Full text of Diaries of Henry Morgenthau, Jr. : Volume 303 : Part 1

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DIARY
Book 303
Sep~er

5 and 6, 19t0

-A-

Book
Alcohol Tu Unit
Graves' report on ~ogress in absorbing functions
of :Federal Alcohol Adltinistration - 9/6/1.0.. ....... 303
a) FDR i.Dfo=ed - 9/16/1.0: See Book JQ£, ;a&e 100
Appoint~ents and Resignations
Collector of Internal Revenue - Toledo, Obio:
Donahey 1 s secretary calls Gaston ree:&rdi.ng appointment;
F'DR asks thAt appointment wr.it until later; Gaston
thinks FDR wishes to consult Sa-.yer, of Cincinnati,
National Co:cittee:an- 9/5/1.0 . ............ . ...... . .

Page

225

- cCaapai&n, Delllocratic
SPe Democratic Cupaign
Cb.ina
See .ar Conditioos
Chrysler Coap&cy
See •·ar Conditions: J..irplLnes (Plt.nt Expansion)

Collec tor of Internal Revenue -Toledo, Ohio
See J.ppoint.ents and Resign£tions
Curtiss-trigbt Corporation
See .ar Con:!itions : Hrplanes
- D-

Deaocra tic Caa;:aign
Lucas (Scott , • ; Senator, Illinois), in Chicago,
etartiL~ operation of Regional Beadq=rters, consults
~r conce~g outstanding Jewish residents for that
section - 9/5/1.0 ..••........... · ·. · . · · · · · · · · · · · · · · · · ·
Destroyers
See t.ar Conditions

103

- F-

I .

:federal Alcohol Administration
See Alcohol Tu Oni t
Financing, Gove~ent
liational defense expenditures, Jul) 19.:'9 - AUb'U6t 1940..
Estimates of working balance for four mo::~ths entiin&
llovellber 30, l9.GO, without any new cash financing .....
Election year financing. ................................
Yinland
See War Conditions
:P'r&.nce
See hr Conditions: Foreign Funds Control

21

196
197

- G-

Book

Page

Geraany
See tar Conditions: Foreign Funds Control; Oil
Great Brita.ill
See iiar Conditioos: Airplanes; ..l.ilitary Plcnni.ng
- H -

Hopkins, Harry
~r's note on resignation &~ Secretary of Co.merce
and Hopkins' ans.er- 9/6/40 ••••.•• .•..•••••.•••••.
a) IDI.Jr read~ 3opkins 1 letter to Tre~<SUI') group •.
Housing
Sand.idge-'<'urphy Develop;iellt - Owensboro, Kentucky 9/5/40 •.• ••.. ••..••••••••.••.••..•••..............•

- I Intel'lllol Revenue , Collector of - Toledo, Ohio
See Appointm:nts ~d Resignations

Ital.T

See \l'ar Conditions: Foreign Funds Control
- J-

Jape.n
S..e liar Conditions: J.e.pe.n; Oil
- L -

Lucas, Scott • (Senator, Illinois)
See Deaocratic C8l3paign

J

- ll -

lolilitlll7 Planning
See 'lrar Conditions
- If -

Bortbrop Aircraft, Incorporated
See ar Conditions: Airplanes
- 0-

Ohio
Collector of Internal Revenue, Toledo:
See Appoint.ents and Resignations
Oil
See -Mr Conditions

303

189,190
249

47

- pPan-Ac~rican Airwe)s
See ~ar Conditions: ~lrplanes

Book

Page

?ant Expanfion
See hr Condit!.ons: Ai:::l.anes
See also Rennue ReTisian
PlAstics
See 11ar Conditions: Airrlanes
- R -

Revenue RerlsiCIIl
Excess Profits Tax:
aenderson, Knudse n , Bis&ers, and Nelson:
a:...Tr , Sullivan, Fole:;, etc., decide it would
be best to have c on!'erence 'l<ith and ende~:vcr
to iron out differences- 9/5/40 ............. . .
a) Conference.. . ... ... ........... . ......... ..
1) !J!cReynolds an-! lr4Jr discuss . . . . . . . . . .
lnudsen teEtimony - 9/5/40.... . ...... .. ... .... . .. . .
Renderson discusses his testimony with H-Jr -

9/5/40.. ................ .. . . . . .. . . . . .. . . . . . . . . . .•

a) National De!en~e Council ask~g Co:~trol.er
General for an op!.nion on e tex :atter
without u:entioning to Treasury discussed. ...
b) JlcP.e:-nolcs and !r.:Jr disCUSS nender1:0on talk..
SulliT&n reports on fxecutive Session of Senate
Finance C~ittee to c onsider - 9/9/40:
See Book 1Q!.1 page 120

- sSpain
See

ar Conditions
- T -

Tanks
See ar Conditions
TaxatiCIIl
See Revenue Revision

- uU.S . S . R.
See ar Conditi ons : Chin&; Foreign Funds Control
United K!.ngdaa
See T.ar Conditiaos : Airpl£nes; llilitary Planning

103

29
153
185

115
1:?5
1}7

14:0

- 11 -

Book Page
\oar Conditions
Airplanes:
Pan- American Airways: Three Lockheed planes
1
r eleased - 9/5/40 .. . ........ . ............... . . .. 303
a) Voill be used to ferry pilots from Canada
b) Kead's letter to HUJr- 9/5/40 ............ .
13
Plant Expansion:
See also Revenue Revision
Chrysler plant expansion discussed - 9/5/40 . ....
7
Plastics: Copy of report prepared for Hinckley
{Commerce Department) sent to Ht~r- 9/6/40 .. . . .
193
a) Conference on training planes of plastics;
pr esent: H:..Jr , Hinckley, and Colonel Aldrin 9/11/40: See Book 1Q2, page 39
Progress reports sent to Secretaries of War , NavY,
119
etc. - 9/5/40 . . . .. ... . ..... . . ... . · · · · · · · · · · · · · · · ·
a) Northrop Aircraft, Incorpor ated, and
Curtiss-Wright Corporation asked for
126,128
additional information . . ••.... ...... ...... ..
United Kingdom pr ogram for deliveries,
October 1, 1941 - u<arch 31 , 1942, in addition
20
t o those outstanding on Septe•~er ;o, 1G40 . .. ... .
BelgiWll:
War n~teriel shipped to •~inique on French aircraft
carrier BEARN which Belgian Embassy now informs
117
British Purchasing Mission it may ~ave- 9/5/tO ....
China :
Chen 6ives HmJr resuc~ of situution- 9/~/40 .. . . .... .
Buck tran smit s alternate proposals from Chiang ~ni-ahek
9/5/40 ..... . ............................ . . . .......... . 73
a) 99- ycar lease of !:lainan £.nd Formosa
b) Complete Unit ed St ates economic wonof~ly
Financial report from Commercial Attache, Shanghai 9/6/J.O... . .... . . . .... . ........ . . .... . . . . ..... . ...... . . 27tl
r.ar materials r eceived from Russib. since beginning of
war: Buck report - 9/6/40.... .. ..... . ................. 'Z97
Destroyers: Large cutter and a 6 unboat to r eplace destroyers
now in Lisbon waters - this to prevent confusion of
28
destroyers being released to Great Britain - 9/5/40 . . .. .
Exchange market r eswne - 9/5-6/J.O . . .. ... . . ... . ....... . .. . • • 40 , :?98
Finland: Pr ocope summarizes situ~ ti on for Cochran and
43
aaks about possibility of loan- 9/5/40 .. ......... . . ... .
Foreign Funds Control:
Chase National Bank transactions of Bank for Foreign
68
Trade {of Russia), January 1 - August 15, 1940 ....... .
Foreign holdings of United St&tes property af"ected
83
by control. ........ . . . ... .••• . • .. . ...•...•. • . ······· · ·
France: State Depart ent apFroves grantin!, expenses to
diplomatic service in United St.ates ni L.:.t'n Am r'ct• 9/5/40. ................... . .. ... ...... ... ....... .. .... 107,188
a) Chwnberlain memoranduu: 11 Requewt:> of Fr •nch
111
Financial Agency" .... . ...... . .. . .......... · · · · ·
(See also Book 1Q2, ~~e ?4)
b) Hull and H.!Jr di scuss - 9/1V40: See Book 1Q2, pllf;E' 119
1) Martinique ~old mibht be used
!Aorgan & Cie . situation reportE'd to Treasury - 9/6/40 .. 285
Germ~, I talian, and Rus isn transactions by Chase
National Bank - 9/6/40 ............... . ................. 100, 101

- ~ - (Continued)
Book
liar Condi ticos

Continu ed)

J&:;l~Ul:

!:lull says i!' J a?£-Ile~e co not. cha.nte att!tude

he will r ec Olll!llend put ti.Lo = elllbargo on silk 9/6/40. . . •. • • • • . . . • • . . . . . • . . • . . . . . . . . . • . . . . . . . . . . .
:.Con oaic and !'inanci£.1 r ejJOrt from Grew - 9/f/LO .. . .
IIllitary PlE.nn!..n6:
Te ntat:ve Lessons !'rom the Rec ent ~.c tive Ca..:x i&n
in !!Urope : 11'= Der.=tae!!t bul.lPtins - 1/5- f/1.0 ... .
a ) Captured ~= Regul.:c.tions o:1 Po~>co.:;n· t: ·n
snd Cc:cll:l!.cation bet•een Ground and J.ir -

303

9/6/J.O . .. . ......• • . • . •...•. . .•...... . ...•... • .

Geraan attac ks on

~ndon , etc . - 9/;/40 . . . ... . . .. . . • .

Reports !'ro:1 Landen t r ans::.U.ted by Lothian - "1/f:/1.0 . •

250

n1
?5 , 200 , L'Jl;

2.12

105
305, 311

Oil:

SitUE.ticc in ~?S in (Sir An:lret< F.gne

ra,'<>r t) -

9/5/1.0 .. .. ....... ......... ...... ... . .. ....... ... .. .
Sw:c&.r: of situat i on in JE.,..an, C.ermany, and GeM8II-

controlled terri~ory - 9/6/J.O . .. ••. •.... . .. .. . .. . . .
a) Copies sent to S..cr.,taries o!' Inter ior ,
J;avy , State , and liar
Security !Lu~ets (Ri.,n-Grs.de):
Dev-elo~ents : Raas ~emorand~ - 9/6/J.O . .. . ..• .. ... . . ..
Spain: Oil sitU&t !.on (Sir Andrl'W !gn"'ll re.>ort) - Q/'5/1.0 • •
Ta::.ks: ?atterson c onfer~ •ith itaU"r, Bell, Fole:-, and
I oll:lg - 9/5/L.D. • · • · .. · .. • • • · · · · • · .. · · · · · · · · ...... · · • · ·
a ) ~r r eports t o Purvis - 9/5/40 . .•.•..•... . . .. .••
T.ar

Depa.rt:oent

lU l itary Intelligence Div-:si on bu:J.etine :
See uar Condit ion s : llilltary ?lt.nning

113
258

266

113
5

Prescn~ :

!:r.
1~ .

r:r .
::r.

Scpte...~.er -> , 1940
11: 00 a . ...

Bell
Fole,.
YounG
Patterson

Geor~e

Young :

Uead just called me on this Pun-American \irline situation . He talked to Tripp
and iripp said he :;ould release the planes .

n.::. Jr :

'::onderful.

Youn: :

So he called Purvis, nnd .. ilson is evidently
hnv.:.n.; a neetins and Purvis and \.'ilson are
no\"/ talkin- about it in I·:ew York .

H•. ·. Jr :

Purvis and --

Youn,:

!.:orris '.. ilson .

H. " . Jr :

Oh. That v:as quick en.ouch, ;·;asn' t it? How
I:!B.ny r.ill they get on that basis , ._rree or
six?

Young :

Three , I think .

H.LJr :

Is tl.is the Boeing or Lockheed'?

Youn.~:

I assUr.ted th.a t ,·;as the Lockheed.
bomber question ;·;as out .

n : :. Jr:

The bomber is out , but they can get this?

Youn :

Yes .

II.:.:. Jr :

I don ' t knm" whether it in Locl.heed. They
have a LockhP.ed coraine ti\rouroh, They are
going to release the three?

Youn. :

That is \-:hat I understand.

li.". Jr :

\.onderful.

These arc

th~

He said the

Lockheed .

'l

L

- 2 Bell :

\/hat can they do •:i th the. t kind of a plane?

Youns :

I still don ' t believe it .

Fly straibht across .
strai~ht

Bell :

Fly

H.:·. Jr :

Yes, ferry pilots over .

Bell :

Fr or.'. Canada?

H.l'. Jr:

Yes .

Bell :

~J

across?

I take up one thins before Patterson co:::1es?
GeorGe I~rrison co+led me this nornin~ and said
tkt of course theu state~:ent r;ould be released t!lis afternoon at 2 : 30 in tooorror1 nornin~ • s papers, their Tieekly statener.t , and it is
coin~ to show a dror in forei,:n bank balances
of about 220 Dillion because of this vanadian
switch, and then that shmvs an up in other
deposits of about the s~~e anount and the re porters, o. course, will look at the 220 drop
and cet a story out of it .

One nan s:.1id to !.llan Snroul about a week a -o,
he said, "I assume that \'le OUf.:ht to \":atch ;"{Our
foreicn balance fir;ure on your· vJeekl.r statement anct so:ae oi these dars ue 11ill see a sudden
c'rop and that will be o.n indication of th<' o.r.J.ount
of money that 'Jreat Britain ~aid for these
de::troyers, " so it happens n ~ht about the slllle
tine and it is very unfortunate .
neor~c

\"rants to exrlain it this \:a;,·, that it is
noth1n1; more than u s11i tch fro~ central bank
balances 17hich central bo.:1lo;s hn.ve been keepint;
as fiscal a ··ent , balances of certain !'oreicn
r;over!Ulents , ancl those forci ...n GOYeril!:lent
balances havo been s1~i tcbed down to other
balances and they arc holding thCJ:l now un.~ er

- 3 -

the

!isc~l e.be:lc~·

functions of this conrnfor tne account of tno~e -o•er~ents .
fle seid t~t is !l.OOU~ •. :east theJ CC:l S~~
ana: see no~~ i:l :+ , ~erle see~ no har=
in it, eiLe::- .

~ent

i; , ' . Jr :

Bell :
,. ,

~

-

.. · - . ... r :

The eost ~~ort~~t t~~n~ t~at has tp· ene~
arou:"!u here· is, : a:a wr~eting a c~ rr; - '"om to .
(Discussio~ ~ff

the record)

The details ~ou 1-:-~nted or. those pl~.l' ~ , l".a t
•as ~itt reference to the b~lence o~ , 1v~?

.

...._ "

'".:e!: , l.i:tic!l r.es s- os"a to heve been placec
'?h.ursde.y or Fri .. ~:-:

Youn- :

'Eead says he
tr..:-ough .

n:·. .ir :

~or.'t

Jou Get it :roc the

Yes .

I ~;E.:ded to see i f he h:'.d it .

.......

r

._

n ... . v~ :

~

:

c seer. eny

~i.gn

of it co::Ling

tn-lish~

::as : e got .:.t?
::o,

li .
-· · - • .J r

!:as~ '

ne

!lasn ' t .

ell, ' ten = spea:: to Purvis ana tell ~ abot..
t\e
'"atoLner~ , tell hi.n - on the oth '" : ... nc.,
t!'.c~· .e:I me the:· hawe giYen letters for 4, 0""
ple~es last ~nurs~ar or rridcy en the ·o~­
~ss.:.or. acesn ' t ~ou an.rthing about :t .
Geo::--o · ~::.s CO':lies of the letters ·
-et t!.e... = ao; ' t see r.hy c couldr ' .. .

cc..n

4

- ... Purv~s' shop
~2:: .

o:e::.e

is

r~~

verl badly.

: don ' t

!ot:.~

ife ~ol{;. ::e ye:terdq he thou.,.ht he ••odd
have it strai~h';;e~ed out :n a r.eek or 10
de.:·: .

:ell :

~e

""'"'

............ .

- ~- ·

\#.0.

•

bot :-.

peo~le .

of a lot of

-_!a
.. ,ne."
rte is getting :he r.nole th:n-

~et un on an
orde:-1·• basis . ..1e -u.'lole dif!icult:. has been
thct r;on ~o-. o= it is not e PurcbLSi~~ tis~ic~ .

:our..:;:

:t

~rodue~ · o~

is a

.eadouarters to oe coorainated

the.defen~e . -n.at -:s tne rinar- nrobla=,
!lOt thf : •e:._ .:_ :>:. "• just (;Oir.e OUt !l::ld bUj'.:_ng
so~th.: .. _. :tis ~·.e question o~ bu.:.ldin:; ten,

u:tn

e:~ecirll; -~ere thi: standaraization co~es UT •
'The i!eo:-:!.e r.:.~ ::.re coed
cht.sin:; are n~t
nortn a a~~ at product:0y .
0

bat do you suppose

-·

~•. eued?

They h ·· .., • t sent t:e in a letter on this Sprin~;­
f ield er::e:-.e.l at ::ock :::lC!ld, e.bout oaking
Srrin~:.:.ela
rifles so the~
c~~ ~et ~ore -nrields .
•
w
•
ii • .:. Jr :

n.:.a

you s ti:-

!:he~

tn:t.t?

up on

Yes , I stil·reC. the:1 ··::- .

:
".:o -- :

~~~t

On

to sncn that

tn:s

financin"'

nro":>!l.:: f: or the

tb~ !10i:lt no...- .

Bell:

to~~~

th:~

t ~"l:t~

:

,
~

Preside t .
~~ •. ~~w~~n sub'll's reached

! sboula thl:L; the Jo.rr...v r.ouH be r-lad to IJUt

tne

Roc~ :~lan" a~senal i~ p~oauction

;et it
You."l~ :

'-i::!SC:-1 to:~ r:e ··ester de.~ theY nere
_v ·~~: ~ t i~ ~~ocuctio; because he got
~.c.r:-~ea. 2.bout the :r.Ieoer of r:fle: theha.d tc let ~o :mtl &sl:ed Ge::.eral l:arsh:l.ll
~nd Genera: -:~rs!l:;.ll sa.:.. the;,· nza alrear.;·

:::0.

l

·e. tterson enterei!. the conference)

~-

•derir~

-

ot:-"- .

.....,... -

~r :

to

~ta~te~ .

~:." .

1

Patter " .. :

"-

if

~e ~:;~~aerstood

each

_ ;.as eU:.i::eC. !or a r'!in'..lte end tne:-1 :
:mte:. to : al: to Gener:tl '.esson abcut tr..e. t

~tte~

.. e

I.e

~ere

a:sc~sse: ~e=ter~~ .

';alkin- about the possibilities •

Patterso~ :

.essen i:: s~n~.:.::.e but is cu.:.te solicitous
that not~n: aefinite be done for the ';ine
oein~ . lie thir.ks that the output of .!'ive
ta.r.::s c. da:- :rc::t tnc.t plc.::t, to~ether 11ith
•~hg
~ .:as fro::t the Ba.ldnin, lmerican Loco!:'..ot.:.· ,'"' ' .:.E r;i-;e hi= the neces::ary equipz:1ent
!'or
P 1,200, 000 fo~ce no.-; in conte:mlatio.. •
ne .:•.:.. . .::~ there r:.:.n be the possibility 0~
a second sh.:.:t at Chr~rsler and .:.s anxious to
coo~era';e . He s:tys thnt he had talked to
Keller of C!lr~·sler about it and Keller Y:as
oost an.xio-.:s froo his o•~ noint of vien,
ju::• the ~l&nt bein~ in the force of direct~or.,
~ost anxious tnnt nothinb definite be done
non
i~ so~e r.a:· leait out ;.b.:.le
. thnt
, ..;;:ight
.
.
+
t.
..
..
t 'le p_a!'l~ 1$ ~"luer con: .rue 10n. ..e se_c
he "';hi) :.. ~f the~e shoula be n.:1y rubLcit:·
aoc.~t .:..~ .
~at it ;:ct:ld be very ~~'or';'..l!". 0 te
f:-o:J "~s :- i~t o~ vie"".1 up i:'l :!ichi

ii .''. Jr :

iic ci:;}lt h!lve !:rouble

0:1

it?

- 6 -

Patterson :

I don ' t kno·;;, but he doesn ' t - ue have had
these leaks in the ~. ar Department .

H . ~.: . Jr :

You had a beauty today, didn ' t you?

Patterson :

Yes . That apparently c~~e out throubh some
Senator . There \7as a letter written last
month to one of the Senators . They are
ah:ays pressing us for infor;na tion, you
knou. I think that vre will have to have an
order there that l'le don' t respond to any
reouests for information fro: .. a Senator
except the Chairman of the :rrlitary Affairs
Co~ttee of the Senate .
These thin~ s are
all ;.:;iven to the.rn. and m.urked "Confidential",
but that doesn ' t mean a thin~ , apparently.
T!:ult is v:here that one came fro::1 toda;;,·.
\',essen rras so solicitous about this thins
that he didn ' t want to make a l.Titten report
to ::1e but came dmm just norr and :ctade an
oral report .

H . ~: . Jr :

tell, what r:ould that mean in ter:as of

Patterson :

The pl~nt doesn ' t go in operatic~ for 10
months . The contract was only s1~ned about
two or three weeks ago .

H . ~J . Jr :

\1e can ' t sit around and l'tait .

Young :

They ficured to :et tanks , I think, didn ' t
they, in about 15 months?

da~·s?

Patterson : \,ell, I had in mind 10 or ll months, but I
a::1 not sure .
Youn: :

'l.hich is a lon::;er ueriod than this other
tank pro~ram that i talked about .

H.t:.Jr :

'.'/hat is that?

- 7 Youn~ :

Yney say they are betting their first t~~ks
frou these other neople, British and ;.rr:ty
prorrr~, in 8 or 9 uonths .

H . ~ . Jr :

I see .

Patterson:

They have contracts , of course , too, taruc
contracts around, the nritish .

H.!!. Jr :

Vihich have not been signed.

Patterson :

Oh, haven ' t they?

H . 1~. Jr :

r;o .

Patterson :

Of course, our tank contracts outstanding
win pr ivate industry are not very large .
The one ni th Chr;)Tsler calls for a thousand
and an optional additional thousand, \7~tich
of course I suppose they \':oulJ take . As I
recall it, the o"les with the !3aldnin, aJ1.d
so on, onlJ· call for 180 .

Youns :

180 tanks?

Patterson :

Yes . 1,.'ell, that is on the program - our
pro.::ram in this last one was for nov, sowet'linr; like that . 'There r.tay have been soue
previous contracts outstanding with ther1, I
don ' t !mow.

Youne :

That was the fi"'ure I had in mind .
that \'las additional to Chrysler .

H.'!. Jr:

I think - there may have been sone that entered befor·e from the old 1940 program.
That is what I am not sure about at all .

Patterson :

~.e

Sketch the situat i on as it is today.

I thou[;ht

have placed the orders for 1941, that
is , a thousand throur,h Chrysler a~~ about 180
throu.;h these other tr;o concerns . laldr;in

a
- 8 -

is one and I thiik
the other .

~~erican

Locomotive is

i:I." . Jr :

So, what is the status rir;ht now, before I
raise this uoint? •.•hat is the status of
the tank pro6ram from the En?lish standpoint?
·.~here does it dovetail v;ith the U. S. Army?

Young :

From the Enzlish standpoint, first of all
a standardized desi~ has been agreed upon
by both . Secondly, certain manufacturers
have been specified as being capable of
doin~ an engine job or transmission job or
other co:r:tponent jobs of the tanks , both by
the !.rmy and by the -ritlsh. J..s Judge Patterson says , Jl.merican Loco:r:toti ve ·and ,alclrti n,
t:1e Lrr:tJ intenus to use and the British nill
also use those tr.o plus four more . That is
primarily on the assemblin; anu on the armor
plate and the heavy steel stuff .
On the transmissions , there is definitely a

joint pro;;r:!.!l r:i th the Cleveland factory,
who said they could build enouch transmissions there are tl:10 CO:JL>anies to .... ether t'lere by some
affiliation - they can buiYd enou~h transmissions
for both the Army and the British in the joint
program for tanks . That sub- pro:ram on transmiszions has non reacheu the point where some
oethod of financinc has ~ot to be very definite .
It is on the fire .
The other sub-pro~ram is the engine pro&ram,
which - those would be a relatively small
number of tanks . It is considered best on
the part of the ar Department and on the
,.,art of the Advisor'' Comnission and 11ith the
~oncurrence of the British thrt that should
not be split, that should be Given to one
manufacturer to do , and it is determined
after ouch consideration that Continental

9
- 9 -

is the best place equipped to do it ana a
license ~las already been \·;orked out betv;een
Curtiss-'"iright and Continental for the engine . Continental is agreeable to ~oing
ahead. They \7ill need noney for plant expansion and for nachine tools and that is
the situation nm1 \7hich the RFC is considerin:; and which the ·.. ar Department has been
talking about nith Continental up to this
mornin~ o.hen they have evidently reached a
prelillll.nary agreement as to ho"t the AI'my
v10uld like to work it out on financing .
H.L Jr:

For the engines?

Youn~:

This is just for the engines .

I: .~:. Jr :

I think \7hat I am going to do is this : I
think I will tell Purvis to go ahead and see

if he can ' t nake his contract on this for
20 tanks a day.

Youni :

Yes , that is \7ha t they v;ant .

J! .U. Jr :

Then if he gets stuck with Jones, I may cone
back and ask you (Patterson) for soue hel~ .
1Iorr is that?

Patterson :

That nould be just rir;ht .

H. J.r. Jr :

If he cets stuck and reaches an impasse with
Jones , tilen I r:ill come back and ask for help .
Otherv:ise , v;e will sort of keep this in abey-

ance .
Patterson :

That is all right, we r;ill hold it in abeyance .

R.l:. Jr :

You are satisfied to leave it with me?

Patterson :

I haven ' t thought of that.

Foley:

Do you have a copy of the opinion?

- 10 -

H.:.:. Jr :

I sent it over to him and he read it .

Patterson : On this?
H.;:. J-:-:

Yes ,

Foley:

!~o ,

Youn::; :

I brou;:ht it over to :,rou that day, the first
tL!te I net you in the ·.• ar Department, and
you \.ent through it .

He sent it --

Patterson : An opinion on rrhat?
Young:

On this question of financing pl:l.nt capacity
outside of the RFC.

Patterson:

Oh yes, but I thou~ht you meant the leGality
of an arrangement as con~CI:lplated in the
Chl"ysler plant .

Foley:

That is rir;ht .

Patterson:

Does that touch that?

Foley:

Yes , it does , Jud::;e Patterson.

H.l:, Jr :

Do you •·:ant us to send it back over to you
again?

-~

Patterson: Oh no, I have no doubt .
Foley:

1:e have no doubt about it.

Younc; :

You ro..ve it back to oe an<l tol 1 ne to keep
it . ~I rri.ll send it back to ;rou.

Patterson :

~ive

it back to me . ! read it and I studied
it, yes , but of course I C'idn ' t have this
thins i

mind at all .

- ll Foley :

'.'.'e have g-iven one ol'inion on the financing
by the RFC of facih ties r:here they mi~ht
be used by the British or soue other f~rei~n
poner, and \7e also have this opinion 11hich~
I a.":! speakin'" about no1·; which involves the
use of facilities constructed directly by
the United States ~or production of ta~~s
and other equipment for a foreicn no1.e r . VIe
thinl~ both can be done .
•

Patterson:

·,.ell , I r1oul d like to - I thi~~ I h.we stated
the thin~ rieht . The Secretary is of the
s~e vier1 and
esson is " the ::;c.!''le · ,.,.. , that
the thir..r; ci1;ht be h<>ncled, but l:e ,-,ants i t
kept very c,ark .

I!.:.:. Jr :

1.elli

Patterson :

7here is a ch~nce there . ~here is a fair
chance that sonethin~ can be ·.:orked out along
that line .

E.l'. Jr :

'l'he slol·.ness i s the difficulty of setting
the!:e thinr;s throuch . It is very disheartenin;:;. It isn ' t a question of taxes or anything
like that . It is largely financing .

Youn, :

Yes . If some sort of a l'attern can he set
on these eni;ines , the th1n~ cen be applied
ri ..;ht m.ay to trar..zuis::;ion::; , for :nstance .

F,!', Jr :

It could be?

Youn::

Yes . The thine boils dorm prett:• much as
to hor: far the ~rn;,· rrill c;o to;·:arC. certifyin:.:;
\'/M t r:e Hill need in the \'ay of ce.n~city
created, ,-,itb the concurrence of t!1e Ldvisory
Col!lni s s.:. on .

ue nill c;o ahead and I Hill tell Jones I to <i Jones : y,oulc. call him up after you
left here .

12
- 12 :: ~n· ~ 1:a:1t

r.

~tter.

:o :;".~· a r:ord nlonc ;Ti th
n, if :: ~!· ·

13
THE ADVISORY COMMISSION TO THE COUNCIL OF NATIONAL DEFENSE
FEDERAL RESERVE BUILDING
WASHINGTON, 0. C.

Septe~ber

5,

1)40

Eon. Henry ~oreenthau , Jr .
Secret~ry of the Treasury
Treasur y Department
~:nshin!;tOn 1 D. C.
t:y dear J.J . J:oreenthau:
I have reviewed the request of the British Cor:anission for
six four - en~ine bombers as discussed in our conference
yesterday . The Air Corps are definitel y opposed to re lee.•in~ this equipment, as they have none of i t yet in
service and are in ~rP.•t need of it . This left the ques tion of substj.tutin::; comr·erc.:.al ships , which I hP.ve discussed vrith :.:r. Tripre • :'!e has rdvised that a confidential arrante' •ent made by ::r. "~.1four should take care of
part of the t.ransr.ortation res.uire·Mmt . =e assured t<e,
furthernore , that he mi~ht be able to release two shi:>s
in the s;>rinc; . Since the 1'\B.tter "as :;ettin~ out of "'~'
jurisdiction, I cPlll•d :01". Purvis and Sll!;[ested that he
J, ,lke dirert contact with :..:r . ':'ri~:'e 1 who was !'repe.red to
talk with h ·.n.
1

Sincerely :'ours ,

~~·~'M~

J. ·

Geor se
ad
Director
AeroneuticPl Division
Copies to

tm. S . Kl'ludsen, rat 1 1 De fens A Com.
ton . Rob!'rt p , Patter~on , .,sst. Sec . of 11ar
!.aj , r.e .. , E . v . Arnol<' 1 Chief 1 Air Corps
!x. Ph\li!:' Youn!':, President ' s Li~ison Com.
1~ .

September 6, 1940

K7 dear Dr. Kead:

!bank 7ou tor 7our letter
ot SepteiiMr ltb «tnng .. the
1h\la1 ot t h e BrUhh requ ..t tor
eix fotuo-en«1ne bOIIber•.

I haTe aske d l!r. rounc to .
t ake the • Uer up w11:b Ur. Purrte.

81noereJ.7 1ou:rs ,

Dr. George 9 .

ea4,

DlNetor, AeJ'OnaaUoal Dh. ,
A4Tl . .J'7 Ca..hliOft to the
0~1 ot Rational Defen•e,

aeM.tOft, D.

e.

ll7 4 . . . Dr. . . .aa
fbaftlt 7eu ffiP ,..., le\ter

ot lep....._r aua p.S.ftlr •• the

etatua of t he Br1t11h requ•at for

alx f~1ae bOmbera .
I have aa'!ted

tak• the

ttr. ::COI.U\1 to

Uer ~ w:Ub llr. PU1"'11a.

111ncereq 7our• ,

1S

117

GMr

or.

••w

!bank JCN ror J'OUl' lettn

of . .ptellber 15th gt.nns
etatua of the i3'f'Uhh

e1x

t~nc 1ne

• tbe
"41l••'
ror
boabwe.

1 ha.'f'e aoked

t ftl:e tlai • -tel' up

1Unoe~l7

e

• Yount: to

w1tl\ llr.

JO\U'a ,

Puma.

17

September 5, 1940

To:

The SecretArY

From:

Mr. Young
Re:

Swedish Planes

~he original plan advanced b:r 1-lr. Berle Tues~ evening
was based u~on the trans~ission of an order to the Swedish
1-!ini ster to turn over the planes to the manufacturer and cancel the Swedish contracts .

CY

The Liaison Co~ittee, including Colonel !~ell, met
llednesdey morning Nld invited Hugh Cum:Di~~& from the Scandiuavian
Division of the State Departcent to attend. In addition, Mr.
Foley designated Oscar Cox to represent him at this meetins. As
a result of the conference, it was ~ointed out that there was no
authority with the power to .order the Swedish ~t inister to cancel
the contracts.
The alternative suggestion was cade that the American manufacturer take the initiative by aski~~ the Swedish Government
to cancel. If the Swedish J.linister A&l'eed, the manufacturer
would reimburse the Swedish Government for all expenditures
immediately. (The manufacturer would have to have an agreement
>:1 th tho Clll\adian Government at the time in order to have the
funds available for reimbursement). If the Swedish Minister
did not agree to cancel , the manufacturer could tell the Swedish
Goverruuent thnt he uas ~;oin.:.; to cancel tho contracts IUIJ"WBY,
reimburse the SHedish Governnent for the full o.count, and take
over the plP~es . Even if the Swedish Government claimed title
in this instence , the cancellation and tender of reimbursement
on the pl'rt of the manufpcturer on an uncompleted contract would
tend to oounterbnlp~ce the title elsie.
The only recourse left open to the Swedish Government would
be to sue the manufacturer for dalil(l6es. Then the securin& of
d~ee would depend upon Hhether the Swedish Government had

18
- 2 -

nctunlly suffered because it coulc not secure the planes. Pre~Jebly, this deoAge could not be proved es the nlenes could
not be exported an~tay. Further, the only other. da:!wge which
the S~tedi&h Gover=ent could prove woulC. be that 1t had lost
the opportunity to sell the planes to another pArty at a hieher
price. It is possible that this could be done as China has been
However , the
negotiatin ~ for these planes from time to time.
manufacturer could include in his agreement with the Canadian
Government a clause insuring him 11gainst loes if dal:lee;es ~tare
secured by the S1tedish Government.
There is sooe possibility that the S"edish Government might
be able to prove consniracy between the American manufacturer,
the United States Government, and the CeoPdian Government. In
any event, there is sooe dnnger in that the manufacturer might
inndvertently tell the S~•edish Government about the potential
purchaser.
l·lr. !fugh Cl=ing called me last night and said thl!t he had
had an unofficial o~f- the-record conversation with the Swedish
The Swedish
Counsellor inasmuch as the Minister is out of town.
Counsellor made tho following points: first, thPt the Swedish
Government \/ants to get full reimbursement plus dl~Jll8&e& (trade
cocciasion administrative expenses, and soce indeterminnte ~unt
for the uoset of the Swedish defense system); aecond, the Swedish
Government would not sell to a country at war with Germany; and,
third, that the President he.d definitely assured 1-!r. Bostrom that
"we wanted the :;~lanes" .
If the third point is correct, then possibly the United
Stetes Governnent will have to take over the planes and release
others to Cnnedn. If it is incorrect, I see no re11aon why the
manufacturers should not go ahead end cancel their contracts .
The Swedieh Government has evidently mnde the SBme t)~e of
contract with both Republic and Vultee , namely, a 50 per cent
down payment and the balance protected by an irrevocable letter
of credit eeainet which the manufacturer draws as epch plane is
couroleted. In the cnse of Republic, 46 ;>lanes are no>~ randy
(22 ~ighters and 24 bocbers), and 66 (ZB fighters and 28 bombers)
are still to be delivered o\·er the next three monthe . The com;>leted planes are evidently now at the Kepublic factor~ and are

.1 .:!;
j

19
- 3-

owned by the Swedish Gover noent . The rnount of the Republic
contract is apnroximntely 10 million dollera .
In the crse of Vultee, the situation ia slightly different
The delivery schedule
es no p lanes hPve yet been comnleted.
for the total of 14{ ple~es on order, as given ~v by the manufacturer this morninc, is as fol lows:
2 not later than Septecber 30

3
7
10
15
20
22

22
23
20

by
by
by
by
by
by
by
by
by

November 30
December 31
January 31
February 28
~larch 31
April 30
Hay 31
June 30
Jul y 31

In ttis instance, as in the c~se of Republic, a 50 per cent
payment !'.mountin.; to $4,367,000 has been made and a letter of
credit si~ed for an additional anount of $4.467,000, makint: a
total of $8 , 834 , 000. In addition to these 144 ,1~nes, the Swedish
per cent spares plus 15 extra e~inee .
Governoent ordered

at

Chi~ has attemuted to negotiate with both ~enublic and Vultee
for these nlanes, but neither of these manufacturers has ~iven that
country p~v encouragement bec~use of their syopatby with the
British. Further, Vultee has informed me that in addition to China,
tho Dutch East Indies, Turkey, Switzerland, and Erin have attempted
to buy the planes. Both cenufacturers nre very anxious to get this
situation clerified.

)_;;
I

'

J

ADDITIONAL TO "'OSE OU .'STANUI!IG ON S!!"!Fllll!R :lQ.

T'll'E

rm:

All180n E

BOEIIiG CO.

Boa too
(Twin engifted boao~r)

11r11;h t H 2600

B!!liSfER

Dive Bomber
(Single Engine)

Wr ight R 2600

co.

I'IBIIIA!a: IU.!lCB

1942

50

Do.

P.B. Y. S
(Twin engined rlyin• boat)

50

50

50

)00

45

45

45

140

so

50

so

)00

JO

25

JO

85

10

lD

lS

15

50

50

100

100

100

100

100

100

600

6S

6S

6S

65

100

100

460

75

75

75

75

75

375

100

100

lDO

lDO

100

soo

so

so

50

so

50

250

50

50

50

so

so

so

300

laep Junior

25

25

25

25

2S

150

25

Wrlght R 2600

so

so

so

so

50

300

50

6JO

700

735

J,!!J,O

615

']!,0

390

F

lflwl: 8?-A

A.ll1~on

OOGGUS crJ,

Boa too

lh-ight P. 2600

Lec:kheed J7
(Twin eogi.ued bo•her)

h att t.: Whitney
R2800

P. 38
(Twin eagioed pursUit )

Al.lieoo F

llortin 18?
(Twin

llright p 2600

H. l. 7J

Al.llsoo F

Harvard
(Sinele engin• d trainer)
Dive Bot~ber
(Single engine)

(Sin;le Ol>gined pureu.it)
(Twin engi.ued txa~r)

co.

Do.

co.

••siDed -~d

I. UFBIC!r. CO .

(Single engioed pureu.it)

Do.

PV'JI.ln
0 T A L

50

TO!'.U.S

1942

R 1830

CUlll'ISS niGIIT

.. !

50

Prat1 & Whitney

L. B. 30
(- ;en•ined boaber)

Do.

W<r!J

50

~ mum
1CJI.2

(Sins!• engined pureu.it)

cGIISOLlDAtED CO •

lllCl!!!ll)

1941

50

P. 39

6llJ.

J&!.

IIO~lk:' Dli.Tmtrr. II

OGTOBIJI
1941

DIG I~

AIR:RAFT

!"Il!IIS

~

PROGIW?'E FOR DEL~ !lmml
u. t. • AIRCIW'T
o~l OC!OB!21 l , 12!.!, A'oD 1\ARCH ll, 1~

'V

s
(l)

Tb: bal&Dco or 7S aircraft. to )'iel.d tbe present procre.m.u.e t 0 tal
Wl er opt1oo

(2)

1n AprU 19/,2 of -

!"~~ ~ll&.!.n.;.•(~ee

2 S Cooeol1dated

so l!o.rtin

L :

r

lin.

3 88S represonte dellnriu

30'

or 315 airera!t ordore a till to be alloeoled to )'io1d the l\lll

to~

r~terenceCT
ex uding eparea) •
These r eq,uire•e.ots are utuil.r eUA!Dation with parti
ea
to the poooibllitioo or obta1ning additional dol1verie, of coooolidatod L.B. 30 J.ondplaO

ond p

•8 . T. 5 Pl)'ing Boata, Leekhe<d 'l)po J7 end Barvard Tl"&inera.

/

~..R.-

......

,., 1

~l

'U..':IO'lAI.

:-----.- . . .,

--~

m:rz::s::;: :.-vy L>I"".JR::S
,,.avy

'!ar

Jul y, 1939

$ 49!.

AU!"St ••

45

"

~

6o ...

l~

69

114

k

September

46

62

108

October

52

63

115

llovember

50

68

llS

.... ecember

511

71

125

Jan1.:ary, l 9ho

58

?ll

132

Febn1<.

57

72

129

.~rch

64

?S

1u2

A;>ril

62

97

159

:.ay

67

87

l~

64

89

153
$1 , 558 M

• .v

:'H::-l.;lf

J\!!lt
':'otal fiscal yec.r
l9ho

$ 66Sl\

... 890 "

Total fi •cal year
1939

490

673

1,163

J~lto

79

98

177

Aueuat ••

91

108

199

..

. 'X)

·~ · ~d&S

July,

22
SP~t.,~b~r

' :17 " . n.
u ."" . Zr :

5,

1)4o.

'-'Pllo .
"r . Pu:·vH: .

F . " . Jr :

uc>lln .

Art':ur
Purv\s :

"pllo .

v ." . .rr :

Art:,ur?

":

Oh ves , Hen!'v .

t..~

. H. Jr :

I had a v~rv "rPnl~ tal?. "'1t'b •·r. ?.~ttl'rson thiA

!10J•nin~ .

·

P:
H.'' . .Jr :

An6 hP :>aid this, the·/ co•Jld l"t Sn<!"ll'nC' hevP
eo~f?

0

100

~':e

t~.n,:s

fro·

~hrvr.ler ,

but

th1~

C'-e•v·rel 1'ess•m see~c to be vrr•• m·•~h H':lrr1 e>cl
c.bo•Jt n'lt 1Ptt1n~ vo•.t hP.VP 1t b•1t tl,e nuhl!.-~it;J
con:-JrcteC! t'i t'• i ~ .

P:

Oh !

""r :

Also re> C"lled u., Vel1,r,Chrya1 r Pnd they ccc:'l
to be uorried in c-:>nnPct1on f•r r,'>'IP rcaEon or
oth"r t'·pt :'""e'' tr.1"at I nve tro•tb1e u!.t' t4 eir
contract.,rs .

,., . '~ . .; r :

\:ho rre buil~inrr tl;e b•J11C'.1n""5 . Tite eu~~e~t1on
t'•E't •te reo Ahead \·11th Jones , see jus t hou
s:rood n deP.1 ne cen n;et fro"' Jon!'e for you .

u

•

P:
\

')

tiP~

P:
" . , . . .rr :

Vn'1HinP" alt-m.ys thnt in the 11'st ren..,rt , the Arny
ic 111111"- to do thi s .

P:
H. " . Jr:

I t'>ld thnt to Jones .

P:

Vp!" .

.. . " . Jr :

Jones snid tl111t he uould i..,..,ei'i~tPlv , t>!s
P.fte!~noon t~, .. e nf'~ hi~ C"''f'lf" :'n~ ,.,...., tl') n,.,r'" Cn
~!Jnt1.nen~..,l ,.,tor., .

- .., 'D ;
1
~
I ~n"or:--r:-1( ·1· ~ ::-eel'·· r~ n'lon , t'le .\:-~·r
...,,", <''l " t? ~'l· n'lrt o • t'n
T<>E' P.nt .

?:

:r

" . " . Jr:

;,.~~

se .

i"" t• t:t•r :!'"'!1 '-1"'r'" 1t ..,ut ·•"t' C">:1!:1rtP":t.,l
''o-.;·n•r ' t"•'lt " . <'011-r.c ""0\lld be t e f'lr-ula
oftnr t ~ '"h?l
t"'n ~ ~rf)-!"'£1.., .

P:
u . •· . Jr :

So 1 t i~n ' t to" rnrou:·artn~ l'n;t nr '"" 'ltlH'l'
t.·nr' t".e .!.ray ir l·~llin"" t? 1 t !'lC Cll" t·~at
it 1-: "!l nee in ti-e •ol 1'-t•'ll'e cpn uce 1~
11e 'hn ve to .

P:
, . . '' . Jr :

Bnt n""

~?li""'('OP.

....... ,.t1~n '

t

1• • c ":11 ,..

~"'U"J"","'

f"

,.r

"-'..,rt

~ t~"l,: ,

!t

''"l "lth t e f"l'!,..,.1.nc .

,-"rt n,., .,,,) tl1i'1"' 1')4"' t.,,p. cl·,.,.,~pr n-:
rPt 1nr- ,•-.nc£ ta tr'·e {' brOPc'l'.r V' ('11 0:1 tl-1 r
ruc•t'on o' t r r n~tn
ooRts nd n~ ;n?

? ;

VCB .

·· . " . Jr:

T

t"on'-:;

··n.,· . :

'"oun

h!•1 ln

I'

bet·C'r 1-u-.o:-

··• t' ~" tn<".tttr \",.,1"" , ! ·.!'\'!:· it me "il1"nil'icnnt ,
t rn I ' VE' "ern ht~ , ~r , ln e1': .. .,nt"r .
l

l

?:

".ood .

u , . :r:

·•ts ott• turic
no~o

t~··srdo

,,, npr•..,nrlly

l'"t: '"~'JCh

fr1enc:'..lv .

t> ;

ve~ .

!' • . Jr :

:;: thi:L; 1 t ' r- ionn'Jrtl''l'.: P.nou-;1 t at in contacttn~
h!.m, it ' • oo ftti1n'" t 1\t v?u "u·"t t" do vou:-rclf .

P:

"fi)O .

fl .' . .;r:

T ~o·tl"n't lenve it :o nnybo<"v olEe .

?:

'o , I
· . '"..r :

(""C't

··nt .

"'eCClH"e I don • t t"t1nl: nn•rbody elre could do 1 t

c ·.·ell.

r

- 3 P:
. .Jr :

·~

P:
'{.

..

I h~ ·1e "n
· f'r~ectly

i<"e~>,

!lnot"!:'r one , "hich ,.,. • be

c:-~ z.·t .

Yes .
. .Jr :

But I 1:ant to t•,ro\1 it At you .

P:
~ . u . Jr :

If they insist on nuttin"' un so.,e spcnrity .

P:
. .Jr :

'.J

P:

Q :J

Yes .

.. .. . .Jr :

''o\: you see , I uni!err tooci , O'llY lnl'rned to<la y ,

P:

" es .
. .-r :

1

''ou p''>Otlt nutt; n,... U"> some aecuri t tea , let ' s say,
thPt t~1e "'nzlish oHn in t '•e Ar-cntinc .

frc>n t!:e State !)c·1art"'lent the Ar-.ontint:ms l're
c-•11 te Horried ab'>ut l'''en nre ... e En-11~h F:"tnto 1,e-1n to du,., t'H'ir Ar-entinian Pec•1r1 ties .

An<'l Jones , p·· o is tn t"e .,.:....,o:-t- Innort :'l,.nk,
if hP insists 0:1 ~ec·1r1 ty , hP ~1-· t be •.·illin"'
to '·"';e ~o.,e Sout" A-erice'l ~<ec•1ri tiN' ~nc. tl>c"l
l'or~; o•tt r; derol ··1t1 t'le"l , .. .., Rell tt to then
on e - over P veAr or so .

?:

,. .. . .Tr :

Yen .

?:
u

I n..ean ."'i ve tl-·ern o ' " e r or so To ouy these f'ecurities ln .

" •.rr :

Does it sound

~erfectlv cr~1.y?

"ell , I don ' t thi n'; anything is crozy .

P:

I

th1n1t

it -

....., . Jr :

Pert~c·1ler l y i::'-You yourself ~roul(i have
n if"tculty dts;>osin~ of tl•ese Ar)~ntinian sec··r1t1es .

~!

I

~·) ~

-

. Jr :

···ou see?

-

!~ -

P:
H. '' . Jr :

:ut ynu

mir:-~

t

\~"~r· : ,..~t

ti rou'"-'1 JonAs , w'ltl

i~po

t'te -;::):"lOrt- i:TVl!'t "'P'11: , nn ~rrRn~e~ent 1 if tiC
ins 1 ~te: on scc•tr' :;,. "" .,.I vln · hin Sout'"l A.,r r lcon
OOPS , onf. l~t rin ~ercrnndise t F., for VCU .
.,.~P .

P:

!

1 Pl 0'1 ~

ff'"".ll l icr

C!'l''Pl""h

l-."1th

i!O\' thP 'I

s t A!ld O'l")o~i tc t' oF>e - t·cll :1ou can see , t'l"t
':i nf. of t~in- , 1 t • ~ an'>~br-r fie l d .

u." . .rr :

•,;e l l you coul d r e na. for the mr.n

P:

Yer. , e::actly .

H. " . J r :

Y::u see .
on it .

\·1'11'1

c"'.oer ha ve 1 t .

I Mean you can .Just start sorcb'lciy

"Ycc . '.:Cr. t no you think of t' .et othrr t :~1 n g
I "1ent1o'l rd :o "OU til£' othrr ca:r , t"'"t end ~r

our .,urc· ases 1:·,1 "h

·~~ve

been "l"1c'. for .

'.'ell , :rou c!'n trv 1 • .
Yes .

? :

. ,.r :

P:

You can. t r;1 1 ~ .
"o•J don • t thin·• :;•·ere ' r. '11Uch ell' nee of
bl' c '· to o•.tr or1-1 nr 1 "To·md .

~=:e t t ' n~

It ' s juF• a Ch"'1Ce , I rlrm • t 1 " !1'>~' . ,.,.,,for
inctance Jon"r tolt\ 'liP t' ~t i n hil" dcP l ··!. th
t!"oe rubber nl"'onl e hew fni rl v he trel' t ed t • E'
-:n.,.l is'• o ve r 'l~ rc on the r ubb e r . I fan ' t ·~naP ,
he n:oid the~ an extr"- ~ao<' ':>r i..,e "nr1 •11 t• ~ t
~ar t ·>f t hin:=r .

P:
'' ." . J r :

"ou

PeE .

P:
Am' I \"loulf t r ;v to r.et back on t'·c ori;:-1nl' l
ba ei s but 1 t 1 s eoMrt"in- t"'lat You ' 11 ha ve t ~
do , v 1~1t h~m vour sc l f .

P:

I rec .

All rln:'"' t n011 tlJen I 1 d bet ter e;et a ~art

2o
- 5 -

. .,,..

,~

T

•

~r .

··e~ , :tnC.
ready to

~~~" ce~n
-"'1·~

te 1 1 hi., tl r t •v''enever h" ' £
· ·"•?re voa •re re . . .-J..,· .

~ont1ne~tA.l

P:
. Jr :

P:

Yeo . An<' I "'leY
anvwey .

C~1'e

00\'11 to"lorr01' :tftern.,on ,

H . ' . Jr :

It ' P a be6 cay but on thp o·~ r bend!
Vpp ,
..,,Y run dn1:n ~cr e. fe•• hour !I , 1 r it ur c onlv
for

Q

VPry

~rel1-1nnrv

~P~

'/ell he <>-oes t o Cab'net on

r~ .

~r'""Y

!"' I don ' t

knr,w "o··· lon- 1> :

~:

. r,.. :

Fr o., tvo to four .

P:
. T'r :

Afte rnoon - no afternoon , two to four .
0h T ~Pr , o" I see . vpn . All ri·l t no\c ti•en ,
I ' ll - I t)oink I' d bet•11r join 1MUP uttr. it
nnd SeE' H"Pt hnT)01ene .

":

YPe , P.nd as I BFlY he Pee"'S to be in I'll e>:·:cellfmt

hU"lOr .

P:

Coo C. . \/ell , tl!e'": 1 t ' s u., to :ne to try Pnd
!tee" hin t~,~re .

P:

':hanlt

t- . , . •

Tr :

~rou vcr~r

nuch .

I •.., £'"ncitn" :i>l-11 ''nrmr; to
bP on t'·1e r.rounc' .

0

•.tff.:~lo on ''nn"~'' to

27

- 6 -

P:

I trl'~nc:l t., 1:nur1re · •Jt
l,nortcnt fllr r~~ t~ be t~Pre .

Gotlr" .

:ol~

'1.!."1 1 t uas

l' . " . Jr:
P:
,;r . '· · "...r :

''c

P:

"h yf's , !JP 'cno1rs tho~e trin<:e , it 1r~c Jurt , he
rce.li•er. hP ' r "'Ot to iJe •·1111n" tn do r. l1t';l e
'lo::-e of llht't I 1ve donP .

P:

AnC' !

df1CE .

R1p::·t .

,.

l:e Fhnulcl .

Ani' tl•Pfe next tl·'O 1·1ee!·• ;-.re

?:

iM?)O:r'tl'l!'lt

tO
t-·

thin'~

. 'r :

·'" . Jr :

MP ,

Rt-ht .

P:
. Jr :

P:

Goodby •
Goofbye .

~rt ·ht~•l1l::

on t!,'"lt ':.in: o-r P::-oro,_..rre

~t

coee""'~

September 5 , 1940,

TO:

Secretary Morgen~

t'ROll:

l!r. Gaston

~

Adnirel Sterk, after a consultation with the
President , hAs requested that we send one or the large
cutters to Lisbon to replace one ot t~o destroyers
The other ia to be replaced by a gunboat .
DOH there,
The reason is that the destroyers now stationed at
Lisbon are or the type similar to those that are
being sold to the British end it is desirable not
to have our vessels on cruise in ~uropeen waters
mistaken tor hostile ships. ~inca the G-JRG- o ,
l:AJ.l'll:.l.I. is the only one ot our cutters w1 th tull
war e~uipmant, it ib proposed to send ber attar her
erri nl at Brooklyn !levy Yard from Greenland to replace the propellers and other minor repeir s . She
will be abl e to sail within tt.o weeks which ,,drtiral.
Sterk says 1S t11:1e enough.

1

29
GROUP J..:ZETir:G
Prc:;ent :

Se~tecber

l:r . Bell
J.:r . Faas
::r. Gaston
!.:r. r-raves

!:r.
:.;r.
i:r .
::r.

5, 1940

9: v0 a .n .

Youn~

Sulll van
Fol ey
Thompson
!.:1' . Cochran
l:r. Schwarz
l:r . Chacber lain
1:r. ·.bite
1:rs Klotz

H.LJr :

I an sorr:· I have held everybod~· up, but
has been on the phone for 20
minutes askins what I thought of him.

Foley:

..bat you thou.:;ht of hl:r.?

H . ~ .• Jr :

Yes .

Fole.r:

I think \'lha t he clid yesterila~· r:as inexcusable .

~enderson

I tol d him I >;as terribly disa?pointed .

Ee 1.ants to ;;et to;;ether ru: d talk about the
nee tin;:: :resterclay at lunch .
Foley:

' .ell, they called me - ::ac callerl first and
then Leon, and he said he h:ard that you
said that this plan they had cleared rrith
the Comptroller General -;.as ille(;al, and I
said ~·ou Ladn ' t sa i d any such thms . You
thou ·ht there m.r::ht be some difficulty and
if they had cl eared it with us first , ,-;e
could have ironed out the difficult;, , but
you said nothi n;: about the let:;ality.

JI.:· . Jr :

I said you coulc:n ' t do it without r;etting
l egislation.

Fol ey:

I think you said that as of last Friday there
was nothing in the bill that \.oul d take care

3J
- 2 of the :;i tuati on.
ille-al.

You didn ' t

sa~·

i t ¥Ia:;

'• hat is rir;ht , no .
the~

Foley :

I pointed that out to
I had advised you .

u.;:. Jr :

!.lhoulC. I have these fellows over and have a
free - for - all?

Foley :

I think that >:oul<i do it .

!1 .. -. Jr :

The only time I could do it •·•ould be toni~ht .
I was going to see --

P.ell :

\.by couldn ' t you have then over?
your a tti tuO.e .

\ihile :

That is a bood fibht, too .

;; . ~· . Jr :

~.bat?

'..bite :

I say, "The Sea Ha,·;k" is a ;:;ood fic:ht , too .

I:.'". Jr :

Is it a good picture?

':.bite :

It is a ~ood fight .

. H,lr. Jr :

Sullivan :

and they thou:ht

They lmor;

I don ' t Jr..no\'1, the 1:ay I have felt - you have
r;ot to do the ,-·or!:, Is it any good tr:ring
to ~;et that crovrd in line?
Leon tol d me himself, he sai d, "I am absolutelj' positive of the positi on 11e bo.ve
taken and the onl;; thing that disturbs
me
11
is th!l.t ~·ou and I are so far a:part, and I
said, "Yes, v;e are . It is entuely different
froL any position you have ever taken before
and in the testimon:, yesterday, it was so
far -- 11 I knm• lha t they knew the facts

. I ~
- 3 -

to be . . It di stur·bed rae very :auch. They are
not ~,;o~n;: to r;et ar;ay \"li th it and they are
not aolng any haro.
Foley:

They are not doing the Administration any
good .

Sullivan :

It is the norst example of lack of teanmork

•:.'hi te :

It seems to me Leon ou~ht t o be the one on
that Commission v1ho should be fighting for
the position which the Treasury has .

Foley :

That is right, and if he doesn' t like the
position of the Treasury, he ousht to come
over here and give us a cbence to fix it
u; before he roes dorm before a Committee .

\,bite :

That is the position he clnios he is shooting
at and he would like to have and if it woul d
be possibl e to have another meeting - I knoP
there heve been several - an<l see just whether
he can not be brouc;ht closer to the position
and why not . He clai:::J.s to have a lot of justice on his side . He said, for example, that
Chuck Kades has a r;ood deal of sympathy with
his position . I don ' t know nhether that is
true or not . I haven ' t talked to Chuck.

Foley:

Chuck v1as ar:ay Hhile I was awar.

\;bite :

I mean previously alonr, the whole line . So
so:aethins :any be accomplis~ed alo~~ t~at.
direction, because I certainly th1nk 1t 1s
too bad that he shoul d be takinr; a dif:'erent
position, because ·;;e ou;ht to depend upon
him to ••••
Did they or didn ' t they sa~r yesterday that
that excess profits tax ~ould not ~;o throur;h?

II.::. Jr :

I have ever seen .

32
- 4 Sullivan :

That was after he concluded his formal state·:r. Knudsen said, "I would no~. like
to ClVe a personal statement . This isn ' t
for t~e Co=i.ssion, this is for myself . "
Tlli~t lS the one I ~ave you . And in that he
requested a raise in the - increase in the
rebUl ar corporate rates , the imnlic•tion
bein::; that that r.oula. be a substitute for
excess profits , and I doubt very nucb if he
prepared that statement . I am go i n•· to try
..,
to find out r;here it came from .

ment ~

H.:'. Jr :

Knudsen - if r:e are goin:; to ito it tonight,
I suppose it ou~ht to be Knudsen, Bigsers ,
!Ielson and Leon Henderson. Those are four
Co'"Oi.ssioners . ~ mi e;:h t as vrcll have Stettinius in because he seems to be frienitly .

Sullivan:

I

l,.hite :

I think before it ~ets to you, ~ . 0ecretary,
I think there ou:ht to be nno:her --

thin:.~

a prelirunary conference ni th Leon --

The;)' can do it today if they ,·;e.nt to . I ,-.111
find out . Anyway, you trro guys (Sullivan and
Fol ey) keep this mov~n~ free until I g:t a
chance to talk with l..ac . Do you (Sulllvan)
have to go on the Hill?
Sullivan :

It is all right.

Thompson :

I hr.ve nothing .

II.LJr :

i)an?

Bell :

:~othinc .

!l .:.·. Jr :

Harry?
.:~one requests cme in for a Treasury o.ccisi on
on loans cont~plated by the Export- Import

~·;bite :

'"

- 5 Bo.n!~

and the;,' asked our annroval or dis i\?r:, they co:ne-occasionally .
- m1.s \·;onde:mg y;hether you r·ouldn ' t
sut;gest an mfoi'I!l8.l cotl:!li. ttee which would
auto~tically pass on that and ~ive them
"'
your reco.:nendation.

~pproval.

!!.::. Jr :

In the Treasury?

\,'hite :

Yes . If JOU could have~. Bell and l~ .
Cochran and o~e of Zd ' s ~en - I think
Tietjens is \"/Orkin::; on it . If \Je could
tleet 'l. 'toma.tically iohenever they send a
request of that kind and then ~ass it --

H.ll. Jr:

Is it all rir;ht dth you, Bell?

Bell:

Yes .

J!.: •Jr :

i.ill :·ou take it on?

....i te :

:.ll

: ..... Jr :

Bell and Cochran.
Counsel?

~1hi te:

Tietjens, yes .
In!lort Bank.

Fol ey:

Yes .

..hitc :

'l'here was a cabl e that came in which :,•ou may
not ht>ve seen fro 11 Hongkong which r1as of
· ntcrest in that it

H. , Jr:

Talk louder, I.arry.

'.•11i tc:

'lhc cable stated that the Je.pane:.e \':ere
a~kin,... all t:teir na tionr.l~ to leave 'ion;:;kon:;
and tile·• e.r1ticinated difficulty there. They
are lea~in.,: rather rapidl:,•. It is just of
passinr· interest .

ri ~ht.

SonPbody from General

He has been ·.. orkinz on !:.xport-

34

,I
- G-

l
I

Bell :

I sa\; a stor-- in last ni ~ht ' s paner ;;here
China is ~ettin~ a l~r~e-loan . -

H . :~ . Jr :

"'! •

!3ell :

Yes .·

H.E. Jr :

.~nythin;;

..

• •

...,oon:;.

else, Harry?

:mite:

..•. o.

H.::. Jr :

I au puttin;; you dmill. for 3 :30 .

. hite :

Yo·c~

H.::. Jr :

I cc.n ' t .

..hi te :

~n"

couldn ' t racl.e it 11 :00, could JOU?

11 :00 o' clock a?pointnent hns been cancelcc .

·.,hose 11 :00 o' cl ock appointnent?
.•l.i te :

The one that you !lave •

H.:'. Jr :

Your infortu:.t ion is nronr.;.
co·1in::; at 11:00 .

·..hite :

Doesn' l : :ci:ay ~:no>; it?
ten 1inutes a so .

ll .~· . Jr :

You ~~ve been snoopinc , have you?

~.hite :

I :·;as oa that point . I asked r:hether you had
any free tL~c this mornin::; .

H.! . Jr :

I will see you at 11 : 30 .

::c

1hnt is all I have .
:!.::. Jr :

I \,ill have to r:nrn ::cl~· .

•.nns :

::: h:.vc noth.:.n:: •

~.:r .

Patterson is

didn ' t knon it

..hat el se?

35

- 7 -

H.::.Jr :

P!lil?
I \7ill hz.ve this !:!Ornin:; the first draft of
a1_1 a~rcement between the lirr.J and the Continental on the tank en:;ines, rrhich rill :;o
over .

1
I

H. r . Jr :

Good .

Younr :

I \rill •·i ve :,•ou a nemorandum on the Sr1edes
in the ~ext hour .

L.:. Jr:

Good.

Schrre.rz :

Sooe necks aso at a press conference , ;ou
;··ere as!:ed about re;:orts thrt 3eroe.ny nas
rl~ins to dispose of looted silver , s:lver
lootec in :.:uro~e b; \.ay of ·:exico , and ;:e
said \le rrould .Look into it . I understand a
courle of :hi' bo:rs found their notes and
thou-:;ht about as!:in· a"out !.t today. You
!:!i ht be read:· for it . Do you ,·;ant to set
a tmc on ~d _;H ::omer?

'r . ...:. Jr:

Oh, 11 :00 o ' cloc": tonorrow . Tell :.:ct:ay.
eo!'~, ::eat' says if they had you over tilere
bmilLnr. their publ.:.city on drphncs , they
wouPn ' t be in all the ::1ess the:,' o.re .

~chr;arz :

F• •

Jr :

I am ·rateful to :~ . ::cad . Kintner and Alsop
said yesterday 13ob Horton is doinr.; e. cood
job .
Soce bod:.r el se te lls ~e \.hen you call him up
he is never there .
J~erle?

Cochr:m :

I have not\.:.n:;, sir .

ChClilbCl' I •• :

ith respect to the purchase of the ~el ·ir>n
l'rancs £or the ::at.:.onal City Eanl-:: .i.n ~elzill:..'l,

l"

- 8 they so.:·. the!' co.~ cet - the~· think they can
. et l3el~:an f~ancs in S~ai:l anrl r:ant to knorr
J.f . y~u .o~lC. have cr:.y objection to their
d01:1...,

tha • •

. • . J:- :

i'one ;.hll.tsoever .

Chru~tcr 'n :

I told them :::

.. .': . Jr :

Fine .

~hs..:oer ' n

:

..~er ' n :

·~:olA.lJ

re!lort to

J01 •

~ ~...... the:e i:lc::1oranda thnt I ctr. ;:;ive you
th: t :·ou ns' ed for yester ~:· •

Yes .

.:u te :

, ho .:.c m!:i::- those Bel ...ia!l fre.."lc:. available
;n ~ ain? ~~re you :::-ivin · a~- roval on t. at?

Cr.nnbc. '

a.."'l:: o. S...n :.. . 'hey ::ave to :;;ct
Tne:· are .o c .. taln t 1e; cnn
et then, but they -;-;an'.;ed .o l:nou ·.~hethcr the:
c uld :;et the:~ .
.ilrou-h the
ernisslo~ .

'.'!lite :

Is fin:.l action bein::; ta.!~cn on timt nm:?
aiil.n ' t :mo~: that car.e u~ .

... ' , Jr :

Frofessor Che.nberl ain is reco:ut.endinc; it.

Gl.ru"ber ' n :

It seens thr.t is better than gettin::: them

, ol J :

I

nnothcr Y:ay. The:· have tried every other
\·:a~ an1 hwen' t been able l.o finu any
Bel pian francs . The· nl'P 1o• sure the~' can
. ' ~. t
.
·
-- t'~nA
~J .
lrc~c~ L~u1s
cL" Bc lc~~n
~.oul\l be n r;ood nln~ to lc.' t 1 <:i:l tr. · ~ ut.
It !!li~"hL snve a b·cat deal of .rou' le .

I hv.ve nothL.- .

37
- DGaston :

~~ere i~

th:).t re•:iseC. short nemorandU!:l that

<-ou._'l:~ed for (re Coast r.uard Reserve Bill,

..,e;: cc...1b er 'J} •

!:ere is t:lnt letter -Jr :

'J:'hnt goes to the ·..hi te House for l unch tor.Lorrow.

Gaston :

Here is that letter fror:, t 1 .e ~exas Comnany
(Lu."ust 30, addr essed to ·:r. Cairns) . •

H.J.•• Jr :

!:arr'J, ,·,hat is ti1e name of this oil man that
is over here?

'.,'hi te :

Agnen.

:: •..• Jr :

Sir Andreri?

..1L. te :

Sir AnO.rew Jsnev1 .
as in fish . v

H.'". Jr :

!!o~7 1:ould yo-- pronounce it?

h . ~" .

.•hitc :

:!: think the "~;;" is silent ,

I ;:renounce "':ritish nanes exactly the r:a~· they
are not supposed to be . If they are spelled
1:it:'l a";:", I don ' t pronounce the "r,".

Gaston :

Here is a."lother of those so- called aviation
~:).soline ship:nents to Japan and :i asked
about thaL , but I su:ppose it itill be the
saLle story, that it 1s \';ithin the contr ol
but l t is not the actu'll aviation ;:;a so line .

!J:.l'. Jr :

I r:ill use that t:,is afternoon . '..hen he comes,
you ('..1tite) come, too •

..hite :

At what tioe?

H. • J.,.. :

Sir A."ldrew e.t 3: 30 tor.Lorrow .

.-a3ton :

I \7ill see whrt information I can ;:;et on
that :mel let ;,·ou Jr..nov·.

3a
- 10 E. ·, J,:

•·h~· t1on ' t ;?Ot sit in a l so , '.erbert, at 3 :30
r:i th ir Andre·;;?

Gaston :

All ri,sht ,

n::.Jr :

Sir Andrew is ':_tti te a fellon,

39
IJ-2/2657-220

No . 186

RESTRICTED

SITU~ION

REPORT

M.I.D. , W.D.
September 5 , 1940.
12:00 M.

This military situation report is issued by the Military
In. vie\'1 of the occasional
Intelligence Division, General Staff.
inclusion of political information and of opinion it is classified
as Restricted.

J
I

I.

Western Theater of War.

1.

No ground operations.

2.

Air Force Operations.

During the day of September 4 at least three large
formations of German planes entered Kent, Essex, and the Themes
Estuary and bombed airdromes. British fighter reaction apparently
was strong but developed well inland. During the night of September 4-5 German bombing, by individual planes and by formations,
was on an unprecedented scale. At least fifty different areas were
attacked.
British boD:bing targets on the night of the 3rd-4th
included Berlin and certain forest areas. While hidden factories
were claimed as objectives of the latter attacks, it is possible
that experiments in forest-burning are being conducted.
According to news reports air fighting is in progress
over England today in fine ueather.
II.

Mediterranean and African Theaters of War.

No ground operations reported. There has been considerable air activity over the Mediterranean, 1·1here, in addition to
air fighting, the Italians claim to have bombed a convoy off Crete
and naval units off Algeria. They also claim an aerial hit on a
British ship in the Red Sea.

,.

40
TREASURY DEPARTMENT

DATE
TD

Secretary Morganthau

PlllOM

Mr, Cochran

Septe:ober 5, 19llo

-C 0=N F tf)E N T I·A L -=-

TodaT'• tranaactiona in registered sterling bT the six reporting banka
were &I followe:
Sold to commercial concerns
Purchased froo commercial concerne

.J
1

£71.000
£

7 .ooo

The larger part of the ealea were to cover imports of rubber.
In the open market, sterling vas quoted at 4. 0}-1/2 all d&T·
o! the reporting bank1 in open market sterling were ae followe:
Sold to commerciAl concerns
Purchased froo co~ercial concern•

Traneactione

£13 .000
£ 2.000

It vae mentioned in yeeterd&T'• report that the Britieh authoritiee were
~oneidering whether United Statee banks could acquire regietered eterling to
cover their open market eterling requireoente. Tod&T the Jederal Reeerve Bank
received a cable from the Bank of EnglAnd stating that it vae not clear whether
dem&Dd for free eterling waa for United Statea or foreign account, The cable
continued: •Should be glad to eupply American demand but for adminiatrative
reaaona are reluctant to permit transfer• between re,!;htered and free account&,
Pleaae inform Joreign Exchange Co~ittee that we will provide free sterling at
4.0}-1/2 to meet all United States need• but we shall re~uire to be advined of
ultimate beneficiariea.• It is poaaible, therefore , that .uch aterling will not
be a~plied to thia market unleaa ultimate p43ment ia made to a United Statea
account, However, eince the volume of New York aale1 of open market sterling to
banka abroad has been very small , England' • latest action will probably have the
general effect of placing a top limit of 4. 0}-1/2 on New York 1 a open market
quotation.
The other currenciel cloeed aa follova :
Swi88 franc
Swedieh lerona
Canadian dollar
Lira
Reichamark
Mexican peao
Cuban peao

J
Mexico,

. 2279
.231!6

1 2-3/8~

discount
.0505
. llooo
.1996 bid , . 2016 offered
lQ-1/~ discount

We purcbaaed $1.125.000 in gold from the eel'll&l'ked account of the Bank of

41

UNClASSIFIED
].£._ . ~
per

d•te

- 2-

CQ-N P I e-E N-ft-A-l=)

The State Department forwarded to ua a cable atating that Samuel Montagu
A Comp&QT• London, ahi pped $78,000 in gold from England to the Irving Trust
co~· New York, for eale t o the u. S. As~ Office.
There waa a holidaT in
that cauter.

Boob~

t odaT, and no quotationa were received from

In London, the pricea fixed for spot and forwa.r d ailver were both unchanged
at 23-7/16d and 23-l/ 4d respectively. The dollar equivalent• were 42.56¢ and
42.2~ .

and Harman'• aettl ement price for foreign oilver waa unchanged at
The Treaa11r7' • purcbaae price for foreign eilver vaa alao unchanged at

Bandy

34-3/4¢.
35;.

We made four purchaa.. of ailver totaling 275,000 ounoea under the Silver
Purcba.. Act. Of thh amount, 100.000 ouncee repreaented a aale f r oe invtu~tory,
and the other 175,000 ouncaa conaiated of new production froa foreign countriea ,
for forward delivery.

-,

42
TREASURY DEPARTMENT
INTER

DATE
TO

~eptembar

5, 19qo

Secretary Morgentbeu
Mr. Cochran

STRl Cft-Y C1>-N FI 0 ENT1 AL

·I

Y.r. Alpha.nd, Financial Counoelor of the French Eaban;y, telephoned me from
Jiew York at ll o 1 clock thie morning. He wanted to lmov .men be could hear from us
on the varioua urgn~t mnttera which he has before our Control ~rou~. 1 told him t~at
theee queationa were being given our careful attention ond thet Professor Ch~be rla in
would give Lim M:t" word nt the very ea1·lieat date . 1 8\l&Gected , however, tl:L.t this
woulli probabl!' not be earlier than Fridq afternoon. l-!r . Alphend insisted u:;>on the
urgency of aomc relief, since it is not possible tor auloriea of the French d1ploaat1c
atatf i n the United St~tea to 'Loa ::;>eid s.r.~ for oany ~ther ·.u-gent accounts to be tekelt
care of. T'.. ree check which hnd been dra•"II aame d.to;ra .go h'lve alreeey beer. protested
end he fe&re the credit of French offici~s i n the United St,toa wi ll auffor as a
rea\IJ.t or the .vr01ent aitUAtion.
Hr. Al?bNid r&ferr~d to the mecora.ndto left "'i th Pr o!eaaor Chamberl ain under
of .luguat 2& a.n<\ added th&t our daciaion with rupect to paragr&phs one and t'l.o
? aragraph one refers to " Bank of Portugal tranaectioo,
th~reof ~cs ur~entl7 deaired.
and ,aragrerh ~wo to the South American transaction of ~5 , 000 , 000 which baa been ~endfor aeveral weua. in en ewer to Al:;>hend 1 a in'lulry n• to whether we bed done lllll"hing with rea9ect to paragreph four, 1 ~old him th~t thie queation of pay:ent of
aervico on French locna fl<>ated in 5>~ t:erlan~. was cain& considere~ alon& vi tn the
quutiocs which Y.r . AlwAn~ h.c.d aet forth in hh long momorendWI of Auguet 29. Y: .
Aljbend indicated hie deeire to meet our requirements , but reiter ated the ur~ncy of
ILil oarl7 anawer to hit problema .
C-~o

-tng

43
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

TO

Secretary Horgenthau

uNCtmmo
J.I•'.S. •

--- pet

PftOM

Mr. Cochran

DATE

Septeober 5,

194o

St

d~t•

£ T~ LLe:Gitf t ut NT I At-

At ten o'clock this ~rning Minieter Procope of Finland called 'on me by
appointment. He ~ized to oe the present situation in his cotU>try, and submitted
the attached memorandum concerning Finland's need of credit for purchase of foodstuffs
and other prime commodities.
The Minister's first question was that as to whether he might properly approach
the Treeeury for assistance in obtaining for Finland money out of the $50 , 000 ,000
voted by Congress for Red Cross relief . He asked this question since be understood
that Secretary Horgenthau, along with Secretary 1iallace, was responsible fo r the
adminietration of this fund . After checking by telephone with Under Secrctsry »ell,
I told the Minister thnt he should continue to lllllke his applications thro~ Mr. Davis
or Mr. Swift in the American Red Cross which, in turn, would pan on any recommendations
to Cabinet Member s , it being their duty in connection with thie work to make the purcbeees upon which the Red Cross decides, and to deliver the &oods at an American port.
( V.iniGter Pro cope had explained to 108 that he had nlreedy received :;1,000,000 out of the
lbove-melltioned fund, after teking up the matter with the Red Cross and with President
Roosevelt himself,
Tba ~inie ter sta ted that he had only Lbout ~10 , 000,000 still unused cut of
the two credite which have been given by the E%port-Imyort Eank, In enswer to his
question, I told him thct I was not aware of any clauses in the bill now before Congress
for additional authority of $500 ,000,000 for lending by the Export-Import Eank which
would place any restriction upon further credits to Finland. I suggested, however,
that the ~linister consult tl.irectly vi th Mr. Jones upon thie subject.
The Minister reverted to convereetione bed with Secretary V.or~entbau last
Spring and asked whether I tho~t it would be worth while to revive those conversations
now with the view to obtaining for Finland some additional assistance to help out over
a winter that must inevitably be a herd one for his country. I told the Minister that
my per•onal and frank opinion was that he should not approach the Secretary upon this
point. Although Americe.n aympatby for Finland had not in the lenet declined, I doubted
whether any enthueinsm could be aroused in Congress just now in favor of a special
financial arrangement to help Finland, considering that F inland is now out of the active
war area and that many other countries are in serious diotreu. The J.linister realized
that there might be some objection to a new otep of the charecter under reference since
there ia acme ieor still prevalent in the United States that Ruasia may renew its
aggression &4><'inet Finland . The Minister thouQ1t thia might even be an argument in
favor of speci a l treatment , it bei~ h is contention that if the United ~tates let the
J oviet aea the.t we are willing to lend more money to Finland and are not fearing that

I~

44
- 2 -

the Soviet may take over F inland, the Rustians might be even
t:-e~.tment of Finland.

~ore

generous in their

The l•.iniater 3teted thnt hie country is obtaining some gaaolene and grc.in
from Russia but only a small percent of ita normal imports of these products.
The lUnister stated that our friend !!;yti is rtill carryill€ the main load
in keeping Finland together and in effectinb its restoration. He is aided principally
by Tanner and. l>la.rshcll Kannerheim. The President of the country haa recently BUffered
a stroke and Ryti in substituting for him. Should the Freaident die it is quite likely
that lcyti will succeed him. ·
Before leaving, the Minister told me that he was alreeAf considering What he
should do with respect to the Finnish debt installoent due the Treasury on December
15.
told him I thought his action eo far had been entirely correct •

.)

J

45

LEGATIOli OF FlllLAHD
WASHINGTON, D. C.

lo!EioiORANDUiol
concerning
Finland' s need of credit for nurchase of
foodstuffs and other agricultW.al commodities of primary necessity.

More than most countries Finland is dependent u~n her foreign
trade, It is calculated that in normal years imnorts and exnorts both
correspond to between 30 a 40% of the country ' s total natio~l i ncome.
This means that the standard of living, and not only the rather satisfactory nre-war standard, but the nation' s very nossibilities to live
are dependent upon im~rts from abroad of a lot of primary commodities,
such aa cereals, particularly wheat, lard, other foodstuffs, clothing
lll:!.terial such as cotton, etc. The imnort was un to the war naid by
erporta and at the sace time Finland always fulfilled her obligations
with regard to her foreign loans and even re~id a great pert of thea.
Owing to the war Finland had to fight and through the general
European situation circumstances have now completely changed.
About lc:; of the country has been lost through the neace treaty .
Thus and through other conseouences of the war, production has decreased
both in agriculture and industry. On the other hand there are in the
country about 500, 000 refugees to be teken care of. Thus it is obvious
that the country 1 a need of imports of primary commodities , narticule.rly
foodstuffs, has increased, although the strictest econo~ is scrupulously
observed. On the other hand the export owing to commonly known facta,
has decreased to only a small part of what it used to be,
Finland ~s tried to correct this situation through commercial
agreements with neighboring states. But only partly could this measure
bring help. Thus the commercial agreement with Russia is i ntended to
bring about yearly exports and imports to a value of ?f million dollars
each , which is not more than about 4% of Finland' s total foreign exports
or imports. The imported quantities of cereals for which the agreement
provides are reetricted. The same is the case to a still higher de&ree
concerning for instance tobacco and cotton. The commercial agreement
with Germany , which also provides for balance in the trade and for an
increase in the exports of Finnish products, p~rticularly products of
the woomworking industries , can of course not brins Finland hel p as far
ae the imnorts of foodstuffs and agricultural products are concer ned.
The aame i.s mainly to be said about the trade relations to Sweden.

43
LEGATION OF FINLAJID
lfAS!Jn iGTON, D. C,

2.

Finland' s only hope is thus in t he trade with the United States
and Finland ventures to trus~ t hat she will be able to acquire from
here considerable quantities of different agricultural ~roducta such
as wheat, cotton, lard, etc. ~t nothing of what Finland thus could
get from here will be re-exported, is evident owing to the general food
situation in Finland and the Finnish Government is of course disposed
to g ive all poesible guarantees in this res~ct. On the other hand
Finland cannot under the present circumstances p&f for these commodities
by her exnorts. She must hope to get them either as direct assistance
out of t he 50 million dollar amount allotted b,y Congress for suffering
EuropeP~ nations, or on credit.
In this respect it ia to be noted that
what is left of the 30 million credit, which the Export- Import Bank last
winter accorded Finland or about ll million dollars will very quickly be
cons=ed.
Under these circumstances the Finnish Minister has expressed the
moat sincere hope that Finland may get extended credits from the United
States Government or Governmental Agencies and that the reatrictions to
the 30 million credit now in force as far a a t he Exnort-I111n0rt Dank
credit is concerned, be removed.
Washington, D.C., September 5th, 1940.

47
Si...lH>IDGE-IJURPHY DEVELOP!lEtiT
Ohl:lSBORO, KEliTUCKY

This project contemplates 103 houses meeting all FHA requirements to be built in two FHA analyted subdivisions to sell
for l l570 per unit , complete with lot, including builders • profit
of $100 per unit, and to be financed under FHA terms either Ti t l e I ,
Class 3, or Title II, Section 203 .
Thirty- nine houses in the first ~roup were sold before constr uction started and all were financed under the FHA plan.
Lot size averages 58 ' X 70 ', approximately 26 feet between
houses and all construction well set back from the street. City
water and sewerage , electricity, gas , and cinder and oil streets
are furnished .

24•.
2EATURES

The over- all dimensions of the houses are approximately 22 ' X

The following featur es are to be found in each of the houses,
galvanited termite shield, solid concrete foundation, sand finished
tinted plaster on walls , two flue brick chimney, built in bath tub,
large closets with shelf and hook strip to accommodate roll away bed
off livinG room, metal lath angles at all corners of openings, double
roof (asphalt slate shingles over felt roofing sheathing) , fin i shed
oak hardwood floors over subflooring and slater s felt , ampl e wall
receptacles, gas heater and 30 l allon hot water tank, built in cabinet
under sink, built in table and seats in breakfast nook, linoleum and
pl ywood over subfloor in bathroom and kitchen and utility room with
30 square feet floor area.

J..or ~~ ~-t;-~

FTIIA!ICING

FHA Titl e I , Cl ass 3~ Sale• pr i ce $1570. Amount of l oan ) 1470.
Amortitation of principal and interest per mont h
Total eotim&ted monthly payment $15 .00.

Down payment )100 .
)12. 47 .

.f

43

0

y

~ENEAAL

JlQMITf PflOtf C f tV'I,I WITN GAlVA N ILI 0 TLIU.\H E 51-HI.L O
CONCfU_rL t-OUNOI\T IQN
SE\o"ER C VI\I"" I:...:. ri..,,...S ..._.._H.. ,PLE ff:O
W\TU~ I. IUiif UAS i \N O

SOL • ~

Mt:r~u

oo-_

UTI... tT\ nO..>M FtJI~ ~flt,)5.JAC.t0,
L 1\1JNDtl\ ...Jiol

..._·LO~fT

VV.::>n.._lh,)..;JM

llYtLT-IN SP"'-~ SAVING

WlfH ':l>hEL.t

\No

Hlo)O~oo. ":;~Til• ·..,

~AND

FINISH TINTCO

nliEAro.FA!.T--;;;oo;c:-

BED
I Dlli\IN f \ ~E SIN I(.
~ 1 0-;;LT · t:. CA- 0;;:;-T

-<?-

UNOI:Il

ROOm

f' tfiU , ttiO ..,.., "-'ROM.A)P'
f\)J'fi..OOiit~U

10

'::JUBFLOOq

o·

X II 3

rwo· I=&..J£ or:uc...

W

CHIMHE'It

WATE n

~NO

LIVIYlC-

FINI~"I'D

..

SHt:U

---

AND WO\>Ior. :::tTU.IP.

WI\I..L':.

ROOm

_DlAU. T · IN 61\Ttt TUO ,

~ITti

.!!_H_!?_!! Tl!"fTLJ)
I,.)N "1..'- -A. IN

._.I,)U~f

0\tiA. L.A\A"fi)lfV

CI..DSfT

._OT

TAN...._

I'I.. •V~rrf<

Mlf\Q\)Q. 1\NO MtOIC.IN(

- -

._ .,&.I..<JN

-,

~~~~~;wiq "::o~~A
CA01H~T

Slh ...

'-"'lo.. HAitllw"""

r,:u> FLOOR ~"E~
SUI) FLOOR.

"
CLQ.

5.J

AM1="LE

WI\L.L

1\EC.. PTAC&.Iii.S

~AL-I'I.NC.L£

~"'TH

_._

AT A.LL C.OAw&RS ANO OPENI"fGS
T'O PRfVI!!NT PLAST ER Cni\C._S

ST~ -

~j
t--

MfTAL AHGL£ LATH 1\T

....c;s-

AL.L COANi"f'l"- -z.oo~

T'"O _,AC ... S:HT l'i..A.STifA CR:AC ... S

SCALE

l."" ..... .

53

EL';VAriCll OF HOUSE C

55

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. . ,,...
., .. , .. , ..

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l r ,

US.:. t.

\?:J
I

t

•

I
I

. ,...-

•.

'

/-

....

)

.

1re • n 41reote4 bT the Prea1du.t ( throa&ll a ptaou
eall. f'J'OII Pa 1re.holl to Jill oa A1agU\ Mth) llOt to do a.,tiWic
allcNt t!w appolll'-t ot a BllOOaaaor to Cllarlee a. Onfte,
OoUeotor or latft'llal Renll• at 'foleclo, Ohlo, no 41e4
AIIIPt llltla, aUl tllil Prea1dat allolald llaft all oppon..i'T
to apae): to J'01l dcln tM •tter. S1lbuq-t~ . . reoaind
rr. tu 'Illite llowle a letter to tu Prea14nt rz.a. Seutor
Dollehe7, dated Aagut 2:5r4 alld rece1Yecl at tile rute BDue
AIIPA 26th, ~1118 tor appobltaent JW.pla o. 81Q'4er,
SeeretU7 to ~ lola llakr at 'fol.ec» aJIIl a1eo
e\at1118 ~ the appo~ at OM J'ruier . . _ , a
la~~JW or 'folMO, wotid Ukwi• .... witll hle, J:1011abe74e,
appro'Rl..
!'hie .mWtc I be4 a plaDIIe oa.U h'la Sellator lloulle)'' e
-retar7. He had prertou~ oal.led tu rute Baue uA
lla4 bee 1Ato~ tlwre tllat the •tter llad 11.- reterrw4
tu appoillw.n ooul4 'be
to u. He wutad to llr:ll.o- hcnr - t to tu Saute, u tlile Sellator waa allld.- that tllil ape.ad ooat~ 'before a d j - t . •• edt
pobltant 'be
it ... "1'7 illportut ill tlw eleOtt.a, tut W11lk1• J11Pt
wla U' tu appoill'-t -.re ROt aadl, •alld ot OOUII . .
-uJ~'t 11111lt thle to Jaappa•. I aaRrel Ma that • ~·t
ud tllat I wo'814 l.Dok 11lto the Jllltter r1pt fl.ftT•

-4•

I doll't th11lk tlw Prea14nt will win to aka MT
appo1a1ant Oil the reo-n4at101l of eit'Mr Seutor Dou)aq
Kater, or 'both, b'cd; will await word rzor
OM.rl.ea SaiiJW or C11lo1allaU, •aUOil&l c-1Ue-. I
dlndlt that tMrl wi.ll lie a 4ea1re to JIAke Ulif appolll-..t
..til after the eleotlaa.

ao.are•-

•

Tim/r

65
KWA.NG PU CHEN
~hinc Tradinr, Corporation,
China
Sept . 5 , 1910. '

Foo

Kunnun~,

The Honor~ble Henry Morr,enthau, Jr. ,
Secr etary of The Treasury,
Washin~ton , D. C. ,
U. S. A.

Dear Mr.

J>'orl!;enth~u:

Since I mniled my fifth let+,.r to you on Au~st
16, IID.lCh has happened in the Far E!\st. .T11po.n hos increased
her ~ress'.'re on Indo- China, dem~~ndin~ to use it M a bo.se
f or 1n':'ad1ng Southwest Chino. !Uld pushing her southward
ex~ans1on ~rogram. Whei;her Japan will succeed in lndo~h1na rema1ns to be s•en, but , at least for t he time being,
1t set>ns safer to count the Yunnan- Indo- China railway out
of our consideration in esti111"tin~ the pr~sent cap~city
for trnnsportin!'; goods in Md out of Southwest China.
Despite restrictions imposed by the Burmese
~;overnment , the Burma Road rPm~ins to be the sole international outlet froM Southwest China. On the basis of
field investi~Ption m~de by Mr. c. T. Tun~; , r~nero.l Manager
of Foo Shing Tradinr, Corporation, it is estiMated th•t the
~onthly c•p•city ~f the Burmese Railway c11n be increased
to 12, 000 metric ton~ . For thf> distRnc" of 193 kiloMeters
on the Burmese Hi!';hvra:: froM Lashio , the t"rminus of the
Burmese Railw'\y, to W•.ntin~ . on the Chinese-Burmese border.,
the Souttr.•rest Tra!'S]lOrtation Co . has secnred permission to
operate 200 tl"l'""~ of two-ton capncity. Calculating on
the basis of thirte"n round trips a n0nth, the total monthly cap9.city >VOnld l'J'lount to 5000 tons. For the distance
of ll4ti kilometers on the Yunn"n- BurMa Hir.hwaY from Vl"nting
t o Kunming, there nre 'lnonr.h equipnvmt avoil~b l e for C!\r ryinr, 3, 500 metric tons per month, All .these ri~ure~ ore
estiM'\tes b!\sed upon the highest poss1ble exce[>tl\tlons f\Jid
represent objectives thnt are only at1;ainable with g:r e•t
ef fort and barrinr, unexpected developments .
The total amount of government- owned material
store<! in R~n!';oon is ~0 , 000 metric tons , ?f which S , O?O.are
goods belonr,ing to the prohibited cater,or1es . ln add1t~on,
there are 1~ 000 tons stored in Lashio , 25 , 000 tons at
various pla~~s ~lonr. the Yunnan- Burma Hi~hway end 10, 000
tons in Kunming. This tre~endous accumulation of goods in

/

.....
~I "
:

,

68
.I

.....

•:

- 2 -

Sept.

5,1~40 .

Ra!tr.Oon tt.,..a o+~,.,. r 6>loe"'s t!lo...,,.. tl .:. ro~d -~'k~s it nf'leer:~lliT,Y
tO d••VO~ .,..n ... nr th~ B.V!Ul~b}e tr"T'~ ..H\!"._ CB.i)!.City for t-,h~

llBxt ff!'f' :non•l•s to >)u• <'•rryinp- of the~~ o;oo~s . This m~•n·
thDt, with th, ~xc~ tinn of r.o0rls of •n e~~rrency rhar•cter,
thor" i a llttl" C"Mdt:y l pft !' or c•rrying l'l•terid• f reohl •r
bro11,.ht to Rt-,.,~oon from "hro~ ! .
I hove be~ n fol1o••1.nv ·~" ~· ily pr Ps• T"'T)Orts
of vour nul'ifP.rl nus •ctiviti"• •r~ il; ,.1ve' "'e p:re"t ple•sure
to be T"'f'4'.1 .. terilJ Tfl!'::li"'\t1ed C'\f t:;hfll f, ~t. t-hnt ~'011 or'll tAldT'I~
such ~ l~erlin~ •nd !'lctivn n.. rt in the hestoric to•v ol
forti r::i"r •h" '1eet<•r!l Hemiavhere agnin•t "f"rresoion ""''
thercl • strcn-.th,.,.,l.nr, t~" fore"· <'>f fr""A""' the world ov.,r.
Ill f"!\4 rd, ... ,...r .. ,.. .. r,"' !Si.nn, t.h~r~~~fore, shoul d feAl trrll'te-

1'\11 to ,·ou.

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1.1'10-•

1.~·

.................,
._..a.~

n IIIIO.Nta... -. •

.....,.,

.,....

..

.....
...............".......... ,..,..110
-.•..
.....
nll*t,lda

lattaallltFt

a/e ftU. ••••

.,_..atmaaM......
-~·,_

71

,.. ... ,.,

.

•w

'•

•

I
)

I

),1JI.t0

•

\tut.A

'

.,.

b. . . . .

•
•

......

.... ,.,,..

.,"'
.,

-

lV

OJ II
I

4'

.1

•

• un •u..... "··"'..._.

•

•

~

"'llf

•

~ IMibc e.,.• m i . - .

"'

•

.....,. ......... ,0 1'dl ,.,... •• 1.1'•

.,..

•

lll f
l.l»·lf

l,W. OO

........... ....,.,.... ... .........."'"

•
w

......
....

ftJ
fiJ

ttV /. . .
,,

•
•

•• II F

a.llf••

~

.........."""' ,

,..,

~,

,.:n··.,.

Septecber 5, 1940.

'I.!Et!ORANDUL!

l

I

rJ

~or&entbau

TO:

Secretary

FROM:

Mr. Gaston

We were directed by the President (tbrougb a phone
call from Pa Watson to me on August 24th) not to do anything
about tbe appointment of a successor to Charles H. Graves,
Collector of Internal Revenue at Toledo, Obio , wbo died
August 15th, until tbe President should have an opportunity
to speak to you about tbe matter. Subsequently we received
from the ?/bite House a letter to tbe President from Senator
Donahey, dated ~ugust 23rd and received at tbe \Vhite Rouse
August 26th, recommending for appointment Ralph 0. Snyder,
Secretary to Congressman •ohn Hunter or Toledo and also
stating tbat tbe appointment of one Frazier Reams, a
lawyer of Toledo, would likev,ise meet vr1tb bis, Donahey's,
approval.
This morning I had a phone call from Senator Donahey's
secretary. Re bad previously called the Vlbite House and
had been informed there that the matter had been referred
to us. He wanted to know bow soon the appointment could be
sent to tbe Senate, as the Senator was anxious tbat the appointment be made and confirmed before adjournment . He said
it wae vary important in the election, tbat Willkie might
win if tbe appointment were not made, "and or course we
·wouldn't ~<nnt this to happen". I assured him tbat we wouldn't
and that I would look into the matter right away.
I don • t think tbe President will wish to make any
appointment on the recommendation or either Senator Donahey
or Congressman Hunter, or both, but will await word rrom
Charles Sawyer of Cincinnati, National Co!ll'litteeman. I
doubt that there will be a desire to make any appointment
until after the election.

.'

I- 1

TREASURY DEPARTMENT

)

INTER OFFICE COMMUNICATION

'I
DATE

S8 cretar.v

TO

September

5, 194<>

Morgent~

J.lr , Cochran

In line with your request for information of this type, I hove received from
Hr. Knoke the atto.ched memorandum showing transactions debited 'ey the Chase llational

~j

1

Balik t o t he account on its books of the Bank for Foreign Trade (of Russi a) from
Janua17

l , l94o to Aueust 15, l94o .

mentioned .

Several payments to the Russian :Embassy are

The payee, Kenneth Durant (Tass Agency) is covered in some detail in

r eports which you have in your files from the F. B. I.

, DECLAScr~·rED
....
T-na.sv<.'\

~P.PR

I)

~-~ ~-?3
:'I: u.I -.-<" •1

e..t'

7 1975

,,

77

lli.l

January, 194o
~

1/2 Bank for J'or. Trade

~

Eva Joroslau, 219 Amberet St,,
:Brooklyn, N. Y.

$ 3.123. 00

l /3

Josephine Xlempa, 3 Calvert St. ,
Harrison, Hev York.

1/3

James Magnus,

1/5

Robert and !Unnie Schneider,
1520 Crotone Park East , :Bronx

1/5

Embassy

l /15

:Barbel Lovpovich, 1434 Whits Plaine Rd.,
:Bronx

870.00

1/16

Chae. :r. Sherman, 128 Farra.gut Ave. ,
Vallejo, Cal.

869. 22

64o Riverside Drive

1, o41. 86
3,622. 62
21,144. 00

Elizabeth Borland, cfo Mrs. R. T. Osborne,
c/o F. W. Woolworth & Co., 1518 :S~. N. Y.

1/19

522. 00

3,212. 00

;,)
February, 194o
~

2/5
2/6
I

')

:Bank for J'or, Trade

PAYEE
Amtorg for Xarsov
Pete Stefanotoe, 510 Monroe Ave. ,
Detroit

10, 382.00
3. 771. 83
30, 344, oo

2/6

Embo.sey

2/7

Lola E. Grant, 772 \{, Cedar St.,
Eldorado , Arkansas .

2/9

Amtorg for Xarsov

2,910. 49

2/9

X. Durant (Tass) Rock. Center

5, 000. 00

2/15

Geor8io Pellori, 1072 - 43th St .,
Brooklyn, N. Y.

4,350. 00

2/29

Richard N. Humphreys, Londonderey,
Windham Co., Vermont

1, 7;1. 00

IJJ

736. oo

?8

- 2 -

March, 194o
~

~

3/2 :Ballk for For, Trade

H. F, Reves, 434 :Book :Bldg., Detroit

3/2

Grant Grahmn, Fair Haven, Hinn,

3/~

tmbaae;y

3/6

K, Durent (Tass) Rockefeller Center

5, 000, 00

3/11

Alfred H. :Billstein, 2338 Hollywood Av,,
Tol edo, Ohio

8, 755.43

3/12

K. Durant (Tess) Rockefeller Center

8, 000, 00

3/12

Expenses of Comni seion

15, 456. 00

3/27

Amtorg for Karzov

13 . 700. 00

$

437.17
4}4. 75

42, 060, 00

7 ,800, 00

3/29
Anril, 194o

(j
~

'4/3 llank for For. Trade

Albert Klein, 1115 D St. ,
Sacramento, California.

'4/5

Embassy of the

U.s.s.R.

'4/ 9

John Kaepariunae

'4/9

Embassy (for Pensioners)

4fl0

Kenneth Durant (Taas)

'4/10

Harry Kl einme.n, 4200 :Baltimore Av. ,
Philadelnhia

'4/ 10

National City, afc Wilder P. C.
Wang order Chinese Military Attache

4fl0

Joe. Hilburger, 343 E. 34th St., N. Y.

'4/27
.)
'4/ 29

2,929. 00
39. 385. 00

'4/5

,,

1, 74o. oo

and Irving Friedman,
3078 Perry Avenue , :Bronx

Hyman

Amtorg, for Extended Miaaione

1, 300, 80
238.00
10, 000. 00
953 · 95

~
4l, OOO. OD-- •
2 ,380. 4o

79
- 3 Malt 19l!o

)
~

5/S BAlik f or For. Trade

~
Embassy

U.s.s.R.

$27, 665.00

5/S

'

2,371. 00

5/9

Kenneth Durant, Rockefeller Center (Taae)

8,000. 00

5/9

Aotorg for Kalinin

7.387. 00

5/13

David ',linters, cfo <Hlndelman,
230 W. Runyon St . , Newark

3, 138. 00

5/1~

Dirk Landatra, Alameda, Cal.

1, 119 . 2~

5/17

Thoa . and E. L. Hcllonout;h, Parsonsburg,
Hacyla.nd.

2, 617.84

5/2~

P , Goodman,

5/29

.Adolph J , Marschall, 515
Madison, Wisconsin .

J

June ,
ORDER

6/1 Bank for J'or. Trade

I

1277 Bellerose St. ,Pittaburgh

1, 802. 00

l!o,?inclcne;y St . ,

1,739· 75

19l!o

PAnlE
Amt org Tradi~ Corp. for KaroT

$

369.00

6/1

Irar:oT

768.00

6/1

Karzov

1,~22 . 00

6/3

A. Simeonoff, 926 So. So;yemore, Laneing,
Michigan

599 ·75

6/3

Carl F. Helbig, 1645 Olaf Street , S. F.

174.46

6/3

Amto rg Trading Corp . , for Karzov

6f3

Wm. Wiener,

6/5

Amtorg Trading Corp., for Iarzov

6f5

Karl Lorenz,

6f6

Manuel 1~ . Svartz,

j /10

6/12

1,500. 00

550 Saratoga ATe. , Brookl;yn

10, 500.00

138 Jefferson St ., Hartford
50 Park Terrace

536.18

il . ,

li. Y.

Anna Rochester, 85 Bedford St., li.Y.

183. 61
183. 86
523.78
435. 00

Mary and Chas. Bolthouse, 330 l!ain St.,
Osawatomie, Kans .

877. 84
5, 268.30

- 4 June, 124o {Cont 1 d.)
ORDER

~

6/14 Bank for For. Trade

Amtorg Trading Corp., for KaUnin

6/15

Antonio Romiti, 5483 Claremont Av.,
Oakland, Cal.

522.00

6/19

Regina Schreiber, 122 East 34th St. ,

616. 00

6/21

K.

470. 00

~~t,

Rock Centre v54? (Tase)

$13, 465. 00

July, 1240
ORDER

p,;,YEE

7/2 Bank for For. Tr:lde

Kenneth Durant (Tass Agency)

7/5

Embassy U. S.S.3.

24, 370. 00

7/5

Consul General

11, 700, 00

7/15

Allltorg rradillb Corp, - for K&l.inin

- 7/26

$ 8, 000. 00

6,000. 00

for A. I . Michel
(disposal of )

3.568. 25

7/29

for Ke.rzov

6, 886.00

7/30

for K&l.inin

3,000. 00

Au(i!!et, 1240
$21, 900. 00

S/9 Bank f or For. Trade

Embassy U. S. S.R.

8/9

Amtorg Trading Corp. - for Consul General 16,800. 00

8/9

for Kalinin

8/12 State Bank

for A.

Last currency shipment Jonua.ry 9, 1939 - $500,000.

I~ .

Petrov

7. 687 .oo
5, 000. 00

I~oacow NN'odny Bonk, London.

(J _) Individual tickets examined by me , period July l et to J•~v 13th, 1940, inclusive.)

51

Excerpt !rom

DATE:

Sept.

110. :

377

5. 5 p.~ .

~377•

Talk vith high Yugoslavian Official ,
I apoke of problems vhich ve are encountering vith the
National Bank in obtaining foreign exchange for the purpose of
importing American gooda and specifically for motion picture•.
Be r eplied that thio vas due to German pressure and added that
there bad been friction betveen the Minister of Finance and the
Gonrnon of the National :Banlt.

The reeul t vould probably be

the replacement in the near future of the pr esent governor •.
Be

~roai1ed

to arrange

&Qy

specific difficulties vhich might

be brought to hi1 attention in this matter.

B;y phone !rom State Department.

9/26/4o
KA:EH

'I

\

82

September 5, 1940.

}!Ef.!<RAN DULl

Secretary l.:crgenthau
TO:
FRO!.!: Wr. Gas ton

4 '---

~

The Bureau of the Budget has approved and submitted to tile
President a bill which changes the name of the existin" C08st
Guard Reserve to Coast Guard Auxiliary and creates Within it an
actual resorve of physically fit and qualified men 'llho TIJIJ:Y be
called into the active service of the Government "as reserve
officers by t h e Secretary of the Treasury in · time of peace and
by the Secretary of t h e Na:vy in time of war. The new bill has
the active support of Admiral Stark and in fact it was drawn in
consultation with h i.zh o fficers of the Navy Department . If this
bill iB enacted we can (l) enroll many well qualified young men
llho would not nomal.l,y be enrolled eitiler by the Army or the
1\avy; (2) act~ train them in peace time to take up very essential war time duties.
I t is ~ belief that we ought not to neglect tbis opportunity to increase our effective naval strength for war time purposes and also to have available a body of men who can be called
into active duty in any g reat peace time emergency.

,,

(")

I~ j

·o
!'"'

J..l

'I

511!11.!{
Tab1e I - Foreign Ho1dinas oE United Stetes Property AEEected by

Various Dates - (In m:lll.ions

or

Contro~

dollars)
:

..
Bullion )
Currency )
Demand Deposits )
\
Time Deposits
Securities:
(a) u.s. Government obligations
(b) State, municipal and other local
(c) All other domestic securities:
i, Bonds
ii. Preferred stocks
)
iii. Common stocks and other
)
securities:
(a' ) Common stock (10% or more)
of issue outstanding) )
)
(b') All others
Total Domestic Securities
(d) Foreign securities:
i , (Same country as in heading) )
)
i i. All others
6, Credit Instruments and Claims
7, Goods, merchandise and chattels
8 , Real property
9 , All other property interests

1.
2,
3,
4.
5.

~

:

22

20

y

17.3

.351

560

9

1,135

.33

79

30

249

341

411

17

1,160

.3

y

-

2
2

20
4

44
22

y
y

71
28

16

1
1

7
6

27
52

40

2

y
)

13 )

16

19

9 )
2
4
1

35
9
7
1

~

~

)

9ifl

y

42

y)

fj)

1,226

)
)
)

)
)
)
)
)

Total
Debit balances
91 y
Total (deducting debit balances)
Treasury Department, Division of Monetary Research,

y
y

Latvia

Denmark : Norway :Luxembourg: Belgium :Nether1and8: France :Esthoni.a &: Tote1
:
:Lithuania
:
:
:
:

176
2
174

3
9
14
1
1
1

lL

y

47

y

47

93
78
189

272
359
734

22
184
354

13

4

48

42

51
5

y

9.3
9
15

2

2

6
44
50
1.3
8
68

738
1
737

1,597
3
1,594

1 , 514
1
1,51.3

1/)
1
1

)

y)

!/)
II
y

-

1L

1,.327
202
206
39
25
2~

28

4,191
7
28
4,184
September 5, 1940.

-

Less than o500,000
Excluding 35 of American origin belonging to 3 individuals

m

w

-

L.i. t.l'lu.an.i.&• Ba t.bo~• and. Lat....s..a

Sumo..

3

Jul.y ~o, ~940 - (In thouaancl.e

or

dol lars)

LithuaniA
EsthoniA
l.!tvia
:Banks in NY:
Banks in J;"Y: Total., : Total.,
Total,
Banks in NY: Total,
~'ederal
:All Gr oups
Federal :All Gr oups
Fe deral : All Gr oups:
3
lleserve : and All
Reserve : and Al.l
Re serve : and All :Countries
Distri ct : Districts
District :Dis tricts
Distri ct ;Dist ricts :

1.
2.
J,
4.
5.

Bullion
Currency
Demand Deposits
Time Deposits
Securities :
(a) u.s. Government obligations
(b) Stete, urunicipal and other local
(c) All other domestic securities:
i . Bonds
ii. Preferred stocks
iii . CollUilOn stocks and other
securities :
(a• ) CollD!Ion stock (10% or mor e
of ias ue outstanding)
( b 1 ) All others
(d) Foreign securities :
1. (Lithuania, Esthonia or Latvia)
ii . All other s
6. Credit instruments and claims
7. Goods , merchandise and chattels
8. Real pr operty
9o All ot.her property interests
Total

2, 806

2, 425
20

Less than v500 .

2, 880

5,562
19

2, 880
34
5, 636
20

3, 430

3, 430

8, 296
20

!I

8, 320
27

9,116
50
16, 5!!1
136

-

-

11

-

-

-

-

32

-

42
4

53
4

-

6

37
6

7
42

8
42

2
2

5
3

50
51

-

20
54

884

-

886

115

-

20
1, 078

149
290
6

150
290
109

17

-

150
386
364
1?

47

-

fXJ

11

-

-

78

49

-

-

-

2tt

-

-

5, 3?5

5,865

9, 840

Treasury Department, Division of l.!onetary ll.esearcb.

1/

2, 806
16
2, 625
89

1

-

6

-

2

10,068

-

-

12

2

-

138
18

206
11

l

-8

11, 931

12, 212

-

82
28, 145

September 5, 1940.

85
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE

TO

MJ- • iihite

FROM

A•

Sub ject:

Comments on Hitler' s Speech

},! •

September 5, 1941)

Kamarolc

1. Hitler stated that in retaliat ion for the British bombings the
German answer was night raids of increasing inLensity. This is a r~cog­
niti on of the failure of the German Luftwaffe to date to achieve the destruction of Brit ish air r esistance . Had this goal been won, the Germsns
would be able to bomb England at will in the daytime and would not need
to resort to night bombing.
This does not mean that all Ger nan daytime raids will cease. In the
case of objectives important enough to repay the necessary expenditure of
materi&l and men, daylight bombing will continue. But for other purposes,
night bombing (ilio having purely nuisance value of itself) lrill e used.
One of the lessons of the war so f ar has been thct as yet no good defense
can be made a gainst night bombings .
2.

Hitler's condemnation of t.he H. A. } . raids nroves their value, of

course.

J. There was a hint in Hitler's speech of psychological preparation
of the C.erDIBJls for a long war . In t he props.;anda- wise Third Reich, such
preparation is si ~nific ant - unless it were merely to throw the English
off guard. If the J:o. n glish now start again t o boast that "Hit l er has
missed the bus" an i nvasion will be imminent .

FROM:

Treasu17 Attache Michohon,
Sb.an&b&i, China.

DATE:

September 5 , l94o.

For the Secretary of the

Trea~.

Ourrent 11 tuation for veek ending Auguat Jl. Week on local
exchange market vae one of rumor and uncertaint1 vith Chineae dollar
veakenin& froa both speculation and merchant actiTity.

OTorb o~t

poaition in foreign currenc1 vaa increased conaiderabl7 during the
period vbile local Talue of aterling ranged between U.S. dol lar•
3· 57 and 3·59·

Figuree aTailable locall7 ahov Hongkong tr3de
A p rominent feature ia that ezport1

alightl1 dovn from J une.

increaaed vb1le imrorta ven leea

t~

being made from accumulated atocke .

normal indicating ah.i pmantl

There vaa large decreaae in

both import and ezport trAde with Indochina.

Cuatom• figure• for

China trade Jul1 compared vith June ahov import up 26~ ezporta up
3~ total trade up l~~.

On aterling baaia wi th adjuatment m&de to

CO!ipenaate for oTer Taluation of i mporta in l!orth China comparhon
above importe u. 18). ezporte up ~ 8lld total trade up 14~.

Compared

vith July 1939 the Cuetoma figurea abov import• up 94~ export• up
11Y-' total trade up 10~.

On aterling baei e aa aboTe comparison above

ill'porta up 41~ exporte up 53~ t otal trade up 4Jb.

On thh adjuated

baaia exce 1 a of iz,ort e for aonth vaa rougbly £7 . 000 .000 .

Ja~ again

87

- 2 -

l&rpat ir.ICrUr vlUI ::.

of

•

s.

IICO:l&!.

•J:?O"• vi Ul H~cc nccn4•

vh1l•

U.s.

vaa larcut purcl:aaar

- 2 -

l argeet t.porter v1th U. S. aecond vbile U. S. vae largeet purcha1 er
of expor t• vith Hongkong aocond.

NICHOLSON

eh

88
PARAPHRASE OF TELEGRAM SENT

TO:
DATE:
NO.:

American Embassy, Rome, Italy
September 5, 1940, 6 p . m.
417

It wo uld be appreciated by the Treasury if you would
telegraph inf ormation to supplement and make clear the
report appearing in the ne\'Tspapers attributed to Mario
Mazzuchelli, the Italian economist, to the effect that
Italian end German financial representatives, including
Funk of the German Reichsbank, met on the seventeenth
of August and reached a decision that in t he event of
victory by Germany and Italy the Axis Powers would return
to the go l d standard.
HULL

{HF)

0>

........

EA:LmT

89

..,,__ 5.

1,.

... J.l ftttr hl.,U.et . . , . . . . . . . . . . . . efteot , . ., \he ...-....."' . , ...... .
W la(Ur.. • ' " ' a fttUd •lela llie 11114 reenll7 ....lUet h tiM ltah hpartanl

'" a , . .u tv •Oel't...a• te enl " ' Hthv b J'ruo•

t2,51)0. l ba're • •-n

r1 . , - ' • U a a ,.,.. ..,. "•'• hJertaad b n.e pr.h.. , 1114 ha" aU:M
lr. " " . . •• prntte UfT hnher btenaUea aftlla\le b

'"' ....

\Jae hate

hput••• ea

lt \lie O..•Nl .., alreeq ' - fllllllar vUll the eppllcaUn, I .U.U

~..W·•-l.UC

. . . - - .. ,.••

-~;;;?P'/-r

~ · .

........ '· 19110

lr.
1'11&1'4 c.n.r toltl&oaH .. troa J . • Wol'pa .. e•..,.., la
Jork
•• 11•15 Wo . .nlai. •• wuh4 \o aov OO\UJ' u 01114" un..uo far lt.la u.4
Jr. U . . . .or h .... M ltaM.Uctoa a\ aa t&1'l7 uh it UHUI &U tuoUta of \bo
UUlbl 17 lerpao of \lko 11alrl.ai tu4 oa otr\ala hoacll luat tloah4. ill \hie
.,_..,,
••:1.4. kill ___, llila.l nRI.UtQ. a . .,..r..._ ~;oa ~t. "'~'' h .,
1111..,_.1
tblo' adter Jii.l tlni hen l'id.. t 'b;r kr • .4loua4u, u.t l.hat I nuU
11Uilt O tb ot l aioa 1a ..._ pre~ttl,
u 1 " " ' ' ' ' ' \11 i a tai'Ul qpllcd 1oa
tor llooaM af.t:lai 'M \lila beat apJroula , Ouhr e\ah4 ._ i \lloi'O ,. ... corbia polah
tMf " 'llt rdhor llultr vU4 u 'llefara \Miac ~~ to~
(a, an.rsaAa
••., ... , ....... vu " ' " A.\\«Ut\ • l~liO. )

*••

••t»·

!llo oto.U aJ.' ]llha\ioa 11

val'''

• IIJ ,904 a.:ad . . . . ., •• a J'uiUaaeo fro• ~·

........, taat 1a \lilt
t olot of \lka t..-1'''' fol' kaa Jlla4e4 ia l•'lle io
~· - l u.. •;~.... u J naoo • , U.. ncuhaUea •tdlfuaoUoat 1a rruee, b .

Cuter 1e tJ." htan.NI' ef \IIIla ee-1u...
1... , loooe-..u , h a pi'Oaiatd .a'bor,

••

vlt.lelil Ulo r redt.eal'• ao\bn, l•n.

?~~

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