going to do?
Sullivan:
Yes, sir .
H.M. Jr:
I think you had better . At the rate we ar e
going, we will be through in a few minutes .
Cochran:
I have nothing.
H.M.Jr :
Nothing?
Cochran:
No , sir .
Young:
Not at the moment .
H.1f. Jr:
\.elli I have got plenty for you . Mr . Purvis
is a 1 excited about a tank program .
Young :
I can' t get very excited about that yet .
H.M. Jr :
As near as I can make out , nothing has happened.
He hasn ' t got his form in and he hasn' t got the
nhole thing. He has been with the people over
the week- end. He tells me that t he Swedish
plane thing, they haven ' t got the planes .
Young :
That is right .
H.M. Jr:
And they are very much upset over all of this
stuff . They don ' t get anything.
Young:
The tank program has been going very fast .
H.ll. Jr:
It has gone nowhere .
Young :
Oh yes, it has gone a long way.
H.M. Jr:
No, I mean they can ' t - the Engli sh can ' t do
business on that basis .
Young:
Yes, that is correct, on this last - r ather the
first tentative procedure .
25
- 3 -
H.ll. Jr:
\1bich tank program are you talking about?
Young:
I am talking a bout the same one you are .
H. M. Jr :
\'1bich one is that?
Younc;:
On the engines .
H.M. Jr :
You see, I don 't know. I don' t know what
size tank or anything . \fuat size tank is it?
Young :
It is the medium 25- ton tank .
H. JJ. Jr:
And how many do they want or how many does the
Army want? I have no knowledge of that . It
seems to me froia what Mr . Purvis told me Friday
ni ~ht, and uha t Morris ·,/ilson tells me, that on
al~ of this stuff they are in a terrible jam.
Are any of the English people in town?
Young:
I don' t lmow, sir . I think Mr . Purvis will be
in this morni ng, if he isn't here now.
Bell :
Buckl ey said he woula have Purvi s here this
morning in case you wanted to see him.
H.M. Jr:
One of the things , Dan, I would like you to
do through the Bureau of the Budget and t he
RFC - I woul d like to have you do it, if you
could . Are you very busy today?
Bell:
No.
H.M.Jr:
I can ' t make out how many differ ent plans there
are of financing . First , U. S. Government . I
mean, I would like to have for the President let ' s take the Navy. I mean, how many different
formulas are they using to let a contract and
furnish the manufacturer with the money? I
read in the paper - I mean, I am constantly
accused - I read in the paper that the Navy
has got from Pratt & \fui tney 17, 000 engines
I don't know.
- 4 -
and they have financed it one \7ay, I read
i n the paper that the Army has bought 20, 000
engines from Curtiss ilr i ght and they do it
another Vlay. They buy a tank in another way.
I read that the RFC has financed 160 milli on
dollars, more or less, of Government contracts . I don't see any evidence of it ,
Bell:
As far as the RFC is conc erned, it is just
commitments , No money has gone out and probably
won ' t go out for some t ime, as far as I can see.
H.M. Jr:
Well , would you take it up with the RFC and with
the Army and uith the Navy and v1ith the Bureau
of the Budget , how much of this 200 million
doll ars are they using? Is it 200 million? I
want i t for the President to use, you see ,
Bell :
It is 100 million ,
H. M. Jr:
\Jell, and maybe there is some more in t his bill.
I am just as confused as everybody else and I
am sure the President must be, too, and certainly
anybody that reads the newspapers is. How many
different ways are the Army and Navy buying and
financing for plant expansion and for purchase
of tools , and so forth and so on , Now, can you
(Sullivan) help him any on that? You are out
of t his, aren't you?
Sullivan :
I don ' t think I have any information that would
be helpful to him.
H.M. Jr:
Has your shop got any informati on, Huntington?
Cairns :
V/e may have some ,
Bell :
Oscar Cox may have some .
Cairns:
And Kades .
H.M. Jr :
Have you got anything?
I will inquire ,
- 5 -
Young :
Nothing except what I have collected from
Cox and other people around here.
H.M.Jr:
Would you have anything that Cox doesn ' t have?
Young:
I don 't believe so .
H.M. Jr :
Well, will you look it up?
mind, the various methods?
Young :
I don' t think it is clear in anybody' s mind.
Bell:
They come out VIi th a new one every day. Jesse
Jones asked several pertinent questions at the
last Cabinet meet1ng and he thought the Government could do it cheaper by doing it directly
rather than a round-about method .
H.1!. Jr:
\'lho said that?
Bell:
Jesse Jones told Knox. It \'lould probably cost
the Government at least two percent on that
basis, where they could do it at one percent on
direct financing .
H.M.Jr:
Normally, in normal times, the Bureau of the
Budget would be in on this. I am sure they are
not .
Bell;
I don't think so .
H.!J.Jr:
Well, let 1 s pull them in on it and l et ' s go
directly to the Army and Navy, because they
have got to sign these contracts , haven 't
they?
Bell :
Yes, they have to sign them.
H.M. Jr:
I would like, i f I could, to have something
and then, you see, out of that I spoke to
Mr. Patterson this morning and asked him if
he GOt Foley's memorandum where the case of
Is it clear in your
- 6 -
the Government - as I understand it , it financed
Chrysler to build tanks . The Government did it
itself , not RFC . But the Englishmen come along
and buy some of those tanks . Fol ey wrote this
memorandum which I asked you to send over .
Patterson said he read it . He said, "There i s
no doubt in my mind but what Foley i s r ight ."
Well , if it could be done that way and the
Government coul d do all the work and then after
the thing was v~itten , they could come along
and say, "Well, the English want so many more,"
it would make things very, very much easier fo r
the English Purchasing li;J.ssion.
Bell:
That was done directl y out of an appropriation,
I think, for Chrysler .
H.M. Jr:
Well, there is the Fol ey letter which was sent
over to Judge Patterson, which you can get hol d
of . But the way it is now, at the rat e they
are going - I mean, they have been fussing how long has this t ank progr am, this one - how
long have they been fussing with it?
Young :
The o~ening conferences were held the first
week 1n August on standardi zation .
H.M. Jr :
But on the financing?
Young :
Oh, they didn' t get down to brass tacks on that
until last \•ednesday, on the financing .
H. M. Jr:
\',ell, is the Packard deal closed up yet?
Young :
The contract had not been definitely siened at
the end of last week, that is, Wednesday or
Thursday . It may have been signed Friday or
Saturday .
H.H. Jr:
That is an Army contract, that Packard contract?
Young :
No , I think it is one with the British, too .
2S
- 7 -
H.H. Jr :
But would the Army know about that?
Bell:
RFC was in on that , too .
Young :
Yes , the RFC was .
H.li. Jr:
Well, it is a big job, Dan, but if you coul d
pull it all together . Don ' t you think we
oueht to use the Budget?
Bell:
Yes , I do .
on that .
H.JJ. Jr :
It is perfectly crazy and everybody is slowed
dO\m and is just t r eading on everybody else ' s
toe~ and they are not getting any production
and I don' t think - if we get all these various
methods, you will see that the tax thing is
very, very unimportant because there is no
central brain who is directin* the thing, whose
responsibility it is to say, This is the way
we will finance i t . How, come on, gentlemen,
this is the way we will do it ." If there r1as
a central brain who nas doing the thing, the
tax thin~ , I think, would fall very much by
the \1ays1de, and i t is one of these things I
am doing . To show how perfectly crazy this
thing is, if you are a manufacturer, they give
you about six or seven different methods of
financing . There ought to be one .
Sullivan:
They could give us a lot of hel p
I think part of the trouble is they are not
it to you . They are just suggesting
lt .
~iving
H. 1!. Jr :
\'Jho?
Sullivan:
Defense Commission .
H.l.!. Jr:
'l'hat is why I \7ant Bell to take that , r1ith the
authority of his office, to go after that
thing, and then if the Army will take the
30
- 8 -
position v1here they have closed a contract
r1i th money appropriated by Congress and the
English can co~e along and get some of that ,
it would make life very much sweeter, wouldn ' t
it, Phil? I mean, it would make life very
much easier .
Young :
Oh yes , sir , very much so .
H.M. Jr :
\';ell, if you are not too busy, Dan, if you
would get it , because I really - I mean, take
it - if the Republicans were really on their
toes, rrhich, fortunately for us , they are not I mean a thing like this, this is the crux
of it, I think . It is a big job I am handing
you .
Bell :
\,e will see r1hat we can do .
Okay.
Do you (Young) want to step out and find out
whether l:Z. . Purvis is here in town, because
if he is - let me just find out if Stettinius
is comin,; .
(Discussion off the record)
Well, Phil , I can see you and Buckley, in any
case , at 10 : 30 and if Purvis is in tovm, also
at 10 : 30 . Do you \7ant to find out now?
Younr; :
Yes , sir .
H.1i. Jr :
Please .
Chick?
Schwarz:
I have a request here relayed throu,;h Ur . Gaston
from Theodore Granik . Granik, who has no\7
expanded that radio forum that he has to a
31
- 9 newspa~er
syndicate, and he is asking for
an art1cle under your name on the question,
"Has the tlew Deal Policy Been a Good One?"
and in which he would have some opposition
statement by some Republican. lle coul d, by
revising your discussi on of May before the
l adies , supply that and by making it close
to that, we could say that it was not a new
special statement for any person .
H.J.l:. Jr:
Commercial, isn ' t i t?
Sch1·1arz :
He sell s it , yes .
H.M. Jr:
No .
Vlhite :
Thi s has been hi s fourth or fifth attempt to
have a discussion on {;Old and silver . \,e
have been successful 1n having ~ostponed it
in each case and I think if i t 1s possi ble
here , there i s nothing to be gained by a
discussion - -
Schwarz:
He probably has i t on his list and i t i s one
of those thi ngs he wants .
\'lhite :
I t hink it mi ght be better to post pone i t , i f
i t is possibl e to do so .
Schwar z:
It is possible .
H. :M. Jr:
I woul d kill it . What el se?
Schwarz :
That i s al l. You saw the }.ferry-Go-Round, of
cour·se , t his morning?
H.1:. Jr :
Yes, and I have asked them to look up some of
the facts on the thing and I am going to gi ve
it to Sul livan and he can t alk to some of his
people about it . Did you read it?
Sullivan:
No, I didn ' t see it .
- 10 H . 1~. Jr:
It is by Pearson and Allen . Take a look at
it . ilhen I get what I have on it - I wasn ' t
here Hovember 8. This memorandum he was
supposed to have sent to the President on
depr eciation, as I remember it, you (Bell) \':ere
here at the time . I am looking it up .
Bell :
November 8 l ast year?
H. M. Jr :
Yes . I didn ' t read Pears on and Allen the
whole t ime I was away and I ~ot al ong beautifully. ";,hen I get it, I Wlll turn i t over
to Sullivan.
Schwarz :
I woul d like to straighten them out, just for
the record .
H.l!:. Jr :
Somebody has been talkin~ to them. I don ' t
know who has , I woul d l1ke you to straighten
them out, too , but I am not excited about it
yet .
Phil?
Young:
Mr . Purvis is due to arrive at 9 :45 .
get in touch wi th him.
H.l.!. Jr :
You and Buckley and I can start at 10 :30 anyway. Anything el se , Chick?
Schwarz :
That is all .
H. ll. Jr :
George?
Haas :
Have you got a minute to look at the Allison
picture on the P-~0 situation?
H.U. Jr :
\1ell, I talked to Evans Friday.
Haas :
Here is the picture here (handing chart to
Secretary) .
I will
- ll H.LJr:
I will talk to you about it later , Come back
in and see me at a quarter past 10:00 .
Haas:
All right .
H.Lf. Jr :
And that - I wrote this out, George . I want
from you, whatever way you have got it, beginning Januery ' 39, the number of people employed
in the engine and the frame ends . You have got
that, haven' t you?
Haas:
Yes, sir . I have a new report on my desk for
you . I will bring that in.
H. L:. Jr:
\nll you? I think if the President could use
thal , showing my guess - as I remember , there
v:ere about 10, 000 people employed in the airplane industry in 1939. There must be close
to 100, 000 now.
Haas:
Very near it .
H.M. Jr :
The thing is tenfold.
Haas :
That is all . By the way, you will be interested
in - while you were array, orders have picked
up sharply from the reporting companies .
H. M. Jr:
I did that up in Canada .
Haaa :
Did you?
Chamber •n :
I have some matters that I would. like to take
- I would like to have a chance to talk
w1th you, possibly tomorrow, J,;r , Secretary,
on some matters I haven ' t got quite ready.
H.tr. Jr:
Anything that is "manana" ah:ays appeals to
me .
Chamber 1 n :
~·.en, it
Anything else, George?
u~
doesn't to me very much, but I don ' t
want to take your time up unnecessarily.
- 12 -
H.M. Jr:
3: 00 , tomorrow afternoon?
Chamber 'n:
\'1e have a meeting regularly, but if that is
convenient to you, we can put it off .
H.M.Jr :
Is it a Treasury meeting?
Chamber ' n:
No , just a meeting of our Committee.
H.M.Jr:
Could they meet a little bit later?
Chamber 'n:
\le will put it later, yes .
H.ll.Jr:
Who do you want there, Professor Chamberl ain?
Chamber'n: l'ihy, I think I would like to have 1Ir . Cochran
and probably Ur . V&ite and~ . Bell. I wanted
to talk about that French matter we discussed
particularly. I think that needs attention .
H.U. Jr:
Tomorrow afternoon.
Chamber ' n:
Tomorrow afternoon at 3:00.
H.M. Jr:
Good.
Harry?
White:
With reference to the remarks on Government
financing, I l earned something which may or
may not bear on that matter . If it doesn' t
bear on that , it bears on something else the
Treasury should be interested in . I understand that the Council of Defense is heving
a couple of experts prepare a report on
Government financing . Now, I don't know
v;hether the Government financing related to
what you are talkin~; about or whether it
related to the larger problem of ~eneral
Government financing, but in any case , I
will l earn more about it because I think
they are coming around to see me .
35
- 13 -
Now, I was wondering whether if it relates
~o t~e larger problem of Government financing
1n v1ew of the fact - as I understand it
this report is going to the Budget, to the
Preside~t - .w~ether JJr . Bell might canvass
the des1rab1l1ty of the report, and if such
a report is called for , then it ou~ht to be
prepared by the Treasury beforehand and
passed through normal channels .
H.H. Jr :
Supposing you find out more about it .
VJhi te :
All r i ght.
H.H. Jr:
They have got a committee on taxation and
finance over there .
That is the thing (handing clipping to Sull i van). If ~ timson did that without our peopl e
knowing it, I think it is an outrageous performance . That i s the thing I talked to you
about .
White :
Or it may apply --
H.hl. Jr :
Find out more about it .
a quarter of 3:00.
Sulli van :
I have that in
\','bite :
The report on inventories of the French assets
has been compl eted and there may be a couple
of fibllres lou might want to stick in your
mind . One 1s that the total is a billion and
a half and half of it is - belongs to the
Government . The answers to the questions which
we put to Chile were received on Friday and
we will have a report ready by t omorr01v or
the day after .
my
This is for you at
file (returning clipping) .
I wonder whether you want us to work with the
Federal Reserve Board and the State Department
- 14 -
before you have a chance to nake up your mind
on it, t hen if it is all rie;ht rrith you, we
will call a meeting --
]
I
H.!~. Jr :
Please ,
White:
••• •with them.
H.1J. Jr:
The longer you can keep me out of it, the better .
White:
All rieht .
The Executive Committee on Commercial Policy
has been considering two things which you might
\'/ant to just lmow about, One is that they are
preparing a draft of a bill, giving the Government considerably extended powers \'lith respect
to quotas and trade arrangements so that they
can undertake various f orms of cartels through
any countries they may s ee fit . That hasn't
~one to Congress, but they have passed upon
~t.
Secondly, there is a question which is disturbing
the CollliJ.ittee very much with respect to subsidies
of manufactured cotton goods, wh1ch apparently
the Department of Agriculture is eager to see
put through and which the State Department is
much opposed to . The State Department has sent
a letter to you and to the Secretary of Agriculture in v.hich it states that when Sir Frederick Phillips was last here, in his discussion
with the State Department and with the Secretary
of the Treasury, he indicated that he wanted to
cooperate with the United States in Latin American trade problems and that t his would be a
step - t he first of ficial step, if the subsidy
\'/ere gran ted, would be one in the opposite
direction and apparently - I understand from
our member who was present at the meeting that
they \'IOuld like to have some co!IIIIIent from you
to the effect that such a step would be undesirable
in view of that conference in order that they
37
- 15 may use that to put further obstacles in the
path of Agriculture ' s prograo to impose subsidies . I think the thing had better wait
until we see what happens to it , so the answer
to the Secretary of State ' s letter can be
for the moment noncomnittal . I don' t see why
you have to take that position .
H.![. Jr:
Vv'hite:
J
J
ij
.J
All right .
Another "manana 11 •
The question of a meeting of - inter-Treasury
Tiill come up again. \'Je are preparing
a poss1ble agenda , Do you want to take that
up now, or at any other time?
meetin~
H.1!. Jr:
Ask for an appointment .
White:
Al l right .
H.!.!. Jr :
Dan?
Bell:
I have a nucber of things I would like to talk
to you about, but there is no special hurry.
H.!J. Jr :
How about 3: 30 this afternoon?
Bell :
It doesn' t have to be today, if you are tied
up .
H. M. Jr:
No, I v10uld like very much to see you.
Bell :
There are two things I \'tould like to tell you
now , George harrison came in a couple of days
after you left and said he v:anted to tell you
about the growing criticism in New York of
treatment of American citizens who Tiant to
transfer their funds abroad to help out in
relief, and I told him to put it down on paper
and let me have it and I·would see that you
got it . It came in late Saturday. I just
v1ondered i f you would like to read it or
shall I send it to Professor Chamberlain?
That is all .
38
- 16 It is just the criticism that is going up
about prohibiting American citizens sending
their orill money for relief purposes over
there \7hen they can send them to Germany
and Italy and - Vfuite :
Did you note the Gallup pol e, by chance, with
respect to sending t he foodstuffs?
Bell :
Yes .
H.M. Jr :
No .
'.'lhite :
It is a lit tle surprising to me . It showed,
i f I remember correctly, something like 72 to
28 or 70 to 30 opposed t o sending of foodstuffs
to the invaded areas . Am I correct? I only
san a sumoary account of it . It is within the
week ,
Schwarz :
Yes ,
Chamber'n:
It was very grave .
Schwarz :
It was primaril y farmers.
\'fui te :
I saw the breakdorm by various coiilllluniti es and
it was surprising that the farmer s likewise ,
despite their interests, were opposed t o it .
H,1:. Jr :
',', en, we will get it l ater .
Cochran:
Alphand has already been here and he will be
back to see you. He is the one who succeeded
Leroy- Beaulieu , He arrived while you were
away .
H.ll. Jr :
I will l et you receive him.
Bell:
He has been receiving him.
Chamber ' n:
I would like to talk to lJr . Cochran and :lr . \,hi te
more about that matter, about t he treatment
- 17 of the French Government funds here . They
have several propositions that they ~ant to
make to us that I think - we thought it v1ould
probably invol ve questions of policy of consi derable importance, some importance at
least .
Bell :
The onl y other thing I have, you kno\'f Nelson
Rockefell er has been appointed coordinator
of commercial cultural relations with the
American republics and he wants a repr esentative from each depar tment , particul arl y
Treasur y, and they want to have a meeting at
ll: OO o' clock every Tuesday . They want t o
make it very short so that ever ybody won' t
be bored, and there is a meeting today and
he woul d like to have somebody f r om the Tr easury att end i t . There was one last week and
I attended it, al though it was jus t for or ganization purposes . Then he asked for a
l etter from the people that were working on
South American matters and I gave him Mr . Gast on ' s name and Mr . Cochran' s and JJr . White ' s
names, as those who had worked on South
Ameri ca .
H.M. Jr :
I think on that if you have got t ime, I think
you ought t o do i t , Harry .
Bell :
All right .
White :
You might be interested to know that that
Committee has made a great deal of progress
in formul ating a proposal for a coff ee cartel
for the world, which they hope to set up as
a possi ble quota type for other forms , but
they have made progress which has been much
better than they had hoped for .
Bell:
That is all .
H. M. Jr :
Thank you all for not bothering me whil e I
was away. I might go away again soon.
- 18 -
Bell :
It hasn ' t been decent ·.. ea ther at all here .
Tho::1pson :
.•e have had six days of rain .
~ve ryboay
has been on the job •
-
UNCLt~;l£0
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
J.F.L •
date
per
-~
DATE
TO
Secretar,y Morgenthaa
PI'IOM
Mr. Cochran
September 3• 194o
CO:N F-1-D E: N I I At:-
To~'• tran..cticne in registered aterling by the eix reporting b&Dke
were &II followe:
Sold to commercial concern•
Purcbaeed from commercial concerne
£81,000
£16,000
The open market for sterling wae Yery quiet and there waa no Y&riation
from the initial quotation of 4.0}-1/2. Traneactione of the reportin& b&Dka
in open market eterling were ae followe:
Sold to commercial concern•
Sold to foreign banke (Venesuala)
Total
£24,000
£ 5·000
£29,000
Purcbaeed froa commercial concerna
£63,000
'l'b.e Canadian dollar •. which baa had a !ira tone of late, weakened
and cloeed at 12-1/'i!f,.
t~
Thera wae turther iaproYement in the Cuban peeo. Aa compared with
Saturdq1 • dieco=t of 1~5/Sf,, that currency wae quoted at l~l/4'f. todq.
~e
other currenciee cloeed ae followe:
Swiee frano
Swedieh krona
Lira
Reichemark
Mexican peeo
. 2279
.2386
.0505
. 400o
.1996 bid,
.2016 offered
'l'b.ere were no gold traneactione coneummated by ue toda7.
Ve learned that, on .A.uguet 31, the J'ederal ReeerYe llank of llev York
granted a thre.-monthe loan of $50,000 to the Central RuerYe li&Dk of
Ia SalYador, .A.e collateral for this loan, gold Yalued at $57.434 waa aet
aside from the Central llank 1 a earmarked account at the J'ederal.
Tbe J'ederal ReeerYe llank of lJew York r eported that the followin& ehi~
mente of gold were being coneigned to it:
UNC~.~-SSiflED
-'
J.i . .
p;;- -
liMt 20 1Jt
~
$16,500 .000 from Argentina, representing four shipments of British aOYereigne
by the Central Bank of the Argentine Republic for i t1 own account ,
disposition unknown.
2,649,000 from Curacao, shipped by the Bank of Curacao for i t1 own account,
di&poeition unknown.
111,000 from Mexico, sh ipped by the Bank of ~exico for itt own account, t or
~-~-- sale to the U. S. Aaaa.;r Office.
$19 . 26o .ooo Total
The Bombay gold price was equivalent to $34. 14, up 4; from Saturday 1 e
leYel. The equivalent of the eilYer price wae 45.011, up 1/161.
In London , epot ailYer vat fixed at 2}-l/2d, up 1/Sd from the quotation
ot l att Fri4aT. Forward eilYer wae quoted at 23-5/16d , up 3/16d from Pri4aT 1 e
price. !be dollar equivalent• were 42. 671 and 42.3}; reepectiYely.
Harman'• aettlement price for foreign eilYer wae unchanged at
The Treaeur;r 1 • purchase price for foreign eilver was aleo unchanged
Hand7 and
34-3/4;.
at 351·
We made elBYen purchaaee of silver totaling 1,270,000 ounc81 under the
SilYer Purohaee Act, all of which coneiated of new production from foreign
countriee, for forward deliYer,r.
· (Handed by Mr. Stopf ord of the British Embassy to Mr. Cochren in the
Trea~ at 3 :30p. m., Sep tember 3 , 194o . )
-
0
p
y
11 (1) E. C. Mathie f r om Nev York informed :Banco
Eapirito Santo that :Bank of Manhatt an would have receiTed
$20 , 000 for their account and instructed Espirito Santo
to pa;y $8, 000 . to Fenner and :Beane account MOTOX S. A. and
$5, 000 . t o Ri t z Carlton account Mathia without mentioni.ng
Mathie' IUIII8 to :Bank of •~attan. Mathie 11 p reeWiably
the French motor manufacturer , br other- in- law of Mauri ce
:Boyer of llanqu e
, :Basel, ~o vas
recently on the French Embassy staff at Waahi ngton.
(2) Swi ss :Bank Agency, New York referr ing to a
pr evious communicati on of t he Svies :Bank Corporati on i n
:!Iaal e ask them not to ment i on i n their repl y the name of
owner of .Account No. 2856. 11
I have reason to believe that MOTOX
s.
A. , has
an account vith the Sviu :Bank Corporation, Nev York.
(Initialed) R. J.
September 3rd, 194o .
s.
43
• (~M bJ' 1:r. ~" or. or tht> I rlt!c!l ->-P~~,. to )(r . Cochran 1A the
Tr unr')' at J :J
. a . , Sep~.U.r 3, 191~ . )
Co.patO' or
)lew
JareeJ 5" Tore told ite ellk141&17 1D
liaabllrc \bat 1t wu
appl¥~
to tt.e Treu wy tor U e nlle
( e)
C 0 :P T
a.J.s.
- (:iaded ~7 -~. Stop!ord of t~ :Sr iti ah El=l'l:au 7 to rlr. Cochran 1.n the
~ru.W%'7 a t 3:30 :?·•·, Septe2ber 3, 1940. )
C~
of
~
Jerse-J lin York told ita aubsid.i.ary 1.n
(a) R. J.S.
C 0 P T
•
(~
ed
•.r. Sto;~:!ord of the zri tiu :Ca.::q to
at ) :30 ~ . a. , Septaber 3, 194<). )
~:r
~Um%"7
ttr. Cochran ill the
"It a~an that on .lut;uat 16th Standard 011
CcmtJaQJ of New Jersey lin York told 1h subsldl.ary ill
Haabllrg that 1t
to
•u
a~!'l:rin&
to
t.ae freaaur:r
for Heeue
. a eertau patent and trade ark "DqMnh to
Dutch
!u; .lntboriUes and u b •hetber Baaburg could arra.a«e
(e) R.J. S.
Septe:sber 3rd, 1940.
C 0 P T
- (Ke.nded b;y !.r . Stop!ord of the llr1t 1ah Emba1;a:r to Kr . Cochr an 1A the
Tre&.ur,r a t 3:30 p. m. , Septeaber 3, l 94o .)
"It appears that on A~t 1 6th St&nc!ard Oil
COC!Jl~Ulf
of Nn Jeraey New York told ita aubaidiuy in
Haaburg that it wae apply ing to t h e Traaaur.y tor licenBe
to make certai.A patent and trade -.rk
~nta
to Dutch
Tax Authorities and asks whether Hamburg could arrange
~nts . •
(a) R.J. s.
September 3rd, 1940.
C 0 PT
(Handed by Hr. Ctopford of the British Zzcbno;y t o Mr . Cochrm in the
Treasury at 3:30 p.m. , Septeober 3, l94o.)
I learn that on Auguat 23rd VEREI:UGTi
S~
inatructed Steel Union Sheet Piling Inc. ,
to p8'f aecuri ty tund $? , 833. to Chaae :Sanlc in faYour
of SKANDINAVISKA li.UIXEN , St ockholm, and a.bd thea
to cable at the aame t ime to SKANDINAVISKA. that awa
was intend8d for nl!EIII'IG'l!E STAHL'IIEl!XE. •
(a )
)
Septeaber 3rd, 1940.
c 0 p y
:a.J.s.
45
TREASURY DEPARTMEN
INTER-OFFIC E COMMUNICATION
J.F.~' .•Aif 2ow
p;;-- ......--
46
C.OUPif4fiJ£ ±JJ7>
DATE September 3, 1940
TO
FROM
Subject:
The usiness Situation,
Week ending August 31, 1940.
Conclusions
(1) Increased industrial orders, arising in large part
from the defense program , are apparently bringing to an end
the recent period of business hesitat ion. Some imnrovement
in the FRB index in September is suggested by recent trends
of orders and activity in important industries, following a
three-month period in which the FRB index (new) has held at
approximately 121.
(2) New orders for steel , as reported by t he U. B. Steel
Corooration, have risen to t he second highest figure since
last October, equivalent to 125 per cent of capacity. A
recent increase in heavy construction a'I-Tards under the defense
program will provide increased demand for structural steel and
other building materials.
(3) An improvement in buBiness confidence, doubtless due
in part to
well as to
orders, is
prices and
the s trong British resistence to air attacks as
increased activity in placing national defense
reflected in improving tendencies in security
in basic commodity prices during the past tliO weeks .
The general situation
The declining trend of industrial buying that had been
apparent during July and early August has been broken by an
expansion in the volume of orders for steel and textiles
during the latter part of August, due largely to neu buying
associated with t he defense program. Taken in connection
with other indications of an improving business undertone,
this suggests that the fall upturn in industrial production
is getting under way. Following a three- month period in
which the FRB index (new) has held a t approximately 121, some
Secretary Morgenthau - 2
i mprovement seems likely during September. The trend of
production will cont inue to be dependent, however, upon the
r a te at wh ich actual orders are placed f or defense materials .
Our weekly index of new orders (see Chart 1) ros e sharply
in the two we eks ended August 24, with stee l orders expanding
broadly and textile orders showing no ticeabl e impr ovement .
The rise i n the combined i nde x would have b een greater except
for a seasonal fallin g off i n automo bile sa l e s, wh ich has
sharply reduced our index of orders for products other t han
steel a nd textiles. This situation will doubtless be corrected
as soon as buyers begin to place heavy orders for the new model
cars.
Defense program s purs bus i ness
~'
Increased activity in the placing of orders under the
defense program has been an i mportant f actor in the recent
increase in new business. As a consequence , the volume of
awards for heavy construction pro je cts has r isen to the second highest figure of the year, fol l owing a considerable
decline from the July peak. (See Chart 2, upper section. )
In the week ended August 22, public construction awards
amounted to ~109 millions out of a tota l of ~ 1 28 millions ,
accounted for largely by cont1·acts for a smokele ss powder
plant at Radford, Va., a tank plant at Detroit, a nd the
fleet ooere ting base at San Pedro, Cal. In the follo wing
week, awards again decl i ned t o about normal.
Orders for structural steel (lower seotion of chart)
have not maintained the hi gh levels of late July. Reports
fro m the steel trade , however, indicate current i morovement
in the market for structural shapes, due to heavy orders
under the defe nse pro gram, with mills in this division
operating a t capacity.
Orders for machine tools, particularly fro m the aircraft
industry, show no slack ening. The Wri ght Aeronautical
Corporation has begun t o r el ea se orders f or its iS ,OOO, OOO
tooling pro gr a m f or the new plant t o be built near Cincinna ti,
and the Chrysler Corpora tion is alrea dy ordering so me of the
needed tools for its t a nk production program.
48
Secretary Morgenthau - 3
Steel activity increasing
The rate of steel activity rose t o a new 1940 high during
the last week of August at 91 . 3 oer cent of capacity, not much
below the previous peak of 94 . 4 oer cent reached in the week
ended December 2, 1939 . The Labor Day holiday, however, has
reduced the scheduled rate for the current week to g2 . 5 per cent .
The output of steel has already been carried practically
to capacity in most districts, the importa nt exceptions being
the Pittsburgh and Youngstown districts. (See Chart 3. ) The
current rate of 9gt oer cent for the large Chicago district is
believed to be higher than ever before reached in that area .
One reason for idle capacity in a few districts is a relatively
low production at mills oroducing tin plate, which are currentl y
o~erating at 55 to 60 per cent of capacity.
~
New orders reported by the U. S. Steel Corporation r ose to
125 per cent of capacity in the week ended August 22, a sharp
recovery from the recent low of 67 per cent in the week ended
August g. New orders of the Corporation have exceeded shipments during the months of May, June and July (see Chart 4, upper section) with a consequent increase in the backlog of unfilled orders. Steel production in recent months, however, has
been at such a hi gh rate that shipments could be made quite
oromotly , hence the present backlog of orders is not much above
normal, according to our estimates (lower section of chart),
and does not comoare with the peaks reached in 1937 or 1939.
Business improving in leading industries
Influenced by the rise in steel production and an early
fall upturn in automobile output, together with near-record
electric power production, the New York Times index has recovered to a new high since mid-January. (See Chart 5, upper
section.) Automobile production, as indicated in the lower
section of the chart , has started up a week or t1~o earlier
than last year, and promises to climb steadily over the next
several months.
Cotton mill activity has again started upward, aided by
recent heavy buying of textile products. Activity in the
cotton textile markets expanded again l ast week, with total
sales of gray goode in the llorth Street d1Atrict estimated
at 50,000,000 yards, or two and one-half times the oreeent
The week was the moat active exoerienced
~eekly mill output .
in the cotton goode markets since June.
49
Secretary Morgenthau -
~
Lumber production has held in recent weeks at the high
level rea ched in l a te July. The dema nd for lumber has continued to be sustained by a high level of residentia l construction
as indicated by the F. W. Dodge figures for July. (See Chart 6:
upper section.) Confirming a favor able outlook for residential
construction this f all, the volume of FHA mortgages selected
for appra isal (dotted line on uuper chart) rose noticeably in
July in contrast With declines in t hat month in the two previous years. Weekly FHA data (lower section or chart) show further imurovement in August .
The number of new homes started under FHA insnection (see
Chart 7) rose to a new weekly high in July, but has declined
somewhat in August, about in line with last year's seasonal
trend. The FHA reports that the most substantial increases in
home construction continue to be recorded in areas or expanding
industrial activity, for example, in Pittsburgh, Long Island
and norther n New Jersey, and Hartford, Connecticut.
Business confidence shows imurovement
Some recent improvement in business confidence is reflected
in a gradual rise in security prices over the past two weeks,
and in improving prices for a number of basic commodities. The
Dow-Jones industrial stock index has gained g poi nts in that
period, and the Dow-Jones •4o bonds" index has reached the
highest level since eerly May. Increased activity in awarding
defense orders has not been the only factor in improving business confidence . The apparently effective British resistance
to air attacks, with the near a pproach to unfavorable weather
over the English channel lessening the possibility or an early
end of the war, has tended to revive general confidence in
this country.
While the rise in commodity prices has affected principally the foodstuffs group (see ChartS), prices or raw industrial materials as a group have firmed slightly. In the case
or some commodities, stronger statistical positions have contributed to the rise in prices. Pressure on wheat prices, for
example has been reduced by the moveme nt or S3,000,000 bushels
or the i940 wheat crop into Government loan channels, and
December wheat futures have gained 5 cents in two weeks . Wool
prices have strengthened in resoonse t o heavy Government orders
or woolen goods tor Army use. Hide prices, which last Monday
rose 30 points in the futures market, have been lifted by
general buying to build up depl e ted inventories .
Secretary Morgenthau - 5
Employment gains in war mate rials industries
Although manufacturing employment and payrolls normally
decline from June to J uly, employment this year a ctually
showed a slight rise, and the decline i n payrolls was less
t han seasonal . This encour aging showing was due l argel y to
conti nued expansion i n t he war materials industries. The
extent to which empl oyment trends in typical war materials
industri es moved ahead of f a ctor y employment as a whole may
be seen from the following t able :
Per cent change mid- June to mid-July
Employmen t
Payrolls
All manufacturing
/0.1
Aircraft
Machine t ools
Shipbuilding
19.9
-1. 5
/ 5. 5
/2 . 5
/5.3
/1.7
15-3
It is also of i nt erest that employment and payrolls i n
the iron and steel indus try, which have be en stimulated by
war materials orders, showed gains of 2.0 per cent and 0.9 per
cent respe ctively during the s ame period.
We ekly business indexes
The New York Times index of business activity fo r the
week ended August 2~ advanced 0.6 to 104.3, recording its
third consecutive gain.
The rise in the combined index was due principally to
greater than seasonal increases i n miscella neous freight car
loadings and automobile production, a nd a contra- seasonal rise
in steel operations. Cotton mill activity also rose contraseasonally. The principal off setting factor was a greater
than s easonal drop in el ectric power production from the high
level of the previous week.
The Times index has gained 2. 2 points in the two weeks
ended August 24. By far t he largest part of t h is advance was
due to an extremely sharp gain in the index of automobile
production a rising from the fact that the changeover to new
models was effected faster than had been seasonally anticipated. Gains we r e al so showa in the adjusted indexes of steel
ingo t production, frei ght car loadings and cot t on mil l activity.
Secretary Morgenthau - 6
Preliminary data f or the week ended August 31 reveal a
further contra-seasonal gain in steel operations, which will
nroduce a rise of around ~ points in t he adjust ed index of
steel ingo t production, and a moderately greater the.n seasonal
rise in automobile production.
Barron ' s index of business activity, on the other hand,
has not shown as favorable a trend as the Times index, due
l argely to different seasonal corrections used for automobil e
and at eel production. During the wsek ended August 2~.
Barr on ' s index declined 0.5 t o 109.S in the face of the moderate gain in the Times index, while over the two- week period
Barron' s index shows a gain of only o.S point .
. · . ......~ ~ . ~ j
INDJCBS
OP
NBW
ORDBRS
Colnbtnad Index or NP Orden and Soleeted Component.
I 9
'
:: 1-r----t~::~:··_-_-++---~----t
--__,~--i
l 9
'"'" ' 'TJl A ~
.
...
140
lXI
1 ......-
120
110
t-t-
!-i-t--J-A-~---t--t---t--1---+ - -
Tbttl leo-biNd lndul
IW • 100
V _
-t.A
IV\
1\
110
110
j
100
100
I
-
I
---1
....
..
..
,.
..
,.
.... T
... .-.
-...
M II..LIOHS
STRUCTURAL
AND
CONS TRUCTION
... I
I
Bngl.-erlng Contraeto
Eng. Newo Ree., Deily A..,.
Ilea")'
..tUt..Y
,.
S TEEL
ORDBRS
Sl,T,
,.-
NOV •
,-----
I
I
00\.I.AII.S
MILLIO~S
<0
I
35
I
I
---~~---+--1---T--+1+~
I
20
1-
--
- - --
30
• 25
--·IS
IS
.JULY
NOV.
TONS
THOUSAHDS
Structural Steel Orders
eo
60
..
20
.
IIIGI..UDI . . OUTL'tiM P'OitUII . . . 0, ntl Uolo
ott"' oil._. S.r«wy ef tM ,.....,,
o-.- ... ._..... ac., ..~a
OUTPUT AND RATED CAPAC ITY "
STEEL
Tonn•!J•
Weekl y
0
I
H
T'?'"T'""'
0
.J
1
ICJ-41
F ""'
f'f'
'"" TONS
r
Mil llo"•
...j
I •
I 4
10
J
F
M
A
M
J
J
I Q3 9
A
S
N
0
PRODU CING
PR IN CIPAL
I
n .........,..
I
A M J . J A I O H O J F M A M . J J A I O N O.IF M
f'
'" "f' 1 f' 'I''"'
I
'f' '!
!
.,.. ,., . . , '
. .,.
.,..,.
J
J
19 "' 0
A
0
I
N
0
J
F
M
19 41
DIS TRI C TS
,, ... ,
to•o
1939
19 -41
19-40
1939
Jr ,
TONI
M
0
.J fM A M J J A I O H O J F M A M J J A I O H O . J t : M
TONS
""!
Thov• •,.d•
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...
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I
.,
-! -
.. .,
.
'TON$
, .. , ,..... d.
c n,c a!Jo
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•• , .. ~ .,. w.., A••
'!
•.;.. _
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......
f"l)u.),UotS
ORDERS,
Sfl I Pi'!ENTS
ANO
EST I i'IATED
liN I· I LLED
OF
TilE
U. b. STEEL
CORI'ORAT 10"1
ORDERS
r
,.,..~
21)00
...
...
I bOO
t
+
1200
T
t.c• Olulus • """'
16":'0
~
___j
800
400
I--
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....,
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-
+
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c-
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..
SELECTED
INDICES
BUSINESS
BU SINESS A C TIV ITY
•••
S•••on e lly AdJ'nt• d
CEN T
Et t Normel• 100
12 0
110
'\..,
100
90
80
'v
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1-
v
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...........
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..........
lr 1\.-
T '\..- r---.. ~
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70
,,.....
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r,,,,
MAR
.1.
MAY
JULY
SEPT
NOV
56
y,.....,,
O.het •• ttl• StH.. IIJ ,, ·~·
0 ..... ~ . _ .... - ~·... ~· •
R8SI08NTJAL
CONTRACT
AND
AWARDS
1 'I J 9
'
r
F.H . A.
.
MORTOAOBB
1 9 .. 0
'r '
,. T
l TO r '- T'
tl ll,,\,.10'- $
( wouo.uu)
DOL'ofl•.lo
,... u s)'
l."''~
1130
Mort,....• Selected for Appraisal
and F.lr. Oodae A•erd•
••
lblthl)'
.f 12?
l
'""
L.
114
r:
/'"··..,......\
80
"r.
'1.
\.\.
Do~t ;.. .. us
W.OUG•GU
~tlt<:TLD
.../
r Oll /
70
',,_.
,VOPUI SAL, (, H. A.
60
••
J~~:.±J,;_._I
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..I..IASOIID..Ir
1•1---+-=+-l)O
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19 4 0
1939
1938
·· m•
-;· TTnfrr·rlTrrrv.. ~~·~.. T~l
40
Mortga...o Selected
for APIIralool, F.H.A.
Weekly
_
~
I
40
lS
30
2S
30
2S
20
IS
10
10
!i7
(Itt""
tt ,..
......_1,....,,
S.ret.wy of U.
......_~._._
c-
2'60- ...
,
J
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'! '/
.
I 9 J 9
.,.
0
I
J
J
A
I
I
I
,l
)2,000
f - r- ~~- '
iI
r- - r·
24,000
'
...
12,000
..
I
I
I
A
r\
It
1
I
I
~~
:
"l
ft ... l·"'I(M
\1
\i
~
l~,_
'L .l
6 , 000
(r .•.oooac,
-"'••>
r-~:J .J
•
.J
U'• S.crtt•ry of ttle TrMtury
o.. _,,,_ ,,_t,..St..!na
I
.J
..
./
I
I
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4 ,000
IJ
J,7SO
1-
J,SOO
l
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2,000
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'
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4 , 2S(J
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\.· ·
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4,SOO
l
I
h--+-
L.
/
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8,000
(
I I I
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f'........,."' o'
+
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l./Y\.1
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14,000
l
IL I v N \
18,000
+
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w
II
I
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--....
- -
I
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11.
I
16,000
F .H.A. IN S'CCTIOif
I
~-L
I
20,000
New tb.lcs STARTCD UNDU
(•<au)
t~
'~
r-
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!--
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22,000
-
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I
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-
I
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28,000
(r ·•·•·)
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ill llii'f'" "''''l"
. . 'T'rr-Tf ~''''II""
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l
r
I
.!6,000
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•
STARTBD
HOHBS
F.H.A .
AND
A•ARDS
RIISIDBNTUL
J
1940
I
..
.I. /, j,_
0
bl.
c -
1,7SO
I ,500
I
58
J(11
en
BUSINBSS
U)
ACTIVITY
AND
PRICKS
OF
RU
INDUSTRIAL
...
''"'
I 9 • 0
MAT&RULS
AND
POOD8TUPP8
I 9 4 0
(••ucu)
1 1$2
+
1..
...
< 148
122
+
120
1. .
l
Ill
rJ
116
~
102
140
100
...
91
..
112
110
100
i
r
+
~
...
1 120
l "'
112
108
106
1..
101
w
~::
106
100
We are now politically making a very feat r a ce towards the right ,
Vrh lle i n my lllind t here -~~ no doubt ~at
noh sooner than I expec t ed .
whoeYer would be the next President things l"'uld be l'Wl on a Jauch more
you may oall it i f you aovern tor all
whateYer
or
~ooserYative basis,
~lasses and not for one alone , it now appears t hFt even C rdenas i e following the s&:lle trend making definite speeches agalnet connun11!1:1, and so
on and so forth , and he is oom~letely reversina his policy i n cert~ic
\hinge which are some~hat for show purposes. For i nstance , as it was
olear t h&t either new Presiden t ~auld fin i sh the " eJ i do " system ( cooperatively run farms ) and both candidates had pro~is ed i t to t he farming
class, he no~ shortly b efo r~ going out of off ice and i rucl ear contradiction
\o all his farner six years or governing, when he did everything he could
for the "oooperativas" has now brought i n a l egislation to the e f fect t het
This i s a complete t urn
~he l and woul d have to be hel d individually.
around agai nst former p6licies .
Naturally such change or attitude , whether out of convicti on or for
political reasons has brought about a complete change i n t he minds or t he
aoat radica l and ~ven the less r ad ical el emente. It i s a~az1ng to see how
\ he whole tone has changed and how ell t he bureaucrats and politicians are
I f , ho,ever , e
running t o beat one another i nto t he conservative cemp .
wind should blow from anot her angl e , they would all change their "oonT1otions" again .
Economically thing s are not oing so well ~hich or course i n Mexico
does not mean that things are bad because so:ehow or other , i n Yiew or
\he flexibility or the demand for things other than the bnre necessities
ot lire eetbacks can be borne very much easier than in s more hi ghl
' eTelop~d country. Therefore v~ ry l i ttle or thie setbac~ is being felt
)1\b the exception of some commercial houses.
The e xohan e ba e been moving i n favor of tho dol lar so~e~b~t , but
the State Bank ls selling t o meet ell demands a t 5 and s o rar baa had very
11\Ue to pay out . The dane er subs ists t hat all t hat money y.bioh baa been
.......,
l\
-
bl
- 2-
'~~tri at ed fro
u~ bank s mi~t
1 t he Uni t ed State s and i s held her e in peso deposita in
at a g i ven mo~ent get scar ed and as k for doll rs. The
11110unt of suo i n crease i n deposits i n t he las t f ew 1110nths i s calculated
as somewhere between 60 t o 70 million pesos, s o at a s iven aoment the
Bank woul d have t o fa ce to lose so~e 15 mi l l i on dollars, whi ch would get
the Bank, as fa r as r eser ves are concerned , i n a r a ther awkward position
as they only have 31 mi l lion doll · r s r e s erve as per by t he President ' s
speech on Sunday. It is i nt eresting to know t hat gener ally ~e believed
the Bank had consi derably higher r es erves . This same report also informs
that du ring h i s s ix year s the Ca rdenas Government has t axen out of t he
Bank of Mexi co s omet hi ng like 170 million pe sos , overdraft and Tr easury
bonds, outside ot t he r oad bon ds and s o on which they have placed in t he
Bank. This is not a ver y good picture and would be ver y bad fo r any
1noom1ng Gove rnment if i t woul d follow the same syst e!ll. Hov1ever, i f t he
new Gove rnment w1:U play ball with Waehin8ton, no doubt they oan then land
ro Bl!T1
!.. a rathe r big loan of say 100 mlll1on dollara, or 500 million pesos , which
118 111
It el!.t 3&. '"'1 for that country is very little and mllkes t he 170 millions as said above
look like nothing.
a s;t!I..'P t
[ ed.t l!ll
~
, ;~
' "(lli Cl
.tr. !ol
As far as credit restriction s are oonoern.ed, t here is a sradual
loosening up or se1u as complaints by oo!B~r cial and industrial enterpriaea
were so strong t hat t he Bank had to drop out s ome ot ita ha rdneaaes. I t
is also worth my mentionin6 that apparently the President seema to be reaolved t o at least fix the amount of t he oil ind~zation and have it
legally signed and delivered before he leavea off ice. Tbe valuation
•• given by t h e Kexioan Government is somewhere near 200 million peaos.
Taking aa comparis n t he e::nount i n v.hioh the Sinclair interests
figure in this valuation and the amount actually paid to t he Sincla ir,
the whole valuation looks rather "unreliable".
62
G-2/2657- 235
ll.I.D., IT.D.
Tentative Lessons
Bulletin llo. 39
September 3, 1940
TEt!TATIVE LESSONS FROII THE RECENT
ACTIVE CAMPAIGN IN EUROPE
This document is being given an approved distribution,
and no r.dditional copies are available in the Uilitary Intelligence Division , Its reproduction in v1hole or in part
is subject to the provisions of letter TAG, November 15,
1939, AG 350, 05 (11- l - 39) !J- B-!.1, "Dissemination of Military
Information by the !;!ilitary Intelligence Division and by
Recipients of M. I . D. Information" .
a'l aJ.
1v
aa.a
'Ii18 Cl 9
The information contained in this series of bulletins
nill be restricted to items from offi cial sources uhich are
reasonably confirmed , The lessons necessarily are tentative
and are in no sense mature studies .
t'! C#l oal.a
:t tf
Jt~
.la ll
l
'td
GERIWI I.IETHODS OF CROSSTIIG ANTITANK OBSTACLES
SOURCE
The follcming is a F.ritish translation, deted June 1,
11
1940, of 11a German document • • • published in Berlin in 1940.
~
CONTE!"\ITS
t:>
~
\•'·
\
~
GENERAL PRINCIPLES.
~
~
A.
I
I
Antitank Obstacl es •
~
-.)
Difference Betneen Antitank Derrages and
B.
~
Importance of Destroying or Bridging Barrages
and Obstacles.
c.
Ll<!tbods of Destruction and Extemporized Uethods .
? J~.
.. ,...
L... ..N•
\t .
- 1-
63
5200 .9 ( 9~7/58!
~lfPE3g~;u t
II.
,l
I
I.
ANTITANK BARRAGES .
A.
Ditches .
B.
Barrages of Rails or Grids .
c.
tarrages of Tetrahedrons or Antitank See-saws .
D,
Antitank llines .
E.
Traps .
GENERAL Pi1lNCIPLF..S .
A.
Difference Between Antitank Barrages and Antitank
Obsta cles ,
"It is necasso.ry to distingui s h bet11een antitank
barrages and anti tru1k obs tacles (Panzersj?E!rren and Panzerhindernisse) .
Antitanlc barrages are artificial obstacles covered by def ensive
troops, such as anti tanl< ditches , barrages of r a ils or grids,
dragons ' teeth, hedgehogs, anti~~ mines , traps and road blocks ,
lllld tetra.rteo.rons. Antitanl< obstacles consist of woods , fields of
craters , steep slopes , vineyards , streatos , and marshy ground."
B.
Importance of Destroying or Bridging Barrages and
Obstacles .
"It is seldom possibl e to cross barrages and ant i tank obstacles nithout ;:aving destroyed them beforehand or nithout
using extel:tpol· ized means .
"Antitank bar rages crumot be crossed by tanks in
most cases except 11hen they hc.ve been destroyed beforehand or when
passages have been made through them b;• engineer troops or by tanks
whose contl"ibution t o the battle i s in this nay diminished,
"In order to make passageways thr ough antitank
barrages or across obstacles , either by destroying t hem or by
building bridges over them, i t is necessary to collect the available
means at t he point t1here t he principal effort nill be made and to
use t hese liith surprise and rapidity.
"13!' malcing use of artificial fog, by doing the wor k
a t night, or by making feint attacks on other points, it is possible
to prevent the enemy from spotting the place where the break- through
is to be made. Attack and the action of other al'lll3 on a nide front
disperses the defense.
r rllJlkli n D. Roosevelt LibrarJ
o·~ -· . -· ~
;
64
5200 . 9 ( 9/27 /5'f'W*'E3l:lli'l'fkt ~
"All nork in connection with the destruction of
barrages and obstacles necessitates the reduction of the ene~
weapons to silence . Above all, fire must be concentrated upon
the enemy in position behind the barrages at the spot nhere the
brea!c- through is to ta!ce place ."
C.
Uethoc\s of Destruction and Extemporized Uethods .
1.
.J
I
tleans Available for Destruction ere as follo\7s:
a . Artillery Fire . "Good results cannot be
obtained froB explosive shell i f the caliber does not exceed 75
mm. rlith heavy caliber shell the firing must be carried out with
non-delay fuzes to prevent the formation of craters. It is
possible to get rapid results at distances belen 1,000 meters by
direct fire from the tank gems an& heavy mobile antiaircraft. The
artillery cannot make passages in mine fields without a large
expenditure of ammunition. 11
b . Aircraft Dombs . "The use of aircraft bombs
can assist the action or the artillery, but the craters nhich they
produce may make fresh obstacles for the tanks . "
c . Special Engineer liethods . "Explosive
charges are placed. by detachments of sappers or nith the special
material provided for armored formations. The use of engineer
detachments should alnays be follonec'. by o. tank attack. The use
of special material under the protection of the tanks often
allons a rapicl attack by a mass of tanks . 11
d . Upsetting of Obstacles by Tanks . "Only
very lightly constructed barrages can be overturned by tanks ,
and e.ction by tanks is generally fruitless on rising ground. 11
2~
Extemporized l>:ethods
consist of use of:
a . Fascines . 11Fascines and other extemporized
means are used for filling up ditches , craters , and angles for med
by vralls , but it is possible to carry only a very limited quantity
of these upon tanks . "
b . Double Tracl: Bridges . "The track bridges
are used for crossing ditches up to 5 neters l"lide."
c . ::ats of Spars . "!lats of timber spars are
used for crossing soft ground and for climbing slippery slopes,
rrhether ice-covered or rocky . "
-3-
Franklin D. Roosevelt LibrarJ
65
rr~'- r· "'f''r' ~D
l
5200.9 (9/27f58te&~:alS!iSA!l
d. Bridging tlatorial . "Engineer bridging
.
and br1dge- laying trurucs ore principally used for crossing
u1de o?stacles. The use of bridging material necessitat es the prior
The bridgees~bl1shment of a sufficiently strong bridgehead.
lay1ng tanks of armored formations can establish cros sings even
under enemy fire , but it is necessary that enemy antitank weapons
be neutr alized."
.
r.~ter1al
II.
ANTITA!lK nARI\AGES .
A.
Ditches .
1.
.J
I
Gener al •
"Di tches are generally easily visible on aeri al
photographs , but often they cannot be seen from the ground e:,cept
from nearby. It is possibl e to use as ant ita~c traps short l engths
of ditch dug behind and nithin the visible spaces nhich separ at e
nat ural antitank ditches . These ditches camouflaged lT.f a layer
of earth calli•ot be spotted beforehand.
2.
Dry
Ditches.
"These are t r i angular antitank ditches at least
1~2 meters deep and c~'-7 meters wide, with parapets of earth 70
ern. high on both s i des or a parapet 1 meter high on the enemy
side . Their rear s lope is often concreted . These can be crossed :
a . 11By destroying the vertical face with
shells equipped nit h del ay action fuz es and fired from the 75 mm.
guns of the tan'cs; Vlith expl osive charges ; with shell from the 210
mm. gun, or ui th explosive cherges if the rear face is concreted .
b.
"B:l' filling them with fascines or by using
bridging mat erial .
11\'ii de ditches - at least 2 meters deep and 3- 7
meters vride, with a steep rear slope , freqt\ently concreted, and
parapets from 30 em. to 1 meter high on bot h s i des - ca n be crossed
as a rule ei ther by destroying the rear face with short r ange
fire , b;r filling them with fascines or earth, or by using bridging
material .
"Antitank ditchez filled with wc.ter or II!Ud are
usually 2-6 meters deep and 6--12 meters wide . These can be cr o9sed
by filling them uit h fascines or by building bridges . "
B.
t1
Barrages of Rails or Gr ids .
CII5 TWUlfN
-4-
~ranklin
~"!
D
[i '
•
D. Roosevel t LibrarJ
• .,. ...,
.u
66
to /??/f\A\
CQI!l?Hlil!l'l'Htlr
"These often extend for several kilometers in front
of defensive organizations and :u-e aluays visible from a distance , "
1.
Barrages of Rails .
buriec~
in the earth a nd
Barrages formed
ox a sJ.ngl e r ow of railnay lines or T girders can be crossed i f
tanko are c~iven against them one or more times at a speed of
12-15 !em. an hour.
"These are rails deeply
d~spo s~d at random in several rons (up to 7 rows) .
]
I
"Heavier barrages of rails or those comprising
several reus must be dest1·oyecl by other methods , One can ma.ke
gv.ps in them in the fol lorti ng nays:
"By cutting the rails with expl osive
a.
shell of 75 mm. or
caliber.
~reater
b . "By blowing up the rails uith special
apparatus , such as the thrm1ing apparatus carried in tanlcs .
c.
"By having engineer detachments bloVI up
rail s , "
2.
Barr&ges of Grids.
"These cannot be crossed until they have been
destroyed uith shell or e:~losive charges in the same manner as
the barrages of rails are destroyed. "
C.
Be.rrages of
Tetrahedron~
or Anti tank See-5alls .
"These a1·e hollort tetrahedrons made of reinforced
concrete about 1 meter hi gh . This type of barrage can be crossed
nit h the use of f ascines or other ir.1provised means , or sever al
tet rahedrons can be c'.emolished to rnake a gap. These tetrahedrons
can be destroyed by dire ct f ire with shells from the 75 mm. gun
or by expl osive charges pl aceci against the concrete apex . "
1.
Heavy
Tetrahec~ons .
"These tetrahedrons are of reinfor ced concrete
about one meter hi gh . It is not possibl e to cross a bar rage of
t hem until the tetrahedrons have been demolished wi th explosive
charges placed against their bases or until a bridge has been
built . The bridge i s constructed qy filling up intervals betneen
tetrahedrons t?ith fascines or other improvised means and by placing
11
upon t:1em raiJ;,:>S for the tracks of the tan!:s .
Franklin D. Rooaevel t LibrarJ,
Ot f}l~®II=!ED
r ·!J u. 5200.9 (9/27/f>l)"
~HlBII'i'EidJ..
67
2 . Czeck Tetrahedrons or Antitank See-sans of Reinforce{ Concrete .
"These have three feet anc1. a central pillar about
meters high. A barrage of this type cannot be crossed until
several tetrahedrons have been removed or destroyeG. by explosive
charges or by direct fire vtith expl osive shell at a maximum range
of 800 meters. "
1..
1~
3.
J
I
Antitank See-sans l.mde of Steel ,
"If a tank comes UC~ against these, it is raised
to a height ox 1 , 8 meters . This type of barr~.ge can be crossed
only if several see- saws have been destroyed or removed. They
can be demolished either by bloning them up or b>; direct fire
uith shells ox 75 mm . or nearer caliber from a maximum range of
GOO r11eters . 11
D.
Antitank !.l ines .
"One must expact to find mines, mine fields , mines
sorm at random, and "'ines fil·ed by traction, rthose object is to
reinforce the defensive arrangements both in width and in depth.
11 In mine fields, the mines are placed in tuo or
threo roi7S at 25 or 30 meter intervals . As it is not possible to
i c' entify mine fields from the air nith certainty even 11hen the
mines are not buried, their e::istence must be discovered by means
of firing single artillery shots unc'er conditions t~here the fall
of shot &nd the effects thereof can clearly be seen.
"!line fie l ds can be clestroyec in the follorting way:
1 . "By artillery fire which can open passages
thr ough t he mine field. To make a bre~.ch of 20-25 meters wide and
100 meters deep, the follorting may be useG. : 120 rounds from the
210 mm , mortar; 400 rounds frol'l the 150 uun , honitzer, or 400
rounds from the heavy infantry zun, which is used only in exceptional caseo . It is the 210 mrn , mortar nhich offers the best chance
of success .
2 . 11 By detachments of engineers making gaps ,
using well knonn means . They look f or the mines and blort them up
or mark their position by me:ms of boarcls ,
h
"l!ine barrages cr.n be crossed by tanks only after
a passage at least 5 meters nide, 11ith ito sides clearly markec1,
has been ~.G.e , Fielcs of craters can be crosse{ , a nd it is preferable to ~ive through the craters themselves i f t hese are not
68
too deep. "
E.
Traps .
"These are c'itches or pits or about 1. reters square
and 2 meters deep 11ith verticr.l sides carefully cacouflaged . They
are generally to be found behind passages winding through the
obstacle . IThen they cannot be avoid~~ they can be crossed in the
same nay as antitank ditches . "
]
I
•
~c~t >velt
LlbrarJ
i.;
Lu.
Date-
•• 5200.9 (9/27/fll)j
)_
Sienatv•~
h
- 7-
<'!- )
0
~4
· .~
........~
~ !'ranklin 1l: Rooaevel t L1'bri%'J.
tlECl~.SS\flED
~':'H)
\)\\),
69
5200 . 9 (9 / 27/5"'
~C0"1!!i!!l!!!i!!!!!!x~w~
M.I.D., II'.D,
Tentative Lessons
:Bulletin No. 37
September 3, 1940.
G-2/2657-235
TENTATIVE LESSONS FROM THE RECENT
ACTIVE CAMPAIGN IN EUROPE
This document is b eing given an avvroved distribution,
and no additional copies are available in the Mi litarY Intelligence Division . Its reproduction in whole or in part
is subject to the provisions of let ter TAG, November 15,
1939 , AG 350,05 (11-1- 39) H-B-~1. "Dissemination of Military
Information by the Military Intelligence Division and by
11
Reclpients of M. I. D. Information.
The information contained in this series of bUlletins
will be restricted to items from official sources which are
reasonably confirmed. The lessons necessarily are tentative and are in no sense mature studies.
INFORMAL NOTES ON ORGANIZATION
AND TRAHUNG OF THE BRITISH CONSCRIPT FORCES
SOURCE
The information contained in this bulletin was furnished
by a high British authority. His report was dated August 2, 1940.
••••••
11 The following are a few jottings which represent some of
the problems encountered when the Militia was first instituted. In
reading these, one must remember that we had only about 3-1/2 months
in which to prepare, end that at the same time we were doubling the
Territorial Army. The first ~lilitia intake arrived on July 15, 1939,
11
and war was declared Se!>tember 2.
(~: The Militia were the initial conscripts called to
the colors in July 1939 and September 1939 but later absorbed into
the British Army, as was the Territorial Army. Q=g)
rrankl in D. Roosevelt LibrarJ
DECU SSIFIED
QO!) 01• 5200. 9 {9/ 27/58) 981fF!B'I!!I2Uis
70
"The doubling of the Territorial Army absorbed many instructors and much equipment and made the task of organizing the
Militia a great deal harder than it might have been.
'The point which dominates all other s is that , before the
first intake arrives, everything must be completely ready. Accommodation must be ready, as wel l as equipment on a training scale, together 1rl th training appliances.
1
I
"Command, administr ative , and training staffs mus t have at
least three weeks to settl e down together as a running combination
before the first man arrives. Once the men begin coming in, attent ion must be focused on them and commanders must be free to think in
terms of the job in hand,
"This is important not only to ensure administrative and
training efficiency, but to give the conscript a feeling of military
efficiency from the word 1go 1 • In other words, he should be surprised
with the way in which ever ything has been thought out and prepared fo r
his benefit , First impressions go ve~ deep , and if wr ong, they are
hard to eradicate.
"The number of instructors required was tremendous . Officers
and N. C. 0 . 1 s must be organized six months befor e zero and given thorough
schooling. This seems a long time, but quantity reduces quality, and
the quality must be improved before work begins. Army schools may have
to be increased to cope with the work. This requires careful thinking
and preparation.
"Old soldiers are not an unqualified success because, if
they have laid off for a bit , their brains become less flexible and
they do not relearn as quickly as young men learn. A few are good,
and these provide experi ence and balance.
"We decided on six months training, which would have been
adequate for all except signaller s and some technical personnel requiring more . In order t o make Army and Mili tia mingl e and to prevent any feeling between the two , we divided the six months in most
arms into t wo months basic training at depots or in t raining centers
and four months with regular units. The last two months were served
in the ranks of the parent uni t, Our low peace establishment and low
strength made this possible.
"I think it would be better to do four months at depots and
two months with regular units because in our view it takes four months
to complete basic training.
"Thi s system may not be possible , but the orinciple of mixing is sound. If mixing cannot be carried out, ther~ should be close
...raww::r?f
- 2-
Franklin D. Rooaevel t LibrarJ,
OFr.~ f ~~.i'"'t:D
{lf ;
l
71
~200.9 (9 /27/5~
9e!IFimlllil:l: fldr-.
liaison and, if possible, cooperation between regular and conscripted
troops .
"One of the biggest problems is the provision of officers
and N.C.O. 's for the conscript army. We never- really solved this and
were in some difficulty as to how to do so. The question never actually
arose, since the war broke out and Militia were absorbed into existing
organizations.
]
I
"The mixing of all classes and r>romotion by merit from the
ranks were successful. All men, Etonians and paper boys, arrived together , bumped the same t roubles, and had to hel'O each other. Mufti
should not be allowed during the six months in o;der that class distincti~n will not be accent uated, and leave should be sparing.
"Our territorial military organization is geographical in
its recruitment, ns is the regular infantry organization. This is
wrong for Militia because of the inconvenience caused if the men of
one district are all called up together. In addition, it is easier
to place the technician or tradesman where he io required if units
are formed regardless of geogr&phy. On completing their training,
men should be posted by groups to different units, and tradesmen,
N.C.O.'s, etc., placed where wanted. !·lobilization problems may limit
the dispersion to a certain extent.
11 We called up at 20 with certain exceptions.
We allowet
some to come early if they had a definite reason ; for example, wouldbe doctors who wished to go right through without a break once they
started studying. Others we allowed to postpone; for example, apprentices and those going to universities and wishing to graduate
without the six months' break. This system would have been successful
in peace if it had been allowed to work.
J
"I n war however it is wrong. !~en should be called up ei ther
in different age groups - for example , 20- year olds first then 28-year
olds - or else as a cross-section through all ages, so as to get a
supply of older, t ougher, and more experienced mon.
"As it ~·orked out for us in war we called men from the
youngest c l ass upwards. Older men were hanging about waiting while
the kids went to war, and now we have the older men coming in juni or
to the younger. There is no need to elaborate .
"We found that groups of srchool friends tried to be callet
up together, but we stopped any posting by such groups because we
wented to stop class distinction. Ao men arrived at the gateo of the
training cent~rs they were allotted straight off to a platoon, and in
that platoon they stayed. We tried to reorganize after a fortnight
according to mental ability, but the conscript• themselves asked that
~IDWfl?\k
-3-
..,
72
• .J
52('10
fl
I
Q
( 0
/ ?7/F.P.\
COlYPlim:4IIAL
this be stopped because it b~oke up their organization just as they
had settled down, and incidentally it led to class distinctions again,
In the end 1<e decided to leave original platoons for all purposes except ~<ork, We picked out the elowest and the quickest for special
instruction, aud the majority fitted in on a general level.
"We applied psychological testa only in the very technical
arms and those arms in which jobs required different types of men for example, searchlight and antiaircraft gun units. We considered
this method for all arms but decided it must be done before allotment
to centers and ~<ould take too much time.
J
I
"Tr adesmen were allotted to centers according to trades
as far as possibl e so as to make use of each man's civil occupation.
We had not got this quite right, but were sending the right men more
or less to the Royal Army Ordnance Corps , tank organizations, etr..
These were Sc~ted by registering and calling authorities , who .orked
u.~der the Miuistry of Labor.
"We made a great point of treating lUlitiamen well from
the first dRy sc as to popula:ize compulsory service . This worked
well. l~en enj-:>yed their tl·aini"6 and dreaded being returned as unfit or unsuit-able. lie had little crime.
11 Pl:ysical t raining was given an important place in the
curriculum and was extreme!.y ::>t~_;~Ular. Physical tr~ining instructors
gave remedial treatn.ent un~.er a;.,cical officbrs' i nstructions. This
was appreciated. Physical fitnens badGes pr~mote keene&s. Games
are hard to fit in, but should be organized.
"The man of 20 in hard healthy work eats enormously and
requires a big ration.
work
hard
to a
take
"Training should start easily t o permit men to get fit and
up gradually during the first t~<o or three weeks. After that,
~<Ork is essential and is expected. Fatigues should be reduced
miniiiiUm, but men must not be pampered. Even the young peer must
his hand at coal fatigue and scrubbing f loors.
11 Li braries containing military manuals as well as other
books should be available. If possible , rooms should be available
where men can work if they ~=t to·, Many men keep up their studies.
Evening classes at local technical and other schools were well attended.
"Six months is not enough to train a signaller or a man of
the tank units really well . This points to a higher establishment of
regular units. The French, I believe, made all tanka units regular
in the f irst instance .
73
"The organization of the Militia field units must be ready
one year after the first intake finishes its initial six months or at
the end of whatever period must elapse before the conscript is called
up for his annual training . We decided to give every man one year clear,
more or less, after completion of training.
"The organization of the cadre is a problem. The nucleus
of each unit must be senior and experienced. If there is an ample
supply of such officers , warrant officers, and N,C.O. 1 s, well and
good; but if not , they require raising and training. Thay should be
a permanent organization, in that they must be available all the year
round for mobilization and for the conduct of annual training. We
thought, though we did not try it out , that our Territorial units
reduced t~ cadre would fill the bill. This is as big a problem initially as the training of the conscript.
"The junior officers and N. C.O, 1 s can be found from the
conscripts . To do this, we were going to select potential officers
and N.C.O. 's and send them for their last two months training to
schools where they would receive special training. On completion of
their courses, those recommended for commissions would have got them
if willing, and those recommended for promotion to N.C.O.'s would have
been given that rcnk, This needs careful working out to ensure a
correct proportion. Once the scheme is running, the permanent officers
and N.C.O. ' s of the Mili tia units would be found from Militia personnel
willing to continue in the service, to come up every year for training
and to respond upon mobilization. The flow is big enough to ens~re
that only the best are retained. "
Franklin D. Roosevelt Librar7
D EClfS~-~~-!f.D
000 lei''· 5200 . 9
Date-
I-
0, - ? 0
Sipatur•-i
(9/27/fli)J
J
f#~
~t
JT
PLAn<
STOCKBOI.U
Dated September 3, 1940
Rec ' d 9:22 p. m.
Secr etar,y of State ,
Washi~~&ton.
819 , thir d.
Effective September 1 to August 31 , 1941, all
sales oil cakes and meal wheat and ryo bran molasses nnd
corn subject to licenses with allocations equivalent
to 40 '!)l!r cent of consumption during crop year 19381939.
Rationine of hard bread cr ackers biscuits of wheat en
rye and wheat and rye flour effective September thir d to
prevent hoar ding each 'D6rson entitled to one and one half
kilos in all up to
be fixed.
S~tember
Agr eement
~
7th when new quantities wil l
pri ncinle between Sweden and
Gel'lll&ey regarding deliver ies of paper from Sweden to
Netherlands and Bel gium aigned in Berlin details
regar di~~&
prices method of pB¥ment and transportati on to be di scussed
later.
Coupons due September firs t in Stockhol m of City
of Copenhagen 4 per cent l oan 1935 met
b,y
transfer of
funds through Swedish- Danish clearing \
proof furnished
showing the bonds were Swediah- ywned pr
r April 9 , 1940.
\
Coupons
.
- 2 -
Coupons of Norwegian ~dro 4 per cent loan due Septecber
first in Stockholm defaulted and issue of 18 million
crowns delisted although it is understood that co~
possesses adequate foreign exchenge but trana!er not
permitted by occupation authorities in Norway.
Two other
Norwegian coupons both Osl o 4 per cent loans 1937 t otal
outstand.ing twenty-eight mill ion five hundred thousand
crowns also in default although Norway generally has
active trade balance with Sweden negotiations looking to
a triangular cl earing Norway-Sweden-Cel'll18ey for counon
payments understood to be nending.
Rikabank statement
August 31st all in million crowns metallic reserve 644
foreign exchAnge reserve 685 note circulation 1450 loana
and discounts 692.
INFORM TBEA.SURY , Cc:w.IERCE , AGRICULTURE.
STERLING
llPL
76
Serytember 3, 1940
12 : 00 o. m.
H • • Jr:
Hello.
Operator:
Mr. Long .
Breckinrid~~:e
Lens :
-
Hel l o , Henry .
H• • Jr:
Hello, Breck .
L:
I' m all right . I ' m so r ry to bo ther you but
I ' ve got a little matter here tha t has
:everal angles t o it and it concerns the
per manen t Central Opium Board of t h e Drug
Su~ervisory Bocy .
H.h . Jr:
Right.
L:
Your Department has been i nterested in the
operations of those things . .
H. l .Jr :
That's right. You nave a fellow by the name
of Fuller over there, haven 't you?
:t.:
'.'le ' ve got a fell ow by the name of Fuller,
yes . ;Jow, they liant to move over here to the
United States and so does the I.L. O.
H. !1 .Jr:
lfuat 1 s that ?
L:
The International Labor Office of the League
and so has practically the fina ncial and
economi c section and t he health and opium
sections of the League.
H. lLJr:
I see.
L:
They went to Princeton under the private
invitation of the Princeton University , the
Rockefeller Founda tion and the Institute for
Adva nced Study at Princeton .
How are you?
H. lL Jr:
Oh , yeah.
L:
i nd they went there simply to study and t o
carry on their studies and not to be active ·
77
- 2 H.l'. J:r:
Yes.
L:
And they went at the private invitation of
Princeton in which the Government had no uart
and cnly was advised -- I mean formally - ~
that they were going to do that .
H. l.'. J:r:
Right .
L:
The I.L . O. is not a member or a nart of the
League of Nations but it sta rt ed· as a part
of the League of Nations and while we've been
interested in it , it i~ one of those t hings
that exercises a politi cal function and is
sort of a nolitical entity .
H. !LJr:
Yeah.
L:
Consequently we felt that even though
Governor Winant was the head of that office
that we would probabl y not be embar rassed if
it went to Canada, so they decided eventually
and t~ey did go to Canada .
H. M.Jr:
Yeah.
L:
Now these ot~er oeonle here are also like the
I.L. O., they ' re not. actually part of the League
of Nations but they 're affiliated with the
League , they ' re an organization 01·1ing their
origin to the League, they exercise noli tical
functions , part of them Judicial, and they
want to come over here and operate -- not l ike
the t hings at Princeton, just study , but they
want to carry on their activiti es from here .
Part of it is Judicial in that they a re apt
to assess to this nati on or that nation
penalt i es if they do this and t hat , and it
just strikes me that r i ght now it ' s inappropri ate for them to come here because of the
nolitical asoecte of this camoa i gn we 're in .
If it has some of the aspects of the League
of Nations the people of the United State s a re
not go ing to dist inguish bet~~een a branch of
the League and the League itself and they will
submit to having an office in New York to do the
work wit~ the thing advertised there - and
telephones and printing documents i n this
country under the
78
- 3 name of this sub sidiary of t he League and
t h is a nd t hat and the other and we may lay
our s elves o ~ en t o some very s erious fire .
Now o erhaps t he intere et s of t h e Government
i n t h e activ i ti e s of t he s e t 1-10 oartie s is
sufficie nt t o over- weigh wha t s eem to me as
temoor a r y , a t leas t , oolitical obj ections .
H. lLJr:
•ell , here ' s ho w I feel . If this thing
could also go t o Princeton -- t hey 're doing
a beautiful job -- tha t narcotics or ganizati on
hell o?
L:
Yeah.
H. k .Jr:
and certa inly a s f a r a s we ' re concerned
-- I' ll out it t his way -- anything to keen
them going, I t hink , is all for the good.
L:
Well, of course we want to keen them going,
a s a Government we ' re very much interested.
But do you think tha t if we ' d postoone it
the decision until a ft er the campa i gn it
woul d be be tter.
H. l. .Jr:
I guess you ' re right.
L:
You see , I do n ' t like to r a ise the question
of the League of Na ti ons and our participation
in it .
H. J.l . Jr:
I guess you ' re right. I bUese you ' re right.
I ' ll go along with you on that .
L:
We ' ll just tell them to f or get it for awhile .
H. !LJr :
Sure . Well , you know , we ' ve go t som ething
to e tudy .
L:
Yeah .
H. M. Jr:
Exoert s are study ing it.
L:
Yeah.
H. M. Jr:
How' s that?
L:
All right.
H. h .Jr:
Ri ght.
Thank you, Henry .
u
n
L:
(La ughs) .
0 . K.
You agree .
t Li'o't'ar!
"ooee•el
t.JI).li n D • "
:col~SS\f\Etl
U~
, 9 {27/SI)
000 \!\ ••. s2oo.9 ,
~
cS..ylJ.&M operat1ona :rw.terdq oonaiated a1n1;r ot
ti'ft attacka ~ about 8.50 a1rpl.mN 1n tbe lent and the ~ ot tM !' ha...
but all are .UU in Hnice.
U..a
Oil
a ral&Uftl7
onq _.. r.porW.
ttr.c~,
mc110
of
Jour ~ _.. att.aoklld
Lut 111Cht t.buoe ._... -... aoU'Ii-
-u llcal.e CTtW a aa-t-. 111.11or ~
oer.n w- ~.w of 41 ~ -
a J;&"Obehle m4 ,:2 dM.Ip4.
pUou.
'!be Bl'ltiah lDet
ao ticbt.n
hide- ncb u \be _ _, ot dln balliiMr
llllnDoed bun in ft'al»e aDd \be
~t
JI01n' to 1 . - - s o.r.D
povupe ~ ....., to lelai•
to . . -
~upa-..o;y
1h1~
'J'tw Br1.t.111\ lDet 15,000 toDI of
attaolc8.
Uld.u to
ot fwr 1q ft111P
tJW~Iler
eff..W ' - ' 4 the ID4 of W. 'IIIHit
~
ran
ot tbe atr.
dial to II1MI &1111
Dur1.ni the put 24 bean Sl Cli"fil.Ufta _.. ld.l.l*t
... 247 ia,1111'11l.
Ita
Wlk
aco
~.
~
J.lla1.cm
~
wbo lett Pa'1a &bOat a
••tee that tbe Pnmah people are 1M
boplt\il ot a Britiah
a..n , _ _nt 11 DOW.._~
latia ~ -'&1. dli.p8 15 ..
z
the
~
~·deep---
.,..tb;r thq are lhorin& tb• Bl'lu.h.
!be-
tbat ba bu tint hiDd knollledc• that the
popa-
ot \be
s.nr-t .taw
0.~
are di'ri.dine all
80
CONF' I DEfH 1 AL ot france into 12 t erritorial. arwu, 1n each ot wbioh thq _..
utebli.ah1Jii t1..,.
or a1x praon cup., each ot wbich w1ll lurfe a
oapaoif<T ot about 25, 000 - . 'nle
tbo crt..1n Jl'ench
o.n.an. 11111 then coaoentrate
mv 1n tbeH cape with the exoept.1aa ot ooo-
ecri¢4 t'rola qricultural regiotuJ and abolat 1001 000 •n 1d!o 1dJ.l
be t.reeterred to ~ u labor 1zoocpa.
ll
• l!
aucUae end toocl are fti'T ebort. all emu- Franoe and that the ~
pecta tor the OCIII1Di: 1d.nter are btld.
'!be D1Notor of M1llt&rJ Intell.1a-. ot t.ho 8r1\Uh
t:•
io'vtiJ
!le turthC' .tatee that
beUftu
f1JoalT that
the ~ ~ 1D the
a.-
uw,
attea
ora 8r1WD are 411e to opprt.uzd.et .od1t1.oat.ionl of tha CII'J.ciDil p1lll
ot o&lllpiJp wtd.oh . . to oaatain
rr.n..
and .tor:1D at lnJl,ed.
'IIIIIIIQ)Iot.e4 ~· ot ,..._ ..... tho
ar:1c1Ml pl.mw
1ll 1914.
iD a -
1!11
a..ne to ...w:r tMS.r
eiJdllr to \hat ot "f'llll ll'llllk aroaad hl"11
2!le . r - tuk ot OOGIW1nl and Jllll1l)'iDa , _ . .
tbe dinlCNlt;T 1ll ~ tha 41nn1c of tM at'-k to tbe - ' w.rll baa oaued tbe
~
dalq 1ll
~
tbe Cll'1cS.-1 plm ot
IJIII.
J'l'anklin D. Roooevel t Libl'U'f
DEClt r:IFI£.0
DOD U~t•· 52oo .9 <9/27tf>a>
Date-
J- "1 - ') 0
I~
SePtemb er 3, 194o
10: 30 " · m.
RE ALLI ED PURCHASit-IG PROGRAM
Present:
Mr. Purvis
Ballantyne
!•lr. Dewar
Mr . Young
Mr. Buckley
J~r.
H.M.Jr:
I have from now until eleven. If you will
tell me t he th1n&s which are bothering you
t he most, we will list them.
PurviB :
Well, I hesitate --
H.M.Jr:
If you would just run t hrough them.
Purvis:
The mast important of a ll, without question,
is the achievement of a pattern on this
financing ooeration over the tank end, which
would enable us t o develoP the maximum of
complementary programs with t he Defense
Advisory Commission. We, as you know, failed
on the l~erlin thing, I think oerhaPs t hrough
leaving it in Mr. Knudsen's hands entirely,
and I think I ran across a situation which
we know about. Actually I feel that from
now on our exoeriences show that the only
hone of getting to a chance of conclusion at
all BuccessfUlly i s t o have a small team on
both sides or the same individuals with perhaps
an air man one time, a tank man one time , and
so 'on from our end, and the Ar~y and Navy as
it may be have their men sitting in, but always
the same individuals so th~t we get to a real
conclusion and ma ke it stick . I feel very
conscious of the fact thllt t he minute any of
us leave the me e ting which are interested in
the broad oolicy, the tug of war on the oart
of ~ur men, oe rhao s, who have Purely a purchasing
out look down the line - we noticed it in the
Colt ma chine guns the ot he r day, or perhaPs,
82
- 2 -
one of the services here, get away from the
very thing we are trying t o do, and I do think
the establishment of a sort of team on both
sides will enable us to get somewhere.
The particular thing we are anxious about at
the moment is the question of the tank
financing, insofar as the Continental engines
are concerned. We are terribly anxious - H.M .•rr:
I\
~
May I ask a counle of questions , because I am
not uo to date. As I understand it, our
Government has a contract with Chrysler for
a tank.
Young:
Yes, sir.
H. "'.Jr:
Do
Purvis:
That i s a light tank.
Buckley:
Medium tank .
Dewar:
It is the same one.
Young:
Without the engines.
Dewar:
No engines are included.
H. M.Jr:
How do ;you describe this tank?
Dewar:
N-3.
;you
know what kind of a tank that is?
H. M..Jr:
And how many pounds?
Dewar:
55 ,000 pounds.
H. M.Jr:
This is to be built by Chrysler?
Dewar:
Yes.
H.M. Jr:
And you are going to buy some of these tanks
from Chrysler?
Dewar:
Not fro m Chrysler, no .
H.M.Jr:
Who are you buying from?
- 3 Dewar:
1'/e are oroooeing to buy from six different
firma, balanced within --
H.M.Jr :
A group?
Dewar:
Yes, from a group of three in the East and
three in the Middlewest.
Purvis:
All but the assembling.
Young:
The Chrysler deal is quite outside the
complementary program on tenks.
H.M.Jr:
Why?
Young:
That order has been placed for some time
with Chrysler.
H.M.Jr:
You don't know how many tanka?
Young:
It is a relatively small number.
Dewar:
It is five per day for Chrysler, and the
Army have placed orders - I should eay I
only know it indirectly - for eleven hundred
with a further oot1on on another eleven
hundred .
H.M.Jr:
And they have gotten started?
Dewar:
The Chrysler deal is all signed and sealed
w1 th the Army.
Purvis:
ThRt has been tor some little time.
other deal is a bigger deal.
H. M. Jr:
HOif
Purvis:
Three thousand for us, including the right
to modify it to the first 1,500, in type,
in the light of experience, and whRt is it,
a thousand minimum and two thousand maximum
for the Army they etRted the other day?
H. M. Jr:
Let me get this straight. The Army has on
contract with Chrysler now for the same
tank how many?
This
many?
- 4 Young:
Eleven hundred .
Dewar:
It is aoproximAtely tha t figure.
H.M.Jr:
And the Army need s how many mo re tanks besides?
Young:
They will olace a firm order for a thousand
with an option for another thousand.
H.M.Jr:
And you want how many?
Dewar:
Three thousand. We want to order 1,500 first
and 3, 000 if we can get some modifications
afte r the first 1, 500 , dependin g on experience.
Purvis:
Which would not affect t he engine, would it?
Dewar:
No .
Purvis:
And therefore we are up against the engine
deal , which i s simole. It is the engines for
3, 000 tanks on our part .
H. M.J r:
Just a minute. I have got an idea on this
thing . Chrysler can make five a day in eight
hours?
Dewar:
Yes.
H.M.Jr:
We ll, they could make ten a day , I suopose --
Dewar:
I think ten is the \l'ar Department Is idea or
their maximum.
H. M. J r:
\/e ll, thttt financing deal, as I understand
it, was taken care of and that is finished.
I am not sure or that figure .
Young :
Chrysler, yes, except tor the engines.
H.M. Jr:
ExcePt for the engines . The Army has placed
its orders for t he engines?
Young:
No.
Buokley:
They are go ing to use these engines.
- 5 Young:
The engines for the Chrysler tanks will come
out of a joint orogram.
H.M.Jr:
And that is to be olaced with the Continental?
Purvis:
Yes.
H.M.Jr:
And that is where you are bogged down?
Purvis:
We are bogged down, purely, I think, on the
question t hat the RFC at the laet minute
suddenly said that we would put our security now, the object, of course, of the whole thing
was to roll it over a longer period and if we
put up the security, we have defeated the main
object. All we have got is a contingent
interest in possible depreciation.
H.M. Jr :
I have a fairly good understanding of this .
Buckley wrote two letters on this thing.
There is nothing sipce you wrote me this
letter, is there?
Buckley:
No.
H.M.Jr:
Have you seen this?
Young:
Yes.
H.M. Jr:
It is a good letter. How many engines - well,
you want one engine for each tank, I suppose,
plus spares.
Purvis:
It means 3,500 engines for us, doe s it not?
Dewar:
Yes.
H.M.Jr:
What I have in mird, and I need 24 hours to
36 hours on this thing, but I have already
started the t hing - we hold, and Judge Patterson
has informed me - and I want this kept in this
room - that Chrysler can make tanks for you.
Now, if that is so, what I would like to get I am go ing to have him ov er for lunch tomorrow let's say that you wanted another- to have them
turn out ten, so it would be one and one for
85
- 6 -
,
you and that whatever the amount or money
that the Army has advanced ror Chrysler,
that you would pay back half or it as you
got each tank and that would certainly be
moet highly satisfactory to you.
Purvis:
We can pay as thei~ things are delivered ,
that is our object.
H.M.Jr:
But that would be entirely satisfactory to
you .
Purvis:
Well now, as I understand it rrom your detail I don't know how rar you are with your
negotiations.
Dewar :
No, that is all right as rar as I am concerned.
It would tie in. The problem is the delivery
date.
Young:
Yes.
H.M.Jr:
All right . We would double the order ror
Chrysle r and then I would say to the Army,
·~ow , please go ahead and ordtr another rive
a day and the English will take another rive
a day, but you make all the arrangements and
when you are all through, the English will
come in and they will take half or the orders
on the same basis," but let's let the Army
do it and you fellows sit back until it is
finished . I just go t through talking to
Knudsen, and I told him what I had in mind,
and he said , "Well , I have got an idea , and
I w111 see you t onight," and I said, no, I
couldn 't, I was busy, but I could see him at
eight tomorrow morning. He hae got an idea
that he t hinks he can get around this thing,
eo if you would give me a day or two to plsy
with thie thing, I either can or can ' t; and
if I can~ I will say , •Gentlemen, I am sorry,"
and the most you will lose is two days, but
it is certainly worth it. Now, if that will
work, t hen you oeople would just sit beck
and wait until either the Army or Navy, doing
the splendid work that has been done on getting
87
- 7t hem the technical information and gett ing the
model t hat you want - but I am Just t hinking
about the financing end of it . I am firmly
convinced we can go ahead and not have so
damned many people mess i ng i nto this t hing
and either the Army or Navy will sign up for
what they want, knowing all the time tha t
you want half the product when the c ont ract
is f ini shed . It sounds too simp le to be true .
You will simoly come along and say, "Well, we
will t ake half the oroduct," and repay the
cost added to each machine that you receive.
Purvis:
Do you think we can get a oriority when the
time comes , is that what it means?
H. M.Jr :
You get half the oroduction .
Purvis:
I mean a oriority on half t he oroduction.
Would it c ome down to the case that we would
get a oriority or woul d we know in advance - -
H.M.Jr:
If they can turn out ten a day , you would get
five and the Army would get five. I don't
know whether you would call that priority or
not.
Purv1 a:
We would buy direct from the manufacturer?
H. M.Jr:
You would buy direct from the manufacturer
and in some cases it mi ght be if they ~~re
turning out ten, you might get f our or five
or six or seven, depending upon how many the
Army wants, but the Army would say fi r st
how much they wanted of that, knowing a ll
the time what the tot al number is that you
want , and instead of your negot iat i ng with
five or six different manufacturers, let
the Army go ahead , sign the manufactur er
up, knowing all the time how many you want
and what you want.
Dewar:
We wa nt the capacity of about 20 a day.
If we could have the others in addition ,
that would be fi ne.
H.M. Jr:
Well, I have got one chance i n thr ee of
nutt ing this across.
88
- 8 -
Purvis:
You wa nt to establish a source which would
be better t han the o ne we have been trying
to establ1sh.
H.~I . Jr:
14uch better. The Army doesn't come in on
this at all. It would be t he ma chine guns
and everything, the whole works.
~lhst do you. think, Ph1l7
plain?
Do I make myeelf
I haven't got through it yet .
Young:
Yea .
H.M.Jr:
Well, ask me and then maybe you will bring
out some defects .
Young:
The RFC bothers me a little bit. You said
it does not come into the picture . If you
run into any difficultie s there whereby they
will have to finance t he plant eXPansion,
the Army has to certify and the Defense
Commission has to certify that they need
that o roduction capacity created in this
country and whether the >far Department w1ll
do that and the Defense w1ll do that, I
don't know, because the total daily production
capacity or the British and America combined
is pretty rar in excess or what the Army
wante itself today .
H.M.Jr:
You mean out of this money that they have
for this puroose?
Young:
Yes .
H . ~! . Jr:
On a one shift basis, the Army testifies
that they need f i ve tanks a day . Well ,
t hat leaves Chrysler saying on a two or
thrPe shift basis they can turn out ten or
twelve .
Purvis:
So far, the Defense Advisory Commission has
been willing to certify 20, or rather the
Army to the Defense Advisory Commission, would
be willing to certify 20 a day.
Young:
Yes.
It is a question of
89
- 9 -
1
I
(
Buckley:
That was the Defense Commission, I believe .
Purvi s:
Yes. They couldn't have done it, had it
not been certified. But 20 a day has been
certified as being necessary for the United
States defense .
Buckley:
I don ' t believe so, l~r . Purvi s . They have
certified that on a standard program it is
desirable to have 20 a day, but that is not
for the Defense Commission. The Army hes
been very insistent on not becoming obligated
for caoital investments in excess of whet they
really believe they need.
H. M. J r :
ll'ell, you see, here 1a what I have found
out. Here is Mr . Patterson, Assistant
Secretary or 1·/ ar, who says, "I don't know
a thing about it." He hasn ' t been consulted.
Purvis:
I think oerhaos I should have gone along to
see Mr. Stimson.
H. M.Jr:
I mean these n eoole haven ' t got the authority.
I told him, "Does this thing appeal to you?"
and e vidently i t does, and I am bringing in
Purvis :
You are bringing in the policy end at the
top.
H.M.Jr:
And I may not be able to get away with it,
bu t I will try it, and I wil l either do it
by Thursday night or I won ' t , but I mean this
thi ng has nev~r got t o Patterson. If it hasn' t
got to Patterson , it hasn ' t got to Stimson.
It I am wrong, say so .
Young:
I don 1 t knot<.
H.M.Jr:
Patterson said with the exception of the
memorandum which we sent him - we have
given him a legal memorandum ~thich I would
like these gentlemen to see.
Young:
He gave it back to me . He wouldn ' t keep it.
He read it very carefully while I was t here,
so
- 10 -
a nd I sugge s ted
woul dn ' t.
he keeo it and h e
H. II:.Jr:
Let Mr. Purvis r ead it. \~e hol d in that
memor a ndum, u s ing thi s Chrysler deal as a
f or mula , that you p e ople cou ld come alon g
and get part of the product and t he t hing t he.t is t he formula I would like to out
acros s . If we ca n do tha t for one thing ,
we can do it f or everything.
Purvis:
That is
anxious
getting
Council
H. M.Jr:
I mentioned this over the telephone to
Knudsen and he said, 11 Well , aren 't you
afraid the Government will end uo owning
too many planes? 11 I said, "Mr . Knudsen,
if the RFC does it and they have it and
they have a deficit, who do they come to?
They come to the Treasury anyway, " and so
he said, "Well, I have got one I think is
as good."
Purvis:
At least we seem to have stimulated a lot of
thought .
H.M.Jr:
I appreciate that you men have done a tremendous
amount of wo r k on the thing, and I am coming
in
Purvis:
It is coming into h i gher po l icy.
H.M. J r:
I may be a complete washout on this, but I
would like to try it. I t would make l ife
so much simpler for everybody.
Pur vis:
Oh yes, we had visions of --
H. M.Jr:
I mean, instead of all t his that is going
on - Young had, whe t was it, 50 o r 60 oeople .
Young:
We had a mino r convention.
Purvis :
The mac hine gun is ve ry important, too.
1
I
~
I
~~l
t ~at
the vital ooint for us . We are so
to get a pattern and stop these t h ings
away f r om us bece.us e the men in the
seem to pull apart.