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~ilson
H.M.Jr:
Morris
Purvis:
I finally got worried about tt, and oressed
Morris very hard to bring those oeoole into
line, because they were taking a rather strong
oosition on th1s . We got to the ooint that
the machine gun program as it affects both
the air and the tank is n c~se wh~ re owing
to it having started a little earlier, the
Army hae been dealing with two or three
people and has given us oermies i on to deal
with two or three oeople, and I think there
is a great deal to be said for getting those
togethe r if we can. If they a re too far
advanced to bring them together at the
machine gun stage, my hooe had been that
it might be ooss1ble to get them together
at the machine toolror the machine gun stage
and perhap s create some holder that licensed
all the tools and loaned them to the contractors.
H.M.Jr:
\/ell, t o get back to this formula, I wonder
whether this couldn't be done today, Phil,
on one piece of paper we could talk in terms
of- I don't know- if you could out on one
piece of paper that the United States Army
has bought so many tanks of - whet do you
call it, N-3 - that they may want so many
more and they have a capacity of five a day
at Chrysler on an eight hour shift. The English
want 20 a day. They might get five from Chrysler.
Now, the Army has testified that the ceoacity
in this country is eo much, whatever it is ,
you see. What I am thinking of is, if the
Army could always out their testifying on an
eight hour shift basis
Purvis:
I see your point.
H . l~ . Jr:
Then the English can take up the slack. In
other words, let the Army set - did they say
they might need 20 tanks a day?
Young:
No, the British want 20 tanks.
Purvis:
Somebody certified that a capacity of 20 10uld
be good from a defense viewooint. That was the
Defense Advisory Commission.
seemed very happy over that.
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Buckley:
The Defense Commission.
H.I4.Jr:
Let's just say those figur es are right and they
say they are willing to testify they need 20.
They can do that on an eight hour basis . rhe
Engl ish need 20, and there you are. Provided
that the Army is willing to finance the manufacturers so they will be in such shape that
they cs.n manufacture 20.
Purvis:
In that particular case, the Army will urobably
f!ay, "Well, we will only finance uo to ten but
we certify that the existence of 20 would be
helpful." Is that about their Position?
Buckley:
That is their position.
H. M.Jr:
Let's say whatever their pos ition is, we will
get it down on one sheet . Then if you go just
as far as you can with the Army and then - all
on this eight hour idea --
Purv16;
I see your idea.
H.M.Jr:
Then where you use up all t hat capacity and
you still need more , you go to the manufacturer
and make your own deal, just the way you did
originally.
Purvis:
In the meantime, we are having a very substantial
basis already arranged.
H. M.Jr ;
Yes , arranged at once . Then the Army is out
of it. We will just say, "All right, Army ,
we have gone this far togethe r. Now do we have
your pe rm! as ion to go to l~r . 'X 1 ? We would
like to give him an order for five tankR a day
and we will arrange the financing directly with
him and all the rest of it. ',fe don't want the
RFC or anybody else . \l'e will just make the deal
with him. " You would come out better in the
long run on that. This business of you and the
Army and the RFC and all these other oeople
sitting a round the table ia wasting too much
valuable ti me and if you could go as far sa
possible along the way I am talking, then
when we have reached the end of that road,
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- 13 you juAt e1t down w1th the manufActurer and
make the best deal that you can.
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Purvis:
Yea. In the meantime, we would already hAve
a eubetan~ial amount of what we wanted.
H.M.Jr:
I am just throwing th1s out.
Purvis:
If 1t could be worked , it wculd be very s1mole.
H.~.Jr:
That would go for machine guns and everything •
Purvis:
That 1e
H . ~ .Jr:
Go just as far as you can, and when you reach
the end of the road, all right, we have done
what we can, but from th1s point on we will
deal directly with the manufacturer.
Purvis:
An eight hour day has oo1nts, of course.
Buckley:
Under the recent legislation, the Arcy puts
down }{ down ~ayment, and under the plan
suggested now, they are going to balk on the
down payment.
Purvis:
Accept the down payment of some sort of
security. That wouldn't be anywhere near
as great as you think it would.
H.M.Jr:
Look, between now and tontght, this afternoon
before I go, take th1s thing - maybe I am
making a suggestion which le no good. If it
isn ' t , you can tell me so, but I just -- I
mean, the other thing seems just 1mooes1ble .
Purvis:
It ie very difficult unless when you get you r
f1ret pattern, the thing becomes easier, which
I don ' t know, and , of course, we haven't got
a first pattern .
Young:
Well, doesn ' t it boll down to whether or not
the Army will finance the creation of excess
caoacity over the ordinary amount?
Purvis:
On a basis above eight hours.
you (Young) see anything wrong w1th that?
Do
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- 14 Young:
Well, any amount of excess caoscity.
Dewar:
They have already in Chrysler.
H.M.Jr:
They have, yes.
Dewar:
That is where I thought your suggestion
was so excellent, because they have already
committed themselves.
H.M.Jr:
You see, they h~ve done this thing, never
dreaming th~t I would come back and grab
this Chrysler plant and say, "Now I want
the ot her eight hour production for the
English." It never occurred to them. In
the meantime, I am having Mr. Bell, the
Undersecretary, go through the Bureau of
the Budget and we are getting every single
financing p lan that exists in Washington
to lay on the table. Any method of finance
that has been used, I am going t o know in
a day or two. You have got the idea,
l·lr. Dewar. They never dreamed that I would
come along with t h is suggestion.
Purvis:
Tha t is really a ten- a-day capacity, not
five.
H.M.Jr:
They have done it. They have given t h em
the working canital. Now, I have got a
minute or two. I don't know how they are
doing it.
Purvis:
It is too deliciously simple after last
week's struggles for us to take.
H.M.Jr:
I may be over-simplifying the thing, but
I am just coming in at the top, which is
always dangerous .
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The other thing, f or instance, Mr. Evans
of GenP.ral Motors tells me that he is going
ahead and spendi ng 17 million dollars of
their own t o increase the Allison production
to 40 a day. I d~n't know what that formula
is, but he is just doing i t .
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Purvis :
Yea, tha t i s true. \i e made t he best
fin anc ing arra ngement with Allison that
we made wi t h a nybody . They have - they
a re moving t he reoayment period over
towar d delivery .
H.M.Jr:
Take a l ook at t hat one, becaus e they are
go ing ahea d now with t he Army --
Purvis:
They were very nice. ~~e struggled t o do it
with the others, but couldn't get the Allison
pattern .
H.M.Jr:
But don 't forget, I think the tide is all
running with you.
Purvis:
Quite . It is a great change.
in t hree t o four months .
H.M.Jr:
I came back with this thought, that if I c ould
this week, working with you gentlemen, work out
a financin g fo rmula, I would have made a great
contribution.
Purvis:
Oh yea. As a matter o f fact, Mr. Secretary,
it go es further. If we can't find some way
of rolling thia thing over, the excess airplane
uro gram is going to fal l of ita own weight .
There is no doubt about it . I can see the
talk o f t he oeople o n the other aide is,
"You haven't yet got a pattern for doing this."
That airolane thing, I believe, is deoendent
upon the solution o f findin g a pattern within
the terms of that thing you told Mr . Knudsen.
H. M,Jr:
I had a ao lendid talk with Morris Wilson , and
we discuss ed that. I don't know t he details,
but if it could be worked out during the day
on the fl.nancing thing, I could find out enough
about just what the Chrysler c ontract is . Do
you think you (Young ) could find out?
Young:
Yea, we could find out wha t t he terms are.
Purvis:
Mr. Young , oan we ou t uo against that, eo that
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That was done
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- 16 I could aryorecia te wha t it wou ld mean look a t t he t h ing if it works the other
wa y? Do we know enough about th e RFC
views s o t ha ~ one c ould l ook a t the t h ing
i f it work s out that way?
You (Buckley) rais ed the oo i nt of working
cap ital.
Buckley:
I think the RFC hasn't ex plored as much as
I have been thinkin g about what your maximum
liability would be, and I think we can work
that out to show you that it mny not be as
much as you fear, looking at both the side
of the Army and the RFC, so we ca~ work that
out today and call for additional data. I
would like t o look et it.
H. M.Jr:
I wouldn't throw the other one out the window .
Purvis:
It would give us an idea of where we are go ing.
Young:
1'/e ought to be able t o get
of it.
H. M.Jr :
What are you trying t o do with Cont inental?
Purv1 s :
Continental i s held up pending - because of
this breakdown, temoorary breakdown, as we
hoped it was, in thi s financin g situation.
Otherwise we had the negotiations o retty well
advanced in every other t hing. This is the
only thing holding it.
H. M.Jr :
What do you want Co ntinental to do?
Purvis:
That is the making of t hese engines f o r
tanks .
Buckley :
They Are not being held up at the moment
because they haven ' t f l nlshed with the Army.
We have wo rked out a dea l and they have been
working with the Army individually and Mr. Reese,
t he oresident called me this morning and said
that. they wouid be with the Army until this
noon before t hey would be ready t o sit down
in a conference with t he British t o wind the
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pretty good i deA
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so we have got the ma Jor oort 1on of today
without hindrance from Continental .
Purvis:
As a matter of fact, probably thet negotiation
between the Army and Mr. rteese is going on
with the same basis ae it would be with
Chrysler, and it is on an eight hour day
basis.
Buckley:
No , I d on 't beli eve t hR t is true , ~Ir. Pu rvi s ,
because t hey have all talked deflnttely about
the mRximum c apacity of this ple nt as being
20 a day, working all of one shift, a goodly
portion of a second, and a small portion of
a t h i rd.
Young:
A
De1<ar:
It is the maximum amount, allowing for spare
part s, 20 a day, so I am afraid there is no
l oonhole there •
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shift bas is.
H.M.Jr:
Well --
Purvis:
Underlying all - -
H.M. Jr:
Twenty a day for Continental sounds awfully
big. How much hor~e is t his engine?
Dewar:
Four hundred.
H. M. Jr:
We mi ght give it t o two comoanies . Twenty
a day for one company sounds awful ly bi g.
Nobody is doing it. Continental has a very
poo r orgl!n ization .
Young :
We explo red that.
Dewar:
He exolored t hat rather thoroughly .
Purvts:
That has been gone tnto strongly.
Dewar:
Mr. Knudsen's department are rather against
dividing it .
- 18 H.M.Jr:
I s it t he i r own engi nes they a r e mak ing, the
4oo hor se ?
Dewar:
It i s t h e
Young:
Wright en gine, radi a l .
H. M.Jr:
I didn ' t kn0\1 tha t . I am Jus t thinking out
l oud . I rea lize coming in like this - i t
t hey gave them - divided it to two plAnt s
a nd stuck on the eight hour theory, it the
Wright engine - maybe put Lyc oming or so~e
body el a e o n the thing .
Young :
We di s cuss ed t he nos sibility ot Buick going
into it .
Purvis:
That got quite a little way alon g until tt
was held up .
Young:
It seemed to be the general consensus ot
oninion on all fronts, a s I followed the
conversation, that one co moany could do the
job bett er t o r tha t number ot engines, which
i s not considered a large amount, that it is
hardly lArge enough t o divide it up into two
Buckley:
There is a lot to the machine tool nroblem.
H.M.Jr:
I t you co uld divide up?
Buckley:
Yes.
Pur'lis:
There is something I would like to say about
machine tools.
H. M.Jr:
ll'ell, I still - I me an, it i s sti l l - we ll,
the Army is going to make a contract with
them first, aren ' t they?
Buckley:
Well , in theory they wer e t o run along oarallel
and t hen in t he s ame meeting with the RFC there,
then because Mr. Purvis wanted t o be absent
trom the meetin g scheduled Friday morning,
which was t o start t hes e negotiations, the Army
~frigh t .
CO I'llHtniE'f!.
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orefP r red to go ahead and wo rk out their
deal with Continental up to the po int or
signing separately and then get together
and the Brit ish do the same t hing and
then they would get together and iron out
anything that ought to tie in between the
two contracts.
Purvis:
I took fright at this thing. \fuen I heard
that security had to be put up, I realized
it cut to the very heart of the thing and
did not achi eve the roll over that we had
hoped to achieve on the basis of the - and
I thought I should keep out of anything
which would tend to get that to eoltdify.
Young:
The RFC pos ition is pretty much now boiled
down to the point where they fi6Ure there
has got t o be some security f or at least a
certain part of t he British order, either
in the form of British-owned American
securities deoosited in trust or a letter
of credit or cash or eomethln g else.
Buckley:
I may say that Mr. Schrom, Friday morning
when we met h1m, was very sympathetic. He
felt that what he was su6geAt ing was an
a l ternative to what you suggested, but was
in some degree and in the greatest degree,
they felt, they could atternot at that ooint
to meet your objective. In other words, he
felt that they couldn't go 100% but that thls
maybe went some fraction, 60 or 70, which
represented their ultimate, as he thought.
They were very sympathetic.
H.M.Jr:
Yes, but --
Purvis:
I hope I fully understand what he is suggesting,
becaus e I haven ' t be en quite able to see how it
helps and it is orobably entirely my fault .
Buckley:
He was under the l rnp reeslon you were more
interested in serving - get ting your deoreclation
on income on whatever balances you might have .
Under that you wouldn't have to pay a cent to
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Continental until December, 1941 .
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Purvis:
Wouldn't we have to put uu securities?
Buckley:
Yes.
Purvis:
But a 11 we are getting tor it l..n exchange ,
it you take tt in its ultimate effect because t he other way, they are loath to
accept , according t o whether the market is
going uo or down .
Buckley:
He would say, 11 \l'ell , they ought to put up
securities coverin g ~ million of olant plus
their maximum liability tor goode 1n orocess
at any one time," which might be 5 million ,
so that your total that you would have to
hock would be 9~ million dollars against the
tota l commitment order olu a olant of maybe
25 m1111on.
Purvis:
So far, Mr. Buckley, we have not had to do
anything like that exceot in ~ery exceutional
instances. As a whole, even proceed ing
i nte re stedly, we have not had to out up
either securities or cash--
Buckley:
In contrast , there are your down oayments .
Under h i s scheme, that would take the olace
of down payments.
Purvis:
But I doubt whether this would be an 1morovement because we have been able to arrange the
down payment spread only as the commitments
were made .
H.M.Jr:
But you had to out down 30% as a down oayment .
Buckley:
Under this you would have to put 9 million dollars,
approximately, in cash before you ever got the
motors if you followed the Continental terms,
plus ~. which would be 3 million 5 in cash
you would have to put out before ·you got a
motor . Under Mr. Schrom's eubgest i on you wouldn ' t
put up a cent until you got a motor 1n Februa ry,
1941, a nd then you would only be uaying for motors
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as you go t them.
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Purvis:
You see, t o me the minute you put the
securities, you put t he t otal amount up
just the same.
Buckley:
Then contrast the 13 million 5 wh1oh you have
to put in cash with probably 9 million 5 worth
or securities which you would have to place,
which seems to me is almost a maximum. That
~1ould rep resent the ~ million dollars ini t1al
liability on the plant plus around 5 or 6 million
dollars representing the maximum liability at
any time !or the manufacturer's commitments
or working capital as the contract is canceled.
H.M.Jr:
\'/hat is the total contrs.ct !or the English?
Buckley:
It is about 20 million dollars !or the motors
plus ~ million !or planes.
Purvis:
Getting back to the basic policy, as I understand
it - I may be wrong - but as I understand it ,
it was something l i ke this, that as these manufacturers or fac i lities useful to defense were
under the sovereign rights of the United States
at all times, it was all right from their view
and , of course, excellent from ours in spreading
out the cash and security situation to let us
repay c ani tal faclli ties at the delivery there.
This seems t o me to be getting - you say the
difference for us is instead of putting up l t
million we would put up g or 9 or 9*?
Buckley:
Inotead o f nutting up 13 million in oash, it
would be 9 or 10 million dollars in securities
in trust .
Purvis:
It achieves a small part of the possible - -
H.M.Jr:
Then if what he says is so, it may not be as
bad as it looks at first.
Purvis:
Except tha t is apparently what you think it
looks like when you l ook at it.
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Buckley :
That is my best est imat e.
Purvis:
There you a re. It r eally mean s t hi s is a
method whereby we a chieve about a t hird of
what we hop e t o a chieve . I s that it?
Buckley:
I t ie a matter of d e gree.
Dewar:
Could Mr. Youn g and Mr . Buclcley a nd I
co l laborate t o put something to gether in
two schedule s ?
H.M.Jr:
Suppos ing you do tha t, and if you c ould come
back at 4 and give me a chance t o have it
before I see Mr. Knudsen.
Purvis:
Yes.
H. 14.Jr:
I am seeing him the first thing in the morning
and if I could talk t o t hese two gentlemen f o r
a minute and then would you (Dewar) want to
wait in t heir of f ice?
Dewar:
Yes, I will be there.
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September 3, 1940
To:
The Secretary
From:
Mr . Youn&
Re:
Tank Financing
The British Purchasin& Commission is currently attempting
to develop a tank manufacturi~ program in this country with a
production rate of approximately twenty medium weight tanka per
day. The United States Ar~ has already placed a contract with
the Chrysler Corporation for a production rate of five medium
weight tanks per d~, with delivery begi~~i~ in approximately
fourteen months. In addition, the United States ~would
like to create production facilities for ten more tanka per
day.
Because of the fact that the British and the ~ have
agreed upon a standardized design, it would seem to be indicated that both parties would benefit i! a Joint tank program
could be arranged. Joint programs could be worked out in &JJ:1'
one or :nora of four mo,ys:
(1) By utilizi~ the original co~lementary theory
wherein the United States advanced coney for the CRPital
expenditures, and wherein the British paid their proportionate share of such exoenditures over the unit nrice
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( 2 ) By following a formula similar to that utilized
in the Packard-Rolls Royce deal wherein the Br itish found
it necessary to make large do1tn payments in advance.
(3) By utilizing a for mula which would be a coopromiae
over 1 and 2 , namely, the allocation of British-owned
American securities or some similar collateral, perhaps
embodying a trust agreement ns securit~ for the advance
by the United States of funds representing the British
interest in a production nrogram.
(4) By utilizing United States reserve production capacity (capacity over and above current needs for defense
purpoaes) for the British •
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As method No. 1 noted above has been fully diacuosed in the
past and as method No. 2 has been demonstrated in the Pael:ard
deal, the compromise method llo. 3 1e outlined on ths attached
sheet with respect to financing a tank engine '!)rogrl!lll. As the
original comole=entary program theory cannot be used, and as
method Uo. 2 1a unduly hllrsh on the :British, a practical solution must rest in methods 3 and 4 or a combination of the two.
It would seem that method No, 4 could be baaed effectively
and wholly legall y unon the defense requirements of this country,
I f the Gover nment can finance production capacity for defense
purnosee over and above that required for current needs, there
are no obstacles in the wa:r of utilizing such excess capacity for
the :British. The amount of excess capacity would have to be determined by the Army and Navy with the help of the Advisory Co~iseion.
Thus, if the Army wished to creAte a plant to produce ten
tanka per day on one shift , it might be nossible for the :British
to secure ten tanks per day at the saoe time from a second shift ,
In this connection, however, it should be pointed out that it would
be better to determine reserve capacity on a percentage basis rather
than on a mechanical basis. For ex8.111Ple, the Arm7 could determine
ita current needs plus 50 per cent reserve capacity.
I t must be nointed out, however, that the excess capacity
certified b7 the Army, Navy, and Advisory Commission still m83 not
be adequate to meet the requirement s of the llritiah on such a
baaia, In such an instance , the :British would find it neceesary
to satisfy the British excess requirements by caking a oaparat e
deal with some other manufacturer. It is perfectly possible that
the coat of financing the British excess might equal or exceed the
coat to the British under compromise method No. 3 outlined in the
attached.
In utilizing method No. 4 there is aleo preaented a pr oposal
in connection with working cauital inasmuch as it would seem t hat
the llr it ish would have to auF.>ly this item in order to operate the
additional production shifts.
At first glance it would seem thllt the complementary progrN:I
method No . 1 would be the best of any method evolved to date, and
that the advantages of method No . 4 over the compromise method No .
3 would depend upon the factors involved in the individual pr ogram.
105
RE ALLIED PURCHASI!lG PROGRA!.::
Present :
September 3, 1940
4 :00 p.m.
Mr . Purvis
1~ .
Dewar
1fr . Young
1fr . Buckley
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Purvis :
~y
Young :
After you called me today, I had a copy of a
letter that just came in irom the STiedish
llinister to J.:r . ·.. elles . Here is a memorandum
I wrote up . I am sorry I took so l ong .
H.L:. Jr:
I had better take it all
Purvis:
That isn't clear yet, is it?
Young:
I gather from this letter that he has definitely
given up on the planes now, but not on the other
stuff .
H.M. Jr :
But you think he has on the planes?
Young :
Yes .
H.M.Jr:
Is the letter attached there?
Young:
Yes, I have got the l et ter here . It is very
short and it takes a few cracks at me .
H.L:. Jr :
Is this the S\·1edi sh letter?
Young :
Yes .
H.M. Jr :
I will take this home, too .
Young :
He accuses ce of being unduly harsh.
I put on your desk, \'li thout asking you to
read i t nor1, the Allison statement as it was
given, somethin;; that came out in Sunday' s
talk, which I haven ' t mastered myself? It is
supposed to be shortly put .
ho~e .
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H.ll. Jr:
Good. \:e will give you a promotion.
Purvis:
L~y
H.L!. Jr:
Do you think the Swedish plane thine is through?
Young :
Yes . In that letter he asked for reconsideration
of the munitions .
H.Ar. Jr :
But not t he planes?
Yount;:
But not the planes .
H.ll. Jr :
Did you know vThether it is true or not?
Purvis:
Our ne~otiations with manufacturers are right
up to the point r:here they are wai tine word .
H.L'. Jr:
Could I blindly call up 1:r. '.• elles and ask hil:l?
\1bo does the releasing over there?
Young:
J.!r . ·;,elles does .
H.H. Jr:
I had better read it .
about the planes?
Young:
Yes, you can say that you heve seen a copy of
it and say that you i nfer from the language
used that the pl anes are out from novr on.
H.H. Jr:
\'lhy
Young :
That is right and it is at the point nov: v:here
he has got to 'come back and find out the procedure to turn over the stuff .
H.1!. Jr :
They haven ' t done anything yet.
I add my
con~ratulations?
You can go on the bas is of
that letter . You can call hit!! up and say~
"Have you replied to the other munitions? '
Should I ask him just
not just put it in the affirmative , "I come
back and I find out that the Swedish ~lanes
have not yet been released to Canada .
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Young :
He wouldn't talk .
H.ll. Jr:
;·.ho nouldn ' t talk?
Young:
Bostrom, Swedish llnister ,
H.M. Jr :
But \,-elles \7as all agreed at Cabinet two vreeks
ago last Friday ,
Young :
SuPe, and then he passed the buck to me . He
backed me up in one of the di rt i est corners
I have seen yet .
H.U. Jr:
No\'1, have you got a couple of pieces of paper?
Young :
Here is one and the next one is coming .
Buckl ey :
It went on to two pages and a quarter , 1lr.
Secretary . I am sorry .
Young :
That is the trouble .
make it simple .
H.M. Jr:
\'tell, v1ha t have you got?
Young:
That is on the RFC plan.
H.li. Jr :
Have you seen this (showing Purvis headlines
concerning 50 destroyers to be sent to the
British)?
Purvis :
I noticed that with great satisfaction .
began in earl y May.
H.ll. Jr:
I will have to take it up wi th Mr . Hull . \'.'elles
is on vacati on. I can' t do this . I am tired.
Buckl ey:
If you go to the third page, there is a littl e
table t he re that comes as close to putting it
toge ther as r1e could.
H .~. Jr:
Tell me about it . I don ' t want to read it .
Tell me about it, somebody.
~.e
didn ' t have time t o
It
108
- 4 Buckl ey:
All right .
H.L!. Jr :
\':ell, nhat does all this raean?
Buckley:
'l'here are
H•.I.;. Jr:
Incidentally, find out from J,:rs . Klotz the
type that I use . I can ' t read this thing.
~d . v1hen you d? a thin~ for me! use a type 1 t l.s about tvnce as b1.e; as th1s .
Seri ously,
I can ' t read it . It hurts my eyes . Get from
her the kind , and have a typenriter put in .
Buckl ey:
On the capital items , the RFC will buy the
machinery and lease it, that is their proposal, and ~et the money back in the cost
of the product . There non' t be an1 initial
cost to t he British, but under the1r plan
the British would have to put up security
for their portion, Tihich is 4} million dollars .
t\~o
problems --
Now, r:ays in r:hich that could be reduced somer:hat within the RFC plan are , first, they might
be willing to give a 10% all0\7ance for ultimate
scrap val ue, which would cut it dovm from 4}
to four million fifty. In addition , the Army
might be will ing to assuoe a higher proportion
of the capital liability than their proportion
of the total orders, because if they haa to
put up their ovm plant to buy 2, 000 motors,
which is 4/llths of the order -(Telephone conversation v:i th Adolph Berle follows : )
109
Se~tember
4:12 p. m.
Adolph
Berle:
Hello, Henry.
H.H .Jr:
I' m fine .
3 , 1940
How are you?
How are you?
1
B:
•.. ell, I ve been back ten days and .....
H. lt.. J r:
And so the bloom is off.
B:
..... so the bloom is off but I must say
that tha t couole of weeks was first rate .
H.H.Jr:
Good . Look , I wonder if you want to help
me out .
B:
::hat ' s up?
H. !! .Jr:
Two weeks ago last Friday at Cabinet it was
agreed that we ' d cancel all outstanding
licenses to the Swedish Government with the
excePtion of 7 million r ounqs of ammunition.
B:
Yeah.
H. M.Jr :
That was all agreed to . 'A'elles agreed
and everybody . The President approved
everything. I come back today and the
thing st i ll -- the planes Particularly
not been released for Canada, and it ' s
B:
.iell , that ' s hell.
H. H.Jr :
It is -hell .
B:
All right .
H.IL J r:
Now it 1<as all agreed two weeks ago last
Friday at Cabinet . Welles eat there and he
said -- I eaid so~ething - - well, you know
he ' d been for this Just as much as I had .
Well, it ' s two and a half weeks and theee
~lanes, a lot of them, are finished .
B:
.~ell ,
)
I agree w1 th you absolutely .
to i t
it and
damn
have
really
1!0
- 2 -
:)
J -J
H.J.i.Jr:
Ar.c
B:
Sure. All r ight, I' ll
at onc e.
H. !J..Jr:
"ow t he man who has a ll the detai ls is in my
offi c e now and he'd be blad to come over any
time a fter fifteen or twenty minutes if you
want him . It ' s Philio Young .
B:
.>"h ich is he'
H. H.Jr :
He handles t h e British Purchasing Hi ssil)n for
me .
B:
All right. '.I'ill you ask him t o come over i f
he could abou t 5 o 'clock . I've go t a fellow
coming i n here at 4:30.
H. ' .Jr:
He'll bring you over-- t here 'e a lot of
corresjondence and wha t they di d , they wished
Bostrom onto him , so Phil hAs the whole story .
B:
In t he meanwhile I' l l have our Swedish
Ri~ht .
o e ool e down . But I had a little chat here
when I go t back and I' d understood that our
oe o-ole were all agreed thet ...••
H.I'..J:r:
,;ell, it
B:
Well , it seems to me inconceivable something
hasn 't been done about it. I ' ll find out
about this ri ght away .
H. lLJr:
See if you can 't do it still t onight.
B:
·.~·ha t
they r.eed them desjerately.
•~as
~et
to
wo r~
on tha t
all agreed a t Cabinet Adol pb.
is it?
H. H.Jr:
See if you .. . . .
8:
Well , t hat ' s exactly what I thought .
H.l·I.Jr:
Phil Young will be at your office at 5 o ' clock
tonight .
B:
Ri gh t .
H. H. Jr:
Thank you .
ThanA you.
All right.
111
- 5 -
)
H.J:.. Jr:
He says it is a dann outrace .
Youne:
I think Bostrom was anay over last weelc.
H.:.!. Jr :
He say~ it is a dBrul outrage . I want to do
someth1ng today. I uant to &et sooethin~
chalked up .
b
Purvi s :
May I suggest this (exhibiting headlines concerninr; destr oyers)'?
H.1!. Jr:
I only had ~ soall part in that . These gentlemen. are comlng to . d1nner at a quarter of eight ,
so 1f Berle gets 1t done tonight, let De know,
will you? He 11ill do it . He is sending for
the people immediately.
Young:
I will be delighted .
H.1!. Jr :
You will go out and order yourself two Smorgasbords.
Young:
Here is the other memorandum.
Buckley:
\
,.)
\\ell, the maximum liability that RFC will want
secured Vlill be the 4·} . That may be reduced
first by the loans, if that can be worked out ,
and second by gettin: the Army to take more
than its proportionate share of the liability
because obviously it can ' t buy 4/llths plant
for 4/llths of its cost, becaus~ they are
. getting more than they could produce without
having the British in with them and they might
be willing to take part of the advantage they
gain by having a complementary program plus
the additional fact that they have asked for
the privilege of takint; up to one half o~ the
plant ' s production if they want to ex.ped1te
deliveries . So that is the whole cnp1tal.
Something less than 4~ mil~ion would have to
be secured. Hon far dorm 1 t would go, we
don 't know.
112
- 6 -
Now, on norking capital, the RFC will advance
t? Continental all the 1.orking capital they
w1ll need up to reasonable limits and that
limit figures out about 40% of the contracts
or about eight mi llion dollars . Nor;, that ,
hor:ever, is subject to cel'tain reductions
which can be worked out in two ways . In the
first pl ace , if the British had to terminate
the contract so~etime early in its existence,
even though Continental might be stuck v1i th
ei~ht million dollars worth of material commitments , they could use those to round out
the Amy contract because they nouldn ' t have
committed for the nhole h11ndred percent of
the Army contract and I have worked out the
mathematics on that .
In addition, as the British par for motor s
that they take, they are reaucin& the amount
of liability they have on the pl ant, the
4~ million, and rel easing that collateral
which could be shifted over to secure their
working capital liability.
)
Nor;, the sum of all those factors boils dovm
to the table on page 3, which I think may be
clear .
ll .ll. Jr:
Under the one called "Tank Financing"?
Buckley:
No, the third page of the little memo I just
gave you. That is right up at the top there .
Now considerin; both the capi t al liability
and' the r:orking- capital liability and crossinG
off the amo11nts that they will be releasing
in one place the. t they can use in another r1hen
that point comes, m:[ view o~ t~e . ~tter , these
are the maximum est~ted l1ablllt1es of the
B.P.C. at these various points in this production llrogram.
113
- 7 -
""'\
Purvis :
You mean liabilities aGainst nhich ne v:ould
have to put up securities?
Buckley:
The liabilities against which the RFC on its
present :o':'te v10uld p:obably want you to put
up secur1t1es, yes, s1r .
H.Ll.Jr :
1
Buckl ey:
No , that isn ' t , unless it is on Philip' s .
H.L:. Jr:
I thought you nere going to take the two and
put them side by side and see which 11ay they
bear the best .
Young :
That \7as the idea . ·.. e were very definitel y
hamperP-d by a lack of information as to hoTI
this other one \7oul d 11ork out, as far as
figures go .
H,l.i, Jr :
Oh.
Young:
You Vlould have to go back to Continental, you
see, and get a different set of fienr es from
them.
H.M. Jr:
Well, I mean, do it the other way. I mean,
take the Chrysler tank program - will anybody
tell you how the Army has done that? I mean,
then apply thi s H.FC formula to that contract
and then put those two side by side . Do you
see what I ~aean?
Younc :
You mean take Chrysler?
H.ll. Jr :
Take Chrysler, whatever. t:ay t..e Army Iu:s done
it, on an eight-hour sh1ft, end suppos7ng the
English came along and got the other e7ght
hours . It would be added to each mach1ne
...)
I.J
:!ell nov1, have you taken down at all the proposal v1hich I sketched this morning, the
Chrysler tank thing, and how they woul d fare
under that? Is that on this other memorandum?
114
- 8 after delivery, you see .
Young:
yes . There are h:o points r1hich I brine out
1n ~y m~oPanduo in that connection . The
first one is ~nat on the shift basis you have
got to establ1sh a Peserve capacity ~hich the
Army and Defense Commission would like to h2ve .
H.l.f.Jr :
Yes .
Young :
That capacity woul d have to be expressed on a
percentage basis of, say, what the Army needs
now, plus 50 or 100~ extra, rather than on
a shift basis because you run into mechanical
difficulties .
Secondly, it may be possible t~t that sort of
progrllll in certain instances r:ould cost the
British more than socething like this l~C
scheme because the reserve capacity over and
above J.r7r.y current needs cay be a good deal
less than the British require~ents , in which
case their financing of the excess might cost
them oore than doinb the whole thing on a joint
basis .
)
H.!.:. Jr :
\',ell, \"'e don ' t know. \','e haven ' t :;ot it .
haven' t had time to get it .
Buckley:
Mr . Dewar and I made a very rough estimate of
Purvis :
1-..J
You
that on the engine program and as against th~s
908 million maximum on the RFC plane product1on,
it seems that on the other plan i t \7ould probably run around 12 mill ion .
llr . Secretarj·, I do think there is a littl~
dan::;er by getting away from the base on thlS .
I feel there is the dan~er that ~e are not .
very carefully tryin:::; to r.or~ out th~ ':lechan1cs
of this and ,.,e shall automa be ally hl!ll t the
output of the munitions in question, according
to, A, appropriations in Congress , and B, o~
dollars, 1:hereas ;;hat r:c really r.unt to ach1eve
115
- 9 if we can is the !Ji.litary needs of the situation and I a~ a little afraid of the effort
to help that turnin& out to be a bottleneck
on nhat really is a good defense program.
"
H.:!. Jr :
\Jell , supposing you sleep on this .
Purvis :
>lell , I think it needs a little more t houooht
0
and if you r;ouldn ' t mind, l)erhaps tonight
we can have a little more aiscussion.
H.1!. Jr:
Maybe I wi ll ge t a chance to read these between now and a quarter of e1gnt.
Purvis :
I thin_lc --
H.M. Jr :
Supposing 71e let the rest go until then.
Purvi s :
I think that is wise, rather than rushing it .
Youn:; :
Oh yes , sure .
H.M. Jr :
..hat do you think , l.:r . Dewar?
i)ewar :
co~ent,and I have no doubt
Young can take care of that, and that is
our relations v1ith the Army and the Defense
Advisory Committee . They are not v;anted to
have this uiscussion here with us?
..)
I have only one
l.~ .
h.J
Youne :
They don ' t want it tonight and probabl y will
not before lunch t i me tomorrow.
H.M. Jr :
At lunch tomorrow, I am having 1~ . Stimson,
1~ . Patterson, ~ . Forrestal, Mr . Knudsen
and wr. Jones, and I am soinG to have you
(Youn"') and I will talk about the whole
busin~ss at that time and I am sure that
1:r . Stimson and Jir. Forrestal and Mr . Patterson all will have to start from scratch .
From the conversations I have had with them,
I don ' t thi!lk they kno\7 as much as I know
116
- 10 -
about this , and I know very little. I don' t
think they know a single thine-, I talked with
~orrestal and he sa~d, . ·'I am just getting into
1t totlay. My head 1s 1n a swim. " That was
his ansuer . I said, "I l"iant to get you all
together and see if m can't simplify the
thing. " He said, "For heaven' s sake, do . I am
absolutely di zzy. "
It hasn ' t reached that laye r . It has been
handled by the Admirals and the General s and
the fellows that are really respons i bl e and
it hasn ' t got to them and I thi nk tomorrow ' s
luncheon may prove to be very useful and I
decided to ask Jones ,
Purvis :
I do tnink that Schram' s attitude has been
Young:
Oh, I t hink so .
Purvis :
But I have the same doubts that you have on
this thing .
H . !~ . Jr :
\.ell - -
Purvis:
I may have some i deas myself .
H.M. Jr :
Sur e if you \7orked until 2 :00 o' clock today,
you ~ust have found enough to keep yourself
busy,
Purvis :
I v;as on the t el ephone for an hour .
H.1l:. Jr :
Uaybe this is all right . Maybe this is a
better deal than you all think it is .
Purvis :
I am not sure but what it carries impl ications
that woul d tend to reduce the output in the
country_.
)
~._)
extremely f r iendly in intent , don ' t you think
so?
117
d
- ll -
H.!J.Jr:
.bat I am t alking about?
Purvis :
Oh no, not
H.1'.Jr:
I
Purvis :
No , no . I \;as really thinkin"' of this as a
'
~
matter of fact .
Younc:
I thiru' it might, very definitely.
Il.!.f. Jr:
~·.nic h,
Young :
Yes .
H.JJ. Jr:
·,iould reduce it?
Young:
Yes .
H.M. Jr:
You mean because i t woul d be using up the
Con~re s sio nal money?
Young:
Yes , and it depends u:pon how much perception
you can get in deterrruning wlmt is reserve
capacity and so on, and f r om what I have seen
so far , it isn' t GOing to be very l arge.
H.U. Jr:
I am cl ad you did get throuch the destroyers .
Purvis:
Has t here been any reaction yet?
H.M.Jr :
Is the Packard deal sewed up?
Purvis:
The Packard deal, I understand, is still rocking along . I don' t think it is closed up .
H.lf. Jr :
Do you know what the Packard company are doing?
Purvis :
As f ar as I know, certain thin~s are going
forward, but I can ' t help feeling they are
not going forward fast enoueh . I!o11ever , I
thou~ht
~-ours .
you oeant mine would reduce it .
nine?
118
- 12 -
think there is a certain amount goin~ on but
it doesn't seen to finish up . As fa~ as' I
~0\1, i ~ ~ s no t. signed yet and our people are
JUst 17a1hng. .ie have continued to play the
san~ ha!_ld fron &y 31st, as you !mow, on that.
It 1s d1ff1cult to reach a conclusion .
~~
H.!!. J,. :
Just to switch back again to the Swedish thing,
there must be a lot of those planes that are
fini shed, aren ' t there?
Purvis :
Yes , there are some on the docks there .
H.L!. Jr :
'rhe last
Purvis :
They are very valuable just now .
H.l.l, Jr :
\'.as it 30 or 40? Have you got all that information?
Young :
Oh, I don ' t think that many are \7ai ting.
H.ll. Jr :
Oh yes .
planes .
Purvis:
And it seems such a shame .
H.JJ. Jr :
Could they get that information for Phil before
he goes over?
Purvis :
Yes, because we are right up with the manufacturers .
H.ll. Jr :
Could you get that for him before 5:00 o' clock?
Purvi s :
Yes, \7e can get i t on the telephone .
H.l.l. Jr :
Two weeks ago there \'lere 30 or 40 of those
Republics IThich were finished then . There must
be a lot more .
Purvis :
That is what I understood.
H.M. Jr :
All right .
That was tno weeks ago, of the Republic
There were 30 or 40 that r:ere finished .
119
COlli'ID:r::lTIAL
ACT I 011 lli:9;l!IlU!D
Sept&Qber 3, 1940
To :
The Secra tary
From:
Mr . Youne
The attached request, ~bich requirea epecial
netion, b~a been received from the British Purchaaing
Co!Dllliuion.
I forwarded this request to Colonel Burna pointout that it was not en ordinary one &nd abould be
called to the attention of Assistant Secretary Pattereon .
I llleo forwarded a cony to Mr. Knudaen &nd again upheaited the !act thAt it should receive apecial attention.
i~
)
Thia matter is of vital i:DOort&nce to the British
end needa Preasure h!U1dlin,; .
-:fit.
120
R!Q.UEST J'OR PRIORI'l'T OJ'
SIX OO!iSOLIDATED ADi.CRAft
CORPCIU.'l'ICll MODEL LB-30
!be Government of the United Iingdoa have on
or der with the Consolidated Aircraft Corporation
120 four-engilled landplane boabarcment aircraft,
Model LB- 30. The first of these 1e dua to be del i vered J'ebruary, 1941.
!he Britieh Government are, however, extreael 7
anxious to obtain six of theae aircraft during September
and October, 1940, and aa they are the same model aa the
United Statea Ar11.7 B-24, which 1a aho on order and due
f or delivery prior to our own, it io desired to know
whether the United Statee Gonrnment would be w1111n& to
allow the British Government to take earlJ deliver7 of
aix in exchange tor six of the Britiah contract in
J'ebruary, 1941.
!be ee aircraft are re~uired to fi7 baol< to Cauada
piloh en&e&ed in ferryi ng planes to J:nglaud. Other
available .eans of transport are iuadequate either , aa
in the case of the o.eraeas airw&Js aerTice , becauae in
October ice eats in at Botwood, or, becauae aa in the caae
of aea tranaport, it tal<ea too long for the acheae to be
worl<able w1 thout a nry large li:Uilber of crewe.
It h understood that the J'rench had an arr~aent
with the United Statea Ar~ to obtain two or three of the
earlieat deliveries. The larger quantity of aix now aaked
for ariaea from the fact that the Bllbauy hope to persuade
lngl.aud to uae this type of landplane f or continuing the
original traneatlautic air service durin& the winter, which
aeana three for ferry pilots and three for transatlantic
aerYice .
A.
Aucuat 16, 1940.
c.
Melia
UQIJBSf J'OR ntoatn or
SIX COJSOLIDADD .lll!CB.lft
COHPCIIU.!l 01 ltODIL LB-30
!be 0oftr-at of the Ua1 tell IiapH ha.... Oil
order with Ute CoaaoUdate4 .Urcrart CorporaUoa
120 tov-eaclu4 laadplue lloabar4Mat alrorat\,
llo4al LB-30. !'he tlrat ot \heae le due \o \a cl.ellnred lebraar,, 1941.
~
J
I
lrlUeh Oonrauat are, lt.owner, ex•re.lr
aaxl01UI to ob\ata al.x of \h. .e alrorat'\ brlac S~\eakr
ud October, 1940, ud aa \he7 are the .... aode1 aa \he
lJal H4 1\ataa .lnt:r .J.-24, which 11 abo oa order aa4 du
t or 4allnrT prior to our o'A, l\ h 4eelr. . to llaow
11be\her \he 1Ja1\e4 Sut.. Oo....rueat weald k wllllac to
allow \he Brl\leh Oonrueat to \aft early ullnrT .r
ab la nahaa«e tor el.x of \he llrlUeh coa\raot la
.,.~. 1941.
!beae airorat\ are required \o nr kelt \o Caada
plloh •...-ce4 1a ferrTla& p1aa. . \o ...,.aad. Other
nailable ..,. . . ot \ru111>0rt are 1Aa4aqah el\lt.er, ae
la \he oaoe ot \he o'ftr .... alrvqe ... mea, becaH la
Oc\ober lee ae\e la at Botwood, or, becaH ae \a \he oaN
of Ha \ruepor\, U \altee t oo loac tor \he eoh- \o M
wrllable wl U!.ou \ a nrT l arp aaber of creve.
I\ h 'IUI4ere\ood \hat \he "reach ha4 aa arr.......t
wl \h \he Uni \ad 1\atea .f.nt:r \o obtai a \wo or \hrH of \he
earli. .\ dellnrlea. !be larpr quuU\7 of al.x DOW uD4
tor arhee fro• \he tao\ \ha\ \he
hope \o per....S.
~ \a uae \Me \7pe of laadpleae t or ooaUaulq \he
? rlliaal \r&aaa\laa\lc air eerYlce dnrlac \he wla\er, whloh
..... \lt.ree f or terrT plleh aDd \hrM for \reaaa\luUc
NrYlca.
•••87'
A.
Aa&uat 111, 1940.
c. Ilona
1
~
PROPOSAL BY THE RECQ!;STB.UCTI ON FINANCI CORPORATION FOR
J'IUANCIIi'G COMPLDOJITARY PROGRAM FOR PRODUCTIO!l OF 'Ul:X EliGiliES
CapitAl I te!lll
The Reconstruction Finance Corporation vi ll buT $7,100, 000
o! machinery and tool s to be l e&eed to ContinentAl Mo tors . The Reconatruction F i nance Corpor a tion vill be reimbureed &s Conti nent&l
col lects this cost from purchasers (United States Ar~ end British
Purchas i ng Commiss ion) &s engines are delivered. Li&bility of the purchasers vill be in proport ion t o their share of the initial order of
5,500 enginee, vhich vill mean 4/11 or about $2,600,000 for the United
States Army a nd 7/11 or $4, 500 , 000 for the Britith Purchasing Commission.
lL
rt
..,..
l
Jl1
The Recons truction Finance Corporation vill require security
from the British Purchasing Commission in t he form of trust certi f i cates
secured by United States securi ties t o &saure aatiaf&ction o! this l iability. Aa motors are taken and paid for by the British Purchasing
Commiaai on, thi s liability vill decreaae ao follova:
l
••"'
-
_.
•t
D
o
~
Prior to delivery
Upon ~~ deliveries
Upon 40% deliveries
Upon 6~ deliveries
Upon 8~ deliveries
Upon l ~ deliveri es
$ 4,500,000.
::1,600, 000.
2, 700,000 .
1,800, 000.
900, 000.
-- 0 --
The Recons t ruction Finance Corporation •ight be vill ing to reduce
thia liability initially b.y an estimat ed scrap value of a&¥ 1~. vhich
vould decrease the initial and subsequent liability by $450,000.
The Army might be vi lling t o a eeuma l i abili ty !or more than
ita 4/llthe ehare, since it could not put up a plant to produce 4/11 o!
a total order of 5,500 engine s at 4/ 11 of the coat. In point here ie
the fact that the Army has asked f or an aeaur&nce that it can hsve up
to l/2 the dai ly capac ity of t he plant if it deaires ita deliveries
expedited.
Vorkine Cap! ta1
The Reconstruction Finance Corporetion vill loan Continental
&t 4~ funds needed for worki ng cap ital. They require fro• the British
Purchuing Co111111ieeion security to cover such liability i! the contract
be terminatad. The actual liabi lity of the British PurchAsing Co.. ieeion
at &JlT terminati on date v i ll be for cancell&tion penaltiea, enginea-in-
123
pr oceee, and material commitment• which at most ie eatimated not to
exceed 4~ of the &~proximately $20,000,000 order, or $8 , 000,000.
Thie l iability at worst would probably be ae followe:
At beginning of production
After 2~ production
After ~ production
After 6~ production
After 8~ production
Af t er full production
$ 8,000, 000
8,000, 000
8,0"0 , 000
8,000 ,000
4,000, 000
- 0 -
Two factors, howev er , operate to reduce thia liability in actual
practi ce. Theee are:
(1 )
The fact that unti l the Army portion of the order is i n
ita final stage, commi tments released by terminat i on of
the British Purchasing Commission contract can be used
to fill the portion of the Army order for vbich the manufacturer has not yet made commitment s.
(2)
The feet that the liability fo r capital iteme wil l be
reduced in proportion to deliveries , r eleasing col lateral
pledged there to t ake up t his liabil ity.
A r ough e etimate of the effect of theee t~~ factor• on the wor ki ng
capital l iability of the British Purchasing Commieeion ie as f ol l ows :
Groes llPC
Li~bi l,it.l
Start of
Production
After ~ •
After 4~ •
After 6~ •
.l.tter 8~ •
After 1~ •
$8 , 000, 000.
8 , 000,000.
8, 000.000.
8, 000, 000
4,000 , 000
- 0-
Amount which
Could be Asgumed ~ AIJ!!Y
$6, 850,000.
4,550, 000.
2, 275,000.
- 0-0-0-
Collateral
Rel eaaed f r om
Cru~H!l I~~!!ll
$
- 0900 , 000.
1,800,000.
2, 700,000
3 , 600 , 000
4 , 500 ,000
llet llPC
Liabilitz
$ 1, 150, 000.
2, 550, 000.
3 ,925, 000.
5 ,300, 000
400, 000
- 0-
The probabi l i ty is that the above figure& repreeent a maxi mum actual
liabil ity. Adjuetments and refinement• would poeeibl y cau ae an average
decreaee of 1Q% or more. I t ehould be noted, however, that t hi e i s
an expoeition of the Reconetruction F inance Corporation suggestion
which goea beyond any point they have yet r eached in ito appl ication.
- 3 -
124
On the basis of the above diacuaaiona, the eatimated
caximum British Purc~~aing Coamiaaion liability for both capital
itema and working capital at various production point& ia aa
!ollowa:
Start
After
After
After
After
After
)
L,
I
of Production
~ Production
~ Production
6~ Producti on
Be% Production
1 ~ Production
$ 5,650,000
7 , 050, 000
8 ,4?6 ,000
9 , 800, 000
4, 900 , 000
- 0-
125
Se otember 3, 1940.
9:10 a . m.
Robert
Patters on :
Hello.
H. M.Jr:
I'm fine .
P:
Yeah .
H .l~ .
Jr:
I s this J udge Patterson?
Morg enthau .
How a re you?
P:
Y~ah.
H. H.Jr:
I m very well.
P:
Have a good time?
H. I1.Jr:
Very well.
P:
\'/here di d you go?
1
went t o a pl ace called the Seigniory Club.
It ' e half way between Mont r eal and Ottawa .
H. I .Jr:
~e
P:
Yee , I've heard of that .
H. r .Jr:
It ' e very nice.
P:
Tha t' s where t he Dutch family is, isn't it?
H.M .Jr :
Was . They parked there for a while bu t she
has a house i n Ottawa now .
P:
Oh yeah .
H. IL Jr:
I sen t a message t o you on All i son .
P:
Yeah , I passed it on .
tomo rrow.
H. l' .Jr:
Well , I wanted t his . I tried t o get hold of
Mr. Stim~on bu t he ' s no t here.
P:
He won't be back until tomorrow I bel ieve.
H. H.Jr:
\'/ell, will you keep him straigh t on it, I mean ,
so that I can go ahead with you on it?
1
Good fishing.
General pow- wow
128
IJ
- 2 -
P:
Yes, s1r.
Now , what time would be good for you
tomorrow?
P:
Any time you like.
H. II..Jr:
Ie 1 0 : 30 a good time?
P:
Yes.
H. ILJr :
That is a good time?
Shall I marshal my crowd?
P:
That is.
H. M.Jr:
'·Hll you?
P:
I understood you wanted a man named Doolittle
from the plant and someone here, either Brett
or Arnold. Is that ri ght?
H. ILJr:
That's right .
P:
Fine .
H.I~ . Jr:
~ell, Evans isn ' t getting here until 11:00
o ' clock Thursday . He said did it make a lot
of difference a nd I said no , as a matter of
fact, it gives me an extra day.
P:
Should I ge t anyone from Knudsen ' s office?
H.I'. . Jr:
Yes, I think if Mead would be here .
P:
Mead ?
And you 're going to have Evans?
Should I arrange to null him in?
I will.
l
,., Q'
H. H.Jr :
I wish you would.
P:
Be glad to .
H. l' . J r :
And I don't know whether Knudsen wants to sit
in himself . 'ilha t do you think?
P·
Well , I don ' t know. It ' s a general go ing over
and review of the Allison business isn't it?
H. M. J r:
That ' s right , in connection particularly with
the English but I ' d like also t o know what
127
'J
- 3 you oeonle are going to do both for your
Bell fighter, you see, and f or your Lockhe~d
intercentor -- I don ' t know what t he numbers
on these things a re, I think they call them
P- 39 ·
P:
I underst ood tha t their stuff was comi ng out
be tter now.
H. J,, .Jr:
I talked to l~r . Evans Fri day and for the
first time he sounded very cheerful
stand , and that ' s one of t h e things
verify, you see you were to get 200
of these Curtiss P-40 's.
and I unde rI wan t to
ol a nes
·
P:
Yeah .
H.I~.Jr:
He will complete the delivery of those engines
he t old me Tuesday or ~ednesday of this week .
Then you are t o get 100 scares and as you
rememb er I asked whether you wouldn 't let the
Engli sh have some of tho s e.
P:
Yeah .
H. ILJr :
And he sa i d that the
wi t h the Army that if
one spare a day until
let the bal ance go to
P:
I see.
H.ILJr :
See?
P:
Who sa i d that?
H.M.Jr :
Mr . Evan s who is Vice Pr esident of General
Motors i n charge of the operation .
P:
Yeah. I didn't take that up here because
for the time being with no engines coming
out why we deci ded that it was moot.
H. ILJr:
·.~ ell,
arrangement tha t h~ has
Allison will give them
t hey get 100 that they'll
the English.
that' s what he told me as of Friday
but I ge t these t hings fr om all corners and
then so oft en they a re contradicted, so I
,:an t ed to sew it up to know what you people
would o r wouldn ' t do bec a us e if you would
if the Army is agreed to that, that from the
English standpoint will be swell .
128
- 4 Yeah.
P:
H. l Jr :
1 ou see?
?:
Yeah. ',le haven 1 t done anything about 1 t
because t~ere were no eng1nee comi ng out
anyway , 11 e can thrash that out tomorrow.
H.ll. Jr:
Would you? And if you would invite
yo u see. Hello?
P:
Yeah .
1• •
H . l~ .
I
f!
Q)
Jr:
l~ea d,
Mead and Capte 1 n Kraus.
1
s Kraus .
P:
\~ho
H. JL J r:
he is the Navy man who works with Mead .
That was my or i ginal set-up. K- r - a- u- e. He ' s
very able, and what I ' ll do is , I ' ll call up
Knudsen and tell him the meeting ie taking
ol ac e and if he'd care t o come we ' d be delighted
to have him . How' s that?
P:
Good .
H, JI , Jr :
And t h en if you could out for yourself on
your calendar 11 o 'clock Thursday , that ' s
when Evans 1s going t o be here , you see .
P:
Yeah.
H. l1 . Jr :
And then by that time you and I ' d be po sted.
And I ' m goi ng t o have the Engl i sh who a r e
doing the buying of the ulanes in Washington
both 11 edne~ day and Thur sday so they can come
i n on a mi nute ' s notice.
P:
All right, fine .
H . l~. J r :
But that's the thing and-- I mean , all these
different tyues which t hey're turning out-and I thought both fr om your standoo1nt and
from t he English standpoint 1f it could be
straightened out I think it'll be heloful.
P:
Yes .
R. H. Jr:
And then I'll look forward t o seeing you 10 :30
'1/edneeday and 11 Thur sday.
~e ll ,
I ' ll get my gang togethe r.
I ' ll get my crowd t ogether.
129
- 5P:
11 Thurecay .
H. ~.. Jr:
:low , 1~hile I have you one otl:er thir.g. I ' ve
sen t word-- I ' ve invited l~r . Stimson to have
lunch with me t omorrow. They tell me he ' s
U':l at .....
P:
He may not be back.
H. l'. .Jr :
'~'ell ,
what I have in mind -- t he t hing that
I 1 ffi anxious t o t a l k with both of you is thie
ques ti on of a formula of financing the English.
I t old Foley t o send over to you a n opi ni on
o repa red i n my office that where t h e Governmen t fi nanced the manufacturer to mak e somethi ng f or the Government with t he -- what I
call G' vernment money, that that manufacturer
could t ur n out somet hing for the English.
P:
I t hi nk I got that .
H. H.Jr:
Have you had time to look at it"
P:
Yee.
H. lt..Jr:
.I ell , c ould you
P:
But I ' m co ntent wi th it.
H.H .Jr:
You are?
P:
Ye s .
H. H.Jr:
\I' ell ,
t here were all ki nds of troubl es during
the l ast two weeks I under s t a nd from Purvis
in regar d to where t he English ~<•ant to buy
and they ' re a l l bogged down and I wanted to
ge t t ogether with the Army and Na vy and see
if we coul dn ' t work out some t hing so that
t he se oeoole cen place their orders ra pidly .
P:
Yes.
H. IJ. • Jr:
It ' s in t errible shape ; machine buns , tanks
part icularl y and if you ' d have that in mind
now do you think I ought t o wai t un til l~r . Stimson
gets back on t ha t
ough t n 't I ?
P·
Well, I ' d be glad t o di ecuss it with you .
Good.
I r ead that over hurri edly.
130
- 6 H . :~ .
(
.
Jr:
.{ell , if you would do t hat maybe we could save
a little time and ~oseibly when this engi ne
meeting is over you could stay behind and we
could talk about t hat .
P:
Be glad t o.
H. M. Jr:
Because som ething has £O t to be
week.
P:
~ell,
H. lL Jr:
tlell, I ' d like very much to br i ng Hr. Stimson
and you up to da te on i t, also Mr . Knox.
P:
Yeah . Yeah, fine . Of cour se , I suooose
Forrestal will be doing Knox's business .
H . l~ . Jr:
',1
P:
I
H . I~.Jr:
See?
P:
Right .
H . l~ .Jr;
O. K.?
P:
Fine .
d~ne
this
I ' m not f amil iar with it at all .
very new t o me.
It ' e
ell , I 1 m going t o get in touch with him -but they have no orders on Allison and they ' re
not interested in that.
see .
H . l~ .Jr :
Thank you.
P:
Yes , sir.
Good -bye.
131
I"
Se~tember
3, 1940
lC:25 a.m .
(
.
H.I~ . Jr:
Hello?
Wm. S.
Knudsen:
Yes.
H.M.Jr:
Henry Morgenthau .
K:
Hello , Henr y .
H.I~.Jr:
I s this Knudsen ?
K:
Yeah .
H.I~. Jr:
How a re you?
K:
Very well.
H.H. Jr:
Look, I ' ffi full of vim and vigor and in the
first place I asked your office whether you
could have lunch with me tomorrow at 1 o'clock
and what I' m trying to do is to have
l~r. Stimson here -- Henry Stimson -- and also
somebody from the Navy. Now what I 1 ve got in
mind is this - - I'd like to lay on the table
all the vari ous, different olens that the War
and Navy are using to finance Government
ourchases , you see?
K:
Yeah.
H.!~ .
Jr:
And I think that there're just too, God-damn
many different ul ans . Hello?
K:
Yes I get it.
H.M. J r :
And whether we couldn ' t agree on -- well, maybe
some kind of a formula -- the thing thet you've
been talking about .
K:
Well, of course the formula went haywire when
Jones wouldn 't do it.
H. M.Jr :
', l'ell, that's just the thing and I wanted
do you think I ought to have Jones there or not,
or just talk it over Army and Na vy and you and I.
132
- 2 -
~
K:
dell, I think if Jonee is involved he ought to
be there or ,,·e'll have to start all over again
after lie get through ·.ri th the Army and Navy.
H . I~.Jr:
\·/ell , I 1 ve got a way I think I can do it
without Jones.
K:
I see . Well, have they &o t the defense
corooration set up now so that it is functioning?
H. H. J r :
Well , I don ' t know.
K:
I don ' t know eithe r but I see it in the paper .
H.H.Jr:
Well , I ' ve been away and I've had time to
read the paoers and I' m as mixed up as anybody
else is .
K:
Uh- huh. I was over -- I saw some of the boys
from I ndianapolis yesterday. They say that you
~1ant to see them on Thursday.
H.I~ . Jr:
That's right .
K:
Is it essential that you see them on Thursday?
H.ILJr :
';/ell , I asked them for ',l'edneeday and just
Evans -- he said he
can't Evans come
Thursday?
K:
they are right in the middle of a lot of
changes down there but of course if you went
him you can get him.
H. M. J r:
Well, I tell you , that's the other thing.
Patterson i s c oming over tomorrow with hie
people who 'know the Army end of Alli son. You see?
K:
Yeah.
H.M.Jr:
And I wondered whether you would care to sit
in. I ' m looking a t it fr om the standooint
of the Allied Purchasing Mission, you see .
K:
:/ell , I know the Allison oicture now.
H.M.Jr :
.-I ell ,
K·
Yes.
H. M.Jr:
At 10 : 30?
J
That ' s the other thing.
~ell
would you be available tomorrow morning?
133
- 3-
?
K:
Yes.
H. M. Jr:
'i lell , suuuosing we mee t •. ...
K:
I te ll you what I'll do .
Washington this evening.
to be t his evening?
H. H. Jr:
I ' l l be a t home .
K:
Uh-huh.
H. M.Jr :
Well , here ' s the t hing , Assistant Secretary
Pa tterson is coming to the office at 10:30
and he ' s bri nging somebody from -- well he ' s
go t different p eoule -- anybody that knows
anything abou t Allison and maybe if you sat
in maybe we wouldn't need Evans.
K:
I
H.lLJr:
But I t hink that the English may want to
change their order ou t there.
K:
Uh- huh .
H.H.Jr:
I mean, they're thinking in terms of keeping
on the C engine and not fussing with the next
one.
K:
'•Yell, of course , that we can do . We can
i ncr eas e the amount of material to be ~u rchased .
Th ere' s something over 2,000 orde r ed ahead for them now .
H. H.Jr:
So I understand.
J
I 1 11 be back in
Wher e are you go ing
•, ;ell , I ' 11 call your house.
see .
K:
\~e
H. l~ .
Well, why not leave it tha t -- tell Evans 1
to come on and then if we find tha t we don t
need hi m t omo rrow we can telephone him - - I
mean , if we don 't need him Thursday.
Jr:
can make t ha t anything you want.
K:
Yeah , we can have our meeting in the mo r ning
and t hen we can call him .
H. H. Jr:
How would that be?
K·
That ' s all right .
134
- 4 -
1D
~
H. lLJr:
~ell , now, I ' m exnecting you twice tomorrow.
O n e'~ et 10 :30 and o ne'~ at 1 o 'cl ock.
K:
All right.
H.!LJr:
Is tha t all ri&ht?
K:
Yeah.
H. U.Jr:
And now I ~ant to talk to you again . I don ' t
know whether I ought to have Jones or not
because the thing I have in mind-- we don ' t
neeo Jones .
What do you think?
K:
·.~ell ,
H. ll . Jr :
':lell, what I've got in mind is this, take
this contract which is all signed and sealed
that the hrmy has wi th Chrysler for t anks.
·.~e believe and Patterson believes that where
the Governmen t does the entire financing
that they could let the English have some of those .
K:
They could what?
H. I.. . J r:
Let the English have some of those tanks that
Chrysler is making .
K:
I
H. M.Jr :
~ ow
K:
No.
H . l~ .Jr :
See? Now I sent a legal document over t o
Patterson and he ' s read i t and he says he
agrees wi th Fol ey.
K:
Yes, but everybody agreed with Foley exceut
Jones .
H.M .Jr:
Well, but i n this uicture -- the one thet I ' ve
got we don ' t need J ones .
K:
Uh- huh . Of course, you'll have a lot of
ulants on thst beeis .
R . !~ . Jr:
·t:hat?
I
N
of cour se, I don ' t know what yru have
in mind.
see .
if that is so, then you don't need Jones .
That ' s right .
135
- 5-
)
K:
You ' ll have a lot of ~lants on t hat bas l E.
H. li . J r :
Jell , hell , we ' d have them anyway .
K:
Uh- huh. But you ' ll have a lo t of rylan t e
t ha t you ' l l b e ree oons i ble f or 100% won ' t you?
H. lL J r:
':/el l , the ot her way t he R. F. C. is, and when
the R. F. C. has a deficit t hey come t o the
Treasury anyway so wha t the hell' s t he difference .
K:
(Laughs) .
H. M. J r :
All I' m tryi ng t o do i s t o make t he t hing
simpler so instead of si t ting a r ound and
t r yi ng t o ba r ga i n with s ha lf a do zen peoole
K:
\'I ell ,
H. M. Jr :
. .. .. if you anl y had t o bP r gain with one
oer son whi ch would be either t he Army or the
Na vy and the manuf a cturer and yours elf, and
t h en a fter you go t it all str a i ght you could
say t o t he Engl ish , no'" • do you wan t some of
t his or don 't you; say yes or no .
K:
Yeah . Of cour se , that coul d all be a rranged
fo r ln a di ff e re nt way which I t hought I ' d
l i ke t o t a l k with you about t oni ght.
H. lLJr:
'llha t 1 s t ha t ?
K:
I say that coul d be arranged i n a differ ent
way which I' d lik e t o t alk t o you about t onight
1f I could .
H. M.Jr:
Well , I tell you . I' ve go t Lothi a n and Purv i s
coming t o t he house f or euryo er but l f you
wan t ed t o oi ck me up -- I ' m ava i lable any ti me
f r om g o ' clock on tomorr ow mor ni ng .
K:
I eee .
All right . '11ell , I' ll pick you up
i n the mo r ni ng then .
H. U.Jr:
Do you 1.ran t to do t hat?
K:
Yeah .
D
I s ee .
t here ' s no que stion about tha t .
s . ~ .J ::-:
!:
=.}... J:r:
1:
l
!!.l:.J::-:
1::
E::e- c::e.
Se?ternber 3, 1940
ll:53 a . m.
H.!L J r:
Hello .
Xr. l<'orrestal.
!I.H.Jr :
Hello.
l~r. J ames
For restal :
Good mor ning , Hr. Secret8ry .
H.M.Jr :
How are you?
F:
All right .
H.H. Jr:
Forrestal , I wondered if you were going to
be free for lunch t omorrow.
F:
I certainly will if you ' re going t o ask me .
!I. H.Jr:
I am end I' m trying to get Mr. Stimson and
?sttereon and I ' ve got Knudsen. I tell you
what I ' ve got in mind so t hat you mi ght be
t hinki ng abou t it. I am very much distressed
over t he many , many ol ans that are in
.~ashington to finance the manufactur er who
gets a war con tract end particularly the
interests which I' m looking af ter for the
President -- the English Purchasing !Hssion
end what they ' re up aga i ns t in trying to ge t
t heir orders -olaced, and I l'lan t to talk about
t hat and see if t here isn't some way of
simolifying t his t hing because everybody
seems to have a di ff eren t plan and no con tracts
are being signed. So that ' s whet I've go t in
mi nd .
F:
Well, I think it ' s a very good t hi ng -some t hing to explore myself .
H. M. Jr :
An d it ' F just unbelievable the number of
formulae that they ' re floundering ar ound with
end they ' re not ge t ting them si gned.
0
,.
We l l , I just had t~ee or four of t hose
formulas come t o me this mor ni ng and I had
exactly the same thought that you had that d
there ought to be some common met hod adopte
that would cover all of these things end
- 2 -
in a de l tion to the form also they ought to be
looked at from the s tand~o i n t of wha t oeoole
will think of it about three yea r s hence.
0
H. l!. Jr:
'tlell, that 1 s a lifetime.
F:
YeAh .
H. IL Jr :
So thnt ' e what I ' ve go t ln mi nd and if you
would com e a t 1 I' ll give yru a little
something t o ea t and either Stimson or
Mr. Patterson will be here and Knudsen .
F:
Fine .
H. I~ . Jr :
Thank you .
F:
All ri gh t.
I ' d like to come very much.
133
Sery tember 3, l 940
4:oo o. m.
J esse
Jones :
Hello,
How are you?
H.M.Jr:
Oh, I ' m fine.
J:
Pre t ty good , t hank you.
H.H.Jr :
I horye you had as good a vaca tion as I di d .
J:
Well I had a vaca ti on of one week -- g day s.
Tha t 1 s nretty good .
How are you?
H. H. Jr :
Well , I welcome you i nt o the Cabinet.
J:
Thank you .
H. M.Jr :
And you can s it around and Join the fight .
J:
Yeah.
H. M.Jr:
I ' m sure you can . J esse , I ' ve asked both
Mr. Sti mson - - Knox won't be here but Forrestal
i s coming fo r lunch tomorrow and Knudsen , and
I ' d like you .
J:
Tomorrow?
H.I!.Jr:
Tomorrow.
J:
0. K.
H. M.Jr:
And I want to t alk oartly on fin an cing these
vari ous war contracts partly fr om the Treasury
standpoint and oartly from the English and see
whether we can ' t g et-- there a re about a
dozen differen t formulas and s ee whether i t
could be simplified a lit tle bi t. See?
J:
Uh-huh .
H.M.Jr:
Hell o?
J:
H. M,Jr :
J:
\~ell ,
All right.
maybe we can be hel='ful.
I was Just listening .
And t hat ' s 11.•hat the our oose i s .
whether it can be but
You 'll have Forrestal and
St i m~on
I don 't know
:.I!.Jr:
..
~.
I' l l t e
~:e~ t?
s. N.Jr:
J:
3.1!.Jr:
l
J:
0 . Y: .
3. ~ .Jr:
You ' re welcor.:e .
J:
? 1 C!OCit .
TI:s:Ute .
c
e.
:!.)! . .;:-:
::
::.H. J:-:
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Good-bye .
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Good- by e.
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to co=e .
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c:~e.
141
BRITISH EMBASSY,
WASH I NCTON .
Personal an~&Cl
t."
~eptember
3rd 1940 .
Dear :.r . Secretary,
I enclose herein for your
personal and secret informatio n a copy
of
t ~e
latest report received from London
•
n
on the military 3ituation.
3e l ieve me ,
Dear J:r . Secretary,
Very sinc erely yours ,
laitT
lko
•
The Honourab le
Henry Morsenthau , Jr .,
Uni t ed States Treasur y ,
.111s 11n.;ton ,
D. C.
.....--·-..--~•..-~ vwua:rcm
142
Te l egra~ de epa to he~
fro• Lon3oa lata
1o t ba eveo1ag of S.pteaber la*•
!!.!!!:.·
1.
Ai r craf t baTl D reported lerae ouabtr of
enemy ab1pe off
~rtbera
BollaDd 711terdaJ
wart ordered to jetUaoa thtb ala" 1Dd tttaolr,
rl7 th11 IIOI'IIlng tbret dlltror.. • ••• ahed
re turn1oa a t dow apeed.
D11tro7••
craf t have been ae nt to their a14.
YeaterdaJ morning a eubear1oe el&I:J.ted three
anem7 cru1eera .~ daatrorera toutb-eatt of
VeeelDI end J•ttcrdaJ afternoon • ••oood tubeariae
reported tour enemr oru1eare and five deetroJtrl
t o tbe •••• erea, no1ng eoutb et 111gb epeed.
Thtl • ••"'r.-.nr1 ne attacked anc! ola1al two b1U.
2.
ltoyal
1r
orce .
~ur1n~ boab1nb operat1one on
n1s b.t
of
Auguet :sotb./:nat o1oe h.... ,. t>ollllere attaekH
St emen• ;leo tr1c factorr at 5erl1n, oaudDI
143
acSjaoent raUwaJ al cS1nga, to e1r
~ort ,
a015 to
an aircraft worka ancS oil ctatarna.
Latter two targeta ware reparteeS burDiQS
trealJ•
Uanr burata and exploalona were obaarvad
amongat c1eterna at lagcSeburg.
•Jntbet1c oil factorJ, ahipa at
• ••1 t.rgah,
R 11
~aD
and SUD
poaittona o oe1t<!' "over era abo bo•bacS, but
obaarvatlon ••• difficult.
aerodrome• were attackecS.
Claar weather conditione pravantecS olaudt lflng bo11bing bJ our atrorett 1••tarcSaJ•
Laat night medium bo11bara were aent
againat gun emplaeemaota oppoaita Dover, and a
l!aiVJ bomber•
ware ae nt to aircraft factoriaa, a gaa warke
and a1r port at 11erl1nl abo to oll and ra1lwa1
target• elaewhere in OermaDJ•
All our aircraft
b.ave returneeS aafelr and one ,..diu• bomber landecS
1n t he aea var1 near the abora, aDd the craw
Coaatal coMmand atroratt want
to attAc' ruel ten"• an<l • aaaplane baae in
Holl••·d •
:5.
Two drcrett are miulog.
German Air Force.
Total civilian caaualtiaa in London ar ..
<Suring the night of Auguat ~t'b/:5let are
l'a'POI'\e4
144
.
where a11 iron a nd atlll worka na attaoki4J
cabl ee, water mai pa and bu1141aaa ware 4amaaed
but machinery wae onl y ali&htly atteotl4 .
Y.. terday , about 800 eneay aircraft
~Jring
t he morning two
MiD raids on elop-' o• er eouthern J>ngland, and
'l'brH recei'fec
attaoka ware made on aerodro••••
extenel'fl damage, but are atill operationally
aarv i oeable•
At Do'fer all the baDoona ware
reported ahot down, and at Croydon a factory
employed on aircraft work, already twice attackec
wae finally wrecked.
about 150 aircraft and the aaoond about 100.
Both ware interrupted and dleperead by our
tightera.
Apart fro• damage mentioned, other
damage oaueed wae chiefly ill Ee..x and 'Kent,
mo etly bouae pr operty end waa in no "Y
proporti onal to the a t tack.
caaualtiae ••••
145
cltr, da maging the town Hall, an~ t1r11
were ca~ ead 1n the docke , Minor demas1
aleo cauee~ t o dec''' et 'Ur'•enhu~.
rao;orted !rem
wounda~.
t.1la
,.
1
Cuualt1 ..
area are 31 kllll4 encS 7&
l>bewbera damage wae lligbt
axoapt tor minor rallwar
~ialocation,
an~,
..1n17
bouea propart7.
aff aota~
a~amf
bomber recennaieeaDia aircraft
are raaululr aothe aroulld Englhb coaete,
for eoma dletanoe in th• B17 of Bt•c•r, aDd
into the J.tleatlo •• fu 11 waetarn Irelalld.
·Patroll bava been •1ntalned 117 d17 in t'llt
Oalah area. al)d along tbe Dutch coaet u
nl&bt.
•·
Miaa leJlQI aontlaeee actlvelJ•
su..ari
•t
Air Caeualtlae.
~·
b7 our !1"hteret
dee tro;z:a~
S1
Bombora
3G
F1ghtere
probable da•ged .
11
81
81
12
~
3ll
b7 a nti-aircraft t1rat
Bomber a
8
Fighter a
7
65
To t all
Br1thhl
S7
(25 pilot. ..ta).
146
lu t o1gbtt al• • Br!. th'h ab1p ( e,ooo tonal
in convoy tn thP •••• area oo tht 2;tb.
thia or•• 1ot away in b0at1 .
All
• Jorwesiao 1b1p
( 1,800 tool) 1D eoD'IOJ waa torpaOoed b7 alroratt
off t~•
..,t ooeat of Scotl•D4 oo the 30th.
The larst Dutch 1b1p reported torpedoed
J. . tard•y
ucludhl
77
6.
LlbJ!·
A new air oorpa hal balD toraed with
baa4 quar,er• at Clranl, which will lncluda
all all' uolta oparat1o& 1o Libya.
!b1a 1a
tbl fifth Ill' COI'PI 1D the Ital11D All' Foi'OI0
&bl
bold qu1rter1 of tbe other t our ba1n& at
11111an, l'arl, Ro•• &~ to•e•hera 1o S1o11T•
147
September 3, 1940.
J.!ElJOR A l!DU'll
Secretary l.!orgenthau
Mr. Gaston
TO:
PRO!ol:
At a meeting of the Inter-Departmental Export Control
Advisory Committee with Colonel Maxwell in the Munitions Building this afternoon , C. A. Bishop , r epr esenting the Price
Stabilization Section of the Defense Advisory Commi ssion under
Leon Henderson , recommended a complete embargo on iron and
st eel scrap. Copies of a memorandum prepared in the Price
St~ilization Section were distributed at the meeting. ~
lot'
I
,.
ColGtel Maxwell at the same time distributed a rew
carbon copies or a proposed regulation ror the President' s
signature which v;ould extend the present control now II!Dbracing
only number one melti ng scrap to all scrap iron and steel .
Colonel Yaxwell said that no decision had yet been reached
but he was distributing copies or the proposed revised
order only ror information and comcent .
You will recall that both the State Department Division
or Controls and the orfice of the Export Control AdminiStrator
reehted the inclusion or scraP metal in the list or controlled
commodities, and that at a meeting on July 29th, the InterDepartmental Committee went on record as ravoring the issuance
or export licenses even tor number one malting scrap rreely
and without restriction.
At today' s meeting Colonel Maxwell also presented tor
the approval of the committee , which was granted, a new
proclamation including under the controls (1) equipment which
can be used tor the production or aviation gasoline and plans
and descriptions of such equipment; (2) equipment which can
be used in the production of tetraethYl lead and plans or
descriptions of the same· ( 3 ) plans , specifications , et cetera
for the design or const~ction of aircraft or aircraft engines.
The Cormdttee also diScussed a bill now pendiDS betore
Congress which will permit the \'lar or navy
requisition materials or machines needed in th~ ~ 1 Board baS
Which have been denied export• The )l!uniti oDS on ro
Departm:~n~ de!en.t~•
147
September 3, 1940.
U EMORAllD UJ.l
Secretary Morgenthau
fROil: llr. Gaston
'f():
At a meeting of the Inter - Departcental Export Control
Adrteory Committee w1 th Colonel l.!eXWell in the l!Un1 tiona Build1118 thil afternoon, C. A. Bishop , representing the Price
St abil ization Section of the Defense Advisory Commission under
Leon Henderson , recommended a complete embargo on iron and
et eel ecrap. Copies of a memorandum prepared 1D the Price
St~ilization Section were distributed at the meeting. ~
1•
Colonel waxwell at the same time distributed a few
carbon copies of a proposed regulation tor the President• a
ai gnature wllich v;ould extend the present control now embracing
~ n\aber one ulti ng scrap to all scrap iron and steel .
Colonel Kaxwell said that no decision hsd yet been reached
but he wee distributing copies of the proposed r evised
order only tor informati on and co=cent.
You will recall that both the State DeparU~Snt Division
ot Controls end t he office of the Export control Adn1Distrator
restated the inclusion or scrap JllBtal 1D the list or controlled
commodities, and that at a meeting on 1ulJ 29th, the InterDepartmental Committee went on record as favoring the issuance
or export licenses even tor number one melting scrap rreelJ
and without re striction.
At today' s meeti ng Colonel yaxwell also presented tor
the approval. of the comittee, wnich was granted, a new
proclamation including under the controls (1) equipment wbioh
can be used tor the production of aviation gasoline and planS
and descriptions of such equipment; (2) equipment which oan
ueed in the production of tetraethYl lead and plans or
descriptions or the same· ( 3 ) plans , specifications, at cetera
tor the design or
o! aircraft or aircraft engines.
atl
~
'
const~ction
Co~ttee
The
B!so discussed a bill now pendiDS betore
Congress lfbich will parmi t the War or NeVJ
defense
r.quieition materials or mecbines needed in th~ ~rol Board hU
'IIIIi ch have been denied expOrt • The )!unHiOn& on
neparts~!n!~
148
- 2 -
1uggested an emendment which would permit resale of JDaChines
or JDaterialS requisit ioned and the use or the proceeds to replenieb the appropri ati ons f rom which they were purchased.
Thil 110uld permit the War or Navy Departments to r equisition
a 11111chine tool and sell it to a manufacturer of defense equip1118nt .
u:r.
Vance of the Defense Advisory Commissiona
intormed
the meeting t hat delay by Congress 1n the passage of special
IDQrtization provisions was not nearly so important e.
factor in belding up accomplisbn:.ents under the Defense Program
u tbe delay in Congress in enacti ng tbe J'une 30th reoomendatione
for increased defense appropriations. He said the importance of
the ~rtize.tion provi sion s as a factor in delay had been greatly
ueraggerated.
ALLISON
ZtiG!llE~.ING
D e li verie~
COlJPAllY
of nil'::;Jlane Engines
Actual
de~.iveries
~
del1vP.r1es nn
existing orders
10
10
January •• ••• •• ••• • ••••··•
lla1 1 - 23 •• • • •.. •• . •••• •
11a1 2ll- - June 1 •.•• . .•.••
.rune 2 - S• •••••••• • •••• •
1
~sti !llat ed
a
June 9 - 15 . · · · · · · · · · • · · ·
June 16 - 22 • •••••. •. •..•
June 23 - 30 •••••. • • · • • • •
June 30 - J ulY 6 . ........
July 7 - 13 •.. ..... • ..•.•
11
July lll-- 20 . .. .. .. . .. .. .
July 21 - 27 •••• • ••. ·. • • •
July 2S - August 3· ......
1ugust ll- - 10 •• •••• • •••• •
August 11 - 1 7 .......... •
August 1 S - 21l-•••••••••• •
August 25 - 31 • .. . · · · · · · ·
SeptelJber •• .. • ••• • ..... · •
October • •...•... . . •.. .. . .
Jlovember • •.•... . . ... · · · · •
Deeeober • •.• .• .. . ... · · · • ·
15
t
6
lZ
11
30
1
1
14
45
3~t
359
3Sl
3S6
~
January ••.. , ....... . . . .••
reb:!'UB.ry • .•• • .. . ......•••
l!arch, .. .•... .. .. . . • .. · . •
.lpril •• . , ... . . . ......... .
11&1 •••••.•..•.••..•• . •• . •
June • ••....••....•......•
July, •.•.•......•......••
August , ••••....•.•••.. . •.
September, . , ..• • •. .. .. ..•
October••• , .•••.... •... •.
November • . • ••••. ... . ..•• ,
December • •. .•.• . .• • ... .••
!!f
25
January ••• , • • .. .. .... .. . •
F~bruary , .•.... . . . .... ..•
April • ...... . . ... . .... ...
June, •• . ..•....•.. , .. . .••
the Treasvr:f •
statistics.
21
2
2
september
3,1940.
150
Septacber J, 1940.
TO:
The Secretary
FRO!.!:
!.!r. Young
Re:
Revocation of Swedish Licenses.
On August 22nd J.lr . Yost, Assistant Chief of the Division
of Controls of t he State Depart:nent, called on me to explain
that lOr. \lelles had referred the Swedish :.:inister to the Liaison
Colllllittee in order to discuss any possible reconsideration of
the revocation of the Swedish licenses . l.!r. Yost stated that
the Swedish Uinister was going to make a last plea for reconsideration and then discuss the ways and means whereby the
airplanes and other items could be made available to the
United States Government. Evidently the Swedish llinister took
the definite stand that he 110uld only tum the airplanes over
to the United States Ar:rJy or :;avy.
On AU.,<TUst 2Jrd the Swedish l.linister and the Swedish Air
Attache met with the Liaison Coill!llittee. The Swedish !.linister
stated that ~lr. !felles had tol d him that the Liaison Committee
could accept requests for reconsideration and act as some sort
of an appeal board. The Swedish Minister discussed the airplane motors and other accessories mich had been ordered by
Sweden in this count.ry and asked that the licenses which had
been issued be not rev~ked and that the aircraft i terns for
'IIIlich no licenses had yet been secured be made available for
export. I told the S\fedish Uinistar that the Liaison Committee
had no polfer in itself to reconsider an action ..mich had been
carefully studied and concurred in by the various interested
agencies of the Government. I advised him that t here ms no
hope of exporting thos e items end that the Liaison Committee
WOuld suggest the procedure to be used in turning over the
Swedish contracts. The Swedish l.linister refused to discuss
tunu.ng over t he contracts until he bad entered one more
plea for reconsiderat i on with the State Department.
- 2 -
I received a copy of this plea today in the form of a
letter from the Swedish Minister to Mr. Welles, in which it
is stated, with respect to the Liaison Committee meeting noted
above, 11Mr. Young was ve ry definite that irrespective of tre
1111rits of the case the whole of this material was needed for
the defense of the country and this argument would overrule
lilY other consideration . Only in respect of some minor spare
parts for machines already delivered would Mr . Young be prepared to consider an application for review of tho decisions" .
The Swedish :tinister does not ask for reconsideration
of the action taken with respect to these planes in this
letter. He does ask, however, for reconsideration with
respac:t to the contracts, exclusive of aircraft and aircraft
eoginee and accessories, namely Smith and "/lesson automatic:
rille, 9 mm. cartridges, . 45 calibre cartridges, depth
charges and detonator fuses .
On August 27th the Swedish Uinister and members of tre
Swedish Purchasing 1!ission met mth the Liaison Col:lldttee to
discuss t hese other items exclusive af aircraft. I informed
the Swedish Jtinister at that time, after goins over the matter
thoroug)ll;r, that the situation was the same as in the case of
aircraft. In the Swedish Minister' s letter to Mr. Welles af
.l.ugust 28th, he states, with respect to these munitions items,
that: "As you no doubt recollect, at one of our interviews
;you expressed the opinion that whatever 110uld be the outcome
with regard to airplanes there should be no difficulty in the
way of obtaining licenses for other material . I might add
that the impression I brought away. from my conversation with
the President was that he held a similar opinion. Mr. Young
however spoke in a very different vein · He held out no hope
that licenses would be granted in any case. V1hat I felt
P&rticularly disturbing was that this seemed to be a foregone
conclusion whatever the merits of case, whatever cost or
1nconvenience involved and whether or not the material would
be of any conceivable use to the United States defense forces. • • •
I shall be grateful i f you 110uld see your way to use your good
Offices to obtain an impartial review of these cases on their
~ita".
152
conference held at Secretary J..orgenthau' s office September 3, 1940,
,
2145 p,J.I,
Present:
Secretary l.lOr&enthau, Lord Lothian Sir Andrew Angew,
lolr . H.
,
o...nite
The Secretary explained that his special interest in tile oil
problem was pursuant to a special assignment given to hlJu by the
President.
Sir Andrew An.,ew ex'!)lained that he ~tas Chairman of the petroleum
board which had cont r ol of all the oil problems in the United Kingdom;
that he report ed to Jeffry Lloyd, Secretary of the Petroleum Board
who was directly under the Pr esi dent of the Board of 'f rade. He later
indicated that tr.er e was also a spec ial board, of which he was a member, which handled questions of oil distribution t o the <lu'Dire and f oreign countries.
Sir Andrew angew stated that he was in compl ete agreement with
the Secretary that oil constituted a very powerful weapon, and t hat
0 •
1l used properly., coJld be vit al to t he winning of the "'ar ' he said
that in view of the distribution of oil resources and 011nership it was
DeCessarily a problem for joint action oetween the BritiSh- and American
Governments . He stated that they ..ere most eager to coop.,:-ate with the
American Government in any program dealing with oil.
The Secretary asked him about the reports in the newspaper~ o~
British shi'OIIlents of aviati on gasoline t o Spain and Japan, and indicated that Americans natural]_y expected that i f steps were taken by
the United States Government to reduce sales by Americans to t hose
areas that the british ,,o\•~d do likewise, elE e the Aroerican producers
would fe el that they were being "sold dOYm the river." Sir Andrew
!ngew and Lord Lothian both emphasized their desire to cooperate
and stated that they would at once. get the data on sales to both spun
gas to
and Japan. They believed t hat ther e Vtere no sales of
Japan (except some minor amounts in fulfillJnent of a pnor contract)
to Spain was a curtailed amount which
and that the amount of oil
the British Government estimated to be the miniroum which Spain must
have for her om use . These shipments, further, were
ey
been carried in tankers carryinh. the Sp91lieh flag. 'fhey indica e
and pr esent 8 memorandum to the SecretarY
would obtain all the
~y
goin~
de~ails
a~iation
suppos~d ~odh~~e
on the matter .
r ee.t deal
a 1garger
were bril'gin!>
Japanese
Lord Lothian stated that the
e>o>e for much
t arran
.
f
This
b
o
0 pressure ap:inst the Dutch J.n oraer
be shut
the outch ]:.ast
port of ail and Lasoline
the Japanese, wer e doing because of their rear
fro~
:rn;~~ ~e~a:n~t
153
- 2 -
Divi sion of ltonetary
Research
of! from their /.!:~erican sources of supply. Sir Andretl stated that he
did not feel that the pres s ure could be v.i.thstood much lon;,er .
Lord Lothian stated the.~ the Dutch ...-ere naturally reluctant to antseonize the Japanese since t hey felt tt.at the I:ritish would not be able
to help them out i n the event of trouble in view of t he J:;urope~n situation, and there was no assurance that the United States would help.
Lord Lothian pointed out that the situation was so deli cate in the Far
East that the 'ritish could hardly be expected to antagonize the Japanese
by interferrin[l -with the oil suoply i n the Dutch E.as t Indies unless the
British were able to depend upon t he United States for support in the
Far East. L<ll'd Lothien said the situation v.as similar with respect to
the reopening oi the Burma road.
The Secretary made no answer to this feeler .
The Secretary asked whether t hey had any information with respect
to the stocks of oil in Japan and Sir Andrew replied that they did have
some infonnation end would be very glad to give us what they had on the
matter. I t Tlas arrr.nt~ed that Sir AndreTt would have his oil experts
111ect wiUl w-. White to go over the data relating to the Japanese end
European oil situation.
Lord Lothian stated Ulat tt_e exchan·•e of destroyers for bases was
an extremely i.Jr portant step and that history might well point to that
1
as the cruciel episode in the war . Lord Lothian mentioned t~t there
were a couple of other iteos which the President said the Br1tish were
t get but they herl not yet received them . The secretary stated t hat
those were n:at.ters which Lord Lothian v.ould naturallY have to take up
0
with the President •
.I
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THE ADVISORY COMMISSION TO THE COUNCIL OF NATIONAL DEFENSE
FED ERAL RESERVE BUILDING
WASHINGTON, D. C.
September 3 , 1940
The Honorable
The Secretary of the Treasury
My d ear Mr. Secretary:
Referring to your memorandum regarding the Howard Hue}les plant in Los Angeles , please be
advised that we visited the plant, which is bl.t small, and
through some misunderstanding we were deni ed admission .
l lr . Hughes called at the hotel the
following day and we had a lengthy discussion about planes .
He regretted the misunderstanding regarding the plant visit
bl.t claimed to have nothing to show us anyway.
~ ~ t-
{)
)II\)
-~
His main argument was to advocate
an all purpose plane - a sort of combination pursuit, observation, and bombing plane, which could be placed in mass
pr oduction like automobiles . He did not convince the Air
Corps people of the practicability of this and promised to
send a drawing illustrating his idea.
There \'ISS no difference of opinion
as to mass production i f a single type plane could be
developed .
t...
1-\ \VI~
/
William S. Knudsen
Septeaber .J, 1940
Tbe Hoaorable
Tbe Seoret&r7 of the Tre&8Ur7
117 dear
llr. Seoret&r71
Reterr1Dc to ,.aa:r _,rudua repr61a& the Howard lfu8he• plat 1D Loll .bgel.N, pleue be
ad'dM4 that we 'rialted the pl.aat, which 11 blt ..u, u4
t.brov.F
~ ~•taDding
we were dmieci ada1••1aa.
llr. ImcbN called at the hotel the
toll.owiAc dq aDd . . bad a lcctb7 c!Ucu. .ioll about plu•.
He recretted the ai.euDderat.eDd.iDc reprdillc the plat rt•U
'bllt el.aille4 to haft noUWlg to allow u ~·
U. .-in ar~t
'IIU
to echooo&te
all ~e p1aae- a aort ot caabiDatiaa parn1t, eliHrfttiaa, GDd boab1Dg p~, which could be plaoecl S a procbaotioD like auto.obUea. He did not COtlrtAoe the .l1r
•
Corpe people ot the practicabUi t7 ot thb Uld prclllliN4 te
aead a drawiDg illuatrating hie idM.
Tbere _. no dittarence ot o~
aa to ..... production i t a a1Dgle tTPe plaDe could be
~
Sillcerely ,.aara,
WUliaa S. ~
160
August 16, 1940
fm,10RANDUU FOR l!R. W. S. KNUDSEN
FROM THE SECRETARY OF THE TREASURY
Mr . Hinckley informed me that so far they have been
able to get very l ittle information on the plant which Howard
Hughes has somel'lhere near Los Angeles for building plywood planes .
As far as l!r . !!inckley knows , it is still in the experimental
stage, but Hughes has been working very secretly and they have
not been able to find out much about it .
There is another plant nP'lr Los Angeles by the name
of Timm which is supposed to be Vlorkine on this same kind of
plane, and it is rumored that Hughes is also backing this company. They have one ship completed and the tests were very
satisfactory. Mr . Hinckley thinks that the Timm Company is
plannine to build only trainer planes .
Note :
The above memorandum "as dictated by Secretary Morgentbau 's
office to fdr . Knudsen 1 s office by telephone ·
INTER-OFFICE COMMUNICATION
co:·rrm=.m :AL
DATE
SepteQber 3, 194o.
TO
SUBJECT:
Ernpl oy
Aviation !.:Snufacturing I!ldustry
The number of factor y •vorkers employed in the aircraft manufacturing industry passed the 100, 000 mark
during July . The increase in the number of emoloyees
during the month -- approximately 10, 000 workers - - was
the greatest monthly increase in employment ever e::perienced by the industry .
1.
2.
Of the 101 , 300 f!'.Ctory l'!vrke:-c ennJoyed in the industry,
77,500 workers were in airplane plants and 23 , 800 1vere
engaged in the 'll&nufacture of airplane engines. The number
of e~l oyees in the en~ine plants in July was double that
existinr in Dccew~cr 1939. =~~lcy~nt in the Rirplane plants
has increased by 50 per cent durinG the sa~e period.
3,
The increase in e!:!plo;;""':Jt during Ju~-Y was distributed
among all the producers of airplr neg and airpla:w engines
except the Douelas Aircraft Coc~ny . The largest incress~
in employment -- approxi:n:l"::Ply 1 , 000 er.:.-lo~·ees -- occvrreQ
at th'! Locl'.heed A~:rcraft Cornoration . The lar:::;Pct percentage
increace-s , however, occurred- at '::::e Bell and Vu::.tee airplane
plants, and at the Allison Engineering Co1~oration . Allison
added 663 worlcers t:> the roll!! , during the month , an increase
Of apnroximately 20 ~er cent.
4,
The attached chart shows total ei!J')loyment in the aviation
manufacturlnrr indust"" and the eiJnloyment of selected companies
since J anuary 1937 . ·The attached tables give the figures
Plotted on the chart . The f1 6ures used for total empl oyment
cover almost all of the industry , but do not i nclude the employment of sor.1e of tile srJaller cor:J!)e.nies for 11hich complete
data wet~ not available .
Attachments
I
•J
Employr.•ent in Avletion unufec':ur1n€" In<l.upt 1•y
(Airplanes a~G Airolan~ En~ines)
1937- 19q.o
1
'I
I
1937
1938
1939
191j.Q
56 , 800
57 , 200
58 ,700
60, 600
65,200
70, 300
77 , 500
"
Airplanes
.-
)
I
Jnn.
Feb.
Mar.
Apr.
May
June
July
Sept.
De c,
Airplane
J
22 , 100
23 , 700
25 , 000
21j., l00
21j., 200
27 , 1j.Qo
25 , 200
22, 800
35, 500
23 , 4oO
23 , oOO
21 , 700
21j., l00
lj.1 ,100
52, 800
5, q.o3
6, 316
6, 769
5, 905
6, 311)
7. 555
6 , 1j.t5
6, 517
8, 365
6, 290
6, lj.Q6
6, 610
5, 909
11 , 996
En~i nee
Jan,
Feb,
Jlar,
Apr.
May
June
July
Sept .
Dec.
6 , 68~
1 ~ , 036
1 , 873
16 , 320
17, 562
19, 5a6
21, 6 7
23 , 800
Total Indu stry -- Airplanes and Airol ane Eng! nee
Jan.
Feb,
Mar,
Apr,
May
June
July
Sept .
Deo.
~lice
27 , 503
30 , 01~
30 , 005
30 , 5~7
31 , 685
29, 317
29, 690
30, 206
28 , 310
30 , 788
ot the Secretary of the Treasur~',
Divis i on of Research and Statistics .
'
,.;
1
69, 836
72, 073
75, 020
31j. , 955
78, 162
84.7a6
91, 9 7
~lj. . e:65
101, 300
50 , 009
31 , 769
6~ . 796
162
163
l
~ ~
Employment of Selec t ed. Ai rcraft !llanvfacturing Cor >:lor ations
1937- 194o
.
l q37
.
1938
.
.
.
--- --- -. - -- --------
1939
1940
Bell Aircraft Corp.
615
222
Gc:ll.
..,
g59
g50
290
912
June
Jul y
eos
1!.4o
1, 11.10
g46
g 0
873
1,192
l,ll.so
Sept.
71<'.:
235
703
Dec.
213
606
799
1 , ~311.
1 , 493
2, 666
1 , 726
1 , 711.?
3, 016
1 , 249
1 , e3 6
3, 37h.
Sept .
1 , 109
1 , 948
4 ,46S
Dec.
1 , 380
2, 485
5,199
3, 169
2, 540
968
3, 246
2, 518
819
3, 099
2, 104
832
Jan.
Feb .
Mar.
Apr il
!.lay
Boeing
A1 rc r~f t
Jan,
Feb,
liar.
April
llay
June
Jul y
~65
Co.
5, ~~7
5, 5
~,319
, 77 6
5, 785
F, c;p
7', .,n3
Consolida ted Aircr af t Coru.
Jan.
Feb,
Uar.
April
b.y
June
July
·r
II
J
Sept.
2, 617
989
1, 4og
Dec,
2 , 580
981
2, 540
2, 837
3, 477
~ , 807
, 349
5, oll.o
5, 321
6 , 743
164
I
l "'
Empl oyment of Sel~cted Aircraft Manuf acturi ng Cor porati ons
l937-194o
(continued)
1937
1931S
1939
194tJ
4, 31SO
4, 744
5, 016
5, 213
5, 691S
6, 314
6, 531
Curtiss-W ri ~t
Cor 2 .
(excludi ng right Aeronsutical Corp . )
Jan.
Feb,
t.'.ar.
April
t ay
June
July
1, 241
2, 211
3, S02
1 , 500
2 , 347
2, 939
1 , 933
2, 310
2, 1!)41!)
Sept ,
2, 202
2, 736
1, 562
Dec.
2, 007
3, 4al
~ . 447
5 . 591
6, 321!)
4, 334
5, 961
6, 173
4,1 77
6, 653
4 , 672
5. 445
Sep t ,
5. 532
4 , 021!)
6, 311S
Deo.
f- , 771
4 , 110
10, 362
910
1 , 577
2, 305
~,1 57
1 , 094
1, 594
3, 509
4 , ~2
1, 336
1 , 797
5, 699
Sept ,
1 , 31S3
1 , 997
5, 324
Dec,
1 , 421!)
2,123
5, 156
Dou~1as
~
Aircraft Co .l Inc.
Jan.
Feb,
lar.
Apr il
by
June
July
11, 952
12, 077
1~ ,11 9
1 , 033
14, 656
14, 957
14,662
Lockheed Air cr a ft Cor o .
Jan,
Feb,
l. ar.
April
May
June
July
'
J'
, 761S
4, 0
5, 016
5. 591
6,5°Q
165
~"
Employment of Selected Aircraft Manufacturing Corporations
1937-1940
(continued)
1937
1938
1939
194o
1 , 364
1,Sl4
2,905
1 , 716
1,892
4,092
2,044
2,13'>
6, 029
10,l84
9, 07
9,133
9,010
9,357
9,133
9,513
Sept .
2, 032
2,341
10,070
Dec.
1,818
2, 777
11,174
829
1, 713
2, 223
889
1,935
2,457
841
2 , 4oo
3, 125
1 , 272
2,685
2, 992
2, 530
3,795
2, 350
2,245
1,826
2, 444
2,1 68
1 ,7b6
2, 497
1 , 972
1, 952
Sept.
2, 439
1, 880
2,123
Deo.
2 , 338
1, 774
2, 588
Glenn L. Martin Co .
Jan.
Feb.
lo!ar.
April
May
June
July
North American Aviation 1 Inc.
~
Jan.
Feb.
J£ar.
April
li.ay
June
July
Sept.
Dec.
566
4 , 04~
4, 32
4,154
4,371
'>,336
4.Jp
4, _.18
United Aircraft Co~ .
(excluding Pratt ~hitney)
Jan.
Feb.
Liar.
April
tay
June
July
~·
2, 757
3, 051
3,468
3. 735
4· 912
282
u.: s23
Employment of Selected Aircraft ~anufacturing Corpor ations
1937- l04o
(continued)
1937
Vulte~
1930
194o
364
71!-2
938
959
1, 008
1, 334
2,127
2,615
Aircraft 1 Inc .
Jan.
Feb.
Mar.
Apr11
May
June
July
Sept .
Deo .
)
193o
4U.o
560
533
430
2S8
334
6i=-2
168
l67
Employment of Selected Airnlane Engine Corporations
1937-194-o
1937
193g
1939
1940
2l g
262
454
229
297
466
23g
339
55g
1 ,114
1, 261
1, 610
1, 95S
2, 766
3, 254
; , 917
Sept.
23g
3g2
642
Dec.
266
439
901
Alli son
Eng1neerin~
Jan.
Feb.
Mar.
April
May
June
July
)
/
Co .
Continent a l Motors Corp.
(Airplane Engine Division)
153
134
153
152
13g
162
144
171
Sept.
135
146
203
Dec.
152
142
243
Jan.
Feb.
Mar:
April
L.ay
June
July
151
Lycoming Divisi on of Aviation !tanufacturing Corp.
519
g49
729
Jan.
Feb.
521
704
gg9
Mar.
April
!lay
573
549
901
June
July
644
514
756
Sept.
6g9
506
762
Dec.
2M
344
35g
36g
37g
3gg
395
5gl
63g
657
711
765
gl 9
gn
168
l )
Employment of Selected Airplane Engine
Corporations
1937- 1940
(continued)
1937
193S
1939
1940
6, 642
, 549
Pratt & Whitney Aircraft
Jan.
Feb,
Mar.
April
May
June
July
1 , 931
2, 567
2, 264
2, 119
2, 489
2, 659
2, 384
2, 555
3, 066
Sept.
2, 1+71
2, 384
3, 394
Dec ,
2, 61S
2, 227
5, 022
2, 254
2, 607
3. 398
2, 515
2, 705
3. 771
2, 800
? , 930
3. 997
2, 690
3, 154
4, 026
3.374
5, 141
Wr1~t
7,1~8
7. 5 1
7. 7 6~
8, 50
9,1 21
Aeronautical Cory .
Jan.
Feb.
I.:S.r.
April
May
June
July
Sept , .
Dec.
2,608
5, 411
6, 081
6,534
6, 98
7, 882
8, 682
9, 491
II
1.63
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
Secretary MorEenthau
,_
Proteuor Cha:.berlain
Sept~ber
4,
194o
The French ~!inieter of Finance has requested throU&)l Financial Attache Al"Dhend
the release of $4o7, 744.1::8 to nseure the payment of the 4-1/27> 1937 French looi.
coupona maturing on September 1 . The Federal Reserve Bank of llew York has B'!lplied
tor the neeeeeny license to debit the account of tho Bank of France and to credit
the account of the Swiss l:ational Bank vi th this amount, which 1e th' equivalent of
tho S\liaa trenea which have been bought by- the Swiss Nati onal Bank to remit to the
~ tor International Settlements, the PaY"ing agents, to cover their requir~ents
on the September coupons. This issue of llational Defense :Bonde earriea an exchange
option and guarantee and p rovides for payment in Svitzerl and in Sviaa franca.
Under date of August 7 the Federal Reserve Bonk of New York ~'Plied for a
licenae to transfer on its books from the dollar l\ccollnt of the Bank ot ::'ranee
$454,~ .45 to the dollar account of tho Swiaa ::ationnl. l!Pu to p roTide co.-er tor
the Sviaa francs neeenaary to PaY' the eOU'!)ona due August 1 on the irench 4? loan of
1939. Thia exhrnal loan of !renee was issued in "Dart on the l:etherlanda and in
'art on the SVie• markets . Interest h psynble at- the O'!)tion of the hol~er in Svisa
franca or ln florins. The Swiss 1-!inieter has a"D'Dealed to the State Department in
~ort of thia ap'!)lication, stating that the b~~ds end the coU"Dona for which funds
are now deaired are owned entirely by SWis& cor-,orationt or Sviss citizens and that
there h no rea1on to sup-,ose that the moneys thu1 released will be abused or vill
violate the obJocthee of tte -icerican blockillt:. or~er .
The above interest service on the two loans could be paid in SWiss francs .
fhe l'rench Government however has chocen to keep its renrvea p rincipally in t he
United Statee, i n gold or in d~llars. To pay tho obligation other than through
dollara t he J'rench vould have to 'tuy Swiss franca froc the Swi u authorities sg&illst
French franca. ".'he French Government ill unoccupied France 1B no~< prepared and readY
to malce payment out of it 9 dollpr resources in thh country . In thne troubled times
the dollar 1a DD.turall.y plnyilll: ite role of the one beet curnncy tor international
Pllmenta. The Swiu J.:inister emphasized to the Treasury eome weeks 880 the urgent
dedre of Svitzerlnnd to collect from the FrNlch Government aa many of the obligetiona due thenfroo as possible in dollaro while t he French GonrD:lent is etill co:Parativel.y free . SUrrounded by Geroany. its n].liee, or German-occU"Died territor:r.
the Swiu feel that they may ria < being engulfed vith reichamarks . They desire to t
~tun dollar• and other acceptable foreign exchange t o the gre:te:t poa:i~!~~"!:t
th the view to caintaining their own currency on a firm gold ae 8 ' re
the Srlaa franc 1a tho only currency of this type remaining in Europe .
in our Tripartite
4cr Out ot friendahip for Swltnrlnnd, the sole raoa i n 1n&t'D" rtner
t of blocked dollar
•aeent • it Ients thllt we should permit the above p8,71"en s ou
ed
uld be
0
of the Bank of Frnnce in the United Statea. Any !~~ ~~t~: ::solution
Undue hardehip to SWitzerland and might dhcour~ch
rebuff might even
old fut to the Swiu franc at its p resent parity.
a
~cea
t!U:inc
170
- 2 throw the Slrisa more in the direction of Germany. It 1& certainly not in our
interest t~ encourege defeult on French Government obligations to a non-belligerent.
There ie no question of tee funds going to Germany , since the bonda are held ~
Swiu banka. Furthermore, there is no reason to believe that Gel'!Ullly would coerce
the French Government et Vichy into peying out dollara to the benefit of Switzerland.
llitb our enthuliastic ap,roval, France iB continuing to pay out of blocked dollera
the I UJIII necessary to meet service on French loena floated in the United States.
On August 15 the Federal Reserve 1lank of l<ew York applied for a licenee to
tr anafer on ita booka ~27, 768 . 25 f r om tl:.e doller account of the BeAk of France to
the dollar account of t he :Dank for I nt ernational Settlementa , b;y order of the French
rreaaury, t o cover interett on French Treasury 4~' notea of 1939 held by the :Bank for
International Settlements. It ia recocmended t bet the funda neceasar;y for this
no~l trnneaetion, t o the benefit of the B. I. S. in Switzerland, an int ernational
b&rudng instituti on wboae life dependa upon ita income f r oc aueb investmenta, be permitted t o be transferred na r&aueated .
171
FEDERAL RESERVE BANK
O F NEWYORK
September 4, 1940.
Dear Mr. Secretary:
We have been trying to look ahead toward our part in the Treasury's
financing problems during the present fiscal year . In the pr ocess , 8 question
has been raised concerning which I thought you might like to have an expres sion
of our vi ews .
Under the terms of the Federal Revenue Act of 1940, Ti tle I II , Sect ion 302, there is authorized (by the addition of a new paragraph • (b) • to
Section 21 of the Second Liberty Bond Act) the issuance of obligations, to be
designated "National Defense Series• , not to exceed in the aggregate
f4, 000,ooo,ooo outstanding at any one time, less any retirements made from
the special fund pr ovided for the national defense by Section JOl of the Act .
The Act levies additional taxes for a period of five years, and in respect to
such additional taxes it is provided, in Section 301, that: "The Secretary
of the Treasury shall, as soon as practicable after the end of each quarter,
determine the additional amount of taxes collected attributable to the increases in taxes made, and to the floor stocks taxes imposed, by the amendments to the Internal Revenue Code in title II of this Act (not including the
amount of taxes attributable solely to section 209 and not including any
amount collected under section 1700 (a) (1) of the Internal Revenue Code
attributable to a basic admission charge of more than 40 cents) , and the
amounts so determined shall be set aside as a special fund which shall be
available only for the retirement of any of the obligations issued pursuant to
the authority contained in section 21 (b) of the Second Liberty Bond Act, as
amended. •
It is thus clearly provided that the proceeds of specific taxes
Shall be determined and the amount thereof placed in a special fund and used
~ for the retire;oent of National Defense Series obligations. The Congress
has thereby authorized the issuance of obligations which by statute have the
specific benefit of earmarked amounts of taxes , and which, when issued, will
be in competition with the present general obligations of the United States
of Amer ica. The technical characteristics of the obligations that may be
issued, the plethora of short term funds seeking investment, and the fact
that all obligations are based on the general credit of the United States in
any event, make it extremely unlikely that the market will distinguish, on
thia basis , between general obligations and these obligations ~ichr !~fined
addition to the full faith and credit , will have had the proce s o
taxes specifically set aside to provide for their retirement. Howe~er,~n
obligation is created which may be considered as having an unfairia van ge
in this respect over the Treasury' s general obligations, and its ssuance
COUld set an undesirable precedent .
I
1
flDUAL III IIIAVI: BANK OIP NI:W YORK
12.
Hon. Henry Morgenthau, Jr.
9/4/40.
172
It was made plain in your testimony before the Committee on Finance
United States Senate, on June 12, that it was not in your mind that by earmarking these taxes, National Defense Series obligations would be given a certain
advantage over other obligations of the Government. On the other hand, questions by some Senators seemed to indicate that they saw a possibility that the
dedication of special revenues to special bonds would affect adversely the
value of other bonds of the United States.
Inasmuch as the appropriations by the Congress for national defense
have now been further increased and, before the end of the fiscal year, will
probably necessitate renewed consideration of tax measures and the debt limit,
may not there be an appropriate opportunity to reconsider this question of the
earmarking of the proceeds of certain taxes to service certain specific Government obligations? If that is likely and i f the Treasury' s position will permit, it is our opinion that it would be preferable not to sell any National
Defense Series obligations to the public pending such consideration. It seems
to us undesirable from every standpoint of the Government security market to
1118lte this sort of experiment in our fiscal operations.
Foi-:?:·~~
cYeo{f}j_~ H~ison,
PresiTnt.
Honorable Henry Morgenthau, Jr .,
Secretary of the Treasury,
Washington, D. c.
I
173
m:PAR'l'UP.E .Pl:IIHITS GR&IiTlW TO 'nSSELS C.IJIRYillG
SCRAP moll AND SCRAP STDL TO JJ.PA!I, RUSSIA, SP.Ull AND
SJ:P'l'EXB.II:R
.-1
•
4, 194o
HAT.
CAliGO
~
TO
~
RIUO IW!ll
Jap .
California Crude 011
Regular Lubricatin& 011
84 ,500 bble.
2 bbll .
J aJ)An
Swe.
A'V1ation Oaaol1no
37, 875 bbla.
J apan
IWW!OLM
Nor .
Aviation Lubricating Oil
Re;;ular Lubricatint: 011
3. 273 bbla.
52 ,795 bbla .
U.K.
soY.MJ:RSTAD
PACIFIC GROVE
:Sr.
Regular Lubr1cn ting 011
201 bbla .
u.x.
Ore .
No . 1 Reavf Melting Steel
Regul&r Scrap St6ol
1,100 ton•
2,900 tone
Japan (via Savannah)
MARIA STEPIIATOS
Ore.
No. 1 HeaVf ~lel tlnt; Steel
Regular Scrap Steel
1,365 tona
3,172 tone
U.K .
'UXL\RCRlS
Sp.
No. 1 Be&Vf Melt in& Stool
Regular Scrao Steel
339 tone
1,131 tone
Spain
I!!DtJJC!!U
Jap.
No . 1 Hoary lleltiog Steol
Regular Scrap Stool
300 tone
3, 825 tona
Japan
ou.Til'Ud IW!ll
Clrc.
Do. 1 Beary Meltiog Steel
RegulAr Scrap Steel
342 tone
1,444 tone
Japan (via :Srit\ceport)
PO lilT JUDITH
,_.
~
U'
-..J
w
174
Seotember 4,
4:30 o .m.
1 9~0
RE FRENCH BALM!CES
Present:
Mr. lihi te
l~ r. Chamberlain
!4r. Bell
Hr. Cochran
Mrs. Klotz
H.M.Jr:
The
Does Mr . Bell oarticipate in this?
stock market went up ~~ po ints on Hitler's
soeech, beca.use Hitler said evidently 1n
the speech that he had to oreoare now !or
the strength
four years more of war.
or that, the last thing the stock market
went uo ~~ ooints .
On
Chamberlain:
I always ~:~aintained , l4r. Secrett~ry, thAt
the Br1t1sh could hold out.
H.M.Jr:
I have been studying the tides or Dover.
Fr?m thi s infc~mation thet the English
give you, they told me !rom the 6th to
the 7th - t his is Arthur Purvis - would
be the h i gh tides. He is all wrong. It
is interesting. The h ighest tide at
Dover is on the 5th of September and t hen
it goes down and doesn 't ge t high again
until the lSth, co really when they p~ssed
the 6th, 7th, gth and 9th, when they pace
that, he doesn 't get a high tide again .
Chamberlain:
Then they get one?
H.M.Jr:
Then they ge t it. They needs high tide
to land. I have got all the table s .
C~berla1n:
It l ooks very hooeful.
H.M.Jr:
I think so .
175
- 2 -
Chamberlain:
Thm is interesting. It may have some
eff ect on whRt you think
H.M.Jr:
':le
Chamberlain:
I will ha ve t J tell you about what 1t is.
It is s question of policy that we think
our comm ittee ought not to decide in regard
to the u~e of French funds. You see, the
French ere asking that a considerable amount asking tha t we permit them to draw from the
fund - from their funds here, Bank of France,
for the oayment of the expenses of their
Embas sies ~nd LegAtions everywhere in the
world. No", s s far as the United States
i s concerned , there is no trouble. \l'e won 't
bother about that . So fsr as the other
question - the other question would be
divided into two ?arts, one, whether we
vould p ermit thee to draw for their Embassy
expenses to South America and the other,
would we not extend it to Canada.
H.M.Jr:
There a re really three orooossle . One,
should t;e let them draw funds for the
United States; two, for this Hemisphere;
three, for the rest of the world.
Chamberlain:
For the rest of the ~~rld. As to the first,
we t h ink that should be done with probably
a m~ximum se t .
H.M.Jr:
Per month?
Chamberlain:
Per month , and no time on it. As to the
second , our committee felt that it is a
ouesti on o f oolicy. If we start , if we
don't let them draw out this money, it will
orobably embarrass them quite considerabl y.
If, t herefo re, the oolicy of the Government
is t o helo the Petsin Government, we orobably
should lPt them have the monPy.
are go 1ng to use this against you.
For 9outh America, it will not amount to a
very large a mount of coney Anyt•ay. For
south America we have a request for a three
month o eriod for Ur uguay , Ar~entina, Chile and
176
- 3 P a r~ guay th~ t
which ~re t he
amounts to about 1280 ,000
biggest eX?cnses excent Brazil,
e little over a million a year. If. you don't
put in hrPzil a nd a ll the others -( Mr. Bell e n tered the confer~nce.)
Chamberlain:
I was talkin5 about t h is, that we are
Pre ssed by the French Government to unblock
f or the Emba s s ies the French funds, and I
was t a lking particula rly about the South
Americ a n ~ituation. From the request or
,285 , 000 f or the major embassies except
Bra zil f or a thre~ month period, it would
look as though the total amount wouldn ' t be
say it would be under two million, see, for
f or t h i s Hemi sPhere.
H.M.Jr:
\{ell, r ix me uP a memorandum tonight to take
t o the President tomorrow. He has given me
s tentative luncheon engagement. One,ro~
the United States and how much it ~uld
cost. Two, what we think it would cost
for South America and for Canada -~
Chamberlain:
I don 't thi nk they have - have they got a
rep resentati on in Canada?
H.I!.Jr:
Yes, I saw the Legation there. Three, how
much are they asking for for the outside
countries?
Chamberlain:
They haven't fixPd a figure.
H.M.Jr:
One, two, three, if I could have that.
Chamberla1 n:
They haven ' t fixed s figure .
H.M. Jr:
Just out little notes under th~t, how your
committee reels about each one of those
proposal~, how your co ~ittee feels about it.
Clul.mberlain:
I will give you that. The co~~ittee reels
much more friendly toward the South American
HemisPheric p rooosal than they do t o the
g eneral.
H,J.!,Jr:
Ir you d~n't mind, keeo it on s month t o month
ba sis, don't let's give them any money beyond
177
- 4 a month.
White:
Renewable without special action unless you
see f1t.
Chamberlain:
And l;'e thought we should get reoorte. liould
you use t h~t for the Embassy in this coun try?
H.J.I . Jr:
Ye a .
Chamberlain:
We thought o f giving them three months And
requiring a report.
H.M.Jr :
In thia country?
Chamberlain:
For t h is country.
!I,M.Jr:
And ho w abou t South America?
'-hamberlain:
\iell, in South Ame rica, I am inclined to t h ink
t~t if we are go ing ahead it would be better
to g1 ve them three months with a reoort each
ouarter. It would make it much e a sier for
thel!l.
Bell:
If you have g>:>t control over it, you can
alweye revoke t he license.
Chamberlain :
\l'e can revo ke the licenAe if necessary.
Bell:
If they don't ~ove the money out of the
country , and we will assume they will not.
Chamberle.1n:
1·/e will fix a maximum anyway, eo much a
month, monthly recorte .
H. M.Jr:
I would keep it on a monthly bae1e, and ~1e
can tell them we will let them know - for
inet~nce, let's say this was the first of
September. I t~ould advance them enough
monev to run for September and tell them
that' o n t he 15 th of 9epte~ber we will let
t hem know 1.1hether we will give them the
money for octobe r. I bC uld give them the
money on, eay, the 15th of September, for
October.
178
- 5 -
~
Chamberlain:
Yes.
H.M.Jr:
Do you &ee?
Cba.Db erlain:
That gives them 15 days ' notice.
H.M.Jr:
Yea . I would give them 15 days ' notice.
In o ther words , if on the 15th of September
t hey didn 't ge t a check from us for October,
t hen they would know that they weren't going
to get it.
Chamberlain:
\lh8 t we will do , unless some - t h ere would
be only one difficulty with that, Mr. --
White:
They could request e license each 15th to
be ~aesed on for the - calling for the
exoend itures f o r the ensu i ng month. They
would mer~ly request the license, which
would be aut omatically granted unless t here
was s ome reaeon not to grant it.
Bell:
Make the~ ~ut in an apolication fo r that
or ju Rt on the basis
H.M.Jr:
Make it aut omatic.
Chamberlain:
And t n t he amount fixed.
H.M.Jr:
But t h ings move so fast that to give them
three months' time and three monthe' money,
it is lifetime t hese days.
Chamberlain:
Yea, it is. I think we would require a
repo rt a t the end or each month anyway.
H.l~ . Jr:
Yes.
White:
I would be inclined t o think it is better
to let them send a monthly sum \ti thin this
country and let it go on - let it come u~
before the committee each month , but not
have them come before t he committee and
ask for it.
H.M.Jr:
That is what I mean.
au t omf! tic.
I would do that.
\ihat do you think of that?
It would be Just
179
- 6 -
v
White:
Thereby renewed automatically so they
don 1 t hRve to come to us .
'
H . l~ .J r :
Just the way we do wit h the C11nadian silver.
I ~1ri te a letter every month to CAnada saying
Ne will continue to do the th i ng. Canada
doesn't make a request . I Just write them a
letter at the end of each month t hat we will
continue for e.nother month, but I don 1 t went
to g ive them th r ee months and then let them
go sour on us for two and a half months, in
11hich we don't have that money. Sunpos i ng,
f or instance , we Jus t issued the money for
three mont hs and two weeks after we did
that, GermAny took over all of Prance.
Bell:
You would revoke the license .
H.M .Jr:
But you would have advanced them the money
for three months.
White:
They could have drawn on it and they might
have withdrawn it.
H.M.Jr:
Sure, they might take the whole thr ee
months' allowance the first day and the
next day Cer many takes all of France.
White:
It is poss ible.
H.M.Jr:
Perfectly ooss i b le.
Bell:
WhAt would they do with the money if they
drew it out in the first place?
White:
Pay it over to some other - Italy or Germany
or South America .
H.M.Jr:
It i s an unnPoessary risk .
Bell :
There aren't very many places they can
put it w1t~out having it frozen .
H. M.Jr :
Look, let ' s be II little stiff at the
beginning and you can always ease it.
Chamberlain:
Now, I wanted to call your attention,
180
- 7Hr. Secretary , to the fact that - to ask
you whether ycu wanted to consult with the
State Deoartment on this - on the ooint
t hRt the French may be getting close to
the Naz.is, I don 't know , and it is oossible
tha t something will raise a reeling that the
French Embass ies, the French Diolomats, in
South America may be close to the Germans ,
and may get closer and therefore the money
spent on t hes e French Legations and French
Diplomatic lHss ions may be used improoerly.
I think the - I think it might be well to
check ~1i th the State Depa rtment. I reel
thFt I don't want to go to the State Department without soeaking to you.
H.M.Jr:
I wish you would .
Chamberlain:
I can soeak to the Latin American Division
or you can go to the Secretary.
Bell:
Didn't you have a memorandum from
White:
\/ae Hr. Serle, who was moat interested
in the use made of the funds, there?
H.M.Jr:
I ...ould go t o Berle.
Bell:
You had a me mo rand~m, didn ' t you , last week
from -- was it Welles or Berle?
Chamberlain:
I have got a memorandum here from Berle,
but it doesn't say- 1t ie stmply s
memorandum of h1s conversation with the
French Ambassador. He doesn't make any
recommends tion .
Bell:
He prote s ted rather vigorously
Chamberlain:
The French Ambassador protested very
vigorously --
Bell:
About re?ealing the genPrsl licenses
we gave them.
H.M.Jr:
You go t o Berle and give me something for
noon tomorrow and · I will take it uo with
the Pre11ider.t .
' 181
- g -
Chambe r lain:
All right , I will do that early in the
morning. Then the queetion as to the _
as to Europe and the rest or the world is
perhaos n little different. In Europe, you
see, they have no longer Embassies or
Le6ations in England, in Ital y, Belgium ,
Holland, and Norway . They have cut down
in the other districts and othe r countries,
I don 1 t kno"' ·
H.M.Jr :
They CRn always draw on the 250 mil lion dollars
they have in ~artinique .
Chambe rlai n:
I discussed the.t with Mr. White , and it
doesn ' t seem a very nractical scheme. There
is always the chance, too, that something
may haooen to Martin i que . I saw in the
newspaoer thAt they were carrying on a
olebiscite in Martinique to decide whether
or no t they wanted to join the British. If
they do, and t h e French ~hips, French sailors
there, follow the plebiscite, they will be
holding the money and that money wouldn ' t
be available to the PetRin Government.
H.M. Jr :
Put it uo to Berle and let me put it up to
Roosevelt .
Wh1 t e:
They doubtless have funds elsewhere that they
could use, but if they tell us thRt they
haven ' t, there is no way that we could go
They would orefer, naturally,
back of it
to unloose' these frozen funds and so wouldn ' t
say that they had other funds available, but
they probably have.
H. M.Jr:
Let ' s see.
Bell:
\/hat do they want to usr this money for ,
Harry?
White :
To maintain their Consulates and Embassies.
Bell:
I thou~ht this was di fferent.
lihi t e :
No, I was speaking of Consulates and
Embassies outside the United States.
182
- 9 -
I
r
Chamberlain:
It then depends in part on your attitude
or policy toward the Petain Government.
H.M.J r:
Hell , th;y tell me you go to the Embassy
here in •laahington and some of them are
very nice and some of them are not. There
are no t1~0 men alike. Ee ch one is governed
by his own oersonal feelings. They told me
a story last night about a very pr ominent
Frenchman who said, he happened to be a
desiener of this - what is this best battleahip? Not the Richelieu, but one of their
best vea11els.
Bell :
The Dunkirk'?
H.M. J r:
One of those, anyway. For some reason h~ is
over here. He thinks it is oerfectly all
right to bomb the French people but when they
bomb the battleship he designed, he turned and
everything the Engl ish did was poison. You
Just don ' t know how it h its a person.
Colonel J acquin comes in end says he is going
over to France end work and I understand he
is coming back here a s aviation attache.
Wh1 te:
In the realm of h igher politics , there is
this consideration , that the less money the
Petain Gove rnment has to suooort ite various
Le6ations and Colonies, the iess likely those
Colonies to s elect adherence to the Viche
Government as against the Government in
London, if there is a choice.
H.lo!.Jr :
Yes.
Chamberlain:
It runs into --
H.M, Jr :
Well, let ~lr. Roos evelt decide th1s.
Chamberlai n:
All right. There is another question after
the Embassies. They want - I would also
like to see if I can get some information
fro m the State Deoartment on this. They
want permission to have free ~30 , 000 a month
to soend in the United States for supplieR
for the French Colonies, l4artinique, Guadalupe,
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food, they say, pr1nc1nally, Martinique,
Guadalune, and Indo-China. vfuether that
will be true now, I don't know.
H. M. J r :
I would nut that down.
Bell:
Isn ' t that new money? They are going to
bring supolies from these islands, se l l them
to the United States, largely strategic
materials, and get the dollars and use the
doll11rs to buy exports from the United States,
I thought.
Chamberlain:
That is going on.
Bell:
That was the original
Cochran :
That was one part of it. The other is, they
are to draw froo some funds they have .
Chamberl a i n:
This is another nroposition that we are allo1t1ng
them to do. They a:e having no difficulty.
R. M.Jr:
Oh, you mean if they bring in, say Martinioue
Rum or something like that, and sell tlO,OOO
worth, you free that?
Chamberlain:
There hasn ' t been any such case, Mr . Secretary.
Bell :
Free that to buy stuff in the United States .
Chamber la1 n :
And the bank in Martinique has money that
could finance purchases in this country.
H."'. Jr :
But frozen funds to feed - buy food here to
feed the peonle in Martinioue is something
else again .
Chamberl ain :
That is - That is included in this, because they have
done 1t.
That may be in it, but aren't you going to
get more information on that po i nt?
Q
Cochran:
White:
Chamberl a i n:
pro~os1t1on.
\ie are going to try to get more 1nform~tt1on
on that.
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ll'hite:
That is right, becauqe they don •t specU'y
'lt all cle~rly
H.M.Jr:
Out of this t hing, the President may get
a couole of ·nore bases .
White:
From whor.1?
H.M.Jr:
I' ve been crazy to have him get a base at
St. Pi e rre , and Miquelon, and it i s very
important.
Chamberlain:
Yes, they a re.
H.M.Jr:
Out of this thing, we will maybe get a 11 ttle
deal.
Bell:
,fuere is t ha t?
H.M.Jr:
Just sou t h of NewfoundlPnd.
Chamberlain:
They have another pronosition to which we
haven't - we think it is somewhAt curious .
They want t}O , OOO a month to finance
purchases and the payment or expenses
already incurred in South America in connection w1 th the 'Ourch<~.ee of oroperty,
goode. Now, 1n - they s ay at first they
wanted an unli mi ted right to buy what they
wanted. They said they would like to get
t his f30 , 000 a month for all of Latin America
t o - contrarywise , if they had any large
purchases i n line we should be given a re quest
for consideration. Now, you would be interested
in knowing that we b~d some trouble about a
re que s t for ~400 ,000 in Chile.
H,M,Jr:
I have a lways heard of Chile and Jumping beans.
Chamberlain:
No , those are Mexicans.
H, M.Jr:
Oh, they don ' t Jumn i n Chile?
Chamberlain:
No, they don ' t jumo , they stick . lie ruoven't
given them the permission - something is
sticking somewhere. These are beans the
French bought during t he war.