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167 STATE OF NEW YORK EXECUTIVE CHAMBER ALBANY HERBERT H LEHMAN GOVERNOR December 6, 1940. Honorable Henry Morgenthau, Jr., Secretary of the Treasury, Washington, D. C. Dear Henry: I am enclosing herewith a copy of An Inventory of Idle Plants outside the City of New York, prepared by the New York State Planning Council. A copy of this Inventory has already been sent National Council of Defense so that the Federal to the members of the Advisory Commission to the Government can be assisted in awarding contracts. I am firmly convinced that all effort should be made to use existing plant facilities before the Government undertakes to stimulate construction of new plants. I hope that it will be possible to utilize these idle manufacturing plants for the production of necessary materials for national defense. With kindest personal regards, I am, Yours very sincerely Enc. 168 STATE OF NEW YORK INVENTORY OF IDLE PLANTS REPORTED OUTSIDE OF NEW YORK CITY BULLETIN NO. 43 N O V E M B E R 1940 DEPARTMENT EXECUTIVE DIVISION OF STATE PLANNING NEW YORK 353 BROADWAY ALBANY 169 November, 1940 Bulletin No. 43 INVENTORY OF IDLE PLANTS REPORTED OUTSIDE OF NEW YORK CITY State of New York Division of State Planning Albany, N. Y. 170 NEW YORK STATE PLANNING COUNCIL M. P. Catherwood, Chairman Dorothy Strous Mark Graves Charles L. Raper DIVISION OF STATE PLANNING Maurice F. Neufeld, Acting Director Joseph C. Federick, Engineer In Charge of Inventory 171 FOREWORD In the preparation of this inventory of idle plant facilities, the Division of State Planning has had the cooperation of public service corporations, chambers of commerce, real estate boards, industrial commissions, municipal officials, and of individuals. Many of the agencies whose aid was enlisted made field surveys of the vacant establishments within specified areas. The Division of State Planning is especially indebted to the Buffalo Niagara and Eastern Power Corporation, the Central New York Power Corporation, the New York Power and Light Corporation, and the Central Hudson Gas and Electric Corporation of the Niagara Hudson System; and also to the New York State Electric and Gas Corporation, the Patchogue Electric Light Company, and the Rochester Gas and Electric Corporation of the Associated System. The survey of Westchester County was made by the Westchester Lighting Company, while Nassau and Suffolk counties were covered by the Long Island Lighting Company. Of the many smaller electric corporations which reported on conditions within their territories, mention must be made of the detailed inventory furnished by the Rockland Light and Power Company. Chambers of Commerce throughout the State contributed to this survey. However, the Orange County, Yonkers, Newburgh, Poughkeepsic, Albany, Troy, Schenectady, Amsterdam, Gloversville, Utica, Syracuse, Binghamton, and Elmira Chambers of Commerce made particularly detailed surveys of their respective communities. The Buffalo Chamber of Commerce rendered a similar service in cooperation with the Buffalo Niagara and Eastern Power Corporation. Through its members, the Real Estate Board of Rochester furnished the material on the city of Rochester. The Long Island Railroad made available information on plants along its lines in the Long Island Region, while the New York Central Railroad put at the disposal of the Division its complete file on available industrial properties distributed throughout the State. Without the cooperation and assistance of the agencies enumerated and of the many individuals too numerous to mention, this survey of idle plant facilities would not have been possible. 172 TABLE OF CONTENTS Page Number Introduction 1 Number of Plants Reported Type of Construction Condition of Plants Number of Stories in Buildings Available Floor Areas Transportation Facilities Plants with Service Buildings Former Uses of Plants Urban and Rural Location of Idle Plants Conditions in Strategic Centers of Defense Productions 3 3 4 5 6 7 9 Analysis of Idle Plant Inventory Data 10 10 10 13 TABLES Table 1 - Number of Idle Plants Reported 3 By Major Size Groups Table 3 - Number of Idle Plants Reported By Condition of Structure Table 4 - Number of Idle Plants Reported By Number of Stories in Building Table 5 - Number of Small Idle Plants Reported Classified by Amount of Floor Area Table 6 - Number of Large Idle Plants Reported Classified by Amount of Floor Area Table 7 - Number of Idle Plants Reported Served by Railroad Transportation 4 5 6 7 Table 2 - Number of Idle Plants Reported By Type of Construction 8 9 173 TABLE OF CONTENTS (Cont'd) Page Number Table B - Number of Idle Plants Reported Location by City, Village, or Town 11 Table 9 - Summary of Number of Idle Plant Facilities by Counties (Exclusive of New York City 12 Table 10- Distribution of Operating and Idle Plants According to Centers of Defense Production 14 Table 11- Idle Plant Inventory - Plants Classified by Previous Use - Alphabetic List of 15-22 Table 12- Idle Plant Inventory - Distribution of 22-24 Products, Establishments, and Processes Plants by Cities, Villages, and Towns Table 13- Summary of Number of Idle Plants Reported in New York State - By Counties and 25-28 Municipalities (Exclusive of New York City Table 14- General Summary - Idle Plant Inventory Now York State (Exclusive of New York 29-30 City Table 15- Idle Plant Inventory - New York State Idle Plant Date by Counties and Municipulities (Exclusive of New York City Table 16- Idle Plant Inventory Field Questionnaire 31-54 55 174 INVENTORY OF IDLE PLANTS REPORTED OUTSIDE OF NEW YORK CITY Introduction This inventory furnishes information with respect to vacant or idle plants and makes available to the National Defense Commission, the State Defense Council, manufacturing and business concerns, and other interested agencies, a record of those manufacturing estab- lishments ready for occupancy in short order.* The idle plant inventory moreover affords concerns wishing to locate or expand in New York State a central reference file which they may consult to aid them in the selection of a possible location. This report is concerned with New York State exclusive of New York City. It is hoped that a separate report will be issued for New York City at a later date. The field inventory sheet contained questions covering the following items: 1. Location 2. Main building data: Type of construction, condition, number of floors, floor area 3. Number and brief description of other buildings 4. Previous use 5. Transportation facilities 6. Present land area 7. Ownership *The Industrial Directory of New York State which the New York State Planning Council has prepared supplies vital 1940 data concerning manufacturing establishments in operation. 175 -2- In many cases reporting agencies furnished much more information than was asked for on the questionnaire. The permanent record cards of the Division's central file, from which interested individuals or agencies are invited to obtain detailed information concerning the plants reported, provide for the recording of such additional plant date. On the other hand, many questionnaires were returned with less data than were requested, From the facts available at the Division's office about the different types of plants in various parts of the State, it will be possible to narrow down the field of search for interested persons to plants most suitable to their needs and to refer them to the local persons or agencies in a position to show them the plant at first hand, While convinced that a very large part of the idle plant capacity of the State has been reported and that the facts are relatively accurate, it should be recognized that many different agencies participated in the collection of the data and may have used somewhat different standards in reporting. Detailed county summaries can be found in Table 15 of the Appendix. A copy of the field questionnaire used is listed as Table 16 in the Appendix. STATE NEW A YORK EXECUTIVE DEPARTMENT DIVISION OF STATE PLANNING WYOMING SCHUYLER DISTRIBUTION OF 485 IDLE PLANTS REPORTED OUTSIDE OF NEW YORK CITY EACH DOT REPRESENTS ONE PLANT 20 . S2-88 3 177 -3- Analysis of Idle Plant Inventory Data Number of Plants Reported: For purpose of analysis, the idle plant facilities reported have been divided into two categories: (1) those establishments which contain a total floor area of 10,000 square feet and over; and (2) those plants with C total floor area under 10,000 square feet. For ease in discussion, the former will be termed "large plants" , and the latter, "Small plants." The total number of idle plants reported outside of New York City is 485. Slightly more than 70 percent, or 341 of these establishments, are in the category of plants with floor areas of 10,000 square feet and over; 27.2 percent, or 132, have floor areas under 10,000 square feet. No date as to floor space were reported on the remaining 12 plants. Since in the some up-state crea there are 11,462 manufacturing plants in operation, the 485 reported idle plants represent 4.2 percent of all operating plants. TABLE 1 NUMBER OF IDLE PLANTS REPORTED BY MATORSIZE GROUPS Floor Area Under 10,000 Sq. Ft. Over 10,000 Sq. Ft. Number of Plants 132 341 No Data 12 Total 485 Percent 27.2 70.3 3.5 100.0 178 -4- Type of Construction: The buildings are classified into 5 groups according to type of construction: wood, brick, reinforced concrete, steel frame, and miscellaneous. The steel frame structures are brick or reinforced concrete buildings with steel columns, girders, and floor beams. Brick buildings are the most predominant: 299, or 62 percent of the plants, are of this type. Wood structures account for 19 percent, or 92 buildings; while the 37 reinferced concrete buildings comprise approximately 8 percent of the total. Of the 336 brick and reinforced concrete buildings, 47 are of the steel frame type. A very small number are listed in the miscellaneous class. The 23 plants in this category are of concrete block, stone, tile or corrugated metal construction. TABLE 2 NUMBER OF IDLE PLANTS REPORTED BY TYPE OF CONSTRUCTION Number of Plants Type of Construction 92 Wood 299 Brick Reinforced Concrete 19 62 8 ) Brick and reinforced 37 Percent concrete with steel frame) 47 Miscellaneous Unclassified 23 Total 485 34 4 7 100 179 -5. Condition of Plants: The present condition of these plante is of considerable importance. To escertain the condition of the idlo facilities, reporting agencies were requested to classify the condition of the plant as poor, fair, good, or excellent condition. It should be noted that it was necessary to rely on the personal judgment of the reporter in making this classifiection. It is interesting to note that only 5 percent, or 23 of the plants, are reported in poor condition. A large proportion of plants, 216, or 45 percent, are considered as in good condition; 81, or 17 percent, as excellent; and 117, or 25 percent, as in a fair state of repair. No data were reported on the remaining 8 percent. TABLE 3 NUMBER OF IDLE PLANTS REPORTED BY CONDITION OF STRUCTURE Condition Excellent Number of Plants 81 Good 216 Fair 117 Poor 23 Unclassified Total Percent 17 45 25 5 8 48 485 100 180 -6- Number of Stories in Buildings: Industrial buildings may be classified as single-story or multi-story. Certain types of unnufacturing may be carried on best in single-story plants. Similarly other production processes may be bottor suited to two-story buildings. The idle establishments covered rango from one to nine storios in height. However, 75 percent of them are from one to three storios. The remaining groups account for 18 percent, while about 7 percent were unclassified. Table 4 gives the number in each category. TABLE 4 NUMBER OF IDLE PLANTS REPORTED BY NUMBER OF STORIES IN BUILDING Number of Storics Number of Plants 25.4 28.6 20.6 11.5 3.3 2.5 0.5 123 1 139 2 100 3 56 4 Percent 16 5 12 6 2 7 8 0.2 1 9 Unclassified Total 36 485 7.4 100.0 181 -7- Available Floor Areas: Of primary importance is the amount of floor area available in each plant that can be utilized for manufacturing purposes. The data submitted have been arranged in classes varying by 1,000 square feet for those establishments with floor areas from 2,000 to 10,000 square feet. For the larger plants, over 10,000 square feet, the classes vary by 10,000 square feet of floor area. The smaller plants are more or less uniformly distributed among the 8 classes. For any one of the classes of floor area the lowest number of plants is 10 and the highest 21. The distribution is given in Table 5. TABLE 5 NUMBER OF SMALL IDLE PLANTS REPORTED CLASSIFIED BY AMOUNT OF FLOOR AREA Floor Area in Square Feet 2,000 to 3,000 3,000 to 4,000 4,000 to 5,000 5,000 to 6,000 6,000 to 7,000 7,000 to 8,000 8,000 to 9,000 9,000 to 10,000 Number of Plants 14 13 15 20 21 21 18 10 Total 132 182 -8- In the larger plants, those with floor areas between 10,000 and 20,000 square feet predominate. Sixty-eight percent, or 231 of the plants, contain less then 40,000 square feet in floor space; 24 percent, or 81 plants, are included in the 5 classes between 40,000 and 90,000 square feet of floor arec, an average of 16 plants in each class. The remaining 8 percent, or 26 plants, are distributed in 12 classes from 90,000 to 310,000 square foot of floor areas, on average of 2 plants being in each class. Three of the plants reported contain areas of 1,000,000 to 1,350,000 square feet. TABLE 6 NUMBER OF LARGE IDLE PLANTS REPORTED CLASSIFIED BY AMOUNT OF FLOOR AREA 78 160,000 170,000 180,000 200,000 37 23 19 15 to to to to 170,000 180,000 190,000 210,000 250,000 to 260,000 300,000 to 310,000 10 14 2 1 3 2 2 1,000,000 (group of bldgs) 2 3 Total 341 " 1,300,000 1,346,000 1 3 1 4 1 100,000 to 110,000 110,000 to 120,000 120,000 to 130,000 130,000 to 140,000 150,000 to 160,000 116 1 10,000 to 20,000 20,000 to 30,000 30,000 to 40,000 40,000 to 50,000 50,000 to 60,000 60,000 to 70,000 70,000 to 80,000 80,000 to 90,000 90,000 to 100,000 Square Feet 1 Square Feet Number of Plants Floor Aren in Number of Plants 2 Floor Area in 183 -9- Transportation Facilities: Several of the plants are accessible by waterway, highway, and railroad. However, what is of particular significance is the large number which are situated along reilroad lines and have railroad sidings available. Of the 485 establishments included in this inventory, 337 of these are located on a railroad line. Furthermore, 220 of the 337 plants are reported as served by reilroad sidings. TABLE 7 NUMBER OF IDLE PLANTS REPORTED SERVED BY RAILROAD TRANSPORTATION Total Number with Number Floor area over 10,000 square feet Plants on Railroad Lines Plants Not on Reilroad Lines 337 244 148 97 Sidings 220 162 road Sidings 265 179 Plants with Railroad Plants without Rail- Number with Floor area Unclass- ified under 10,000 square feet 84 48 52 80 9 3 6 6 184 -10- Plants with Service Buildings: In addition to the main building unit, 144, or 30 percent, of the plants have cuxiliary service structures. Such units consist of garages, storchouses, power plants, dry rooms, kilns, boiler houses, etc. Former Usos of Plants: These vecant plants have been engaged in manufacturing a highly divorsified list of products. An alphabetic list of products, establishments, and processos is given in Table 11 in the Appendix. The 485 plants covered, reported 238 articles, products, or processos. Thirty percent of the products listed were manufactured in only a single plant, while there were but 8 fields of activity reporting 10 or more establishments engaged in each particular line. Urban and Rurel Location of Idle Plants: A summary distribution of the reported facilities among the cities, towns, and villages is given in Table 8. More than 60 percent of the idlo plants are in 48 of the cities, while 35 percent are located in 94 villages, and the remaining 5 percent are situated in towns outsido of the villago boundaries. Detailed distribution of idle plant facilities among citios, towns, and villagos is given in Tables 12 and 13 in the Anpendix. 185 -11- TABLE 8 NUMBER OF IDLE PLANTS REPORTED LOCATION BY CITY, VILLAGE, OR TOWN Typo of Municipality Number of Municipclitics Percent of Total 48 296 60 94 170 35 17 19 159 485 City Villago Towns outside of Villagoe Total Number of Plants 5 100.0 On C county basis, the reported upstate idlo plants are scattored among 47 of the 57 counties, exclusive of Now York City. (See Table 9) The 10 counties not reporting any vacant industrial plents and which have an avorage 1940 population of 30,000, cro as follows: Clinton Hamilton Cortland Putnam Dolaware Essex Franklin Schoharic Schuyler Sullivan It is likely that somo facilitios have boon ovorlooked in the survey. Howover, it is bolieved that no plants of consequence have been missed. A summary of available facilities by counties and municipclitics is given in Tablo 13 in the Appondix. -12- 186 TABLE 9 SUMMARY OF NUMBER OF IDLE PLANT FACILITIES BY COUNTIES 25 Albeny 31 Allogany 13 Broomo Cattcraugus Unclossificd 6 7 6 - County Total (Exclusivo of New York City) Floor Aroc undor Floor Aron over 10,000 square foot 10,000 squaro foot 3 3 11 2 3 6 1 Chyugo 1 11 Chorung 14 Chonango 7 4 7 7 - Chautouque 1 1 Columbia Dutcheas 2 1 3 4 1 5 Fulton 4 - 1 5 - Gonosco Groone 4 4 1 1 2 Horkimor 8 9 5 5 Lowis 3 - 3 Livingston 3 1 4 Madison Montgomery 1 Jofferson 3 5 8 15 18 Nassau 3 4 2 6 Niagara 25 22 Onondagn 13 10 Ontario 1 2 3 3 4 29 Orloons 11 1 Orange 10 19 1 3 7 - Oswego 6 6 Otsego 1 - 1 Rockland Ronssolner Saratoga 31 St. Lawrence 16 9 Schonectody 10 8 2 24 1 5 1 6 2 3 3 Stouben 1 1 Tioge 1 1 2 2 Tompkins 7 9 Ulstor 1 1 2 Warron 2 2 Washington 1 3 4 Wayno Yetos 6 5 Seneca Wyoming 1 3 1 2 3 1 2 3 1 3 4 3 Monroe 23 Suffolk 19 Eric Westchoster Oneido 47 counties 27 17 15 4 26 40 21 32 29 485 3 341 1 19 3 132 12 -13- Conditions in Strategic Centers of Defense Productions: Six regions in the State are considered strategic centors of defense production. As might be expected, the New York City Motropolitan area WC.S the most important defense industry center in the State from the standpoint of employment. Four countics in Western Now York (Eric, Niagara, Chautauque, and Monroo) comprise the region next in importance from the stand- point of defense production. This region contains 3,481 operating factorios, and 86 idlo ostablishments are reported. The North Central Now York region (Onondaga, Oneide, Oswego and Herkimor counties) contains 1,256 plants operating and reports 60 vacant or idlo. The Capital District (Albany, Ronssolner, and Schenectcdy countics), another strategic contor, has 758 factories ongaged in production with 72 reported idlo, including warehouse facilities. The South Control Now York District (Broomo and Chemung Counties) contains 391 operating plants and 17 unoccupied industrial facilities. The Mid-Hudson Region, consisting of Dutchess County, includes 237 active establish- monts and reports 5 idlc plants. It is possible that somo of the variction betwoon regions in the number of idlo plants is duo to differences in reporting small idlo plants. It is significant to note that the percentngo of idlo plants in those centers of defenso industries is reletively small, verying from 2 percent in the Mid-Hudson Region to 8 percent in the Capital District. Table 12 summarizes tho distribution of operating and idlo establishments in the verious districts considered contors of defense production. 187 188 APPENDIX 189 -14- TABLE 10 DISTRIBUTION OF OPERATING AND IDLE PLANTS ACCORDING TO CENTERS OF DEFENSE PRODUCTION Center of Defenso Production Now York Motropolitan District Now York City Wostchostor County Western Now York Eric Ningare Choutauque Monroo Total North Control Now York Dnondngo Oncida Total Albany Ronssolner Schenectudy Total South Control Now York Roported Idlo Plants -723 40 1742 27 312 25 302 11 1125 23 3481 86 583 13 411 32 9 1256 393 31 221 31 144 10 758 72 128 Total 6 60 263 Broomo Mid-Hudson Region Dutchoss Establishments Operating 141 Capital District Chomung Number of 121 Oswogo Horkimor Number of 391 237 3 14 17 5 190 -15- TABLE 11 IDLE PLANT INVENTORY PLANTS CLASSIFIED BY PREVIOUS USE ALPHABETIC LIST OF PRODUCTS, ESTABLISHMENTS, AND PROCESSES Number of Standard Plants Industrial making 2669 Bags 2051 Bakery products 5099 Barrels 3729 Barn equipment Ball bearings 3699 Batteries, dry and wet 2511 Beds Blacksmith shop Bleaching plant 2431 Blinds 3432 Boat building 336 3364 2 Boilers Boiler shop products 3751 Bottling milk 2554 Boxes 267 267 Boxes, paper Boxes, folded 3769 Brakes, air 2082 3259 Breweries Brick 3373 Brooders and incubators 3981 Brooms 398 Brushes 1 2889 2 2 2 1 Automobile parts 1 3821 1 Automobile bodies 1 3822 3 1 3811 1 Aprons Automobiles 1 2336 2 1 2892 1 3592 Alcohol Aluminum products Ammunition 1 2861 2 Advertising displays 1 3993 Product 1 Product, Establishment or Process 1 Code 1 Classification 3 3 1 1 3 1 1 1 1 2 Buttons Building supplies, distribution 25 Cabinets 2511 Cabinets, radio 2898 Candles 3759 Calfskin tenning 2071 2033 2 1 3961 3271 1 1 1 3 Candy Canned fruits and vegetables 6 191 -16- TABLE 11 (Cont'd) IDLE PLANT INVENTORY PLANTS CLASSIFIED BY PREVIOUS USE ALPHABETIC LIST OF PRODUCTS, ESTADLISHMENTS, AND PROCESSES Standard Industrial Product, Establishment or Process Carpets 3943 Carriages 2571 Caskets 3322 Castings 3322 Castings, malleable iron Cast stone 289 Chemicals Clothing Clothing, rubberized Coats, ladies 376 Condensers Conduits, electric Contracting, building 2832 Corsets Cosmetics 2211 Cotton cloth 3351 Cutlery 2029 Dairy 3729 Dairy machinery and equipment 2522 Desks 3769 Die casting 2433 Doors 2331 Dresses 2831 Drugs 1 2 1 179 2343 1 1 3373 A 1 2322 1 3271 Coats, sheepskin Collers Concrete blocks 2311 4 2 1 2385 2333 1 2 1 233 1 2022 Champagne Cheese 2084 1 32 2 2 1 1 2272 1 2 1 Caps, milk bottle 1 2691 I Code 1 Classification Number of Plants Making Product 2 1 2 7 2 1 Dry house Edge tools 371 Engines 1 3351 2 283 Extracts 1 2 Farm machinery Fasteners 2042 Feed, prepared 3273 Fibreware, pressed 3912 Films 3729 1 3999 2 1 1 192 -17- TABLE 11 (Cont'd) IDLE PLANT INVENTORY PLANTS CLASSIFIED BY PREVIOUS USE ALPHABETIC LIST OF PRODUCTS, ESTABLISHIENTS, AND PROCESSES Number of Plants Standard Industrial 3749 Forging 3759 Foundry Furnaces 3362 251 Furniture 2511 Furniture, metal Furniture, upholstered Furniture, wood 2341 Garments, ladies 7532 Garages 4821 Gas plants 3766 Gears 3151 Gloves Grates 2514 2512 2 15 2 1 Food preparation 9 2099 2 1 Flour Product 1 2041 Product, Establishment or Process 2 Code Making 1 Classification 6 2 2 2 Haircloth 2599 Handles, wooden 1 2241 1 Grates, locomotive Greeting cards 1 3329 2691 1 3329 1 232 Hats 2 1 3359 Hand looms Hardware 3752 2 1 2251 Heating equipment Hooks and eyes Hosiery 2096 Ice 2024 Ice cream 2 1 3999 1 1711 2 1 2431 Iron and steel fabrication Jobbing, mill specialties 2259 Knit goods 2212 Lace 2292 Lace curtains 3781 Laundries 3729 Lewn mowers 288 Leather 3199 Leather goods 19 1 1 3 1 1 3399 1 1 269 Ignition apparatus Insulating board 1 36 1 193 -18- TABLE 11 (Cont'd) IDLE PLANT INVENTORY PLANTS CLASSIFIED BY PREVIOUS USE ALPHABETIC LIST OF PRODUCTS, ESTAILISHMENTS, and PROCESSES Number of Standard Plants Industrial 3231 Mirrors 3994 Moldings, bakelite 3271 Monuments 3939 Musical instruments 3342 Nails 3971 Novelties 2699 Novelties, paper 2311 7731 Overcoats, men's Ore grinding Packing house 2811 Paint 1721 Paint spraying 2329 Pants, work Paper products Petroleum products 1422 2699 2999 2211 Picture frames Pig iron Pillow cases 3999 Pins 3994 Plastic materials 3329 Platforms, steelbound 2596 3311 3 5 2 2 4 1 2431 Milk products Millwork 2 6 2029 Milk, distribution 1 5051 1 Milk, condensed 1 2023 1 3561 Medicines Metalware 2831 1 2011 2 1 2515 Machine tools Mattresses Meat packing, wholesale 1 3741 11 1 Machine shops 1 7699 1 3729 Machinery, chemical Machinery, road 376 1 2098 3729 Lumber distribution Macaroni Madhinery 1 249 2 249 2 1 Luggage Lumber 1 3161 3 1 Leather, tanned 5 288 Product 6 Product, Establishment or Process 1 Code Making 1 Classification 1 1 1 1 1 2 1 194 -19- TABLE 11 (Cont'd) IDLE PLANT INVENTORY PLANTS CLASSIFIED BY PREVIOUS USE ALPHABETIC LIST OF PRODUCTS, ESTABLISHMENTS, AND PROCESSES Number of Plants Standard Industrial Pocketbooks Pocket knives 2262 Rayon 2262 Rayon cloth 3351 Razors 5081 Refrigerating plant 769 753 3412 Repair shops Repair shops, motor vehicle Repair shops, reilroad 3721 Road machinery 2273 Rugs 2599 3811 Rules, wooden Salesrooms, machinery Salesrooms, automobile 2885 Salt 2433 24 Sash, window Sawmill 3354 Saws 2211 Sheets 3431 Shipbuilding Ships, steel 1 2 2 Radio parts and instruments 1 Pumps 3661 1 376 2 Projectiles 1 3912 3 1 Printing machines and equipment 1 3755 4 2 2751 Power plants, electric Printing 1 3351 4811 Product 5 3171 Product, Establishment or Process 1 Code Making 1 Classification 2 2229 2221 2223 2221 Silk, broad Silk cloth Silk, thrown Silk, yard 1 Silk 1 2221 1 Shoes 1 3141 5 1 Shirts 3 1 2321 1 3431 1 5081 12 10 10 2 2 2 1 2 Soil pipe and fittings 3769 Spraying machinery 3373 Stamped products Steel 332 2 1 3365 1 Soap 1 2841 195 -20- TABLE 11 (Cont'd) IDLE PLANT INVEITORY PLANTS CLASSIFIED BY PEREVIOUS USE ALPHABETIC LIST OF PRODUCTS, ESTABLISHMENTS, AID PROCESSES Toys 3359 Traps, steel 3383 Trim 3822 Truck bodies 3641 Trucks, electric 3811 Trucks, motor 3161 Trunks 3772 Typewriters 2322 Underwear 2254 Underwear, knitted 2341 2312 2335 376 2554 4261 3781 Underwear, ladies Uniforms, men's Uniforms, nurses Valves Veneer packages Warehousing Washing machines Waste collection 3 2 4 1 1 27 1 3941 1 Tobacco processing 1 2131 22 1 Textiles 1 2299 1 1 3759 2 1 2511 Sweaters Tables Thnning 1 2254 1 2062 Suits, men's Sugar, refined 1 2 1 3362 2311 2 1 4251 28 1 4251 Storage-Genoral Warehousing Storage, petroleum Storage, tobacco Stoves, cooking 1 4261 Product, Establishment or Process 1 Code 1 Industrial Classification Number of Plants Making Product 1 Standard 1 3831 Wheels, truck 5099 Wholesale houses 3 1 2433 Windows 2084 Wine 3631 Wire and cable 3132 Wood heels 2599 Wood products, n.o.c. 2431 Wood trim 2599 Woodwork 2599 Woodwork, ornomental 1 1 1 2 1 4 1 196 -21- TABLE 11 (Cont'd) IDLE PLANT INVENTORY PLANTS CLASSIFIED BY PREVIOUS USE ALPHABETIC LIST OF PRODUCTS, ESTABLISHMENTS, AND PROCESSES Product, Establishment or Process 3753 Woodworking machines 2294 Wool reclemation 224 Wool, knit 2241 Woolen goods Yorn 1 Code 1 Industrial Classification Number of Plents Making Product 1 Standard 4 4 197 -22- TABLE 12 IDLE PLANT INVENTORY DISTRIBUTION OF PLANTS BY CITIES, VILLAGES, AND TOWNS CITIES Number of Number Idle Estab. Reported Reported No. Tonawanda Ogdensburg 12 Batavia 2 Beacon Olean Cneida Oneonta 2 Binghamton Buffalo Niagara Falls 12 2 23 Canandaigua Cohnes 11 Peekskill Elmira Fulton Glen Cove 11 Port Jervis 1 Gloversville 3 Rome 1 Salamanca 8 Jamestown Saratoga Springs 9 Johnstown Kingston Schenectady Syracuse 2 1 Little Falls Tonawanda Troy 4 Lockport 9 Mechanicville Utica 3 Middletown Mount Vernon Newburgh Poughkeepsie Rensselaer Rochester 1 Ithaca Watertown 4 Watervliet White Plains 1 13 New Rochelle 6 3 4 3 1 Oswego 4 Hudson 6 Yonkers 2 5 1 Albany Amsterdam of Idle Estab. 9 2 3 16 3 4 1 10 10 3 20 24 1 1 2 17 48 Cities ... Total 296 VILLAGES Attica Baldwinsville Bayport Boonville Camden 3 3 Canastota Canisteo Carthage Cazenovia 4 2 1 Angelica 2 1 1 2 Churchville 1 Andover Brockport Caledonia 2 1 Albion Allegany 1 4 2 2 1 -23- TABLE 12 (Cont'd) IDLE PLANT INVENTORY DISTRIBUTION OF PLANTS BY CITIES, VILLAGES, AND TOWNS VILLAGES (Cont'd) Number of Number of Idle Estab Idle Estab. Reported LeRoy Lindenhurst Little Valley 1 1 1 2 Salem Schuylerville 1 Seneca Falls Sherburne 7 Sloan Solvay 1 2 Spring Valley 1 Staatsburg Tarrytown 2 2 1 Trumansburg 1 1 1 1 1 Kennedy St. Johnsville 2 1 Irvington 1 1 Horseheads Red Creek Roslyn Sag Harbor 1 1 Hilton Honepye Falls Hoosick Falls 1 Hermon Port Jefferson 1 Hemstreet Park Herkimer 1 Hempstead Philmont Port Byron 2 8 4 1 1 Hagaman Hemilton Harriman Hastings Haverstraw Patchogue Penn Yan 1 Ossining 4 1 Norwood 2 2 7 Greenwich Northport 7 Granville Green Island Newport 2 1 Gouverneur 1 1 Glenfield New Hyde Park New Paltz 1 Fultonville 1 1 1 Mumford 2 1 Mohawk Mt. Morris 3 1 1 Friendship Merrick Middleport 1 1 Farmingdale Fort Plain 1 1 Dolgeville Elmira Heights Endicott Fairport 1 3 1 Dobbs Ferry 2 1 Cuba Mamaroneck Massena Medina Menands 1 Croton 1 2 7 Cranesville 1 Coxsackie Livonia Lowville Lyndonville 1 2 1 Coram 1 Reported 1 2 1 2 1 199 -24- TABLE 12 (Cont'd) IDLE PLANT INVENTORY DISTRIBUTION OF PLANTS BY CITIES, VILLAGES, AND TO.NS VILLAGES (Cont'd) Number of Number of Idle Estab. Idle Estab. Reported Reported Wellsville 2 Wilson 2 Waterloo Waverly 3 1 94 Villages Total 170 TOWNS 1 Royalton Sheridan 1 1 1 Somerset 1 1 Wallkill 1 Warrensburg 17 Towns Total 19 1 2 1 Southport Stockport 1 1 Ontario Oswegatchie 1 Norfolk (East) 1 Huntington New Windsor Piercefield 1 De Witt Oyster Bay 1 Arcade Caneadea 2 200 -25TABLE 13 SUMMARY OF MULBER OF IDLE PLANTS REPORTED IN NEW YORK STATE BY COUNTIES AND :UNICIPALITIES (Exclusive of Now York City) County County & Total l'unicipal. County l'unicipal Total Chonango 31 Shorburne 12 Watervliet 1 Columbia 11 Eenands 3 Hudson Philmont 3 1 Green Island 4 1 Cohoos Stockport 1 13 Dutchess 3 Cuba 2 Stastsburg 1 Friendship 2 Pou chkoopsic 1 Canoades 5 Beacon 4 1 1 Wollsville Eric 3 27 3uffalo Binghaston Toravanda 2 Endicott 23 Sloan 3 1 Groom 1 3 1 Fulton Gloversville Cattaraugus 11 Allegany Johnstown 2 Little Valley 5 3 Allogany Andover Angelica Total 1 Albany Co. Albary Funicipal 1 County L l'unicipal. Total 2 1 Olean Gonesoc 4 Salamanca 4 4 Batavia 2 Le Roy 2 Cayuga Port 3yron 1 Coxsackic Little Falls Newport 11 5 Horkimer Kohawk 14 9 2 4 1 1 Southport 1 Horscheads Dolgeville 1 El:ira Hgts. Norkimer 1 9 Shoridan Elmira 2 11 Kennody Cherning 2 1 Chautauqua Jamestown Greene 1 1 Jofferson Carthage Watortown 4 1 201 -26- TABLE 13 (Cont'd) SUILTARY OF HUMBER a IDLE PLANTS REPORTED IN NEW YORK STATE 2Y COUNTIES AND 1U..ICIPALITIES Bunisipal. Total Total Lowis County 2 25 9 Middleport 1 N. Tonawanda Niagara Falls Onoida C 1 Onondaza 23 1 1 1 Solvay Syracuse 1 1 10 1 Ontario 1 1 1 13 New Windsor Liddletown 4 Port Jervis Wallkill 9 1 1 1 1 1 Orleans 6 1 11 Albion Lyndonville 2 2 1 1 Medina 7 St. Johnsville 29 Newburgh 2 Magaman 4 Sarrinan 12 Pultonvill e 4 Canandaigua Orango Fort Plain 1 1 1 1 New Hyde Park Oyster Say Roslyn 13 Dc Witt 2 Cranesvillo l'orrick 24 Baldwinsville 16 Amstordam Glen Cove Kenpstead 3 Utica Montgomery 10 Massau 2 Rome 2 Churchvillo Fairport Hilton Honoovo Falls unford 3 3oonville 3 Rochestor Brookport 32 Camden 2 Oneida 1 1 1 Hamilton Monroe Royalton Sonersct Wilson 2 Lt.Morris 6 1 Calodonia Livonia l'adison Canastota Casenovia 6 1 Livingston 4 Punicipal Total Total Hiagara Lockport 3 Glenfield Lowville Kunicipal. 1 County (Exclusive of New York City) County & County Municipal Oswego Fulton Camago 6 1 5 202 -27- TABLE 13 (Cont'd) SUMMARY OF NUMBER OF IDLE PLANTS REPORTED IN NEW YORK STATE BY COUNTIES AND MUNICIPALITIES (Exclusive of New York City) Municipal. County Total Otsego Municipal Total County & Municipal. County Total Suffolk 1 Oneonta Total 19 Bayport 1 Coram Huntington Lindenhurst Northport Rensselaer 3 Patchogue 20 Troy 8 Port Jefferson 1 Sag Harbor 3 Haverstraw 2 Rockland 1 Tioga Waverly 2 2 2 Spring Valley 16 1 Ithaca 7 Trumansburg 1 Ogdensburg Oswegatchie a Hermon 8 - Tompkins 9 Gouverneur 3 1 Kingston New Paltz 1 1 1 Piercefield 2 Ulster 1 Massena Norwood 1 Warrensburg 5 3 Washington 1 4 3 Granville 1 2 Greenwich Salem 10 1 Mechanicville Saratoga Springs Schuylerville 2 1 Saratoga 2 Warren S Schenectady Schenectady 2 2 7 1 31 Hoosick Falls St. Lawrence Norfolk 1 Farmingdale Hemstreet Pk. 1 Rensselaer 31 Municipal. 1 County & 10 Wayne Red Creek 2 2 7 Irvington Mount Vernon New Rochelle Ossining 1 Dobbs Ferry Hastings 2 1 40 1 1 Canisteo Croton 1 Westchester Steuben 2 1 3 Waterloo 1 Seneca Falls Ontario 3 1 Seneca 203 -28- TABLE 13 (Cont'd) SUMMARY OF NUMBER OF IDLE PLANTS REPORTED IN NEW YORK STATE BY COUNTIES AND MUNICIPALITIES (Exclusive of New York City) County & Municipal. County Total Municipal Total Westchester (Continued) Peekskill 1 Mamaroneck 3 Tarrytown 2 White Plains Yonkers , 2 3 Wyoming 17 Arcade 1 Attica 2 Yates 4 Penn Yan 4 204 -29- TABLE 14 GENERAL SURILARY IDLE PLAIN INVATORY ICEN YORK STATE (Exclusivo of Now York City) Buildings Floor Arsa Total 10,000 Sq. and over Buildings Floor Area St. under 10,000 So. Ft. Total Number of Idlo Plants 485 Reportou Yumber Est. under 10,000: Sq. Ft. Floor Arca Number Est. over Floor Area 132 132 " " 341 " No data 341 12 Type of building construction* Wood structures 92 45 47 299 236 63 Reinf. Conc. 37 2G 11 Stool Frame 47 35 12 Brick Other types-conc. block,stone, tilo, corrugated motal Condition of structures* Number reported as Excellent 15 C 81 59 22 Good 216 165 51 Fair 117 76 41 23 10 123 74 49 139 87 52 100 76 22 " 56 52 " 16 16 " " " " " Poor Number of floors in each structure* 1 story buildings 2" 3" 4" 5" 6" 23 5 4 -- 12 12 " 2 --- 2 7 -- -- -- " " n " 8 -1 1 S Floor areas in buildings reported Between 2,000- 3,000 Sq. Ft. " " " " " " " 4,000 5,000 8,000 7,000 0,000 " 3,0004,0005,0006,0007,000- " " 14 13 15 20 21 16 *The difference between the total number of establishments reported and the total number of establishments under each item is the number of plants upon which no data was given with respect to that item. 205 -30- TABLE 14 (Cont'd) GENERAL SUBJARY IDLE PLANT INVENTORY EW YORK STATE (Exclusive of New York City) Buildings Floor Area Buildings Floor Area Total 10,000 Sq. Ft. under and Over 10,000 So.Ft. Floor Areas in buildings reported* 0,000 - 9,000 So. St. 18 10 116 70 37 23 10 " 9,000 - 10,000 10,000 - 20,000 20,000 - 30,000 30,000 - 40,000 40,000 - 60,000 50,000 - 60,000 30,000 - 70,000 70,000 - 80,000 80,000 - 90,000 15 " Octwoon 10 14 90,000 - 100,000 4 Floor Area in buildings reported* Between 100,000 - 110,000 So. Ft. 110,000 - 120,000 120,000 - 130,000 130,000 - 140,000 150,000 - 160,000 160,000 - 170,000 170,000 - 180,000 100,000 - 100,000 200,000 - 210,000 250,000 - 250,000 300,000 - 310,000 3 2 3 2 " 2 1 1 1 3 2 2 1,000,000 1,300,000 1,346,000 1 1 1 Transportation Facilities whber of buildings on R.R.Linos Sidings 337 240 220 160 52 121 23 with auxiliary struc. 144 88 *The difference between the total annicer of establishments reported and the total number of establishments under each item is the number of plents upon which no data TES riven with respect to that Lton. -31- TABLE 15. NEW YORK STATE IDLE PLANT@DATA BY COUNTIES & MUNICIPALITIES (Exclusive of New York City) Note: S.I.C.C. in the first column of this table stands for "Standard Industrial Classification Code", the code numbers and terminology of which the Division used tc classify various products made formerly by the idle plants reported. 26G IDLE PLANT VENTORY NEW YORK STATE IDLE PLANT DATI BY COUNTIES & MUNICIPALITIES (Exclusive of New York City) BUILDING DATA - MAIN BUILDING S.I.C.C. NUMBER PREVIOUS USE Type of Construction Condition* Wood Brick Reinf Steel E.G.P.P. MUNICIPALITY Conc. No. of Floors 12347 2321 Groceries & Food Specialties Men and Boys' Shirts 753 Repair & Storage Service X X X 3811 3641 Salesroom, Automobiles 3271 2321 Concrete blocks Underwear 2299 Textile X X X X X X Voorheesville Monands Electric trucks, assembly X X X (concrete " Watervliet block) X X X X Cohoes X 6 X 5 X X X " X X X X " X Machinery Textile " Textile Textilo E-Exoellent,G-Good,F-Fair, " 2299 X X " 5081 2299 X X X 6 X X X " 2299 X X " 2299 Textile Textile Textile X X X " 2299 2299 2299 X X " 3741 X X X " 3412 X X X Green Island Dresses, aprons Railroad Repair Shops Machine tools Textile -Poor Siding X X X X X X X X X X X X X X to 2331 X X " Castings, malleable iron X X " Petroleum Storage X X Foundry Warehousing Warehousing Warehousing R.R. X 81,900 24,000 45,200 20,000 35,000 6,240 X X X " 3322 X X X " 2999 X X X " 422 X X " 422 X X X " 422 X X X (Auto) 3759 9,500 35,000 20,000 20,000 64,100 10,500 X X X " 422 FACILITIES R.R. " 422 BLDGS. is " 422 Warehousing Warehousing Warehousing Warehousing 422 Area Frame " 5041 TRANSPORTATION On ALBANY COUN Albany Floor OTHER Figure indicates X number of floors X 24,000 24,000 5,000 23,200 3,900 3,600 60,000 23,400 36,000 20,625 30,000 38,292 8,500 30,000 20,640 11,000 X X X X X X X X X X X X X X X X X X X X X X 207 (Cont'd) TABLE IDLE PLANT INVENTORY NET YORK STATE IDLE PLANT DATA BY COUNTIES & MUNICIPALITIES (Exclusive of New York City ) BUILDING S.I.C.C. PREVIOUS USE ALBANY 2431 2512 249 COUN Y (Continued) X X X X X ALLEGANY COUNTY Aluminum products Friendship Dairy Products, (n.e.c.) Planing Mills Furniture, Upholstered Wellsville tile) X X X X X XX X X Lumber & Timber,Basic Prod. X X 7611 Blacksmith shop Repair Shops & Hand Trades, X X " 2,225 19,800 20,000 40,000 7,500 X " X Cuba (Other) X 3351 2229 Silk manufactures Binghampton 3781 Domestic laundry equip. X X X X X X " R.R. Siding X X X X X X X X X X X X X X X X X Page X X BROOM E X X Endicott -Excellent,G-Good,F-Fair, -Poor X X X X X X X X X X X X " Lumber & Timber Basic Prod. R.R. X X 18,900 X Andover Andover 249 On X Silk manufactures Silk manufactures Cutlery 2229 25,000 120,000 FACILITIES 33 " 2599 2229 BLDGS. TION X ( n.e.c) General Warehousing is storage Wood Products, N.E.C. Area 10,500 3,700 4,940 16,910 12,000 2,592 2,000 X X X Canoadea Wholesale distribution(Eilk)Angelica 4261 OTHER X 3051 769 Floor 5 1,000,000 X X " Yarn, Knit Goods Underwear, woolen knit TRANSPORTA- Frame " 2029 Cohoes 1234 " 3592 Textile, Harmony Hills EIGJFJP. " 2322 Floors hood Brick Reini Steel Conc. 2213 Condition* No. of Type of Construction MUNICIPALITY NUMBER 2299 DATI - MAIN BUILDING COUNTY (Other (Other) X X X X X X 20,385 106,000 42,000 X X X X X X X X t - Figure indicates number of floors 203 (Cont'd) TABLE IDLE PLANT INVENTORY NEW YORK STATE IDLE PLANT DATA BY COUNTIES & CUMICIPALITIES (Exclusive of New York City) TRANSP - BUILDING DATA - MAIN BUILDING PREVIOUS USE 12UTICIPALITY Wood Brick Reinf Steel Conc. Frame EIGIFIP. 12347 CATT ARAUGUS COUNT 2041 Flour & other Grain 111 Oloan Products X 1a X X X X 09 6,400 3,200 100,000 X X X Little Valley X X X Salamanca X X X X X X X X " A Y U G A COUNTY C Furniture, wood Furniture, wood (Citier) 1 A COUNTY X X other 4,200 X X 5 X x " 63,000 X X X X X 5,922 X X X X X " X X " " Furniture, upholstered Furniture, metal Furniture, wo d X 80,000 X X Jamestown 2512 X X 16,500 X Womon's clothing Furniture, wood X X X Port Byron 2511 2514 2511 X " Planing Mills 2:22 2511 X X Furniture & Finished Lumber Products 2911 30,000 3,200 X X X " Furniture, Wood Mirrors, cut, beveled & engraved glass 233 X X " Electric Light & Power 2511 2431 Siding " Vegetables 25 R.R. X Wholesale Distribution (Milk) Allegany Canned & Driod Fruits & 4811 3231 X Paperboard Containers & Boxes 3.051 2033 " 267 Breweries On R.R. X " 2082 Silk Throwing & Spinning FACILITIES 20,000 X 2223 BLDGS. 14,000 X X X Area TION X NUMBER Floor No. of Floors Type of Construction Condition S.I.C.C. OTHER " X X X (other) X (other) X X X X 21,472 12,000 18,720 29,500 X X X X X X X E-Excellent, G-Good, F-Fair, P-Poor Figuro indicates number of floors 203 . Page TABLE 15. (Cont'd) IDLE PLANT INVENTORY NEW YORK ST ATE IDLE PLANT DATA BY COUNTIES & MUNICIPALITIES (Exclusivo of New York City ) BUILDING DATA - MAIN BUILDING Condition No. of Type of Construction MUNICIPALITY Tobacco Processing, CHELUNG COUNTY Elmira X X X X X (Other) X X X Warehousing " 422 " Machine Shop 3769 Spraying Machinory 422 Storage Salos Room Machinery X " Storago, Trucking Terminal 7699 5081 X " 422 17,644 6,000 20,000 X X 27,000 11,850 X X Page Candy Lumber & Mill Work X X 9,000 5,200 17,000 2,400 30,000 2,500 15,600 4,000 9,375 x " 422 X X Printing, Storage If 249 X X " 2021 X X X " Shoos X 2 2131) 4251) Doors, Window sash Knit Goods Greeting Cards X X Siding X " 2259 2691 3141 Warehousing Shoridan " 2433 Dairy Products, (N.E.C.) 6,000 6,000 X " 422 R.R. 2 2029 FACILITIES R.R. (Continued) Block Cinder 2 Framo CHAUTAUQUA COUNTY Konnody BLDGS. On Food Brick Roinf. Stool E.G.F.P. Conc. TION OTHER Aroa Floors 3 PREVIOUS USE NUMBER Floor 4 S.I.C.C. TRANSPORTA Elmira Hgts. Southport Horschonds X X 35 X X X X X X X X X X G Knit Goods Shorbourne 2259 Knit Goods Philmont 2321 Shirts 2299 Textile 2259 Hudson Stockport 22,000 X COLUKBIA X X X X X X 36,000 8,500 28,000 X X X I E-Excellent. G-Good. F-Fair. P-Poor Figure indicatos number of floors 210 TABLE 15 (cc d) IDLE PLANT INVENTORY NEW YORK STATE IDLE PLANT DATA BY COUNTIES AND MUNICIPALITIES (Exclusive of New York City) BUILDING DATA - MAIN BUILDING Type of Construction S.I.C.C. NUMBER PREVIOUS USE Condition* MUNICIPALITY Wood Brick Reinf. Steel E.G.F.P. Conc. TRANSPORTATION No. of Floor OTHER Floors Area BLDGS FACILITIES 12346 On R.R. Frame R.R. Siding ERIE COUNTY (Continued) " Nails, horses Information nct given Leather Tanning Gloves 2221 Silk Cloth Leather Tannery " FULTON COUNTY Gloversville Machine shop & die casting Plant Salt Airport Bldg. X X Johns town X X X GENESEE COUNTY Batavia XX X X Le Roy X X X X X X X GREENE COUNTY Cexsackie 3132 Wood Heels Dolgeville 2521 Furniture, Office Mohawic X 2259 Knit Goods Herkimer X X (Other) 12,000 6,000 X X " X X X HERKIMER COUNTY X X X X (Other) X X X " X X Little Falls X 50,000 30,000 14,000 X X X 9,000 70,000 83,900 83,900 80,000 12,000 X X X X X X X X X X X X X X X X X X X Page X X 36 80,000 X (Other) X Machine Shop & Foundry Wool reclamation X X X 3769 Information not given X X X Projectors,movin pictures Knit Goods X X X X 3912 2259 130,000 7,000 10,000 75,000 28,000 XX X " 3769 X X X X X X " Trim, Interior X X X Leather 3383 2885 X 52,000 50,000 24,000 11,000 75,000 178,000 " " 31 X X X Engines 3151 288 X X 288 X " 3342 Boilers Sloan Tonawanda X X " 336) 371) Repair shop, Railroad X X X 3412 X X X X X Buffalo " Information not given X X X X X X X X XX X X X X X X X X X TABLE 10. (Cont'd) IDLE PLANT INVENTORY YORK STATE IDLE PLANT DATA BY COUNTIES AD :U..ICIPALITIES (Exclusive of Now York City) BUILDING DATA NUMBER PREVIOUS USE Floors LUNICIPALITY Wood Brick Roinf. Steel Conc. Frane Eats Automobiles Dairy Lachinory & Equipment Lachinery, Chemical 4261 3561 War chousing 2811 Paints, etc. 2519 Furniture, household Hardware, n.o.c. 2011 2511 3351 2599 Household is Factory Notalward Heat Packing, Wholesale Furniture Ed-o Tools Candles, wooden #T-Excellent, Ceool X XXX: X X X XIX X R.R. Siding X X X X X X X X X X 63,000 171,600 35,000 X X X X X (Other) X X X . X 7 " X . X " X X X X X X X X X X X X x X X xx X . X X " X X X X X X x X X X X X X X X X X X X X X I I X 41,358 X X 30,150 15,000 13,36c 32,000 44,096 49,000 70,000 78,000 40,25S 300,000 27,604 81,300,000 X " % R.R. X 1,346,285 X X 1,000,000 " Boxes, Paper Inchinery, (n.o.c.) X X . Werehousing 2 Feed, prepared 3359 x X X " 4201 376 Buffalo (Other) On 0 U 11 T " Chemicals, Industrial(n.e.c.) X X Batteries, dry & not, primary Plastic l'aterials 2671 3709 X X ERIL Automobiles 2883 2042 Stantsburg Trucks, Lotor Storage 2389 100,000 25,000 22,400 2,100 X X " 3699 X X . 3811 3811 3811 3751 X . illwork, Lumber TATION LDGS FACILITIES 1.,400 X X X X Boacon Area OTHER CO: n. Farn Tachinery 232 2431 Poughkeepsie 1234A E.C.P.P. . 232 Furniture, Light Floor " 3729 TRA SPOR- Condition 1.0. of Type of Construction DUTCELS S 2511 AI. BUILDING - X S.I.C.C 6 79,636 40,000 3,000 X X I X Figuro indicates 2 TABLE 15. (Cont'd) IDLD PLANT ISSU YORK STATE IDLL PLANT DATA BY COUNLIES AND : 1CIPALITIES (Exclusive of Now York City) TRA SPOR- UNDER ICIPALITY PREVIOUS USE Wood Brick KERKINEL 267) Condition* Type of Construction S.I.C.C. Knit Goods, Boxes Roinf. Steel conc. Frend EIG.F.P. 12346 (Other Leather, tanned Underwear, dresses " 2341) 2331) Emport Carriages Brakes, Air Information not given Watertown CTY 0 X X X 5 X X X " X X " Paper products Certharo 2801) Sammill; wood chemical, Processing Alcohol Clenfield 2511 Curniture Larrillo 3729 3373 3101 Farm Tachimery M Equipment Caledonia Brooders and inculators Livonia Trunks, luggago i.e. orris " Velvos 300,000 X X X X *D-Excellent, G-Sood, -Fair, F-Foor. Siding X X X X X % 22,500 44,250 250,720 35,500 112,728 X X X X X X X X X I X COU X X 4 X Boxes, Paper 370 LLWIS X (Other X 2371 R.R. X X X X 24) X X 2699 R.R 10,400 X X . 3943 3769 On X S achinory, Light X X E 370 X6 X M FACILITIES 15,000 X X 2259) 200 LDGS Area TATION (Continued) Y Little Falls Floor ..O. of Floors OTHER X X (Other) (Other) Corrugated X X Sides X Figure indicates number of floors. 8,336 4,000 10,776 0,000 X X X X X X X X X TABLE lt. (Cont'd) IDLE PLANT INVENTORY NB YORK STAT IDL PLANT DATA 3Y COU RIES AND i.L. ICIPALITI'S (Exclusivo of New York City) BUILDIN DATA - AI. BUILDING Type of Construction Condition* S.I.C.C. NUMBER VICIIAPILITY PREVIOUS USE food Brick Conc. ADISC 3359 3831 251 2431 2259 2091 7699 3749) 2892) EIRIP.P. 12347 Furniture Sash i Blinds Carestota Other) 5 " A Caps, cill: bottle achine Shop X " X Forging, Amountion coufacturing Rochester " 2099 Food proparations, n.o.c. % " Woodworking j'achines X X . 5 Shoos X 200C) l'acaroni, Manufacturing G X (Other ) " Eaching Shops, n.c.c. 15 3769 3769 3769 3362 X " " " " X " Stoves, Cooking X 3751) 2259 Unit Goods 3901 Buttons, l'anufaxturing Packin Mouse, urscry, tree Shocs, ; mafacturing E-Excellent, X 90,000 88,450 X X air, P-Poor. t Figure 200,000 33,000 60,000 122,000 70,000 13,245 5,000 87,982 19,000 20,000 40,000 34,000 X X Stamped Products ursing 314 " " 77731 R.R. Siding X X X % X X % X X X X X 2 100,000 X " 3753 3373 FACILITIES 10 Variod, small general 314 BLDGS 15,600 16,750 12,500 50,000 7,500 8,000 21,200 3,200 Camilton Cazonovia Area Frame " Knit Coods TRA SPORTATION CC X Whools, otal truck OTHER On Dhoida Filleys, wood Traps, stecl Floor R.R. " 2599 Stool Ro3 O. of Floors inlicates er of Clon X X X X X X X X X X X X X X X X X X X X X TABLE 15 (Cont'd) IDLE PIANT INVENTORY NEW YORK STATE IDLE PLANT DATA BY COUNTILS AND MUNICIPALITIES (Exclusive of New York City ) BUILDI NG DATA - MAIN BUILDING MUNICIPALITY Wood|Brick Reinf. Conc. MONROE Food products 204 Flour Mumford Honeoye 314 Shoes Brockport 3981 Brooms Amsterdam 2251) 2259) 2515) Knitting, mill, mattresses X X X Other CO x X X Knitting, mill X X X Knit goods Knit go al s Knit Goods Other) X X (1-5) Other) X X X X X Stone X X Fort Plain " Information not given Silk and reyon Cronesville Textiles Textiles St. Johnsville Fultonville Hagamon X X Other) X X " 2299 x X " 2299 Machine Shop X X " 2262) Textiles Buttons, pearl " 2221) X Carpets Textiles X " 2299 7699 X X X Yorn Storage Warehousing X X X " 4261 On R.R. R.R. Siding X X X X X X X X X X 48,000 24,000 X X X and hosiery " 4261 X " " 3961 5 X " 2299 X X X " 2272 X X X MONTGOMERY FACILITIES X Concrete block x X X X 11,000 14,250 34,600 120,000 16,800 8,400 5,000 18,579 200,000 36,000 27,200 24,000 2,500 27,000 130,000 90,000 X 8 X X X 221 X X X . 2259 2259 2259 2259 X X Stone Paper BLDGS N 20 Concret Hilton 262 32,000 227,215 15,800 2,500 1,500 44,000 X X X TATI ON (Continued) Y X " Floor Area Frame X Information not given Rochester 12347 EIGRIP. I Inform tion not given COU Steel x PREVIOUS USE No. of Floors X NUMBER Condition* Type of Construction S.I.C.C. TRANSPOROTHER X X X X X X X X X X X X X X X X X X X x TABLE 15. (Cont'd) IDLD PLACT Inventory YORK STATE CIPALITIES IDLE FLET DATA in COC ISS AL clusivo of Cow York City) ACA Type of Co struction S.I.C.C. Condition ICIPALITY Wood rich ROME Conc. 2 PREVIOUS USL loor O. of Floors OTHER LDOS Arcc ACILITIES On 4/7 3 TRANSFORTATIC. re c R.R. Red. Siding CC 1753 1-223 3221 Paint Sprcy' Carcentry Information not rivon Lambor distribution usical Instruments Plan Covo lempsteed Roslyn Storage, Cesolino Lumber distribution Corrick Cyster Day New: Ivdc Fk. 2041 Flour Lockport 3703 2007 Dears Icc 3739 Kachino Shop Fiberware, pressed Paper ill Tentiles 2433 4261 2611 2999 2431 2071 3939 Carnod Goods Canned Goods X X A Gesport Cilson X iddloport Purniture, windows, cash and blinds Storaro and Packing also Paints, water, dry Potrolous products, (n.c.o.) Woodwork, interior, X illers Tormanda X W X X X . n 2511 Store (Other) (Other) X X . . 2672 X . Information not riven Nevor used for setufacturing 2672 Stone " 2200 X Z " 2629 7 " X X X 19,200 35,000 13,000 27,113 30,000 52,010 20,000 40,000 33,032 10,000 10,000 44,000 X X X X X X X X X 10,000 11,000 05,000 75,985 24,240 X X X X Candy Instrurants, rusical, other than Picnos X " X " 3311 X 3,750 . 3273 % X NYACARA COUNTY " 5221 X X 100,000 2,000 3,400 X " 4201 X If 3930 12,000 3,000 X Pig Iron Coca, 2-Fair. P-Poor. L Figure indicates medior of Clocks 17,000 X X X TACLE 15. (Cont'd) IDLE PLA I VENTORY HEN YORK STATE IDLL FLA DATA 37 COUNTIES LIU 1CIFALITIES (Exclusive of New Torl. City) S.I.C.C. ILVI : DATA - AI Type of Co struction Condition* it ICITALINY PREVIOUS USE 00 CIAGARA 2071 Candy in are Falls . Ice Cream . X X " Cooks and eves 10,750 2,400 22,079 25,637 - " 3999 Haircloth (Continued) X Toys X X X X X X 3,400 18,206 X X X On R.R. R.R Sidin X . 2241 . 3941) Stampings, Metal TATIC LOCS FACILITIES Frane . 337) Area (Other) . 2024 Floors . Storage, supplies for Service trucks Floor O. of ... rick Roi Steel EGIP. 12347 Conc. 4261 TRA SPOROTHER 0 2254 Underwoor, Chitten, sweators 2051 Bakery Textiles Textiles 3351 Cutlery 68,650 9,000 150,000 15,000 10,000 A X X 5 6 2299 2299 Utice X " Shoots, pillow cases, cotton 233 cloth Silk Clothing 233 Clothing. Lon's " . X X X (Franc) 5 Uniforms, l'en's Krit Goods Soap, Paper Noveltios X n 2041) 2699) 3101) Beds " 2259 X 2299 60,000 20,000 60,000 52,000 17,000 30,000 13,000 30,000 X X X X 60,000 X X X X X Laggaro, Cabinote 252) 382 X 5 * 2511 2312 (Stucco) " 2221 " 2211 X X Autonobile bodies Textiles E-E collent, X 40,000 10,000 X X X TA3LD 15. (Cont'd) IDLE PLANT LIVE TORY NEW YORK STATE IDLE PLAT DATA Y COUNTIES : LLICIPALITIES (Exclusive of Now York City) UID G DATA - AI CUILDING Type of Construction Condition S.I.C.C. COLLEGE PREVIOUS USE :U ICIPALITY food Brick Roid Stool 0D1-A Textiles 2431 Jobbers, mill specialties Utica 12347 EGGP. COC Y X Other) X " X X Other) " 179 Contracting Building Information not given X X X X A . Garage X X - 753 X " 3099 Warehousing Wholesale Couse X X X X 2522) 2509) Desks, beds, woodworling Camden X 2521) Desks and tables 2341 Rayon Underwour 4,000 8,100 18,000 " 2522 X X " 3752) 2511) 3752) 2511) 2273 Rome X x equipment Information not given Handlooms : Furniture Handloons a Furniture X X Coonville X X . X Syracuse Rugs A A " X Coars Z X X X " 2041 12,000 X 0 - c DACA CO Cast SCone 3766 15,000 10,000 X " . 1711) Road Machinery and houting 6 3721) X X X X 6 X X X Soap 3822 Truck bodies 2890 Candles X X E-Excellont, G-Cood, F-Fair, P-roor. X X X X t BLDGS FACILITIES 10,500 10,000 70,000 22,000 20,080 30,000 40,000 12,000 12,000 X X 4261 Area On R.R. R.R Siding (Continued) X X Floor France Conc. . 2209 O. of Floors TRANSPORTATION OTHER X X Figure inicates number of floors. 34,000 74,000 57,000 00,000 10,000 12,000 X X X X X X X X X X X X X X X X X X X X X X X X X IDLE PLANT INVENTORY NEW YORK STATE IDIE PLAN DATA BY COUNTIES & MUNICI PALITIES (Exclusive of New York City) Building Data - Main Building Type of Construction Condition* S.I.C.C. NUMBER MUNICIPALITY PREVIOUS USE Wood Brick Reinf, TRANS POR* No. of Floors 12346 Steel!EIG.FIF 18,300 63,400 38,900 14,000 3,000 37,300 X X X " " X X X " X 4261 DeWitt Steel 3323 2259 3322 Knit Goods Baldwinsville Malleable Iron castings Solvay Information not given Canandaigua X X X X (Other) X X X X X 11 Bleaching X X X X X X X X 3729 Lawn Mowers 10 X X " X " Iron & steel fabrication X X " Clothing X X " 23 X 11 23 Silk Underwear, ladies Clothing X X X " 2341 Boilers Ladies garments X " Suits and overcoats, men's 3399 0 N 2889 2311 CO X X X X X X X X X X X X X X 376 R.R. 4,000 4,000 28,000 7,500 X Siding X X TH X X X X X X X X X X I Ships, steel Woolen goods, mill 2341 X RANGE Newburgh Newburgh X X X 2241 2221 X X X X 3431 336 X X " Corsets Power Plant " 2345 4811 Hollow tile X Garage X 7532 X X FACILITIES On X Warehousing 4261 BLDGS 6 202,300 Syracuse Information not given Area TATION R.R. ONONDAGACOUNTY (Continued) Typewriters OTHER Fisme Conc. 3772 Floor Pumps and condeners 81,600 24,000 30,500 29,100 22,000 19,000 20,000 7,200 9,300 9,000 20,000 4,500 68,000 X X X X X X X X X X X X X *E+Excellent, G-Good, F-Fair, P-Poor, t Figure indicates number of floors 219 TABLE ID. (Cont'd) IDLE PLANT INVENTORY NEW YORK STATE IDLD PLANT DATA Y COUNTILS i LU.ICIPALITIES (Exclusive of New York City) PREVIOUS USE LUNICIPALITY Wood Brick Coats, Ladics Silk . (Concrete Block) " " Warehousing . (Other) X . Nachine Shop Tannory Marchousing Pocket Krives Woolen Cloth Filk, Condensed (forner X X Furniture X idiletown X X X X X New Windsor X X Wallkill X ORLEAN S COU edina (Other) X 2511 Furniture X X X (Other) X x (Stone) Z x X X 2511 X Soil Pipo 2 Fittings (Concrete block) Storage (built for motor bidg.) Lyndonville X " 4261 R.R. Siding 6,250 5,500 14,000 14,200 10,000 8,700 8,662 22,000 15,000 50,000 6,000 110,000 9,000 23,000 58,000 50,000 26,250 22,500 99,869 X X X X X X X X X X X X X X X X X X X X X X X X x X " 3365 R.R. On X " Information not given (Other) X . 2011 X X . 2511 x X X X Harriman Borden Plant) 2511 X X . Cabinets, radio and woodon 2023 X X X " Savs 224 X X 3354 3 X X Garage 2511 3351 X X (Concrete Block " 7532 4261 (Continued) X Shoes " 7690 3759 12347 EIGIFIP. X " n 7532 Area X " 4261 Floors BLDGS FACILITIES X " 314 Frame OTHER . 2221 Conc. Floor X " 2333 Pants, Work Pocketbooks Steel TATION ...O. of X " 3171 Port Jervis Roinf. COUNTY ORANGE 2329 Condition* Type of Construction S.I.C.C. UNDER TRANSPOR- BUILDING SUILDING DATA - LAI x X Dry ouse E-Excollent, G-Good, V-Your, P.TOOR. 1 X X Figure indioctes musber or X X 9,000 17,250 26,000 6,000 X X X X X I X X to 26 TABLE 15. (Cont'd) IDLE PLANT INVENTORY NEW YORK STATE IDLE PLANT DATA 3Y COURTIES 2 LUVICIPALI IIES (Exclusive of New York City) BUILDING DATA - L'AIN BUILDING Type of Construction Condition* S.I.C.C. PREVIOUS USE NUMBER MUSICIPALITY hood Brick Reinf. Stool EIGHTP. Conc. No. of Floors 12347 Woolon fabrics, broad Yarn Oswogo 2433) 315) 239 2262 2254 X X X OSNEGO COUNTY Window Sash, gloves Insulation Board 6 X Ray on Cloth X X X Underwoar, Knitted X E Tobacco Store House X X X Oneonta GO Area BLDGS FACILITIES On COUNTY X X R.R. R.R Sidin X X X X 6,900 27,500 80,000 50,000 12,500 X X 85,000 X X X S 4251 X X Silk 2229) 221 (Stone) . 224) Fulton Albion TRANSPORTATION 10,000 15,000 7,500 X X X " 2511 Lyndonville " 3822 Storage, Packing House Auto Cabs and Sodics Furniture, Wood OTHER Frence ORLEANS COUNTY (Continued) 4201 Floor X X X X X X X X X 8,400 *E-Excellent, F-Fair, G-Good, P-Poor. t Figure indicates number of floors. 221 TABL 15. (Cont'd) IDLE PLANT INVENTORY NEW YORK STATE IDLE PLANT DATA BY COUNTIES & LU ICIPALITIES (Exclusive of New York City) BUILDING DATA - LAI. SHIPING Type of Construction Condition* S.I.C.C. ENDER PREVIOUS USE MUNICIPALITY Wood Brick Reinf. 2322 Collars 2321) Shirts, ladies underwear Collars and shirts 2322 Collars OTHER Floors BLDGS 12346 4,800 30,000 X A X . X X X . Collars and dresses X X . 2322) R.R. Siding X X 14,500 27,000 35,000 10,000 X X X - Collars and shirts On CO X 2322 TATION FACILITIES R.R " 2322 Floor Arca 5 2341) Troy O. of Frane Conc. R E KSSELAER E.G.F.P. Stoel TRANSFOR- X X X X Page X 2321 Shirts Group of buildin X X 5 " 2002 X X " X X 5 X Brushes X " Collars and shirts X 5 X . 398 X5 X 11 Stoves and Furnaces Breweries 2322 5 X " n 2322 3362 Collars, shirts . 2322 X . 2334) X X 3329) Grates, castings X " Uniforms, nurses " 2335 X 3322) X X X X X . 4821 Chericals X X " 289 Genorator Station " 48 X Gas Information not givon 5 X Paper **-Excelle Hoosick Falls x X X x X " 262 Ignition apparatus X X X X X X X 10,700 18,000 43,270 5,000 X (Dry space) (Refrigerated) 36 X 12,500 X X X . 3741) Engines, sachines . 371) 55,100 32,000 206,600 25,000 8,000 40,000 2,500 15,600 42,500 -Good F-Fair. P-Poor. Figure Indicates number of "ford. 35,000 5,040 12,500 X X X X6 6 TA DUE 15. (Cont'd) IDLE PLANT INVENTORY YORK STATL IDLE PLANT DATA JY COURTIES & - ICIPALITIES (Exclusive of Now York City) BUILDING DATA - AT TUILDL.C S.I.C.C. N.C. HIM Condition Type of Construction PREVIOUS USE NUMICIPALITY Food Brick Roinf. Stool Conc. 4261 Warehousing Information not given 2311) 2331) 3329 2262 2699 2221 2571) 2024) 2221 3/31 3329 2629 3751 Brick Stora-c Shirts Storage Coats, shoopaKin, Dresses Platforms, steol Sound Silk, thrown Caskets; Ice X 53,146 6,700 00,000 15,000 33,000 22,500 X X X X X X Houstreat Park Rensselner X X X X . X X x " X cot ROCKLA Stone - ill trpb Navorstrain Gratos, Loconotives Paper ill Grist I'ill X X X x X X X X X x X X Page a X 48 X HED ollow tilo String Valley 20,000 X X n X ST. LAWRENDS COUNTY Corwood X X X 7,817 20,000 4,800 X X X X Ordensburg X X X X " A Osvegatchie Piercofield X X X 3,760 3,000 X X Cream Information not given Silk Cloth Ship Cuilding X 13,800 X X . Cassing Silk R.R. Siding X X E. Morfolz Paper R.R. X . 3259 4261 2321 4261 TATICH FACILITIES On 8,840 X . Paint Shop, Farm Inchines Arca BLDGS X " 2011) 3729) . Vachine Shop MoosioR Falls 1234 Floor (Continued . Colding, baloclite NO. of Floors Frame RDMSSILAER COUNTY 3994 7699 E.G.F.P. TRA SPORS OTHER 42,200 50,000 10,300 35,000 X X X X X x X X X X X X X X X X X X X Hormon 3,600 *3-Excellent, G-Cood, Fair, P-Poor. Figure indicates Number of 223 TABLE 15. (Cont'd) IDLE PLANT INVISITORY NEW YORK STATE IDLE PLANT DATA CY SOURTIES & YU ICIPALITIES (Exclusive of New York city) BUILDING DATA - AI. BUILDINC NUTER ICIPALITY PREVIOUS USE Wood Brick Reinf. Steel E.G.F.P. Conc. ST. LAWRENCE Garage 2221 Silk Mill 2022 Checko, special brands 60 2515 2253) 2254) 207 X X X X X X . SARA + 0G A Sarato Inchinery Mechunicville 5 X X X Other) X Printing, lowspaper Information not -iver X " X (Other) X XX X (Concrete Block) X (other) " X Z " X X X Printing, Newspaper 2299 Textilos 4261 Warehouses and offices " X X " X X " Information not siven " 2751 X X X X X X X 200,000 39,320 36,000 18,200 X X X X X X X X X X 69 X X CC X " . X X X 2751 X A Schonectudy Gas Plant 70,000 X A SCHEECTADY 4021 X CO Victory Hills Kattresses Sweaters and Undorwear Soxos Siding X 17 Toxtiles Power Plant, Electric R.R. n 2200 12,425 10,396 5,000 6,000 42,000 5,000 10,396 X Sill: FACILITIES (Continued) CO X . 3720 Lumber Yard CLDCS On X " 2221 Jakory Laco, Curtain finiding Arca Frama (Concrete Block: X Concrete Glock X Floor TRANSPORTATION R.R X " 249 12346 X " 2051 2292 No. of Floors X (Store) Gouverneur " 7532 Condition Type of Construction S.I.C.C. OTHER 5,000 14,200 6,078 40,300 23,865 7,054 16,617 12,420 11,000 21,079 X X X X X X " Excellent, -Good, F-Fair, P-Poor t Pi ure indicates number of floors. 20 Knd TABLE 15. (Cont'd) IDIE PLANT I LITORY lient YORK STATE CLICIPALITIES IDLE PLANT DACA 3Y DOCITIES (Inclusive of New York City) CHILDING DATA S.I.C.C. UMBER Condition* Type of Cons Struction PREVIOUS USL ICIPALITY Wood Brick Roint Conc. TRA SPOR- BUILDING - Stool E.C.F.P. O. of Floors 12347 Floor OTHER Area OLDOS TATIO FACILITIES On R.R. R.R Siding Francis COU 4223 Warehouse, Distillory 2241 Woolen Goods Waterloo (nover used) Stone and frane " Pumps, (used by Runsey Pump Co.Ltd.) Scheca Falls X 2599 Rulos, woodon Canistic X (Other 2596 5999 Ficture Franc Far 376 2321( 2033) 2212 Tims, eyes, fastoners Information not given Coran cuilding Matorial Information Not Civon 2259 Knit Coods 2322 Ray on Underwear 3351) 3912) Hazors, Films 2431 Wood trin, doors, sash 2331 Dresses Dayport X untir ton orthoort X (Other) ." Sa Harbor X X ( Mor 2331 Information not given 4261 Storago X (Other) Patchogue . X Other) X X X X 57,761 02,650 X X X X X 3781 X X Linichurst Port Jofferson X " 3271 X X X Information not: Fivdr Lado, shirtd; canned fruit 0244 veretables 11,000 X X X X 10,000 7,000 32,000 35,000 7,800 4,300 0,000 0,902 18,000 7,560 4,500 8,000 4,000 50,000 4,800 5,0000 2,560 X X X X X X X X X X X X X X X X X X 2 00 5 TABLE 15. (Cont'd) IDLE PLANT INVENTORY NEW YORK STATE IDLE PLANT DATA Y COUNTIES & 10 ICIPALITIES (Exclusive of Now York City) TRANSPOR- BUILDING DATA - S.I.C.C. NUMBER Type of Construction PREVIOUS USE LUCICIPALITY Brick Roinf. food Conc. SUZFOLX Patchogue X Razors TIOGA Silk, yard 2221 Furniture 2511 Storage 4261 Waverly TOMPKINS Ithaca Warchouse 4251 22213 3432) 6,000 X X X Other) X - 10 X X 5001 X X 23-21 R.R. Siding X Other X X 19.000 42,500 17,000 X X X X X X X X X X 7 X 23,000 16,000 X X X . X X 21,600 X X X X Silk, 3oat Building Trummisburg Power Plant, Electric Refrigoration Plant New Pultz Kingston Noxtiles Shirts R.R. X X 6,514 0,500 X X (Other) X ULSTER 17,000 X X CO 2.300 40,920 X X X (iii) rpc) Z X COUNT WARREL X X 2209 On Page X 48 FACILITIES X 100,000 X X X (Other) (Other) X Woodworking Advertising Displays, oveltics, folded boxes X X X Other) " 3971 LDOS. 3,500 4.000 A X " 2399 X CO X " Warehouse-Wolosale Crocerics (Continued) X Warchouse & Charipagne Factory 4261 TY CCCHT " 4251 Area X Warehouse 2 Stores 4261 12347 TATION OTHER Frame X " 4261 E.G.P.P. Floor No. of Floors X " 3351 Steel COU (Other (Other) X " Information not given 3781 Condition* Warrons Jurg *E-Excellent, C-Cood, -Fair, P-Poor. X X 24,000 17,200 A X X X t Figure indicates number of Floors 225 51 TABLE 15 (Cont'd) IDLE PLANT INVENT ORY NEW YORK STATE IDLE PLANT DATA BY COUNTIES AND MUNICIPALITIES (Exclusive of New York City) TRANS POR- BUIIDING DATA - MAIN BUILDING S.I.C.C. MUNICIPALITY PREVIOUS USE Type of Construction NUMBER Wood 666666 Granville MOR Products 2321 Shirts Machinery,road Knit goods Greenwich Canned, fruits & vegetables Onturio Ctr 2033 1442 Reinf. Steel Conc. Frame WASHINGTON COU 2029 3729 2259 Brick E.G.F.P. X Storage 2431 Mill work Yonkers X 2082 2669 2062 2999 Browery 2g X (other) X X X X (Other) 10,000 10,000 5,250 X X X X X X X X WESTCHESTER COUNT Y X X X 6 X " " X X X X X X X " X X " Repair shop, motor vehicles 4261 Storage 4261 Storago of sugar " Automobiles, assembly " 3441 7511 X " 4261 X X " 2271 Storage Storage Storage Carpets Storage X " 4261 Storage for gas meters " Oil commany tank -storage and X X X X X X X X X X X 6 X 5 X X (Other) X X X #E-Excellent, G-Good, F-Fcir, P-Poor t Figure indicates number of floors X X X 6,400 15,000 6,000 6,000 4,000 24,000 20,000 30,000 15,000 7,500 28,800 X X 10,000 18,000 24,000 8,000 9 180,000 X X " 4261 X " 4261 X (Other) X Sugar office building 4251 X X Bags 8,400 12,000 24,000 15,000 WAYNE COUNT Y " Storage R.R. Siding X X X Area OTHERFACILITIES R.R. On BLDGS NTY X Sc.lem Floor 12347 X 4261 4261 TATION " Ontar io Red Creek Ore grinding X No. of Floors Condition* 5 2 X X X X X X X X X X X TABLE 15. (Cont'd) IDLE PLANT INVENTORY NEW YORK STATE IDLE PLANT DATA JY COUNTIES is :UNICIPALITIES (Exclusive of Now York City) BUILDING DATA - AIR BUILLING MUDER ICIPALITY PREVIOUS USE food 4261 Dairy Warehousing S751 Sottling Plant, Will: 7532 2431 Gara e & Warchouse illwork Tonkers Peokskill White Plains 3631 Dobbs Ferry Mastings 2751 Printing Irvington 3364 2385 3994 2305 Boiler Shop Products 2031) 2332) 2351) 2832) Drugs is Cosmetics 2042 Food Products Warchousing Kankroneck X X X X X X X X X (Tile) X X X X X X X IS X X Ossining X X X X X " X . X X Tarrytown (Other) X X X Area OTHLR TRAESFORTATION ELDGS FACILITISS 16,000 15,000 17,000 5,000 16,000 3,500 5,000 10,000 180,000 87,500 17,000 11,500 5,000 7,013 3,016 On R.R. R.R. Sidin: X Other) X X Figure indicates number o. floors 5,000 7,000 3,000 7,500 4,000 0,400 15,000 16,000 X X X X X X X X X X X X X X X X X X X 5,220 Other X lit. Vernon *E-Excellent, C-Cool, F-Fair, F-Pour Warehousing X X " Printing X X n 2751 4201 Other X 2 X X " Laundry (Continued) . 3781 Y X Z . Rugs T " 2811) 2801) 2273 COU 12346 X Automobile Parts Wire is Cablo Storago Building Paint and Alcohol Frome EIGNIP. X 3822 4261 Conc. X Croton 4201 Steo X New Rochelle Leather Goods Drugs : Cosnetics Reinf HESTCHISIL3 3199 Clothing, rubberized Plastic Products Clothing, rubberizod Brick " Information not ivon 2020 1'o. of Floors Type of Construction Condition* S.I.C.C. Floor X X X X X X X X X 60 5 TABLE 15. (Cont'd) IDLE PLANT IRVL TORY NDW YORK STATE IDLE PLANT DATA BY COUNTIES : I.U. ICIPALITIES (Exclusive of Now York City) BUILDING DATA Type of Construction S.I.C.C. NUMBER LU: ICIPALITY PREVIOUS USE food Brick Roinf. Stool Shoes, Consuits, Electric Shoes Wino Venoer Packages X Penn Yan X COL X X " . Area BLDGS FACILITIES Cn R.R. R.M. Siding X X X X X Y Other) Other) X X X X X X X X X *E-Lxcellent, C-Cood, F-Fair, P-Poor, 18,000 14,400 5,820 Other) X YAT ES X X " 2084 2564 Barn Equipment, Dairy " 314 Attica " 314) 3373) Extracts and Modicines . 3729 Arcado X 233 Knit Goods & Yarn OTHER COU X " 2259 , 2204) EIGHT. 12347 TATION Floor Frane Conc. WYONING TRA SPOR- All GUILDING .O. of Condition* Floors - t x 15,000 4,000 30,000 36,675 Figure indicates number of floors. X X X X X X 230 -55- TABLE 16 IDLE PLANT INVENTORY FIELD QUESTIONIAIRE Date LOCATION City Village Town Street Address County BUILDING DATA Main Building Reinforced Concrete Brick Type of construction: Wood Other Steel Frame Condition: Excellent Fair Good Poor Floor Areas sq.ft. Number of Floors: Number and brief description of other buildings: PREVIOUS USE Products Manufactured: TRANSPORTATION FACILITIES Railroad siding available On railroad line (name) Water frontage with dock facilities On highway route number PRESENT LAND AREA Size of plot (acres) Room for expansion beyond present boundaries OWNERSHIP Owner Street Address Agent City, Village or Town ADDITIONAL INFORMATION Supply all additional information available on separate sheet and attach. Information supplies by: Name Organization Address 231 CONFIDENTIAL FOR YOUR INFORMATION December 9, 1940 To: The Secretary From: Mr. Young Mr. Don Nelson called me on the telephone to ask us to have the British clear all food purchases as well as those items already being cleared. Mr. Nelson explained that there was plenty of food, but that there were certain items of certain packs in which bottlenecks may occur. I asked him if he could give us a list of restricted items on which clearance should be requested, and, while he thought it might be possible, he urged that all food orders of $50,000 or more go through the regular procedure. I pointed out the fact that the initiation of such a procedure might cause difficulties inasmuch as the British Purchasing Commis- sion had very little to do at the present time with the food purchasing program. It was left that I should investigate the matter. If there are any bottlenecks in certain items, perhaps clearance should be obtained. In order to get any food clearances, it would seem that all food purchasing would have to be done through the British Purchasing Commission. It is probably quite possible to work out lists of special items if such a program were instituted. P.4. 232 TREASURY DEPARTMENT INTER-OFFICE COMMUNICATION DATE December 9, 1940 TO Secretary Morgenthau FROM Mr. Haas A During the week ended November 27, 1940, employment under the Work Projects Administration increased by 14,000 over the preceding week to 1,820,000 persons. This represents a 41,000 rise from the 1,779,000 persons reported at the end of October. Attachments 233 WORK PROJECTS ADMINISTRATION Number of Workers Employed - Monthly United States Number of Workers 1938 (In thousands) July August September October November December 1939 January February March April May June July August September October November December 1940 January February March April May June July August September October November 3,053 3,171 3,228 3,346 3,287 3,094 2,986 3,043 2,980 2,751 2,600 2,551 2,200 1,842 1,790 1,902 2,024 2,152 2,266 2,324 2,288 2,092 1,926 1,665 1,701 1,691 1,704 1,779 1,820 Source: Work Projects Administration Monthly figures are weekly figures for the latest week of the month. They include certified and noncertified workers. 234 WORK PROJECTS ADMINISTRATION Number of Workers Employed - Weekly United States Week ending 1940 Number of Workers (In thousands) May 15 May 22 May 29 2,059 2,009 1,970 1,945 1,926 June 5 June 12 June 19 June 26 1,858 1,785 1,714 1,665 July 3 July 10 July 17 July 24 July 31 1,608 1,620 1,659 1,690 1,701 August 7 August 14 August 21 August 28 1,709 1,708 1,698 1,691 September 4 September 11 September 18 September 25 1,690 1,687 1,689 1,704 October 2 October 9 October 16 October 23 October 30 1,747 1,762 1,768 1,776 1,779 November 6 November 13 November 20 November 27 1,783 1,785 1,806 1,820 May 1 May 00 Source: Work Projects Administration 235 WORK PROJECTS ADMINISTRATION Number of Workers Employed United States Weekly W.P.A. Employment Monthly W.P.A. Employment MAR. MAY WILLIONS MILLIONS I 1939 41 1941 940 SEPL NRX JONE - NOT my MM NYA - 2006 or WILLIONS BORKERS WORKERS WORKERS 3.4 3.4 WORKERS 3.3 3.3 3.2 3.2 3.2 3.2 3.1 3.1 2.0 3.0 2.8 3.0 2.9 2.9 2.4 2.8 2.8 2.4 2.7 2.7 2.6 2.0 2.6 2.0 2.5 2.5 . 2.4 2.4 1.6 1.6 2.3 2.3 2.2 2.2 1.2 4 2.1 1.2 2.1 2.0 2.0 .8 1.9 1.9 1.0 1.8 1.7 A 1.7 1.4 1.6 a 0 1. 1.5 JAN. 0 1935 1936 41 MAR. 1.5 MAY JULY 1939 SEPT. NOV. JAN. MAR. MAY JULY 1940 SEPT. NOV. JAN. MAR. 1941 1937 , SOURCE: BORK PROJECTS ADMINISTRATION Z -221 02 Office of the Secretary of the Treasury - Statistics 236 TREASURY DEPARTMENT CONFIDENTIAL INTER-OFFICE COMMUNICATION DATE December 9, 1940 Secretary Morgenthau TO FROM Mr. Haas CA Subject: The Business Situation Week ending December 7, 1940 Summary (1) Basic commodity prices, which had levelled out during the previous two weeks, showed some evidence last week of re- newing their rise. Price increases during the week were most pronounced among wool, shellac, butter and cocoa. Steel scrap prices have risen in nearly all steel districts. (2) Lumber prices continue to rise rapidly. The BLS price index of 44 lumber items has gained fully 25 per cent since early July. Although mill stocks of lumber at the end of October were at the lowest level since at least 1925, there is no acute shortage of lumber except in certain items widely used in defense construction. (3) Present indications point to the possibility of a freight car shortage during the critical crop-moving period next fall, perhaps comparable to that in 1920. While the railroads have been ordering new cars steadily during the past six months, the total number of new cars to be placed in service during the coming year may be not much more than enough to replace the old cars retired in that period. Meanwhile, increased business activity will substantially increase the demand for freight cars, intensifying a shortage that appeared in some areas this fall. (4) Various contemplated increases in steel capacity, which may be completed within the next 12 months, have been announced in recent press reports. However, the total of new capacity contemplated, under construction, and completed since the first of this year would apparently increase total ingot capacity by only 2.5 per cent. This seems too small an increase to meet projected requirements. During the World War, steel capacity was increased 20 per cent in the first two years. (5) The New York Times index in the week ended November 30 dropped 4.8 points, largely to correct statistical distortions in its previous 7.1-point gain. Despite this, the underlying trend of the index continues upward and Barron's index has recorded a further gain. -2 - 237 Prices again turn upward The flattening-out in prices of basic commodities which had been in evidence during the latter half of November was followed last week by some evidence of a renewed upturn among both industrial materials and food products. (See Chart 1.) Prominent among the individual commodities showing increased prices were shellac, wool, cocoa, and butter, while prices of corn and lead showed noticeable declines. Shellac prices continued the sharp rise noted in the previous week, due largely to a growing scarcity of shellac in India of the qualities required by American buyers. Wool prices rose in response to (1) opening of bids on additional Army orders for 13 million yards of wool piece goods, which practically completes the defense buying of wool goods for the current fiscal year, and (2) rumors that Australian imports into this country might be cut off. Wool futures were very active at rising prices. Among the food products, cocoa prices rose sharply last week on prospects that available shipping space from the large West African producing areas will be substantially curtailed. (Scarcity of shipping facilities from Argentina has also recently been a factor in flaxseed prices.) Butter prices have risen more than seasonally, attributed by the Department of Agricultur to increased purchasing power of consumers. Corn prices declined substantially last week, due to heavier receipts of new corn, which is of rather high moisture content, and to indications of a more rapid marketing policy among growers. Lead prices were marked down in two successive reductions last week, attributed in the trade to a growing belief that stocks of lead (including foreign lead held in bond) indicate no prospect of a shortage. Building material prices still rising Wholesale lumber prices (see Chart 2), which have risen fully 25 per cent since early July, are continuing to rise rapidly, according to data from the Bureau of Labor Statistics. A new high since 1923 was reached during the week ended November 30, carrying average prices for 44 lumber items 18 per cent above the 1926 base level. The building materials group index (shown on the chart) has risen 7 per cent since July, almost entirely because of the marked rise in lumber prices, though paint and paint materials, cement, and certain other building materials have advanced slightly. -3- 233 Stocks of lumber at mills (lower section of Chart 2) were noticeably reduced during October, according to month-end figures now available. Total stocks declined 6 per cent from the end of August to the end of October, reducing them to a new low since at least 8.8 far back as 1925. A further decline doubtless occurred during November. Nevertheless, there is no real shortage in total stocks of lumber, according to Department of Commerce lumber speciali CB. The shortage is in certain types of lumber heavily 11. demand for defense construction. Lumber production, previous to the strike in the Pacific Northwest, had begun to respond to the increased demand. While actual output during November was lower than in October, the decline was less than seasonal, and the New York Times adjusted index of lumber production has accordingly risen sharply. (See Chart 3.) In the meantime, new orders for lumber (seasonally adjusted) have fallen off considerably from the previous high levels. (See dotted line on chart.) The strike in the lumber mills and logging camps of the Pacific Northwest has made 12,000 workers idle and threatens a complete tie-up of the Northwest lumber industry, according to press reports. Certain products of this region, notably Douglas fir and hemlock, are among those involved in current shortages. The steel situation Prices for all steel products (except tin plate, on which no change is expected) were reaffirmed last week at unchanged prices for the first quarter of 1940. Costs of certain raw materials for making steel, however, are continuing to advance. Steel scrap prices rose further last week in practically all districts, with a maximum increase of $1 a ton at Birmingham. The closing of navigation on the Great Lakes has shut off the lake shipment of iron ore, and in view of current high operations of blast furnaces, the Iron Age says that "only a very emell amount of ore will be on hand at furnaces and Lake Erie docks when the 1941 navigation season opens next April." Furnace repairs have dropped the steel rate this week to 96.0 per cent of capacity, as compared with 96.9 per cent last week. New orders for steel have shown some indication of tapering off, which trade reports associate with the Thanksgiving holidays. Orders reported by the U. S. Steel Corporation for the week ended November 28 were reduced to 102 per cent of capac- ity, as compared with a recent high of 141 per cent two weeks previously. Japanese buyers last week are reported in the trade to have purchased 30,000 tons of steel ingots, and to be in the market for an additional 15,000 tons of steel bars. 4- 239 Press reports recently have carried stories of capacity expension planned by various steel companies. According to capacity contemplated, plus that under construction or completed in 1940, would amount to an increase in capacity of our calculations, however, the total increase in steel ingot only 2.5 per cent. This seems far too small to meet the projected increase in requirements for defense and civilian needs, plus British buying, over the next year or two. During the World War period, steel ingot capacity was increased 20 per cent in the first two years, and a total of 32 per cent in the four-year period to the end of 1918. Among the current expansion projects contemplated, including those in process or completed this year, the Bethlehem Steel Corporation leads with 970,000 tons of proposed new ingot capacity, followed by the United States Steel Corporation with 500,000 tone. Six other companies account for an estimated total of 440,000 tons. Freight car shortage in prospect next fall Present indications point to the possibility of a freight car shortage next fall, perhaps comparable to the shortage in the fall of 1920, under the increased traffic demands of a record-breaking level of industrial activity. Some shortage of freight cars is already being felt. In the latter part of November the car service division of the Association of American Railroads reported in connection with the supply of large box cars that a great many roads, particularly in the west and southwest, were experiencing difficulty in taking care of their originating traffic and urged increased vigilance by other roads in exoediting the return of 50 foot box cars to their owners. Certain western roads, for example, were cited as requiring large capacity for lumber and other shipments to the east. Various other instances of tight box car supply were also cited. The prospective shortage arises from a continued decline in the number of freight cars, without sufficient provision for new cars to replace those currently being retired and to handle an increased treffic volume next year. The large surplus of freight cars that had characterized the recent depression has been largely wiped out. Although the freight car surplus this year at the beginning of October (almost invariably the peak traffic month) was slightly above year-earlier levels, with that single exception the surplus was at the 240 -5lowest figure since 1923. (See Chart 4, lower section.) Due in part to the rise from depression levels in carloadings (shown in upper section of chart), the number of surplus freight cars has been cut drastically from the high point reached in 1932. In some earlier years, it will be noted, both shortages and surpluses were reported. In addition to the effect of rising traffic, the freight car surplus has also been reduced by an almost uninterrupted decline in the number of freight cars owned by the railroads (see Chart 5), although the decline mentioned has been offset to a small extent by an increase in the number of privately-owned cars. This trend, of course, has resulted from the retirement of old equipment at a faster rate than new cars have been put into service. In 1939, for example, about 50,000 more cars were retired than were installed. On the other hand, the number of cars needed for a given volume of freight has been reduced by increased efficiency and speed in freight handling. Higher carloadings in prospect Looking toward the peak freight movement next October, which will depend largely on the level of industrial activity, it appears likely that freight car loadings in that month may approximate a weekly average of 930,000 cars. (Compare with recent years shown on Chart 5.) This is estimated from the previous relationship between carloadings and the FRB production index, and assumes an average FRB index of 135 in 1941, the approximate consensus of current forecasts. To meet the prospective increase in freight car requirements, the railroads have been ordering new cars steadily over the past several months, but it seems unlikely that the new cars installed will much exceed the number of old cars that will be retired in the next year. In the six months, June through November, 47,900 freight oars were ordered, whereas the number of old cars retired in the last calendar year totalled about 80,000. A relatively moderate purchasing policy is indicated by the fact that the last quarter normally marks the peak of heavy ordering. The tight steel situation, furthermore, will increase delivery difficulties later. If the railroads should put into service before next October as many as 50,000 more new cars than the number re- tired, and continue to operate at the increased freighthandling efficiency of recent years, an expansion of carloadings to 930,000 weekly during the peak month next fall would -6- 241 greatly intensify the tightness in freight cars already felt in some areas, and, according to the analysis outlined above, would probably result in shortages similar to those shown in the reported figures for 1920. New orders rise despite steel decline Due largely to a sharp rise in textile orders, the index gain to a level not far below that of the pre-holiday week. (See Chart 6.) The further decline in new orders for steel of new orders for the week ended November 30 showed a good may have been due in some measure to holiday influences since Pennsylvania was among those states celebrating Thanksgiving last week. The extent to which the lower level of the combined index in the latter part of the month was due to holiday influences may be revealed more clearly when the figures for last week come to hand. Weekly business indexes The New York Times index of business activity for the week ended November 30 reacted sharply from the previous week's record gain of 7.1 points and declined 4.8 to 112.2. As pointed out in last week's memorandum, the index has been distorted largely as a result of inaccurate statistical adjustments for the effects of the Thanksgiving holidays. The trend of the index, nevertheless, continues to indicate a steady expansion in business activity. (See Chart 7.) All components of the index on a seasonally adjusted basis showed sharp declines, except cotton mill activity, which was unchanged, and automobile and steel ingot produc- tion, which declined only moderately. It is interesting to note that actual electric power output in that week reached the highest level on record, while freight carloadings ran above the corresponding week of any previous year since 1929, with the sole exception of 1936. Barron's index of business activity during the week ended November 30, as shown on Chart 7, ran counter to the Times index, rising .6 to 123.5. Apparently as a result of more accurate allowance for holiday influences, it will be noted that Barron's index maintained a relatively steady upward trend in the latter part of November, in contrast with the sharp gyrations of the Times index. -7Preliminary data for the week ended December 7 reveal another increase in steel operations of slightly less than the usual seasonal proportions, and a decline of 4,000 units in automobile production which will cause a drop of over 4 points in the adjusted index of automobile production. 242 o MOVEMENT OF BASIC COMMODIT PRICES AUGUST 1939=100 5 D GENT 2 CLNT 9 PER 23 16 30 JANUARY 28 21 14 11 PER DENT Daily N o A D Weekly Average CLNT 7 PLA PLK 26 19 12 DECEMBER NOVEMBER OCTOBER 4 1940 1939 128 130 128 130 16 RAN INDUSTRIAL 124 125 124 MATERIALS 125 16 RAW INDUSTRIAL MATERIALS 120 120 120 120 115 116 115 116 110 110 A 112 112 105 12 FOODSTUFFS 105 108 12 FOODSTUFFS 108 100 100 LL 2 D N o $ A A . 1939 1940 26 NOVEMBER OCTO 14 21 28 9 95 19 12 30 7 95 23 16 104 " 4 11111 104 JANUARY DECEMBER 1940 e Percentage Change for Individual Commodities, August Low to November 29, and to December 6, 1940 PER 12 FOODSTUFFS CENT PER 16 RAW INDUSTRIAL MATERIALS CENT 40 - HIDES 40 FALLOW BUTTER 35 35 30 MICAT COCOA 30 25 SHELLAC 25 BARLEY STEEL SCRAP. DOM. BUBLAP ROSIN 20 STEERS 20 LEAD ZING 15 SUGAR FLAKSEED PRINT CLOTH 15 COFFEE COTTONSEER OIL COPPER 10 RUBBER STEEL SCRAP. EXP. 10 5 COTTON 5 SILK LASD MOGS 0 TIN CORN -7.6 0 -5 5 Aug. Low Nov.29 Dcc. 6 Nov.29 Dco.6 Aug. Low P 187 Office el the Secretary of the Treasury Division - - Statistics LUMBER AND BUILDING MATERIAL PRICES AND LUMBER a TOCKS 1937 1938 1941 1940 1939 PER PER Wholesale Prices CENT CENT 1926 - 100, B.L.S. 116 116 112 112 108 106 104 104 100 100 LUMBER 96 96 92 92 BUILDING MATERIALS 88 88 84 $ I M J N S J M N s S 1939 1938 M J M J 1937 J 1940 J M N M N 84 1941 BILL IONS BILLIONS OF OF BOARD FEET Lumber Stocks at Mills BOARD FEET 11 11 10 10 9 9 TOTAL 8 8 HARDWOODS 7 7 6 6 5 5 4 4 Sof TWOODS 3 3 2 2 1 1 0 M M J N 0 5 1940 J 1939 $ J 1938 N 1937 20 1941 4 Office of the Secretary of the Treasury Divided of Research - States P 203 255 LUMBER PRODUCTION AND NEW ORDERS CST. NORMAL = 100° MAY MAR. JAN JANA NOV, SEPT JULY MAR, PER MAY <<<<<<<<<<<< 1940 1939 1 938 1937 APPL JULY MYYANITIPER CENT CENT 130 130 Weekly 120 120 110 110 100 100 LUMBER, New ORDERS LUMBER PRODUCTION N.Y. TIMES 90 90 80 80 70 W 70 60 60 50 50 40 40 30 30 20 20 JAN. MAR. MAY JULY 1937 ---- Office at the Secretary of the Treasury SEPT. NOV. JAN. MAR. MAY JULY STPT. NOV. JAN. 1938 BAR. MAY JULY 939 SEPT. NOV. JAN. MAR. MAY JULY 940 SEPT. NOV. "ADJUSTED c 363 OCTOBER FREIGHT CARLOADINGS FREIGHT CAR SURPLUS AND SHORTAGE. 1918 1940 1926 1924 1922 1920 1918 1928 1930 1934 1932 1936 1938 1940 CARS CARS THOUSANDS THOUSANDS Freight Carloadings, WEEKLY AVERAGES 1200 1200 1100 1100 1000 1000 900 900 800 800 700 700 600 600 500 500 1918 1922 1920 1924 1928 1926 1930 1932 1934 1936 1938 1940 CARS CARS THOUSANDS THOUSANDS . Freight Car Surplus and Shortage 600 600 500 500 400 400 300 300 200 200 100 100 0 0 100 100 20 4 11 200 1924 1922 1920 . 1918 Treasury 1926 1928 200 1930 1932 1934 1936 1938 1940 AS REPORTED FOR THE PERIOD NEAREST THE FIRST OF THE MONTH c 300 FREIGHT CARS OWNED BY CLASS I RAILROADS AND FREIGHT CARLOADINGS. 1924 - 1940 1924 1926 1928 1930 1932 1934 1936 1938 1940 CARS CARS MILLIONS MILLIONS (LOADED) (OWNED) 1000 2350 900 2200 CARS OWNED. MONTHLY AVERAGE 800 2050 700 1900 or CARLOADINGS, WEEKLY AVERAGE 600 1750 EST 500 1600 400 1450 1924 1926 1928 1930 1932 1934 1936 1938 1940 5 Office of the Secretary of the Treasury Dividen of - and Studios c 367 INDICES OF NEW ORDERS Combined Index of New Orders and Selected Components PERCENTAGE POINTS 210 200 20% 190 190 180 160 170 170 160 160 150 150 140 140 130 130 Total (combined Index) 1936 100 120 120 110 110 100 100 90 90 V 60 60 70 70 60 60 Total excluding Steel and Textiles 50 40 Steel Orders 30 20 10 Textile Orders 0 $ 1938 Secretary the Treasury - States 1940 I -85-C as BU Weekly JULY SEPT. 1941 1940 1939 NOV. JAN. MAR. MAY JULY NOV SEPT. JAN. MAR. MAY PERCENT PERCENT (N. Y. (BARRON'S) TIMES, 118 140 112 130 N. Y. TIMES EST. NORMAL 100 106 120 100 110 BARRON'S INDEX 1923-25 100 94 100 88 90 80 IIIIIIII JULY 82 SEPT. 1939 NOV. JAN. MAR. MAY JULY 1940 SEPT. NOV. JAN. MAR MAY 1941 ADJUSTED FOR SEASONAL, NOT FOR TREND Office of the Secretary of the Treasury Dividen different and Statistics c 305 1 250 December 9, 1940 Dear Mr. Palmers On behalf of the Secretary of the Treasury, may I thank you for your note of December 5th, on- closing a copy of the letter which has been forwarded by the Secretary of Var to Sir Walter Layton. Sincerely yours, (Signed) Philip Young Philip Young Assistant to the Secretary Mr. Arthur E. Palmer, Jr., Special Assistant to the Secretary of War, Var Department, Washington, D. C. PY:bj WAR DEPARTMENT 251 WASHINGTON December 5, 1940. Dear Mr. Secretary: I enclose herewith for your confidential use a copy of the letter which has been delivered to Sir Walter Layton. Sincerely yours, authen Palmer ARTHUR E. PALMER, Jr., Special Assistant to the Secretary of War. Honorable Henry Morgenthau, Jr., Secretary of the Treasury, Treasury Department, Washington, D. C. 852 WAR DEPARTMENT WASHINGTON November 29, 1940. Sir Walter In answer to your letter of November 14 I am glad say that I have, since our discussion on November 15, been to obtain information upon the basis of which it appears oticable for you to obtain in this country equipment of ican standard types for the 10 Divisions which you have in subject to the conditions set forth below. I am sure you appreciate that it is impossible to give tment as to dates of delivery and that, as I have previously stated, conditions at the time of delivery must control our final action. Also, as you know, it will be necessary to finally resolve a number of legal questions that can only be definitively stated as they arise in the course of working out details of the program. Though preliminary research on these problems is encouraging, it, nevertheless, may develop that some enabling legislation may be advisable or even necessary. I should likewise say that the estimate of the situation which I have made is based in large part on the somewhat incomplete list of items for equipment and maintenance of your 10 Divisions (excluding the "Program A" items) which is attached to your letter of November 14. On this basis it appears probable that sufficient equip ment for your training cadres may be ready by September 15, 1941, further deliveries on most items may be ready by December 31, 1941, and final equipment, including 6 months' maintenance for a force of 10 Divisions may be delivered by April 30, 1942. This does not mean that it will be possible to make such delivery of all of the Items which you may wish to have, and it is fairly certain that delivery will be impossible in whole or in part on items such as height finders, 155 mm. guns, 8" howitzers and ammition therefor, and 37 mm. and 90 mm. antiaircraft guns. In such instances, how- ever, it may be possible to find some substitute or for you to find Bomo other method of perfecting your plans. As to ammunition, the situation is not as clear, but it appears probable that some train- ing ammunition should be available by the end of 1941 if additional new productive facilities can be made effective prior to that date. I can not, of course, give you any assurance that there will be no necessity for initial capital expenditures since these matters are not a matter for the War Department, and must be determined with the appropriate department or departments of the Govern- ment. In this connection, however, it seems appropriate that in the -2- event that orders for equipment desired by you are placed in manufacturing facilities which have been financed in whole or part by the War Department, such orders should bear a proportionate part of the amortization of such financing, presumably on a 5-year amortization basis. The conditions to which I have referred are as follows: 1. That your orders for the 10 Division program be placed promptly in order to initiate at once the production of the items involved and to increase the productive capacity in this country for such items. 2. That such orders shall be placed with the approval of the appropriate supply branches of the War Department and in such a manner as to result in the creation of additional productive capacity to the extent and in the instances designated by such supply branch. 3. That you also take steps to provide such auxiliary or complementary facilities as the need therefor is indicated by the appropriate supply branch, such, for example, as proving grounds for testing materials. This Department will be glad to cooperate as far as poss- ible to assist in matters of inspection and in progressing your orders, and I feel confident that the Defense Commission will likewise cooperate fully to assist in meeting your program. In order to expedite the placing of your orders I strongly recommend that you make arrangements with the British Purchasing Commission to make available to each supply branch of the War Depart- ment a representative of the British Purchasing Commission with authority to take prompt action in undertaking commitments for contracts. I also believe it is essential that this Department and the Defense Commission be supplied as soon as possible with a list of all items now on order and those proposed to be ordered to complete the 10 Division program, as well as any other orders which are in contempla- tion, since without this information it is virtually impossible to make accurate plans. I understand that steps to this end have been initiated through the President's Liaison Committee, and I trust it will be continued and completed as expeditiously as possible. While it is always possible that some unforeseen occurrence may impede the progress of your 10 Division progrem, we will do our best to make possible its timely completion. Since, however, this will -3- require a considerable readjustment in our own plans, and since it is absolutely essential that our forces be given their minimum initial training equipment before deliveries can be undertaken on your 10 Division program, it is improbable that any deliveries can be made on your 10 Division program prior to September 1, 1941. Also, it will be necessary that our full program and your 10 Divi- sion program be given_preference in the event of any conflict with your "A" Program or any other items which you presently have or may place on order. Moreover, it will be essential, when the time comes for delivery of equipment to you, that as a result of the orders which you now propose to place there shall be in sight the production for early delivery of sufficient quantities of equipment to give assurance that the balance of our program will not be seriously delayed. In fact, it is only on the basis of substantially increased production and production capacity for our types of equipment as a result of your orders that the necessary changes in our program can be contemplated. I am glad also to confirm our understanding with respect to your "A" Program which has been under previous discussion and which is covered to some extent in your letter. In connection with this it is my understanding that except for the 2-pounder guns and the .303 rifles, which are British type equipment, and the 4.5" gun, the 5.5" howitzer, and the 6-pounder anti-tank gun, which have not been adopted by this country, all of your orders in this country will henceforth be only for American type equipment, unless, in special circumstances, a proposed exception shall appear advisable to us. In connection with the 2-pounder guns and the .303 rifles I understand you will require no ammunition from this country other than that already on order or that may be ordered to continue in operation present ammunition sources which you are now using. I also understand that only 1,000 2-pounder anti-tank guns will be ordered, the balance to be of 37 mm. U. S. type; that as to the 2,250 2-pounder tank guns, for use in British made tanks, only the tubes and breech mechanisms will be ordered; and that only 1,000 of the 6-pounder anti-tank guns will be ordered. The machine guns and automatic rifles mentioned in connec- tion with the 10 Division program, in your letter, are, of course, to be standard United States equipment, in conformance with the rest of that program. It also seems advisable to ask that there be included in all contracts made by you a provision to the effect that the United States may take over the deliveries under your contracts or may take precedence over deliveries under your contracts at any time if such action is deemed by us to be necessary for the defense of the United States. Such a right is implicit in the present arrangements and should be made explicit in the relationship between you and the contractors. I am sorry that there must be conditions attached to nations discussed herein, but I know that you understand the therefor and appreciate that while they must be made clear do not qualify my desire to give you every possible assistVery sincerely yours, Hinny L Thusia Secretary of War. Mr Walter Layton, itish Purchasing Commission, 111ard Hotel, ashington, D. C. 256 The fact that Boston Edison sells at a better rate than New York City is partially attributable to the fact that the Boston Edison bond is considered a higher grade issue than New York City according to rating manuals. 257 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE December 10, 1940 Secretary Morgenthau W. H. Hadley The $53 million 2-3/4% first mor tgage bonds offered by Boston Edison on December 4 are now quoted at approximately 104, which gives a yield of 2.55% This is the lowest rate on a high grade, taxable corporate issue with such a long maturity. The $55 million offering on December 5 of New York City 2-3/4% serial bonds running to 1970 show yields ranging up to approximately 2.75% Although these bonds are exempt from taxation, they show a higher rate than the Boston Edison issue (2.75% as compared with 2.55%). The New York City bonds range from about $2 1/4 million per year down to $1 1/4 million per year for the longest maturities whereas the Boston Edison issue has a single maturity date for the entire $53 million and yet shows a substantially better price in spite of the taxation. THE EMPORIA GAZETTE 258 W. A. WHITE EDITOR AND OWNER W.L. WHITE PUBLISHER EMPORIA. KANSAS December 9, 1940. Dear Mr. Morganthau: You can never know how happy I was to be with you and your family at luncheon week before last. Quite apart from the talk of official matters, I enjoyed the lovely friendly family atmosphere of your home and your table, and Incidentally I bragged to Mrs. White about what a swell luncheon it was. If you will allow me to put a line or two about official matters in this note, let me say that I think that that freezing process would do more different kinds of necessary things than any other one gadget in the diplomatic box, and I earnestly hope that you will push the matter to its conclusion. Remember me, please, with warm greetings for a Merry Christmas to your dear family. How blessed you are! With all the Season's good wishes, I am Most cordially yours Hon. Henry Morganthau, Jr., Secretary of the Treasury, Washington, D.C. WAW/MY. WAlwhite 259 CONFIDENTIAL December 9, 1940 To: The Secretary From: Mr. Young Re: Planes for Greece I called General Brett this morning to find out if the Ver Department had received any instructions with respect to making available P-40 planes for Greece. General Brett replied that he had talked with General Marshall and that the Yar Department had received no instructions and knew nothing about it. I then called Mr. Berle who informed me that the President had given the State Department peremptory instructions that thirty P-40 planes should be made available, but that the President had not said from what source. The President issued these instructions because the British told the Greeks that the British deliveries of P-10's could not be deferred. There are four courses of action which can be followed: (1) take the P-40's away from the Air Corps: (2) persuede the British to release the P-40's: (3) get some P-40's from the Air Corps and some from the British: (4) use legal priorities to divert British production to the Greeks. General Brett advised me that he has no P-40's fit for combat purposes. I am now attempting to find out just what that means. Mr. Berle feels strongly that the P-40's should come out of British deliveries, and he gives me the implica- is tion that that was the President's idea. My own feeling time. that the British should release the planes a few at a I call this to your attention immediately as it has to do with British aircraft deliveries. D.4. 260 December 9, 1940 This is what the Secretary wrote out before his press conference at four o' clock today. Imude, the w attains A de of the tax free money and hut it to work. We don't want any stacker money in this country. If we continue to issue tax free securities B us we the our the a dd timal burden of paying for national defense an the labour and farmer and consumer. 6 262 FINANCE FARM INSURANCE FEDERAL LOAN AGENCY WASHINGTON JESSE H JONES ADMINISTRATOR December 9, 1940 Dear Mr. Secretary: In reply to your question yesterday 88 to whether or not I, as Federal Loan Administrator, would cooperate with you as regards issuing government-guaranteed obligations, the income to be subject to taxation, beg to advise that if it becomes the policy of the Administration to sell only government and government-guaranteed obligations, the income to be subject to taxation, I will be glad to cooperate in connection with the agencies under my supervision. The Directors of the RFC and probably the HOLC will undoubtedly expect that only short-time obligations be sold, not longer than five-year maturities. This would serve to insure a none too high interest rate. Sincerely yours, Administrator January Jones Honorable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D. C. there copies furnishes to pain approved Acc. 9, 1940 Fil 263 12/9/40 July 2nd, 1940. My dear Prime Minister, By letters of the 29th November 1939, and December 2nd, 1939, I was asked by the British and French Prime Ministers to accept the post of Chairman of the Anglo-French Co-ordinating Committee, which had for its purpose the co-ordination of the economic war effort of France and Great Britain as well as the direction of the Allied Supply Organization in America. In view of the recent events in France, it is obvious that it is no longer possible for the Anglo-French Co-ordinating Committee and the Allied Organization, both here and in the U.S.A., to remain in existence and I have therefore no alternative but to place my resignation in your hands. I have hitherto acted in an Allied capacity, serving the two countries equally. In present conditions I am deeply convinced that not only the future of this country but the liberation of France depend upon the successful prosecution of the war by Great Britain. I wish you to know, therefore, that I should be extremely happy if the British Government would give me the opportunity of serving it and, in doing so, of continuing to serve the true interests of my country. I therefore place my services at the disposal of the British Government in such capacity as they can be most useful. Yours sincerely, J. Mennet The Rt. Hon. Winston Chrchill Prime Minister 264 COPY 10, Downing Street, PRIME MINISTER Whitehall July 16, 1940 Dear Monsieur Monnet, I accept your resignation as Chairman of the Anglo-French Co-ordinating Committee, which you placed in my hands in your letter of July 2. I am glad to note your desire to serve the British Government and thus the true interests of your own country. T have been in consultation with the Minister Without Portfolio about how to give full scope to your qualities and knowledge. We both of us think that it would be best for you to proceed to the United States of America and there continue, in association with the head of the British Purchasing Commission, those services in connection with supplies from North America which have been so valuable to us during the time when ou were Chairman of the Anglo-French Co-ordinating CommIttee. Yours faithfully, /s/ Winston Churchill 265 COPY Offices of the War Cabinet, Richmond Terrace, Whitehall, S.W.1. 17th July, 1940. Dear Monsieur Monnet, You will have received the Prime Minister's letter of yeaterday in which he accepts your offer of services and asks you to proceed to the U.S.A. to work in association with the head of the British Purchasing Commission in New York. The Prime Minister has asked me to make the necessary arrangements with you. I think that it will be convenient to postpone any settlement of the precise terms of your appointment, including your title and functions, until you have had a personal consultation with Mr. Purvis and he is able, after such a consultation, to cable us a proposal acceptable both to him and yourself. It would, I think, be well for you to make arrangements to proceed to the U.S.A. as soon as is convenient to you, and I will take the necessary steps to see that facilities are afforded to you for your passage. In addition to your more permanent services, hich will be defined after your arrival in New York, I should be glad if you would place at the disposal of Mr. Purvis the information which you have acquired during your tenure of office as Chairman of the Anglo-French Co-ordinating Committee, as to the requirements in broad outline of the Supply Departments here, and the lines upon which they wish to see the North American programme developed, so that he may have an adequate background to the current communications which are sent to him. I have already expressed the British Government's sense of its great debt to you in respect to your past services. I am confident that the same qualities which have enabled you to render these services to France and England in your former office will also enable you to make in your new position an equally valuable contribution to the task of securing the utmost possible utilisation of the resources of North America for our war effort; upon which our success may well depend. And I am confident that the co-operation between yourself and the head of the British Purchasing Commission will be close and cordial. Yours sincerely, /s/ Arthur Greenwood 265 COPY Offices of the War Cabinet, Richmond Terrace, Whitehall, s.w.l. 17th July, 1940. Dear Monsieur Monnet, You will have received the Prime Minister's letter of yesterday in which he accepts your offer of services and asks you to proceed to the U.S.A. to work in association with the head of the British Purchasing Commission in New York. The Prime Minister has asked me to make the necessary arrangements with you. I think that it will be convenient to postpone any settlement of the precise terms of your appointment, including your title and functions, until you have had a personal consultation with Mr. Purvis and he is able, after such 8 consultation, to cable us a proposal acceptable both to him end yourself. It would, I think, be well for you to make arrangements to proceed to the U.S.A. as soon as is convenient to you, and I will take the necessary steps to see that facilities are afforded to you for your passage. In addition to your more permanent services, hich will be defined after your arrival in New York, I should be glad if you would place at the disposal of Mr. Purvis the information which you have acquired during your tenure of office as Chairman of the Anglo-French Co-ordinating Committee, as to the requirements in broad outline of the Supply Departments here, and the lines upon which they wish to see the North American programme developed, so that he may have an adequate background to the current communications which are sent to him. I have already expressed the British Government's sense of its great debt to you in respect to your past services. I am confident that the same qualities which have enabled you to render these services to France and England in your former office will also enable you to make in your new position an equally valuable contribution to the task of securing the utmost possible utilisation of the resources of North America for our war effort; upon which our success may well depend. And I am confident that the co-operation between yourself and the head of the British Purchasing Commission will be close and cordial. Yours sincerely, /s/ Arthur Greanwood 266 December 9, 1940 12-9-40 FROM: MR. GASTON'S OFFICE TO: Mrs Renty Mr. Leftingenel is a fine red man , but I see no reason m getting him m The work you mention The mugan connection is had from a mublic relations standhrint Sr is the idea That we have to get am old man who handled Limity hinds in the last was me can get nune people. I vote "no". yes 267 FOR YOUR INFORMATION CONFIDENTIAL December 9, 1940 To: The Secretary From: Mr. Young Re: Netherlands Purchasing Commission Attached herewith is an official letter to you from Mr. E. C. Zimmerman, Vice Chairman of the Netherlands Purchasing Commission. The Netherlands Purchasing Commission is the new organization established as a result of a joint request made by the Limison Committee and the State Depart- ment that the three Netherlands purchasing missions already established be coordinated with each other, with the Royal Netherland Legation, and with several commercial Dutch export firms. When this new purchasing commission was established a short time ago, it was planned to have an American member who would be a United States citizen. With this in mind, the Standard 011 Company was approached and invited to have an officer become a member of this commission. The Standard 011 Company, however, thought it wiser to suggest someone else outside of that particular organization for the job. As a result, Mr. James Herbert Case, formerly of the Federal Reserve Bank in New York, was approached and accepted the position. For your information, I might add that Mr. Case is the father of my brother-in-law and that I have known the Case family for years. The appointment of Mr. Case will make our job easier at present because of the personal relationship, and in the future he could be of some value if Netherlands payments were to be set up on a basis similar to that estab- lished for the British. P4. CABLE ADDRESS: HOLPURCOM NEW YORK CINCLE 5-4691 268 NETHERLANDS PURCHASING COMMISSION 10 ROCKEFELLER PLAZA NEW YORK, N. Y. REFER EXECUTIVE COMMITTEE TO: December 2, 1940 The Honorable Henry Morgenthau, Jr., Secretary of the Treasury Washington, D. C. My dear Mr. Secretary: It is my privilege to address this communication to you in order that you may become acquainted with recent steps taken by the Government of the Kingdom of the Netherlands to coordinate the activities of representatives in its service who have been engaged in the United States in the purchase of supplies and materials necessary for the defense of our realm. Heretofore this work has been undertaken by the following separate organizations: Royal Netherlands Arsenal, Royal Netherlands Indies Ordnance Commission, Royal Nether- lands Navy Purchasing Commission and Civil Marine Service of the Netherlands Indian Government. In the belief that purchases of such supplies and materials may more smoothly and efficiently be effected through a central organization, there has been created the Netherlands Purchasing Commission to continue the activities of the earlier organizations. ALL CORRESPONDENCE STRICTLY CONFIDENTIAL / 269 The Honorable Henry Morgenthau, Jr. . Page #2 December 2, 1940 It is the earnest desire of this Commission that its purposes be accomplished in complete cooperation and harmony with your Government and with the British Government. The essential nature of our task makes it imperative that this be done; and I feel confident that the organization of our Commission is not an inconsiderable step in this direction. Sincerely yours, Unimmeracy E. C. Zimmerman Vice Chairman 270 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE December 9. 1940 Mr. Cochran TO FROM Mr. Hawkey Subject: Gold shipped here by and for account of the Bank of Portugal. More than $70 million in gold has arrived here from Portugal since the beginning of July, 1940. shipped by and for account of the Bank of Portugal. Since all of the gold was earmarked upon arrival in New York, that Bank's gold balance here rose from $30.1 million as of July 3 to $109.8 million at the close of December 5. (About $6.0 million of this increase resulted from the purchase of gold from the U. S. Stabilization Fund.) On October 10, I wrote you a memorandum in which comparison WAS made between the Bank's gold in New York and the asset item "Encaisse-or" (gold coin and bullion) on the Bank's own weekly statement. At that time, the most recent statement available WB 8 dated August 21, and it could not be asserted definitely that the Bank's gold in New York was of a greater value than its "Encaisse-or". We have now received the Bank's statement as of October 2, listing an "Encaisseor of $69.1 million. On the same date, its gold balance in New York amounted to $70.5 million and since October 2, the Bank of Portugal has shipped another $33.3 million in gold to New York. (All of this has arrived; there is no gold in transit at present.) We have no "Encaisse-or" figure available for dates subsequent to October 2, but since this item has moved upward less than $2.0 million in the past six years, it is very likely that little or no change has taken place since early October. The foregoing information is tabulated below (in millions of dollars): Period1940 Imports for account of Gold balance here (At end of each period) Bk. of Port. 1 $30.1 (July 3) July 1; 31 Aug. 1 Sept. 4 Sept. 5- Oct. 2 Oct. 3 31 Nov. 1 - Dec. 5 $ 7.1 16.7 15.2 21.1 12.2 "Encaisseor" 3/ 37.8 55.3 70.5 97.6 109.8 2, $68.8 (July 3) 68.9 68.9 69.1 (69.1) Carried (69.1) Forward 1 All from Portugal, except $1.4 million from England in July. -2- 271 2/ During the Bank of Portugal also purchased $6.0 million in gold from theOctober, U. S. Fund. 3/ According to 1931 law, the Bank values its gold at .066567 fine grams per escudo: conversion of escudo value into dollars hence made at the rate of $.0748 per escudo. The apparent conclusion is that the Bank of Portugal has sent to the United States at least $33.3 million of gold not shown in its "Encaisse-or". Since only $14.6 million of Bank of Portugal gold arrived here during the first half of 1940 (of which $2.1 million came from Portugal and about $12.5 million from England), it say be further concluded that most of the "extra" gold was shipped in the past five months. This "extra" gold may be any of the following: 1) The Bank of Portugal's own gold. In addition to the gold listed under "Encaisse-or", there is reason to believe that the Bank carries some gold in its asset item "Disponibilites-or a l'etranger et autres reserves" (liquid gold exchange assets abroad and other reserves). Here is some evidence: in the week ended March 20, 1940, the Bank purchased slightly less than $5.0 million in gold from the U. S. Fund in order to strengthen its gold reserves. In that week, its "Encaisse-or" changed not even a fraction of one escudo. "Disponibilites, etc.", however, rose $4.9 million (using the rate of $.0748) About a year ago, the largest amount of gold that could have been included under "Disponibilites, etc". was $22.0 million. In the Bank's statement for December 30. 1939. this item was valued at 536.3 million escudos. Examination of the Bank's annual report for 1939 reveals that 242.2 million escudos of the above represented the Bank's holdings of the Government of Portugal's 3% sterling obligations. Therefore, the maximum amount of gold that could have been included under this item was 294.1 million escudos worth, or $22.0 million. (The Bank's holdings of dollars were negligible at that time.) 2) Gold held by the Portuguese Treasury. The Federal Reserve Bulletin, in its table "Gold Reserves of Central Banks and Governments", uses only the Bank's "Encaisee-or" figure, converted at $.0748. But the Portuguese Bank's annual report for 1939 shows a table of the Treasury's liquid assets at the end of November, 1939. wherein appeared 430.2 million escudos worth of gold in bars, equivalent to $32.2 million. For all we know, the Bank of Portugal may have exchanged its holdings of Portuguese Government sterling bonds for/gold, Treasury shipping the latter to New York. *The dollar funds used in this purchase were remitted to the Federal by various banks in New York, Indication that the Bank of Portugal acquired such dollars during that same week is given in the Bank's statements, wherein Portuguese bank deposits at the Bank of Portugal rose 100 million escudos, or slightly more than $4 million. 272 3) Gold of some foreign bank OF government, in the shipment and earmarking of which the Bank of Portugal acted really as intermediary. Unless we receive further evidence that a third party's interest was involved, it would seem inadvisable to question the Bank of Portugal for what appear to be shipments of "extra" gold. The information presented under the preceding two points suggests that Portugal does own gold beyond that shown in the "Encaisse-or" asset item of the Portuguese Bank statement. Regarding the markings on gold bars already shipped here, from Portugal, I think you will agree that these cannot be offered as proof of owner- ship, since many Continental assay marks constitute good delivery in Europe's gold markets. ftt 273 FOR YOUR INFORMATION CONFIDENTIAL December 9, 1940 To: The Secretary From: Mr. Young Re: Air Commodore Slessor Air Commodore Slessor has advised me that he is going on e trip through various aircraft plants with Colonel Spaatz Monday through Thursday of this week, but that he will be available in Washington Friday and Saturday in case you want him. He has also advised me that he is trying to get information from England on the performance of the P-40. I also gather that Slessor, plus the Air Commission, is trying to get a complete Typhoon airplane over here for inspection. Ry 274 December 9, 1940 My dear Mr. President: I am sending you herewith some notes by Air Commodore Slessor, who is in charge of the planning section in the Ministry of Air for Great Britain. I thought that his criticisms of our air production program were so interesting that you would be glad to read them. Yours sincerely, (Signed) Jr. The President, The White House. Enclosure original officer mimo sent to the Pres. - photostat in diary By Messenger 275 December 9, 1940 My dear Mr. President: I am sending you herewith some notes by Air Commodore Slessor, who is in charge of the planning section in the Ministry of Air for Great Britain. I thought that his criticisms of our air production program were so interesting that you would be glad to read them. Yours sincerely, (Signed) H. Morgrathan, Jr. The President, The White House. Enclosure By Messenger original the Pres. sent with to letter 21319/40 MOST SECRET THE U. 8. AIR PRODUCTION PROGRANME - 276 NOTE BY AIR COMMODORE SLESSOR The following note conveys my impressions of the main problems 1. in connection with the programme of production in the United States, arising from a very brief visit to this country. There appear to me to be two main directions in which the programme of aircraft production in the U. S. A. falls short of requirements of modern varfare, from the point of view both of Great Britain and the United States - namely, in the fighting efficiency of the aircraft due for production and is their numbers. It must be remembered that the contribution of U. S. industry to the air war will not make itself felt to a really important degree until the second half of 1941 and early 1942. Lighting Quality The bombers now being produced in U. S. A., while they have good 2. speed and range and a fair bomb load, do not incorporate the important lessons that the R. A. F. have learnt from the fighting of last summer. notably in the direction of defensive arnament. The types coming on to production early in 1941, such as the Consolidated 3.24 and Martin B.26 show a marked improvement in this direction. And, although no U. S. bomber at present in eight compares for fighting efficiency with our own heavy bombers now in production - such as the Halifax and Stirling - the American bembers will be quite adequate for night operations and will constitute a most valuable contribution when they appear in any substantial numbers, though we should have liked a considerably larger proportion of the heavy four-engined types. 3. As regards fighters. however, it is difficult to avoid the conclusion that United States types that will be available in any numbers by the - of 1942 are for the most part unlikely to be of sufficiently high fighting quality to meet really effectively the requirements of the air 2 277 var by that date. If there is one lesson which sticks out more than others from the lessons of last summer. it is the enormous importance of fire-power in the fighter. It is hardly too much to say that it was the 8-gun fighter that saved England in August and September That is not to say that it was only the 8 guns which did the trick. It was also (apart from the fighting value and training of the crews) the superior performance and quality of the British types - Hurricanes and Soitfires. We must keep that superiority - we cannot afford inferior quality aircraft AS well as inferior numbers. Any production man knows that to introduce A new type into existing capacity means a terrible drop in production of the existing types before the new one comes in in any numbers. The enemy has now at his disposal the potential - the floor space, machine tools and raw materials - of all the conourred territories, notably of France; and always in the background is the possibility of the Germans, with their drive and efficiency developing the vast potential of Russia. 4. It is, therefore. of great importance that at least those U. S. fighter types for which new capacity is to be created in this country should be a really substantial advance on British types now in production and At least equal in fighting quality to the new British type, the Typhoon. now going into production to the U. K. I do not claim to be A technical expert. but I do not feel that they do come up to this standard. For instance the Curtiss 87, which starts coming in in substantial numbers in the spring. may attain about the same speed AS the Spitfire II: (on order - actually it probably won't be as fast. but it only counts four .50 machine guns .. against the eight .303 of the Spitfire III. The firm say that, with the best will in the world, they cannot promise to install six guns till the 151st aeroplane; this say Bean that we shall still have 4-gun fighters being delivered in England in January 1942. As compared to the Typhoon. the Curtiss 87 is very such 278 glower. and the Typhoon has twelve .303 or six .20 m.m. cannon guns against the four .50 guns of the Curtiss. There are other more advanced fighters now under development. The 5. Bell Aerocobra, for instance, of which we have several hundred on order. may have . rather higher performance than the Smitfire though less than the Typhoon. and the firm have proposed the installment ultimately of A powerful armament amounting to five 20 m.m. and two .50 guns. It has, however. certain doubtful features such as a very high wheel loading, and its performance when the improved armament is installed must be to some extent P matter of conjecture. Another fighter type now under development in the United States, camely. the Republic P.47.B. will have a useful armament of eight .50 calibre guns and a good top speed at high altitude (25,000 feet). On the other hand I understand that it's performance so far is only on paper and it will not fly until January or February 1941. whereas the Typhoon has been flying for some months already. In general, except at its specialized height of 25,000 feet, it seems certain to be inferior in speed, performance and operational qualities to the Typhoon, and the Technical Officers of the British Mr Commission have not thought it desirable to go in for it. Both the Aerocobre and the Republic P.47 incorporate certain untried experimental features, which may or may not be successful in larger scale production. whereas the Typhoon is a normal development of a tried type, The Hurricane. 6. Reference should be made to the question of gun calibres. It is true that the guns in the initial issue of Typhoons are .303 as against the .50 calibre machine guns in the U. S. types. But the British view, which has received some confirmation in recent trials in England, is that the .50 calibre, while greatly superior in hitting power to the .303 - is not likely to be fully effective against the degree of armour which must be anticipated in enemy aircraft by 1942. For this reason the British intend to mount in the Typhoon six 20 mm. cannon guns as they become available -- a type of gun against which they believe it to be quite impossible to armour. Indeed, British policy is ultimately to turn over to cannon guns in all fighters, including existing types. It seems to me therefore the best chance of getting in substantial 7. numbers by June 1942 a really marked advance in the spheres both of performance and armament, is for U. S. industry to produce the Typhoon - a type of which, incidentally, I have little doubt we could satisfy the U. S. Air Corps that they could make very valuable use in emergency. The arguments in favour of producing American as against British types in U. S. A. are well known; but it is hard to believe that the difficulties (anyway as far as fighters are concerned) are insurmountable. The production of the airframe should be relatively easy; the main difficulty is going to be to make the engine, the 2000 h.p. Napier Sabre. Both of course involve the creation of new capacity, and both will involve difficulties in the direction of machine tools. But it is hard to believe that the vast engineering resources and skill available in the U. S. A., if really vigorously directed along the right channels, could not overcome the difficulties and produce Typhoons by the spring of 1942. Numbers. 8. This can only be dealt with on more general terms. Very briefly, the situation is this. The "3000 a month" scheme has, for the present, faded out of the picture as a practical proposition in the reasonably near future. The present scheme involves 26,000 aircraft for the Empire by June 1942 - the 14,000 on existing orders and the new 12,000 - which works out at an average of about 1300 a month. But this programme is only being achieved by continued use of existing capacity and part use of new capacity already being created under the U. S. Defence programme. -5- 280 The joint U.S. - British capacity which will probably be in existence by June 1942 on present plans, would be of the order of 2500 combat planes a month. of which only 10%, or 250 a month would be heavy bombers. This planned figure is probably little, if any, more than the present capacity of Germany alone. And - in view of the possibility of really serious and widespread interference with production in England by bombing - it seems impossible to sit back and accept a situation in which the British and U. S. Air Forces are backed by so inadequate a production. It will no doubt be suggested that shortage of machine tools precludes the possibility of creating any further capacity in the near future. But there seems some reason to hope that the machine tool situation will show an improvement in the near future. And in any event experience in the U. K. has shown that, where one is really up against it, it is surprising what can be done by going out into the highways and hedges and making use of all sorts of hidden capacity, normally in use for other purposes and, if the best is not available, making do with the second best, such as the plant and tools of the automobile industry. It would be an admission of defeat to accept that the production of aircraft engines and the necessary accessories such as guns, radio, etc., cannot be greatly increased in scope and accelerated in tempo. But it cannot be done without far more drastic measures than are at present in force. 9. As a practical suggestion (which has the authority of Sir Henry Self) the following seems the programme at which we should aim. We had originally assumed that by June 1942 we should see a production on joint account of 3250 combat planes a month (as against the 2500 mentioned above) with a further capacity for 1250 a month, to be started early in 1941 and to be in full production by the end of 1942. -6-- Our eim therefore should be first to create immediately capacity for At least an additional 250 a month of an improved type of heavy bomber - A class which are of vital importance to the defeat of Germany and in which there is A serious deficiency on present programmes. This should be followed AS soon AB possible After the first stage is under way (by which combat plane capacity will have been increased AS =bove to 2750 per month) by the creation on joint account of canacity for the production of new types to bring the total of United States production up to 4500 R month. November 27th, 1940. 282 December 9, 1940 My dear Mr. Stimson: I am sending you herewith two com- munications from Air Commodore Sleeser, one showing the total number, as of Novem- ber 29th, of the six principal operational aircraft and of pilots, and the second giving his impressions of the United States Air Production Programme. I am sure you will appreciate the confidential nature of these documents and will be guided accordingly. Yours sincerely, Hon. Henry L. Stimson, Secretary of War. 283 December 9, 1940 My dear Mr. Stimson: I am sending you herewith two com- munications Commodore from Air Sleeser, one showing the total number, as of Novem- ber 29th, of the six principal operational aircraft and of pilots, and the second giving his impressions of the United States Air Production Programm. I as sure you will appreciate the confidential nature of these documents and will be guided accordingly. Yours sincerely, Hon. Henry L. Stimson, Secretary of Var. 264 December 9, 1940 Ny dear Mr. Stimson: I am sending you herewith two communications from Air Commodore Slesser, one showing the total member, as of Never- ber 29th, of the six principal operational aircraft and of pilots, and the second giving his impressions of the United States Air Production Programs. I am sure you will appreciate the confidential nature of these documents and will be guided accordingly. Yours sincerely, Hon. Henry L. Stimson, Secretary of War. 4 285 December 9, 1940 My dear Judge Fatterson: I am sending you herewith two conmunications from Air Commodore Sleaser, one showing the total number, as of Hoves- ber 29th, of the six principal operational aircraft and of pilots, and the second giving his impressions of the United States Air Production Programme. I am sure you will appreciate the confidential nature of these documents and will be guided accordingly. Yours sincerely, Judge Robert P. Patterson, Assistant Secretary of War. 286 December 9, 1940 My dear Judge Patterson: I an sending you herewith two com- munications from Air Commodore Sleaser, one showing the total number, as of Novem- ber 29th, of the six principal operational aircraft and of pilots, and the second giving his impressions of the United States Air Production Programme. I as sure you will appreciate the confidential nature of these do cuments and will be guided accordingly. Yours sincerely, Judge Robert P. Patterson, Assistant Secretary of War. 267 December 9, 1940 Ay dear Judge Patterson: I am sending you herewith two communications from Air Commodore Slesser, one showing the total number, as of Novem- ber 29th, of the six principal operational aircraft and of pilots, and the second giving his impressions of the United States Air Production Programme. I am sure you will appreciate the confidential nature of these documents and will be guided accordingly. Yours sincerely, Judge Robert P. Patterson, Assistant Secretary of War. 283 December 9, 1940 My dear Mr. Knox: I am sending you herewith two comsunications from Air Commodore Sleeser, one showing the total number, as of Novem- ber 29th, of the six principal operational aircraft and of pilots, and the second giving his impressions of the United States Air Production Programme. I am sure you will appreciate the confidential nature of those documents and will be guided accordingly. Yours sincerely, Hon. Frank Knox, Secretary of the Navy. 289 December 9, 1940 My dear Mr. Knox: I am sending you herewith two communications from Air Commodore Slesser, one showing the total number, as of Novem- ber 29th, of the six principal operational aircraft and of pilots, and the second giving his impressions of the United States Air Production Programme. I am sure you will appreciate the confidential nature of these documents and will be guided accordingly. Yours sincerely, Hon. Frank Knox, Secretary of the Navy. December 9, 1940 My dear Mr. Knox: I am sending you herewith two comaunications from Air Commodore Slesser, one showing the total member, as of Novem- ber 29th, of the six principal operational aircraft and of pilots, and the second giving his impressions of the United States Air Production Programme. I am sure you will appreciate the confidential nature of these documents and will be guided accordingly. Yours sincerely, Hon. Frank Knox, Secretary of the Navy. 290 291 December 9, 1940 My dear Admiral Stark: I am sending you herewith two com- munications from Air Commodore Sleeser, one showing the total number, as of Novem- ber 29th, of the six principal operational aircraft and of pilote, and the second giving his impressions of the United States Air Production Programme. I am sure you will appreciate the confidential nature of these documents and will be guided accordingly. Yours sincerely, Admiral Harold R. Stark, U. S. N., Chief of Naval Operations, Navy Department. 292 December 9, 1940 My dear Admiral Stark: I am sending you herewith two communications from Air Commodore Sleeser, one showing the total number, as of Neven- ber 29th, of the six principal operational aircraft and of pilota and the second giving his impressions of the United States Air Production Programme. I am sure you will appreciate the confidential nature of these documents and will be guided accordingly. Yours sincerely, Admiral Harold R. Stark, U. S. N., Chief of Naval Operations, Navy Department. 293 December 9, 1940 My dear Admiral Starks I am sending you herewith two communications from Air Commodore Sleeser, one showing the total number, as of Hoven- ber 29th, of the six principal operational aircraft and of pilote, and the second giving his impressions of the United States Air Production Programm. I am sure you will appreciate the confidential nature of these documents and will be guided accordingly. Yours sincerely, Admiral Harold R. Stark, U. S. N., Chief of Navul Operations, Navy Department. British Embassy, RRONAL AND MOST SECRET. 294 Washington, D.C., 7th December, 1940. Dear Mr. Secretary, I have now received some detailed figures to supplement the more general information contained in the note which I left with you on December 3rd. You will remember that in the telegram early in October it 1. was stated that the six principal operational aircraft, i.e., Hurricane, Spitfire (Fighters), Wellington, Blenheim, Whitley and Hampden (Bombers), numbered 5209 on 10th May and 3735 on 27th September. That number has now risen on 29th November by 450 to a total of 4185. As regards pilots, the figure given for the Metropolitan 2. Air Force for 15th June was 3101, and for 27th September, 4143. That figure has since risen on 29th November by 249 to a total of 4398. During the same period another 350 pilots have been allocated to the training organisation and the pilot strength in the Middle East Command has been increased by 120. 3. You may be interested to hear that our pilot wastage for the months of September to November inclusive was almost exactly what we had anticipated as a result of a review which we undertook of the figures for this summer's campaign. In September our actual wastage exceeded expectations by about 15%, but in October and November it was less, and the total figure worked out almost exactly the same, i.e., 1217 against an anticipated total of 1218 or an average of 406 a month - allowing for half the wounded returning to duty. I understand that it has been arranged that you should receive the figures for aircraft production from Lord Beaverbrook through Mr. Morris Wilson, and Mr. Wilson tells me that the figures for recent months 4. are on the way. I have asked for any particulars that may be available as to the performance in action of the P.40. I have not yet had a reply but will let you know as soon as I do. 5. Philip Young tells me you are very busy at present with Sir Frederick Philips and other matters, so I am going away till Thursday 6. night to visit some aircraft and engine factories. I can of course return immediately if you wish to see me. Yours sincerely Millesser The Honourable Henry Morgenthau, Jr., United States Treasury, JM Washington, D.C. 295 MOST SECRET THE U. S. AIR PRODUCTION PROGRAMME NOTE BY AIR COMMODORE SLESSOR The following note conveys my impressions of the main problems 1. in connection with the programme of production in the United States, arising from a very brief visit to this country. There appear to me to be two main directions in which the programme of aircraft production in the U. S. A. falls short of requirements of modern - warfare, from the point of view both of Great Britain and the United States namely, in the fighting efficiency of the aircraft due for production and in their numbers. It must be remembered that the contribution of U. S. industry to the air var will not make itself felt to a really important degree until the second half of 1941 and early 1942. Fighting Quality The bombers now being produced in U. S. A., while they have good 2. speed and range and a fair bomb load. do not incorporate the important lessons that the R. A. F. have learnt from the fighting of last summer. notably in the direction of defensive arnament. The types coming on to production early in 1941, such as the Consolidated 3.24 and Martin B.26 show a marked improvement in this direction. And, although no U. S. bomber at present in sight compares for fighting efficiency with our own heavy bombers now in production - such as the Halifex and Stirling - the American bombers will be quite adequate for night operations and will constitute a most valuable contribution when they appear in any substantial numbers, though we should have liked a considerably larger proportion of the heavy four-engined types. 3. As regards fighters. however, it is difficult to avoid the conclusion that United States types that will be available in any numbers by the summer of 1942 are for the most part unlikely to be of sufficiently high fighting quality to meet really effectively the requirements of the air 296 var by that date. If there is one lesson which sticks out more than others from the lessons of last summer. it is the enormous importance of fire-pover in the fighter. It is hardly too such to say that it was the 8-gua fighter that saved England in August and September. That is not to say that 11 was only the 8 guns which did the trick. It was also (apart from the fighting value and training of the crows) the superior performance and quality of the British types - Hurricanes and Spitfires. We must keep that superiority . we cannot afford inferior quality aircraft as well as inferior numbers. Any production man knows that to introduce a new type into existing capacity means a terrible drop in production of the existing types before the new one comes in in any numbers. The enemy has now at his disposal the potential - the floor space, machine tools and raw materials - of all the conquered territories, notably of France: and always in the background is the possibility of the Germans, with their drive and efficiency developing the vast potential of Russia. 4. It is, therefore, of great importance that at least those U. S. fighter types for which new capacity is to be created in this country should be a really substantial advance on British types now is production and at least equal in fighting quality to the new British type. the Typhoon, now going into production to the U. K. I do not claim to be a technical export, but do not feel that they do come up to this standard. For instance the Ourties 87. which starts coming in in substantial numbers is the spring, may attain about the same speed as the Spitfire III (on paper - actually it probably won't be as fast), but 10 only mounts four .50 machine guns as against the eight .303 of the Spitfire 111. The firm say that, with the best will in the world, they cannot promise to install siz guns till the 151st aeroplane; this may mean that we shall still have 40gun fighters being delivered in England in January 1943. As compared to the Typhoon. the Curtiss 87 is very such 297 slever, and the Typhoon has twelve .303 or six .20 n.s. cannon guas against the four .50 gune of the Curtise. There are other more advanced fighters now under development. The 5. Bell Aerocobra, for instance, of which we have several hundred on order, may have a rather higher performance than the Spitfire though less than the Typhoon, and the firm have proposed the installment ultimately of a powerful armanent amounting to five 20 s.a. and two .50 gune. It has, however, certain doubtful features such as a very high wheel loading, and its performance when the improved armanent is installed must be to some extent a matter of conjecture. Another fighter type now under development in the United States, namely, the Republic P.47.3. will have a useful arnament of eight .50 calibre guns and a good top speed at high altitude (25,000 feet). On the other hand I understand that it's performance so far is only on paper and it will not fly until January or February 1941. whereas the Typhoon has been flying for some months already. In general, except at its specialized height of 25,000 feet. 11 seems certain to be inferior in speed, performance and operational qualities to the Typhoon, and the Technical Officers of the British Air Commission have not thought it desirable to go in for it. Both the Aerecobra and the Republic P.47 incorporate certain untried experimental features, which may or may not be successful in larger scale production, whereas the Typhoon is a normal development of a tried type. The Hurricane. 6. Reference should be made to the question of gun calibres. It is true that the guns is the initial issue of Typhoons are .303 as against the .50 calibre machine guas is the U. S. types. But the British view, which has received some confirmation is recent trials is England, is that the .50 calibre, while greatly superior is hissing power to the .303 - is not likely to be fully effective against the degree of armour which must 298 be anticipated in enery aircraft by 1942. For this reason the British intend to mount in the Typhoon six 20 - cannon guns as they become available - a type of gun against which they believe it to be quite impossible to armour. Indeed, British policy is ultimately to turn over to cannon guns in all fighters. including existing types. It seems to me therefore the best chance of getting in substantial 7. numbers by June 1942 a really marked advance in the spheres both of performance and arnament, is for U. S. industry to produce the Typhoon - a type of which. incidentally. I have little doubt we could satisfy the U. S. Air Corps that they could make very valuable use in emergency. The arguments in favour of producing American as against British types in U. S. A. are well known: but it is hard to believe that the difficulties (anyway as far as fighters are concerned) are The production of the airframe should be relatively easy: the main difficulty is going to be to make the engine. the 2000 h.p. Hapier Sabre. Both of course involve the creation of new capacity, and both will involve difficulties in the direction of machine tools. But it is hard to believe that the vast engineering resources and skill available in the U. S. A., if really vigorously directed along the right channels. could not overcome the difficulties and produce Typhoons by the spring of 1942. Instera. 8. This can only be dealt with on more general terms. Very briefly. the situation is this. The *3000 a month" scheme has, for the present, feded out of the picture as a practical proposition in the reasonably near future. The present scheme involves 26,000 aircraft for the Empire by June 1943 - the 14,000 on existing orders and the new 12,000 - which works out at as average of about 1300 a month. But this programme is only being achieved by contenned use of existing capacity and part use of new capacity already being created under the U. s. Defence programm. 299 The joint U.S. - British capacity which will probably be in existence by June 1942 on present plans, would be of the order of 2500 combat planos a month. of which only 10%, or 250 a month would be heavy bombers. This planned figure is probably little, if any, more than the present capacity of Germany alone. And - in view of the possibility of really serious and widespread interference with production in England by bombing - it seems impossible to sit back and accept a situation in which the British and U. S. Air Forces are backed by so inadequate a production. It will no doubt be suggested that shortage of machine tools precludes the possibility of creating any further capacity in the near future. But there seems some reason to hope that the machine tool situation will show an improvement in the near future. And in any event experience in the U. K. has shown that, where one is really up against it, it is surprising what can be done by going out into the highways and hedges and making use of all sorts of hidden capacity. normally in use for other purposes and, if the best is not available, making do with the second best, such as the plant and tools of the automobile industry. It would be an admission of defeat to accept that the production of aircraft enginee and the necessary accessories such as guns, radio. etc., cannot be greatly increased in scope and accelerated in tempo. But it cannot be done without far more drastic measures than are at present in force. 9. As a practical suggestion (which has the authority of Sir Henry Self) the following seems the programme at which we should aim. We had originally assumed that by June 1943 we should see a production on joint account of 3250 combat planes a month (as against the 2500 mentioned above) with a further capacity for 1850 a month, to be started early in 1941 and to be in full production by the and of 1943. 300 Our ais therefore should be first to create immediately capacity for at least as additional 280 a month of as improved type of heavy bomber - a class which are of vital importance to the defeat of Germany and in which there is a serious deficiency on present programmes. This should be followed as soon as possible after the first stage is under way (by which combat plane capacity will have been increased as above to 2750 per month) by the creation on joint account of capacity for the production of new types to bring the total of United States production up to 4500 a month. November 27th. 1940. 301 TREASURY DEPARTMENT INTER-OFFICE COMMUNICATION DATE December 9, 1940 TO Secretary Morgenthau FROM Mr. Cochran CONFIDENTIAL Registered sterling transactions of the reporting banks were as follows: Sold to commercial concerns Purchased from commercial concerns 198,000 142,000 The Federal Reserve Bank of New York sold 130,000 in registered sterling to a non-reporting bank. Open market sterling held steady at 4.03-3/4. Transactions of the reporting banks were as follows: Sold to commercial concerns 111,000 Purchased from commercial concerns I 5,000 Except for some weakening of the Canadian dollar rate, no appreciable movement took place in the other currencies. Closing quotations were: Canadian dollar Swiss franc Swedish krona Reichamark Lira Argentine peso (free) 13-3/16% discount .2321 .2385 .4005 .0505 .2360 Brazilian milreis (free) .0505 Mexican peso Cuban peso 2070 8-9/16% discount The yuan in Shanghai was unchanged at 5-31/32 There were no gold transactions consummated by us today. The Federal Reserve Bank of New York reported that the Yokohama Specie Bank made three shipments of gold with a total value of $9,194,000 from Japan to its San Francisco agency, for sale to the U.S. Mint. The Bombay gold price was equivalent to $33.82, a gain of 1# over last Friday's level. Silver was priced at the equivalent of 42.92 representing a decline of 1/2 In London, the price fixed for spot silver was 22-7/8d, off 1/8d. The forward quotation was 23-13/16d, off 3/16d. The dollar equivalents were 41.54$ and 41.42$ respectively. -2- 302 Handy and Harman's settlement price for foreign silver was unchanged at 34-3/44. The Treasury's purchase price for foreign silver was also unchanged at 35 We made three purchases of silver totaling 175,000 ounces under the Silver Purchase Act. Of this amount, 100,000 ounces represented sales from inventory and theforward remaining 75,000 ounces consisted of new production from foreign countries, for delivery. CONFIDENTIAL 303 TREASURY DEPARTMENT 0 INTER OFFICE COMMUNICATION DATE December 9. 1940 Modgenthau FROM STRICTLY CONFIDENTIAL Mr. Secretary Cochrah The Federal Reserve Bank of New York reported the following transaction in the account of Banca di Rome, Rome, maintained with the Chase National Bank, New York. Date December 7 Amount Debited $108,650. Paid To Chase National Bank, for account of Yokohama Specie Bank, N.Y., for account of Yokohama Specie Bank, Tokyo PMS 304 OFFICIAL SECRETARY OF STATE WASHINGTON DEPARTMENT OF STATE WASHINGTON December 9, 1940. The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury, and encloses two copies of paraphrase of strictly confidential telegram No. 3986 of December 7, 1940, from the American Embassy, London, transmitting a report on the recent payments agreements negotiated by the United Kingdom with Spain and Turkey. Enclosure: No. 3986, December 7, 1940, from London. 305 PARAPHRASE OF TELEGRAM RECEIVED FROM: American Embassy, London, England DATE: December 7, 1940, 11 a.m. NO.: 3986 STRICTLY CONFIDENTIAL. I give below the substance of conversations which took place yesterday and today between officials of the British Treasury and Ferris with regard to Spain and Turkey, particularly concerning agreements with those countries which were recently announced. Waley said that as concerns Spain, the position was a touchy one as of course the Spaniards are not exactly wedded to the ways of thought of the British. However, it was his opinion that the Spanish people are not only near the starvation line, they had passed it. This is back of the British desire to help Spain by supplying the means for purchasing wheat and fertilizers which it is hoped may result in averting hunger riots that would give an opening to the Germans - even though the British are convinced that mort of the Spanish people would heartily dislike pressure from German troops, despite the prevailing political views. There is willingness on the part of the British to find the wheat themselves; however, Australia 18 the nearest source of wheat they have, which to starving people 18 cold comfort. This is why the British (?) that American is the only wheat they have. Waley remarked that for 306 -2for a time the United States had stood off because of the public declaration for the Axis by Franco; however, he understood that there was in process a lessening of some of the difficulty which that situation had created, and that it was possible the United States might not insist that food relief could not be given without prior declaration of non-belligerency. The only reference which Waley made to the terms of the payments agreement with Spain recently announced was to its general effect of providing the Spanish with more funds, and he said it substantially resembles the Portuguese payments agreement. END SECTON ONE. JOHNSON. 307 PARAPHRASE OF SECTION TWO, TELEGRAM NO. 3986 OF DECEMBER 7, 1940, 11 a.m., FROM THE AMERICAN EMBASSY, LONDON According to Ellis-Rees (who took part in the negotiations at Madrid and who intends to go back to Madrid later on), the main purpose of the new agreement 18 to make it possible for the Spanish to purchase more foodstuffs within the sterling area. In order to bring this about the existing clearing agreement is supplemented by setting up a special account system under which all payments (in place of only foreign trade payments) between Spain and Spanish territory (in place of only between Spain itself and the United Kingdom) would be regulated. The new agreement does not involve any new credits. The clearing arrangement will continue to govern the bulk of payments (between 3/4 and 9/10). Exports are still the source of the greater part of sterling available to Spain; these amount to 7 or 8 million pounds a year to the United Kingdom now, as compared with the normal pre-war yearly exports of around 12 millions. Extra clearing rates of exchange, the British are assured, will be done away with. There is a provision in the agreement covering the sterling area accounts of British subjects in Spain who are non-resident from the viewpoint of the exchange control in Spain. This provision corresponds with privileges which the Spanish exchange control has accorded such persons. The latter cannot use sterling in such accounts for commercial interchanges between the United Kingdom and 303 -2Spain; it is good only for personal expanditures in the United Kingdom on the part of the holder. One prominent newspaper has given publicity to the unblocking in London of frozen Spanish assets. Technically it is true that such assets were unblocked, but the payments agreement did not cover this point; only a small amount is involved, and this was released while negotiations were being carried on because of a shortage of sterling on the part of the Spanish. It is the belief of Ellis-Rees that the press probably got its information through a backdoor in Madrid; he is glad of having an opportunity to play down the importance of this point. END SECTION TWO. JOHNSON. 309 PARAPHRASE OF SECTION THREE, TELEGRAM NO. 3986 OF DECEMBER 7, 1940, 11 a.m., FROM THE AMERICAN EMBASSY, LONDON The political importance of the payments agreement with Turkey was stressed by Fraser. He commented upon the key position which Turkey now holds, and upon the fact that generally the Turks have played ball with the British. However, they strike a hard bargain, and it was necessary for the British to pay "hellish high prices" for the commodities received from Turkey. Under the agreement a system of special accounts is set up to regulate all payments between the sterling area and Turkey. This system supplements the existing clearing arrangement between Turkey and the United Kingdom, as is the case in the new agreement between Spain and the United Kingdom. Under the agreement with Turkey, there will be increased purchases by the United Kingdom Commercial Corporation of dried fruits, valonia, mohair, and 80 on, from Turkey, and 10 percent of the purchase price will be paid to the Turks in gold. Every four months there will be periodical settlement of accounts. Offeet against the purchases by the United Kingdom Commercial Corporation will be provided through many British exports - locomotives and many other manufactured articles which are sent around the Cape; therefore the British hope that the net loss in gold by them, which gold would be left free in the hands of the Turks, will 310 -2- will be either very small or perhaps non-existent when the time comes to make the final balance at the end of the third four-months period. The agreement provides that the gold is to be paid over at Ottawa. Fraser made reference, during the conversation, to the policy toward payments to Rumania on the part of the British Treasury. He said that they are suiting themselves entirely on this point; they will let a payment go through if it suits them, but not if they believe it might be of some benefit to the enemy. He pointed out that Rumania is not yet enemy territory, even though the British have blocked their accounts. The situation is perfectly understood by the Rumanians, he said. We have Waley's promise that as soon as it is possible he will let us have copies of the payments agreements with the Spanish and with the Turks; however, it may be some time before copies are available. You are requested to give a copy of this telegram to the Treasury Department. END OF MESSAGE. JOHNSON. EA:LWW STRICTLY CONFIDENTIAL ALLISON ENGINEERING COMPANY Deliveries of Airplane Engines : Actual : deliveries : 311 Estimated deliveries on existing orders 1940 January May 1 - June 1 June 2 - 29 June 30 - July 27 July 28 - August 31 September 1 - 28 September 29 - October 5 October 6 - 12 October 13 - 19 October 20 - 26 October 27 - November 2 10 15 31 50 91 221 49 73 61 48 80 November 3 - 9. November 10 - 16 November 17 - 23 44 November 24 - 30. December 1 - 7 December 8 - 31 56 49 19 30 198 1941 January February March April May June July August September October November December 230 331 345 407 410 412 420 460 486 495 163 45 1942 25 January February Office of the Secretary of the Treasury, (Division of Research and Statistics. 21 December 9, 1940. 312 STRICTLY CONFIDENTIAL ALLISON SHIPMENTS : Oct.: Oct.: Oct.:Oct. 27:Nov.: Nov.: Nov.: Nov. : Dec. : Total :6-12:13-19:20-26:-Nov. 2:3-9 :10-16:17-23:24-30:1-7 : British Army Navy Total 67 52 37 69 9 11 11 6 - 73 - 61 - 48 41 49 16 53 3 - - 80 44 Office of the Secretary of the Treasury, Division of Research and Statistics. - 49 3 3 - - 19 56 29 1 - 30 413 47 - 460 December 9, 1940. 313 CONFIDENTIAL December 9, 1940 To: The Secretary From: Mr. Young Re: President's Liaison Committee The Liaison Committee has been the mechanism for clearing all purchases of war materials by foreign Governments before contracts have been signed which might tie up United States production capacity to the detriment of defense orders. The original letter signed by the President creating the Liaison Committee established it as the exclusive limison between the United States Government and foreign Governments with respect to such purchasing activities and especially with regard to three things, (1) availability, (2) prices, and, (3) priorities. There are two major problems confronting the Committee's activities, one being the priorities, and the other dealing with the scope of its work. As you know, the priority situa- tion is being worked out with Mr. Nelson and Mr. McReynolds. Although Mr. Nelson has not yet submitted his proposed recom- mendation to the President, it is my understanding that his office will be established as the coordinating office between the foreign purchaser and the United States Government. This situation can be taken up and discussed as soon as Mr. Nelson's proposed recommendation is received. With respect to the second problem, that is, the scope of the Limison Committee's work, some clarification should be secured. Because of the great pressure on the aircraft indus- try, all foreign orders for aircraft, including commercial, have been placed under the clearance procedure despite the fact that certain of these orders were not strictly for war supplies. This situation has raised three problems: first, should all foreign orders have to go through the clearance procedure 314 -2even though they might not be for war supplies; second, should only those foreign orders go through the clearance procedure where they are placed with firms engaged on defense program activities; and, third, should foreign orders going through the clearance procedure be even further restricted to some list of specified items or groups of items. For instance, at the present time there is an open question as to whether clearance is necessary for a foreign order for steel freight cars which are to be manufactured in the plant which holds British and United States contracts for the manufacture of tank armor plate. From a slightly broader point of view, there is a question as to whether foreign orders should be placed under the clearance procedure solely to eliminate any interference with the United States defense program or whether foreign orders should also be cleared regardless of the defense program, but on a basis of broad national economic defense. In any event, if foreign orders for items other than war supplies are to be placed under the clearance procedure, some official statement will have to be made empowering this Committee to carry on its work, and the various trade organizations, manu- facturers, etc., will have to be so notified. I might add that this problem is becoming acute and that I should like to talk with you about it in detail. DO 315 December 9, 1940. Dear Bobs The following is in reference to your memorandum regarding a national pension systems As you will recall, I have always been in favor of a national system of old-age security, and I have felt that pensions should be given to the aged as a matter of right. I testified in favor of the Social Security Act in 1935, and I have always been in complete accord with the expressed views of the President that the coverage of the old-age security system provided by that Act should be extended se far as possible or practicable. Great strides have been made in the field of old-age assistance since 1935. In the month of August, 1940, approxisately 2,000,000 persons received old-age assistance under the Social Security Act, in the aggregate amount of $40,000,000. This is equivalent to an average assistance of $20 per month and in the aggregate is equivalent to an annual expenditure of approximately $500,000,000. An analysis of the arguments given in your memorandum leads me to believe that they are primarily arguments for an increase in spending in order to bring about economic recovery. However, economic recovery and a high level of national income now seen assured by the production requirements of the national defense program. The fundamental economic problem today appears to be two-fold: namely, how to make the large increase in production possible, and, how, at the same time, to avoid an inflation in prices, which, as you well know, would react particularly unfavorably on the low-income classes. When the stimulus of the armanent expenditure program slackens at some date in the future, other problems will arise and we are giving every consideration to them. At that time the economic arguments which you advance for your proposal might become more applicable than they are today. 316 -2I have always maintained that a pension system for the aged has a place in our economy irrespective of the force of economic arguments in its favor, and it is for that reason that I have favored the extension of the coverage offered by the Social Security Act. Sincerely yours, (Signed) H. Morgenthau, Jr. Secretary of the Treasury. Mr. Robert S. Allen, National Press Building, Washington, D.C. HEG/mah CC to Mr. Thompson (iip By Messenger 317 December 9, 1940. Dear Bobs The following is in reference to your menorandum regarding a national pension system: As you will recall, I have always been in favor of a national system of old-age security, and I have felt that pensione should be given to the aged as a matter of right. I testified in favor of the Social Security Act in 1935, and I have always been in complete accord with the expressed views of the President that the coverage of the old-age security system provided by that Act should be extended so far as possible or practicable. Great strides have been made in the field of old-age assistance since 1935. In the month of August, 1940, approxisately 2,000,000 persons received old-age assistance under the Social Security Act, in the aggregate amount of $40,000,000. This is equivalent to an average assistance of $20 per month and in the aggregate is equivalent to an annual expenditure of approximately $500,000,000. An analysis of the arguments given in your menorandum leads me to believe that they are primarily arguments for an increase in spending in order to bring about economic recovery. However, economic recovery and a high level of national income now seen assured by the production requirements of the national defense program. The fundamental economic problem today appears to be two-fold: namely, how to make the large increase in production possible, and, how, at the same time, to avoid an inflation in prices, which, as you well know, would react particularly unfavorably on the low-income classes. When the stimulus of the armanent expenditure program slackens at some date in the future, other problems will arise and we are giving every consideration to them. At that time the economic arguments which you advance for your proposal might become more applicable than they are today. 313 -2I have always maintained that a pension system for the aged has a place in our economy irrespective of the force of economic arguments in its favor, and it is for that reason that I have favored the extension of the coverage offered by the Social Security Act. Sincerely yours, (Signed) H Morgenthau, Jr. Secretary of the Treasury. Mr. Robert 8. Allen, National Press Building, Washington, D.C. HEG/mah CC to Mr. Thompson By - 3rd on 12/11 team But: 319 The following is in reference to This will acknowledge receipt 01 your memorandum regarding a national pension system. As you will recall, I have always been in favor of a national system of old-age security, and I have felt that pensions should be given to the aged as a matter of right. I testified in favor of the Social Security Act in 1935, and I have always been in complete accord with the expressed views of the President that the coverage of the old-age security system provided by that act should be extended so far as possible or practicable. Great strides have been made in the field of old-age assistance since 1935. In the month of August 1940 approximately 2,000,000 persons received old-age assistance under the Social Security Act, in the aggregate amount of $40,000,000. This is equivalent to an average assistance of $20 per month and in the aggregate is equivalent to an annual expenditure of approximately $500,000,000. An analysis of the arguments given in your memorandum leads me to believe that they are primarily arguments for an increase in spending in order to bring about economic recovery. However, economic recovery and a high level of national income now seem assured by the production requirements of the national defense program. The fundamental economic problem today appears to be two-fold: namely, how to make the large increase in production possible, and, how, at the same time, to avoid an inflation in prices, which, as you well know, would react particularly unfavorably on the low-income classes. 320 -2When the stimulus of the armament expenditure program slackens at some date in the future, other problems will arise and we are giving every consideration to them. At that time the economic arguments which you advance for your proposal might become more applicable than they are today. I have always maintained that a pension system for the aged has a place in our economy irrespective of the force of economic arguments in its favor, and it is for that reason that I have favored the extension of the coverage offered by the Social Security Act. Sincerely See of Tress 321 PENSION MEMO Equal in importance to the youth problem and in some respects even more important is the matter of a national pension system. It can't be emphasized too strongly that the present old-age pension setup is a delusion and a literal fraud. This existing state contributory system, the work of the Wisconsin group that was brought in to frame the law, is vicious and phony. It sets up a vest bureaueracy and colossal inequalities that don't provide pensions and merely create bitter disappointments and vengeful resentment. A national pension system can be one of the most effective and enduring safeguards against depressions. For example: At present, under the existing phony system, some 200,000 oldsters are receiv- ing a total of about $50,000,000 in pensions. If this number were increased to 5,000,000, where it rightly belongs, who receive the modest sum of $20 a month, that would mean a total outlay of around $2,000,000,000 a year. This money would go directly into the channels of trade. It wouldn't be like a public works program, taking more-for the money to start flowing. It would spread out over the country, in the grass roots and in the city, directly into the veins of the nation's economy. only in the early days of the New Deal was there a public works program of this magnitude. Had the country had a bulwark of this kind in 1930 there wouldn't have been the depression, and in 1937 there wouldn't have been the setback that occured. with 5,000,000, and upwards, of pensions received monthly from the system, the nation's economy could be cushioned to meet almost any kind of A pension system of this kind would be a tremendous bulwark against a orash after the current vast defense 322 expenditures are shut off. A system of this kind, unlike the PWA and WPA, once initiated could never be stopped but would be an annual outlay that would be perpetual. No reactionary cabil would 9 ever dare to strangle funds of this kind. E MM Y E Further, unless this Administration does it, SOME other admin a istration will. You can't stop a Federal system of aold-ug pensions. It must be remembered that the age limit of the country is Esteadily increasing and by 1960 the very considerable proportion of some 30 per cent of the population will be over 50 years of age. Just pure matter of politics shows it is vitally essential that the present phony pension system be broadened into a genuine Federal program. The administration that institutes this kind of a system will draw political dividends for a long time to come. The New Deal has instituted many great reforms but none of them would stack up in - political or economic productivity as rich as a national pension system. All these factors are, aside from the humanitarian one (it alone should be enough to justify a Federal pension system) and from every political and economic consideration, cause for the earliest evolution of the present system into a national program. The Administration should take a vigorous stand for that sort of a system. It should be sponsored by the President himself as an Administration program. No compromises should be permitted. Let the opposition, Republicans, the Tory-Democrats, the insurance companies and the other reactionary elements, fight it. The Administration's record on the matter should be uncontrovertable and clearly in favor of a clear-out Federal old-age pension. The reactionaries couldn't stop it. And if they do temporarily, the Administration will only be given more kudos by fighting for it. a 323 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION ICTLY CONFIDENTIAL DATE December 9, 1940 Secretary Morgenthau TO Mr. Klaus FROM FBI reports: December 5. The Japanese are making heavy purchases of second-hand jute bags in the United States, apparently creating a shortage in the market. The purpose of the Japanese is being investigated. September 21. A report (just transmitted to us) on the activities of ugust Theodore Causebeck, German national who has been in the United States since 1915 and is president of Robert C. Mayer and Company, Inc., securities firm in New York City. Gausebeck is engaged in heavy repatriation of German securities, has had himself appointed as Bolivian Consul for the State of New Jersey, was closely associated with Senators Reynolds and Lundeen, and is said to have held the money which Westrick left in the United States. An associate of Causebeck, one Schellinberg, said to be a member of the Reichsbank staff, 9 said to have been registered as a German Consulate Attache to "avoid being orced to testify before the Dies Committee." December 9. On December 4 the German Embassy withdrew from the Riggs 200,000 in currency, consisting of $100,000 in $1,000 bills, $50,000 in $100 bills, $20,000 in $50 bills, and $30,000 in $20 bills. The credit at the Riggs derives from the Reichsbank. On November 30 the Embassy purchased a cashier's check at the Riggs for $12,000 with 12 $1,000 bills of which 10 had been with- drawn. from the Riggs on November 19. no 324 sent to CONFIDENTIAL December 9, 1940 To: The Secretary From: Mr. Young Re: Rifles for Canada Attached herewith is a copy of a memorandum which I have received from Mr. J. B. Carsvell, the Canadian representative working with the British Purchasing Commission. Some time ago, Mr. Carswell asked for 100,000 rifles for Canada, and I advised him that he would have to supply more detailed information as to the need and the purpose for which they would be used. The attached shows that there is an immediate shortage of .30 rifies amounting to 55,000 if Canada is to meet its training, militia, and air force requirements. An additional shortage of 15,000 rifles will occur as additional mobilisation takes place in 1941, making a total shortage of 70,000 rifles. It is noted Canada is asking for 100,000 in order to provide some reserve. It is my understanding that this request has not been incorporated to date in the recommendations of the United States Canadian Joint Defense Board. (Initialed) P.T. PY:bj MOST CONFIDENTIAL 325 MEMO RE RIFLES FOR CANADA Small Lee-Enfields .303 On hand, September 1939 110,000 Sent overseas with Active Service troops, To be sent over with additional Active Service troops, 36,000 35,000 70,000 40,000 Additional Mobilization in 1941 of Active Service Troops plans for 55,000 men 55,000 Leaving a shortage of rifles, 15,000 Ross Rifles 303 120,000 On hand, September 1939 Sent to United Kingdom to arm local defence volunteers, (Anti-parachutists) In use with Coastal Defence Troops Atlantic and Pacific: at Internment Camps, and with guards at vulnerable plants, 75,000 44,000 120,000 All Ross Rifles now in use Rose Rifles .303, Drill Purpose only. 22,000 On hand, September 1939 These rifles are all in use at Reserve Training centres. They cannot be fired and are for drill purposes only, 22,000 American Lee-Enfield Rifles 30/06 Received from U.S. Government, In use by Air Force, Required for, and now in part being distributed to. Reserve Training Centres, Non Permanent Active Militia, Officers Training Corps, and further requirements of Air Force, 80,000 14,000 135,000 55,000 Leaving a Shortage of Total Estimated Shortage before our Rifle Factory comes into production, 70,000 55,000 plus 15,000 100,000 To provide some reserve, we ask for November 27,1940 326 on CONFIDENTIAL FOR YOUR INFORMATION December 9, 1940 To: The Secretary From: Mr. Young Concerning the United Press ticker notice on December 3. 1940, which was called to my attention by Lt. McKay, with respect to the flying of aircraft from the United States of Canada to England, I have assembled the following information: A special organization known as "Atfero" has been established in Montreal as part of the Canadian Pacific Railway Company under the supervision of Mr. George Woods Humphery, formerly General Manager of Imperial Airways. Crews for flying planes over the Atlantic have been recruited from British Overseas Airways, from Canada, and from the United States, and it is estimated that at least 150 ferry crews will be necessary by the summer of 1941. Twenty-one Lockheed Hudson planes have been flown across in three flights of seven each. The aircraft leave Newfoundland during the night in order that they may arrive approximately at dawn. All flights to date have been made without incident. In the case of Flying Boats, flights are made direct from Halifax to Southern England, and to date only one PBY has been so delivered. Dy. COUNCIL OF NATIONAL DEFENSE COORDINATOR OF COMMERCIAL AND CULTURAL RELATIONS BETWEEN THE AMERICAN REPUBLICS STATE DEPARTMENT BUILDING WASHINGTON.D.C. December 9, 1940 MEMORANDUM FOR: The Honorable Henry Morgenthau, Jr. FROM: Nelson A. Rockefeller You will find, herewith, for your confidential information a copy of our weekly digest of the current activities of the various departments and agencies handling matters on inter-American concern. Attachment 327 323 1919 COUNCIL OF NATIONAL DEFENSE COORDINATOR OF COMMERCIAL AND CULTURAL RELATIONS BETWEEN THE AMERICAN REPUBLICS CONTRONTAL STATE DEPARTMENT BUILDING WASHINGTON. D.C. December 9, 1940 WEEKLY PROGRESS REPORT ON ACTIVITIES IN RELATION TO THE OTHER AMERICAN REPUBLICS COMMERCIAL Raw Materials Coffee: Mr. Grady (State) is considering the enabling legislation for the coffee agreement. Copper: Federal Loan Agency is studying actual terms of purchase of Chilean copper. If 100,000 tons were purchased at $200 a ton, State representative estimates that Chile would receive about $6,500,000 worth of exchange. Cork: If Coord. receives a favorable report from Standards on tests of Brazilian cork, it will discuss possible purchases with Defense Specialties (Commerce) has inquired in Rio concerning possibility of obtaining cork. Hemp: Discussions of State, Navy, Agriculture, and Coord. indicate that Navy may shortly enter into a contract with United Fruit Co. which would guarantee company against loss or establish a fixed purchase price for increasing its acreage in Panama. Commander Shaffer (Navy) reports that tests indicate Panama hemp slightly stronger than manila hemp. Although Waring (Tariff) is concerned about post-war effects on the Philippines of this increased acreage, it seems that growing navy may Use additional supply. Industrial Diamonds: Procurement (Treasury) plans to delay purchases of industrial diamonds pending decision on choice of experts. Iodine: Reid (Defense) states that sufficient supplies of iodine are on hand so that no immediate purchases from Chile will be necessary. Rubber: Since British Government will not allow shipment of rubber seeds from Trinidad for planting in Brazil, seeds are being obtained by Agriculture in Haiti and shipped by plane to Belem. Other Materials: Oil Seeds: Foodstuffs (Commerce) has discussed with Stabilization (Defense) desirability of encouraging through loans development of 1919 Page 2 December 9, 1940 329 oil seeds and vegetable oil industries in L.A. because of Far Eastern situation. Wax: Chemical (Commerce) has made study of possible substitutes for caranauba wax since U.S. demand has apparently exceeded Brazilian supply. Economic Development by Countries Argentina: Active negotiations among the mission, Secretary of Troasury, and Ex-Im. indicate that details concerning the $100,000,000 Treasury-Ex-Im, credit to Argontina will be shortly worked out. Brazil: John Bata of the Bata Shoe Company, which is transferring its main activities to Brazil from Czochslovakic, has discussed with Coord. office development of his business in Brazil Coord. of- fice has submitted 0 momo to the Federal Loan Agency on the propo- sal of the Farquhar group for iron ore development in Brazil Walter Schreiber, marketing specialist, of Agriculture left recently for Rio to make economic studios of agricultural products in Bahin, Pernambuco, and the Amazon. Chile: Interdop, committee has agreed that Treasury be asked to considor possibility of supplementing the aid to Chile announced in last week's report. Cuba: State representative reports differing points of view concern- ing Cuban situation in which an announcement had been shortly expooted. Momo expressing views of different agencies on economic cooperation between U.S. and Cuba has beon submitted to Cuban Ambassador by State, Peru and Dominican Republic: Negotiations with Peru and Dominican Republic for loans are proceeding. General British Mission: A basis for understanding WAS reached at a meeting with the British mission a week ago for further collaboration in S.A. financial and economic problems. Canadian Mission: Canadian mission, headed by Douglas Cole, Canadian Trado Commissioner for U.S., has advised Coord. concerning its trip to S.A. which started last wcek with preliminary stops at Jamaica and Nassau. Commercial Attaches: The possibility of arranging for U.S. commercial attaches in L.A. countries to discuss problems of countries 1919 Page 3 330 December 9, 1940 to which they have been assigned with U.S. business men by grant- ing thom periods in U.S. in addition to their leaves has been raised by Coord. office. Commodity Agreements: Executive committee on commercial policy has established a committee to report on general policy and proposals respecting international commodity agreements. Export Control: Textiles (Commerce) is working with export control administrator on allocation of licenses for restricted materials designed for L.A. shipmont. Export Insurance: After careful consideration by the sub-committee on export insurance, it has been decided to defer action on proposal of Dr. Ezokicl (Agriculture) for export insurance. Geological Surveys: Geologists from the Geological Survey (Interior) are inspecting manganeso, tungsten, and chromite deposits of Cuba as part of the Survey's investigation of sources of certain esExpeditions to Bolivia, Brazil, and sential materials in L.A Mexico will got under way this month. South American Missions: Discussion at Interdep. meeting indicatos that L.A. countries are concerned over longth of time U.S. takes in deciding matters presented by L.A. missions. It was suggested that interested Government groups agree on agenda before missions arrive. Trade Agreements: L.A. Section (Regional Information) proparing matorial for new L.A. trado agreements program. 1919 WEEKLY PROGRESS REPORT, Part II 331 Pago 4 December 9, 1940 COMMUNICATIONS Motion Pictures: Mr. Whitney, who has been in Hollywood for the last ton days, reports enthusiastic cooperation from all producers in the various projects under discussion there. Radio: Progress has been made on the formulation of a program for joint action by short-wave broadcasters, and proposals for such action will bo made today at a meeting in New York with the broad- casters. Their action will be reviewed by the Internat. Broadcasting Committee at a meeting hore tomorrow. Travel: Promotional campaign through newspapers is in preparation. Committoe on travel formerly appointed under Inter-Am. Development Commission has been contacted and organized for cooperation. CULTURAL Agricultural Surveys: Coord. hns agreed to supplement proposed ex- penditures for agriculturel surveys in S.A. Agriculture hopes to have six surveys completed before July 1st. Cultural Institutes: The Am. Library Assn. has agreed with Coord. office to study the needs of the nino North American institutos in L.A., and Coord. will grant a sum, not to exceed 27,500, to meet such needs. The purposes for which the grant will be used will include supplying those institutes with books, magazinos, and newspaper subscriptions, and for adult classes in English. Education: Coord. will grant $16,500 to bring L.A. representatives to U.S. for convention of Am. Assn. of School Administrators and for study of U.S. education institutes Coord. assigns $1,500 to National Education Assn. for a preliminary report on Am. schools in L.A. based on materials available in public and private agencies. Coord. will make two grants to Pan Am. Union; one of $3,000 for preparing outlines of courses on L.A. and for suggesting available magazines and toxtbooks for primary, secondary, and junior schools, and another for $5,100 to aid in the free distribution in U.S. schools of seven pamphlets dealing with L.A. subjects. The pamphlets will be edited by Mrs. Conche Romoro Jamos. Coord. will make two grants in connection with 100 students who will arrive at University of North Carolina in February; one of $4,000 to the Am. Council of Learned Sociotics to onable it do develop the University's L.A. program, and another of $5,000 to the Institute of International Education to assist the students in matters such as travel in the U.S. 1919 332 Page 5 December 9, 1940 Part of Agriculture's exhibit at International Livestock Exposition in Chicago last week showed development of complemen- tary agricultural products in L.A. A pamphlet entitled "More Trade with Latin America" was distributed. Music: Coord. music committee will spond from one-fourth to one-third of its available funds on an exchange of scholars and creative artists, dotails of which will be worked out with the education committee. Publications: Following discussions with Coord. office, the Postmastor General has agreed to reduce the book rate to L.A. from 12c to 5d, and this reduction will become effective upon approval by L.A. countrios Dummies for the proposed magazine on Defense have been completed. Speakers: Coord. office is working on the details of n project for lectures on S.A. in about six oastern universitiesl Theatre: Coord. office has decided to defer theatre projects because of the language difficulties and the uncertain exponso connected with such ventures. ADMINISTRATION Berent Fricle, president of the Am. Coffee Corp., will head The commercial development section of Coord. office F. A. Jamicson of Charlos Edison Company will be in charge of information Interdep. committee has invited the Tariff Commission to appoint a member. Weekly Progress Report No. 12 333 GRAY HSM Jerusalem Dated DECEMBER 9, 1940 Rec'd 6:30 a. m., 10th Secretary of State, Washington. 181, December 9, 3 p.m. is Louis Lassinibar, Latin patriarch- has requested (M my assistance in obtaining transfer of $8,000 from his B National City Bank account which according to of: telegram from the bank is "subject EXECUTIVE orderconcerning France". The patriarch, who was both -W an Malian subject but is now a Vatican subject bearing its diplomatic passport, has been a resident of Palestine since his appointment in 1920. HE assures mE the funds desired are for the official EXPENSES of the Jerusalam Patriarchate. The Controller of Foreign Exchange informs ME that his office will Ensure that the funds, after transfer to Barclay's Bank at Jerusalem as requested, will be sub- ject to the control provided by the Palestine defence finance regulations. STCOR. WADSWORTH DDM COPY TREASURY 1137 CONFIDENTIAL NO. NO. 85 47 Embassy, China AMERICAN CONSULATE GENERAL Shanghai, China, December 9, 1940 SUBJECT: The Outlook in the Chinese Currency Situation in Light of the Announcement of American Support and in Face of the Progressive Threat to the Security of Shanghai. THE HONORABLE THE SECRETARY OF STATE WASHINGTON SIR: I have the honor to refer to this Consulate General's Weekly Confidential Economic Reports for the weeks ended May 11, 1940 and October 12, 1940, which discussed the Chinese currency crisis of last May and listed the various factors lately affecting the Shanghai foreign exchange market. I have the honor also to present the following views and comment in elaboration of the above subject in light of the developments of the past ten days, which include (1) the signing of the Wang-Abe treaty, an event which paves the way for early implementation of the plans for a new currency under a new Central Bank, and (2) the American counter action in providing China with additional credit, part of which is stated to be for currency stabilizetion purposes. Summary: There are two rather divergent view- points on the advisability of further stabilization of rates for the yuan at Shanghai, one of which is rather strongly opposed and the other equally firmly in favor of such support. There is also a considered opinion and program which is not in sympathy with the use of American stabilization funds to support the exchange market at Shanghai should the policies to be exercised by the Nanking regime prove, as expected, to constitute a renewed and serious attack upon the yuan. The considered program involves abandonment of further support of rates at Shanghai, the use of American funds to support the yuan at a new location Manila, Hong Kong or Chungking, the transfer of yuan accounts 334 -2 335 accounts of depositors in Shanghai banks so far as possible to branches in one of those three locations, and destruction of "fapi" notes in bank vaults at Shanghai, as the Chungking authorities are understood to be unwilling to permit further good money to be thrown into support of the Shanghai position in a manner to the advantage of enemies of the Chinese National Government. 1. The Question as to Whether it is now Advisable to Support the Yuan Further at Shanghai. It is obvious in discussing currency matters with local bankers, traders, brokers and speculators, that there is conflict of thinking on this subject. Many are puzzled as to why there should be an apparent intention on the part of the American or Chinese authorities, as implied in news despatches, to support the yuan at Shanghai, considering that conditions are so changed from those prevailing last May as to indicate that continued support of rates may aid chiefly the Japanese and the Nanking regime and may aid only secondarily and temporarily the recognized Chinese National Government at Chungking and loyal Chinese and foreign, including American, interests at Shanghai. (It should be noted that Mr. Suma, official spokesman for the Gaimusho, at Tokyo on December 2, stated to the press that if the American credits are for the purpose of supporting the Chinese currency, Japanese merchants at Shanghai would be benefited.) The exchange market at Shanghai has moved along on its own momentum for the past seven months, since the May crisis, without noticeable support from the Anglo-Chinese stabilization fund, which in early May was believed to be nearly exhausted. This belief in fact was responsible for bringing on the crisis in which the yuan dropped to a low of US $0.04-7/16, as influenced also by the low local free sterling parity. Public consciousness of the existence and operation of a stabilization -3stabilization fund in that period has not been great, the impression being rather that the market has been un- supported, which is to a large extent true. Other factors have contributed to the firmer rates realized. These were principally the changed international situation and the decline in imports at Shanghai, details of which were set forth in the second of the two weekly economic reports above mentioned. The two divergent views on the question of continued support of rates are as follows: a. Views Against Support of the Shanghni Exchange Market. The group which holds this viewpoint includes those in Chinese Government banks, who believe that continued support of the yuan on the Shanghai market will aid principally the Japanese and the Wang regime, that the reasons do not now exist (or have changed) which have served as the basis for support up to the present, that no useful Chinese Government purposes contributory to prestige can now be attained by such action, and that is is preferable to withdraw from the Shanghai "front" as a tactical move in conducting the currency phase of the Sino-Japanese conflict, such a move being calculated to prevent the enemy from enjoying the advantage of access to a free exchange market if not to confound and make more difficult the achievement of enemy aims. A drop in the exchange value of the yuan in a Shanghai "black market" which may be expected to develop, will pull down the yen, so they believe. This group appears to have a blind faith in American intentions to bring about an early "showdown" with Japan. They believe that events are moving and will continue to move so rapidly against the position of Americans, Britons and Chinese 336 -4337 Chinese at Shanghai, that it is useless to attempt further to stave off the inevitable. The action of British interests in reorganizing and "unloading" on the general public (mostly Chinese) shares in certain of their local enterprises is cited as recognition by the British of the unpromising signs in the outlook. They fully expect that the American evacuation plans will finally embrace all Americans, and not only women and children. Those who think in these terms are defeatists as to the immediate future of Shanghai (so far as non-Japanese and non-Nanking interests are concerned) but are optimistic as to the ultimate outcome. b. Views favoring Continued Support of the Shanghai Exchange Market This viewpoint is naturally held by those with large property or investment interests in Shanghai, by certain of the commercial bankers, by traders who have not fared too badly thus far and who believe themselves capable of adjustment to new circumstances. They argue in the following terms: Any palliative is welcome if it will stave off the evil day. Why throw Shanghai to the wolves? If the Japanese and the Wang regime continue to be benefited by access to a free exchange market. they will have less incentive to kill the goose that lays the golden eggs. These thinkers hope that somehow Shanghai will escape dire calamity pending settlement of the European war which they believe will be the determinant of Shanghai's fate. It is preferable to stave off acute situations here as Shanghai is well worth preserving intact, if possible, in view of the huge concentration of foreign and Chinese wealth here and of the presence especially of large numbers of the better class Chinese, many of whom have come here from war ridden areas to avail themselves of the safety offered by the foreign controlled -5- 333 controlled Settlement and Concession. Shanghai is still the nerve center of the finance and trade of the country. That status should be preserved insofar as possible and as long as possible. It is more likely that the Japanese and the Wang regime will let Shanghai live if it can continue as a "going contern". Shanghai cannot be worth much to any of the interests involved unless it can function with some degree of normalcy in trade and finance. Efforts should be bent, therefore, to preserve that status. 2. A Review of the Circumstances as a Basis for Examination of the Two Foregoing Views. a. Points Raised last May in Favor of Support, in Light of Subsequent Developments. Market Performance was Good in Spite of Little or no Stabilization Effort. Arguments last May in favor of continued support of the yuan at Shanghai were: (1) abandonment of the currency system would result in loss of prestige and of confidence generally in the National Government of China by the populace in the Japanese controlled areas, whereas continued support would be the best defence against attack by Japanese sponsored fiat currencies: (2) further support would forestall the introduction of a new fiat currency by the Wang regime at Nanking, particularly as conservative Japanese business interests were known not to favor such currencies, whereas abandonment of Shanghai market support would encourage the early introduction of a new currency in this region: (3) continued support, if properly handled, should make it possible to recover into the Stabilization Committee's control, some of the huge holdings of banks and individuals estimated at US$150 million in foreign currency credits, particularly would restoration of public confidence tend to encourage the conversion of some portion of these holdings gradually -6339 gradually back to "fapi"; (4) foreign trade with Shanghai could be continued, with America as the principal seller, as other supplying markets of importance in Europe were cut off, American sales to Shanghai amounting at that time to about US$? million per month; (5) even though Japan or Japanese interests might realize some small benefits from renewed support of the yuan, the Chinese Government had up to that time so far regarded such losses as a relatively minor part of their war costs: (6) renewed support would connote greater confidence and would "immobilize" bearish speculative activity to some extent, would tend to stem the flight from money into huge excess stocks of goods (produced locally largely from imported raw materials - since Japan was denuding the region of domestic supplies of these materials) and means could be taken to encourage liquidation of such stocks: (7) the cost of American support for the yuan would be relatively small compared with the expense of benefits already bestowed upon China by the American silver purchases; (8) relative to expenditures for relief in the United States and for work relief, the anticipated figure (US$50 million) for establishment of such a fund would be small and might result in placing double or treble that amount in payroll envelopes for production in the United States of export merchandise for Shanghai and in relieving to some degree the American excess staple commodity position; (9) renewed support would fortify and strengthen the American position in China, already impaired and further threatened. It seems patent that item 1 above is no longer of great concern in light of Japan's formal recognition of the Nanking regime and apparent preparations to implement stronger policies in East Central China. Item 2 no longer holds as the now currency -7. 340 currency is expected to be launched shortly. Item 3 has been realized but by other circumstances than employment of additional stabilization funds. As to item 4 a business depression has curtailed American sales to China heavily and no early recovery is in sight. The views in item 5 are no longer held. The Chinese Government is reputed to have sacrificed large portions of its reserves in pursuing this theory. It is doubtful whether the theory expressed in item 6 would hold under pressure of certain other adverse conditions. The flight from money into goods has lessened because of an obviously too highly stocked situation and because of markets being blockaded. With regard to items 7 and 8 the soundness of policies for American general aid to China has been frequently expressed of late by outstanding American spokesmen, but not with specific reference to support of Shanghai rates. The realization of item 9 in view of the greater impetus in the Japanese scheme of aggression would probably not now be possible, ES applying to the position at Shanghai, especially should extreme action be taken by Japan or Nanking. Thus, while many of the points were well taken seven months ago, much has transpired to alter the circumstances and outlook, -- much which has had a direct bearing on the currency -- though certain of the effects in relation to the causes have not been widely understood. For example, few people realize that the intensification of the Japanese navel and military blockade of the Chinese controlled ports and territory and the resultant almost complete cessation of the movement of the products of Shanghai industry to the Chinese controlled interior con- stituted a strong (though indirect) factor in bolstering the yuan -8- 341 yuan on the Shanghai exchange market. While the blockade had an adverse effect on local industrial activity and is still felt, it also to a considerable degree checked the tendency toward flight from currency into merchandise which entailed such huge imports of raw commodities (for manufacture into salable merchandise) and hence which created such heavy demands for foreign exchange. Thus the pressure on the exchange market WES relieved. American sales to China have dropped to a level between US$4 million and US$5 million Der month. Also it must be noted that the intensification of the European struggle, with the blitzkreig of May and June, which resulted in the Low Countries and France being overrun and which created fears even for Britain's immediate safety, made European currencies, including sterling, less promising, hence altered the relative cosition of the yuan. Holders of yuan were quick to realize that their own currency was probably not such a coor risk. There WAS even some market sentiment which believed that with other principal world currencies dropping, the United States might even further devaluate its own dollar. Thus, queerly enough, situations which were worse for the position of the Allies in Europe, and which threatened the business outlook in Shanghai reacted beneficially on the exchange rates for yuan, which have, thus, after reaching a low in June of 4-17/16 graduilly improved and steadied to points around 6$ as at present. It is anamolous but true, therefore. that the yuan has not required much support in the past seven months but, because of the peculiarities of the developments, has been able to retrieve some portion of previous losses from the market, the estimated recovered amounts totalling possibly as -9- 342 as much as US$10 million, 80 it is understood. It is not denied, however, that a sharp decline might have occurred following the signing of the Wang-Abe treaty on November 30. but that much was probably averted by the timely announcement of American aid in new credits to China. However, these credits were anticipated in well-informed circles as it was widely known that Mr. T. V. Soong had been for some time in Washington endeavoring to arrange such credits. At any rate, the stabilization banks in Shanghai (The Hong Kong and Shanghai Banking Corporation, and the Chartered Bank of India, Australia and China) would probably have been limited as to the extent to which they would sell to maintain rates, in the event of another crisis, had definite information in regard to the American credits not been known. As matters have actually developed in the past few days, the stabilization banks, it is understood, bought on the firming market in order to hold rates steady, as appreciation of the yuan is apparently not desired by the authorities concerned. Bankers are puzzled in some degree, because the outlook involves so many complications and because they cannot see ahead even from day to day as to what course events may take. The time element is also highly uncertain. Even if certain assumptions may be made as to what the Japanese authorities locally may do, or what the Wang regime may do, it is realized that the situation in Europe and the American reaction thereto may slow up or accelerate these anticipated events. b. Examination 10 343 b. Examination of Further Views and of the Technical Aspects of the Arguments Advanced by Those Who Favor the Continued Support of the Shanghai Exchange Market. Those who favor continued support of the yuan contend that the issue of "fapi" is vastly greater in the Chinese controlled interior than at Shanghai and that it is not true that the greater portion of China's currency is concentrated here. This view is probably near to being correct. It is popularly believed that there is as much as yuan 1 billion in "fapi" notes in the vaults of one of the control banks (the Hong Kong and Shanghai Bank) in Shanghai and that there may be in the aggregate more notes in bank vaults than in actual circulation among the populace of this region. There appears to be no exact information available, however, as the information is considered confidential, especially by the stabilization committee and the control banks. Those who favor continued or renewed support do not subscribe to the popular belief that the existence of a considerable hoard of "fapi" in the region enables the Japanese, through any possible forcing of issuance of military scrip yen, to acquire any considerable amounts of the "fapi" for conversion into foreign currencies. They contend that the notion with regard to huge Japanese profits as derived from the Shanghai foreign exchange market is greatly exaggerated. They propheay that the new Wang currency, when issued, will have difficult conditions to meet, that it will be accepted in this region no more readily than was the "F.R.B." currency in the North in the initial stages. They hold that the circulation of Japanese military scrip yen in the "Central China" region cannot be as large as generally supposed and that it 11 - it does not have the free acceptance everywhere that is supposed. They contend that only last June, when Japanese interests were selling U.S. dollars in the local market fairly heavily (to acquire about yuan 60 to 70 million in "fapi"), it was learned from the Japanese themselves that this action was for the purpose of financing their cocoon purchases up country (part of the scheme to monopolize silk trade). Thus, they must have been limited as to the quantities of "fapi" which they could acquire through exchange of military scrip or other yen. In the fall when Japanese were again selling U.S. dollars locally, it was learned that they wished to acquire "fapi" for the purchase of raw cotton up country, some for use in local Japanese mills, and further quantities for use in Japan and Manchuria. Certain of the bankers contend that these exchange trans- actions virtually constituted sales of "export exchange". Therefore, Japanese insistence that foreign or Chinese interests negotiate their export exchange through the Yokohama Specie Bank (for export goods acquired through Japanese monopolistic syndicates) represented in part at least only a recovery of foreign currency already expended in financing the purchases in the interior and in bringing the goods to Shanghai. On goods exported by the Japanese controlled syndicates or monopolies, the foreign currency credits are recovered on sale of the goods by Japanese in New York. Naturally special profits accrue to the Japanese, but by no means do they get the whole of the foreign exchange represented by exports. Apparently, therefore, they are still obliged to advance U.S. dollar or sterling credits to a considerable extent for financing the export business which they handle. The situation is not so simple that they can issue yen scrip and acquire export goods for it. For the most 344 - 12 most part the Chinese in the Japanese controlled interior, demand "fapi" and Japanese must, therefore, provide themselves with "fapi" in order to make purchases. Thus, the "fapi" is still strongly bound up in the economy of the hinterland of Shanghai and it would be a great mistake to destroy that status, so the proponents of support contend. Those who argue on this side of the question try to analyse the ability of the Japanese to acquire benefits out of the open foreign exchange market from acquirement of "fapi" as follows: So far the Japanese have been acquiring "fapi" principally from tax revenues which are deposited in the Yokohama Specie Bank. 1. Shanghai Customs revenues, amount monthly to possibly yuan 10,000,000 2. Consolidated Tax, and Salt revenues, together may possibly amount to as much as yuan 15,000,000 Total monthly acquisition probably no more than yuan 55,000,000 It is argued that this money must be paid out in the form of administration expenses for the Customs, Consolidated Tax and Salt revenue services and for administrative expenses of the Nanking regime, and that there can be very little left for other purposes. Some of this accumulation of "fapi", it is averred, also must go to the Japanese Army and Navy for buying provender and other supplies needed in connection with the occupation of Central China areas. Even if this disposition were to account for all the remaining revenue, it would not be much of a factor in offsetting the expenditures which must be made from Japan's budget for maintaining its forces in Central China. The 345 - 13 - The contention, therefore, is that from revenues of the region there is very little if any "fapi" which can accrue to the Japanese, or even to the Nanking regime, which would be free for conversion to foreign currencies in the exchange market. Furthermore, if the measures which tend to stifle foreign trade activity continue, revenues are bound to drop and both the Japanese and the Wang regime will be worse off, particularly if there are any retaliatory moves of an economic nature by the United States such as could easily be undertaken. It is confidentially learned from the largest of the two "stabilization banks handling the Anglo-Chinese fund, 1.e. from The Hongicong and Shanghai Bank, that the clearing balances in yuan accounts maintained in that bank by local Japanese banks are not large and that there are no significantly large withdrawals (conversions) from such balances for the acquisition of foreign exchange. Japanese private individuals and corrupt officials undoubtedly secure "fapi" and, by means of it, foreign exchange out of their "cut" on the gambling concessions and opium traffic and out of extortions of "fees" from passing trade, but this, while probably a large figure, does not benefit the Japanese nation. Rather does it accrue to racksteers both Japanese and Chinese who, however, are believed to spend most of their takings locally, possibly converting some portion to yen for remittance to Japan. Some portion undoubtedly goes into exchange to finance importe of American motor care, to make the latter bullet proof, and into other imported luxuries, as Japanese are increasing in importance as customers of shops south of Soochow Creek in the Settlement, purchasing all manner of domestic and imported manufactured articles, The 346 14 - The Japanese naturally can acquire "fapi" from the territories they control in the interior in exchange for military scrip, but not to any great extent, so it is contended. Chinese will not yield up good money for bad money, except at the point of a gun or bayonet. So the Japanese are obliged to make good on the scrip currency. Unless Chinese can buy Japanese merchandise with the scrip they will not accept it in exchange for their farm or handicraft products. This situation has obtained in North China, a factor which slowed up the success of plans for expanding new currency issues. New money can succeed apparently only through drastic controls of trade, and economy generally. Japanese goods or services must be supplied to replace the currency issued. So the scrip comes directly back into Japanese hands in return for Japanese goods, produced possibly in part from raw commodities imported into Japan from non-yen bloc countries at an expenditure of Japan's foreign exchange reserves. It remains to be seen what the Hanking regime will have to offer in return for currency which it may circulate. Revenues accrue to Japanese companies for operation of railways and inland waterways, but considerable military transportation must be handled, so profits must be lower than imagined. "Fapi" is not acquired for passenger fares or freight haulage. Military scrip is the stipulated currency. Fares and freight charges are not excessive. However, it is admitted, the scrip profits can be converted to "fapi" and hence into foreign exchange. Many observers believe the issue of scrip in the Lower Yaugtene region must be relatively very much smaller than the "fapi" issues in circulation here. Otherwise the military scrip could not be at its present premium, i.e. yuan 1.62 to military 347 - 15 - 348 military scrip yen 1.00 on the local exchange market. Hence popular notions that the military scrip issue must be huge are scouted by this section of opinion. Even when foreign exchange is acquired by any of these operations, (inflation of fiat currencies, monopolistic export trade, or otherwise) the portion of such exchange which may be acquired by Japanese banks or by the government of Japan must be used to meet interest and principal payments to the United States on outstanding Japanese obligations. These are variously estimated as around US$400 to US$500 million outstanding. and Japanese holdings of the securities constituting these obligations are variously estimated at from 40 percent to 90 percent of unliquidated principal amounts. Hence Japanese have a special interest in keeping the payments up. However, it is quite possible that admonitions lately expressed by a certain American Wall Street banker to Japan have to do with warning signs that Japan's policies may lead to default and thus to a break in an otherwise good record for fiscal integrity enjoyed by Japan in Wall Street, In no way is Japan likely under present policies to be able to pile up reserves out of its operations in China or to acquire by attack on the "fapi" amounts which could go far toward aiding in meeting Japan's adverse balance of payments arising out of large expenditures principally in the United States for supplies of war and other materials. If Japan were to acquire any appreciably large gains out of the Shanghai exchange market, they could not long be continued, as the rates would rapidly become depressed. A fall in the "fapi" would pull the yen down automatically. It should therefore be to the interest of Japan to see to it that - 16 - 349 that the status of the yuan is maintained. But some obtuseness among the Japanese authorities attempting to implement new policies related to Far Eastern "co-prosperity" obtains. They cannot see this point clearly. Hence they may proceed along lines which may ultimately defeat their ends. There are some bankers among the group desiring continued support for the Shanghai exchange market who go 80 far as to state that stabilization efforts have cost the Chinese Government little or nothing 80 far, and that a new or renewed fund could be so handled that not a cent of it need be sacrificed. Its mere existence and the fact of American backing would have such a strong moral effect that speculators would be frightened out and there would be no necessity for frittering the fund away in sales to support rates. They do not state how this could be accomplished, however. The thinking of this group presupposes that eventually Japan will reach the end of its resources and be obliged to withdraw from China either by stubbornly pursuing unattainable objectives to exhaustion or, on the presumable conclusion of the war in Europe in favor of Great Britain, by being obliged to yield to strong pressure exerted at that time by Great Britain and the United States. It will be to the advantage of the Chinese National Government at that time, 80 it is contended, to be able again to assume control of the region centering on Shanghai, which, if kept intact, will be ready to function as the basis for regeneration of the economy of the country. If Shanghai's major foreign and Chinese Interests have not been impaired, the industrial life and trade of the country can quickly be resumed, and rapid recovery can be made. But if those interests have in the meantime -17- 350 meantime been jettisoned through any false conceptions of their value to China as a result of doing away with the exchange market which is their life blood, the foreign interests will not be likely quickly to return after the conflict is over nor will Chinese be readily capable of resuming operations. Larger rehabilitation loans from abroad than otherwise would be necessary would have to be secured before China could move forward. Besides, the social and economic consequences which would result from any policy of jetissoning Shanghai would be disastrous to about three million or more Chinese of all walks of life, The importation of rice to feed the populace would be more complicated or difficult if not impossible if no exchange were available. It will be impossible to conduct commercial affairs with "totalitarian" money without full control of exports and imports, and the only way to control trade is through the Customs. Thus, abandonment of the "fapi" would accelerate Japanese, or Nanking regime, or joint trade control policies and would result in Japanese and Nanking regime personnel being given greater or exclusive powers in the Shanghai Customs organization. Thus abandonment of the "fapi" market here would be the same as contributing to the Japanese and Wang aims. Thus it would be a misfortune for the Chinese National Government to lose Shanghai. It is political thought and not good economic or business planning for Chungking to be willing to give up Shanghai. The Japanese authorities carrying out policies in China no longer show any evidences of #holy" or messianic aims. Their operations are rather in the nature of racketeering. This fact makes it possible for foreigners and Chinese to carry on some business, to live and hold on pending a settlement of affairs by - 18 - 351 by "arranging" the details (of transportation et cetera) of commercial transactions with the individual racketeers in power locally. It should be clear that with Japanese individuals profiting as racketeers out of the confused situation, Japan's national aims cannot proceed to a successful conclusion. It should be emphasized that much of this type of argument and thinking is advanced by the large old established British interests here. British interests at Shanghai, it is stated by the head of the largest British trading and holding company here, amount to an investment of no less than $200 million. Naturally their "interested" position causes them to favor anything which will bolster Shanghai and keep it intact. However, their enterprises to a large degree are jointly owned by Chinese and the general public since their shares are publicly issued. But it is clear that they do not ant to lose their position of control. They feel that the British aid in stabilization of the yuan from early 1939 to the present aided American trade to a large extent, and are not averse to seeing some reciprocal or cooperative action of the sort from America. It is scarcely possible to subscribe to all of their contentions. Many points constitute beliefs which only events of the future can prove. Some have a basis of sound- ness. Others are somewhat misleading it is felt. C. Examination - - 19 C. Examination of Further Views and of the Technical Aspects of the Arguments Advanced by Those Who Do Not Favor the Continued Support of the Shanghai Exchange Market. This section of opinion entertains little optimism for the immediate future of Shanghai. Those harboring these views point out that the Japanese have consistently impaired, reduced and partially or wholly destroyed the economic and trade position of all but themselves in every area where their aggression has penetrated and that the losses of most established interests in those areas are great. Therefore, the Japanese can be counted upon to continue these policies and the processes are more than likely to continue until Japan is stopped by force. It is absurd to contend that Japan is not making gains out of the occupation of territory and out of the exchange market. It is pointed out that Nazi influence is behind the Japanese encouraging them in their flouting especially of foreign interests, that the prompt carrying out of the plans for recognizing the Manking regime (following the joining of the Axis entente) and giving it, even grudgingly, greater powers in the form of a central bank and the right to issue currency and to control trade, is part of the imperialistic aims of Japan for expansion. It was a hurdle which must be jumped before the larger scheme for a "Greater East Asia" could be furthered. It is believed or understood by this group that Wang Ching-wei insisted on greater financial control and that the long delay in consummating the treaty was due to Japanese reluctance to meet Wang's insistence that his government be permitted to collect taxes directly and to issue its own currency. Thus 352 -20- 353 Thus, apparently the Japanese had to yield on these points in order to make the treaty a reality. It is considered almost certain, therefore, that the Thang regime will be permitted to proceed with the implementation of plans to embarrass foreign and Chinese interests by obstructive trade controls of a drastic sort. (The only thing that could stop it would be the opposition of the Japanese authorities who may still wish Wang to have only nominal authority and who may wish to further their own preferential position in trade and to perpetuate the military scrip yen rather than make way for a new Chinese currency. The treaty provides, it is pointed out, that the Nanking regime may implement trade controls "autonomously" but must not infringe upon the principle of Sino-Japanese economic cooperation. That these controls will be instituted almost immediately is the expectation of those who have the pessimistic view and who anticipate that conditions may become WOESE here for business and trade generally before they can be- come better. Both foreign and Chinese interests. they expect, will be faced with even more rigid and discriminatory controls than 80 far experienced, --- and this at an early date. In their opinion, there is no point in attempting further to support the situation at Shanghai when that eventuates. There are too many unfavorable signs already visible to expect anything better, and these portents are being added to daily. Shanghai is already being actively looted in that Chinese possessed of even only moderate means live in the constant - 21 - 354 constant fear of being kidnapped and mulcted for all the cash they can persuade friends and relatives to produce as ransom. It is understood that no less than fifteen such kidnappings are perpetrated daily in Shanghai, both well-to-do and moderately well-to-do Chinese being in- volved, very little news of it being published. Only when well-known persons are kidnapped does the news come out. Many have paid handsomely to ganster organizations for "protection" against kidnapping, but the amounts paid are large. So long as the security of Chinese, who are the backbone of the economic life of the community, is threatened, that of the foreign interests is also in jeopardy. 3. Considered Opinion on What is Likely to Happen. The feeling in Chungking as interpreted by the Chinese Government banks is that the pressure on Shanghai will increase, therefore, that the position of Americans and other foreigners in Shanghai will be increasingly threatened, that Americans will probably be obliged to get out in due course. Hence it is useless to plan a long range strategy under which to remain and hold the fort. Nanking is most likely to issue currency, to attack the "fapi" and to introduce trade controls more drastic than anything the Japanese have yet done. Efforts to bring the East Central China region within the yen-bloc scheme may thus proceed much faster than has been the case in North China, and the Japanese now have the benefits of their experience in the north upon which to proceed to a more rapid realisation of their objectives. The "E.R.B." currency - 22 - 355 currency must be reckoned as a success in North China. The "fapi" market in North China is nominal only, is dependent upon Shanghai, and "fapi" have almost disap- peared from circulation in Tientsin, where nearly all business is transacted in "F.R.B." notes, even within the Concession areas. It is noteworthy that two prominent local commentators venture the view that American stabilization money will not be used in any way which will benefit the Japanese or the Nanking regime. A program is being prepared by the Chinese National Government, ( so it is intimated confidentially by acquaintances in the local financial world who have reason to be advised of views in Chungking), to be put into ef- fect so soon as it is clear that drastic currency and trade control policies on the part of the Japanese and the Wang regime in this region will be accelerated. It is understood, however, that the plan will not be put into effect until extreme situations arise warranting the action. The plan involves three major steps: 1. To discontinue further attempts at control of the "fapi" in the Shanghai market. 2. To move the exchange market elsewhere, to some location where a "nominal" free and open market for the Chinese currency may be maintained until the end of the Far Eastern conflict. This will remove adverse psychological effects surrounding the belief that if the yuan exchange market "flops" in Shanghai. it will "flop" everywhere, Manila and Hong Kong are discussed as new possible locations. The "interior" is also talked of vaguely as the locus. but communica- tions facilities would be an obstacle if Chungking were the new location of the exchange market. 3. To -23- 356 3. To retire "fapi" from circulation by providing facilities whereby holders of surplus amounts could deposit them with banks to be chopped up into bits, or shipped surreptitiously out of Shanghai, the credit balances to be transferred to accounts in Hong Kong or Chungking. Some further elaboration of various aspects of the plan are as follows: (1) The American stabilization fund would be used to bring about a favorable psychological reaction through the lending of prestige and backing by America to China's currency, the reserves of which could not be expected to last much longer under any long continuation of the Sino-Japanese hostilities. (2) Specifically, the form of support is expected to include maintenance of rates on a free exchange market to be established in one of the three locations mentioned, or elsewhere, away from Shanghai, thus to displace the Shanghai market, and especially to make it impossible for Japanese interests or Japanese of- ficially to benefit by the existence of such a market. (3) It is reiterated that this program will not be undertaken unless conditions force drastic action of the sort. (4) Pending the anticipated developments, the Shanghai market will function as at present. Considerable moral support has been lent to the "fapi" in local sentiment, and the function of the Control Committee handling the Anglo-Chinese fund appears under present conditions to be to buy when necessary to hold rates down rather than to sell to maintain the market. Despite reference to this fund as "defunct" in the remarks of a local commentator. it is definitely not depleted and has been augmented out of purchases from -24- from time to time, and especially since the announcement of American financial support for China, Higher rates would benefit the Nanking regime or the Japanese and are not desired. (5) If a withdrawal of further support at Shanghai is forced, then it is expected that a "black market" for "fapi" will develop here at lowering rates, which would be likely to hamper the Japanese and Nanking. Conclusions. Certain points raised by each side of the debate are highly controversial and cannot be proved or disproved without more conclusive information than it is now possible to secure, and certain other points can be proved or disproved only as events unfold, since they are dependent upon future developments rather than upon historical fact. However, it is believed that the presentation of the views will serve a useful purpose in that it records a number of sidelights to the currency problem which may be of value in arriving at a better understanding of a highly complicated situation, and may be of some value for further elaboration as more conclusive information becomes available or for future reference as events transpire. Some individuals here, well-informed as to the thinking or planning in Chungking, feel convinced that the considered program above outlined is the one most likely to be undertaken. As many of their predictions have been correct in the past, it is considered highly necessary to report it, even though those opposed to such plans regard them as fantastic and ill-advised. Respectfully yours, Frank F. Lockhart American Consul General 851.5 ABC:JCB/EAR In Quintuplicate Copy to Embassy, Peiping Copy to Embassy, Chungking Copy to Embassy, Tokyo A true copy of the signed original 357 358 BRITISH EMBASSY, WASHINGTON, D.C. December 9th, 1940. Personal and secret. Dear Mr. Secretary, I enclose herein for your personal and secret information a copy of the latest report received from London on the military situation. Believe me, Dear Mr. Secretary, Very sincerely yours, Hank Batter The Honourable Henry Morgenthau, Jr., United States Treasury, Washington, D. C. 359 Telegram from London dated December 7th. Naval. In H.N.S. "Carnarvon Castle's" engagement the raider was sighted at 0642/5 and chased. The raider opened accurate fire at 0800 at 17,000 yerds 21 minutes before "Carnarvon Castle" was in range. The latter's main aerial fire control and all communications were out early in the engagement but raider was also hit early on, made a smoke screen and was on fire aft. She was twice reduced to one gun for a short time and fired two torpedoes which "Carnarvon Castle" avoided. Enemy then turned and fired other broadside with accuracy, range 8000 yards. "Carnarvon Castle" repeatedly hit during this phase and cordite fire resulted while two compartments were flooded. 2. At 0910 "Carnarvon Castle" opened range with intention of shadowing but enemy escaped behind smoke screen. Both shipe expended large amount of ammunition. 3. H.M.S. "Cameron" 18 probably total loss. 4. H.M.S. "Glasgow" has arrived in harbour. 5. No less than 31 distress signals received yesterday due to North Atlantic gales. 6. During air raid on Portemouth last night slight damage caused in dockyard, very alight damage to "Dolphin", no casualties. 7. Royal Air Force December 6th, Weather conditions were bad and usual coastal patrole and reconnaissances were reduced. one Blenheim did not return from patrol. 8./ 360 -2- 8. Night of 6th/7th. 53 aircraft were sent out to attack enemy aerodromes, and one heavy bomber to drop leaflets over Paris. A special defensive patrol of 20 heavy bombers was flown in conjunction with enemy activity over this country. 36 night fighters also operated, but sc far no interceptions have been reported. 9. Greece. on the morning of 6th seven Blenheims attacked dockyards, dumps and communications at Valona. A munitions dump was again hit, and also a motor-trensport Fires from previous raid were still smouldering. park. 10. German Air Force, Night of 5th/6th. Further reports. In London area seven persons were dead and 29 injured. Enemy activity and bombing 11. December 6th. was negligible. Owing to a gale, there was little activity from our stations. 12. Night of 6th/7th. Enemy operations were not on a large scale probably owing to bad weather. About 45 aircraft attacked Bristol and five more operated over Southempton-Portemouth area. Some single aircraft were plotted in the vioinity of some Royal Air Force aerodromes. By 1 a.m. the country was clear. No bombs were dropped in London area. 13. The attack on Bristol began at 7.55 D.M. Many fires were started and important buildings were hit but damage does not appear to have been very serious, although details of damage and casualties are not yet available. At Portmouth-Oceport, ten persons were killed and eight injured, but material damage was not/ 361 not serious. 14. Aircraft casualties in operations over British Islee: Enemy nil. British, one medium bomber missing. 15. Bulgaria. Heavy snow has fallen throughout the country and many roads are unfit for heavy traffic, especially in mountain districts. CONFIDENTIAL Persphane of Code Radiogram Received as the War Department 362 at 12:29 P.M., December 9, 1940. Lendon, filed 15:45, December 9, 1940. 1. There were no daylight operations of the Bember Command - Sunday, December 8. The preceding night 40 heavy and eight medium bombers attacked the gas works, a minitions plant, and the freight years at Desselderf; and nine heavy and 33 medium bonbers attacked German air fields in occupied territory and four Channel ports. Reports indicate that all these attacks were highly successful. Three bembers were lost and two others are down in the Channel. The same night the Goastal Command successfully attacked power stations, shipyards and decks along the coast of France and boubed a French mater convey. The next day three German teakers off the coast of Norway were attacked but none was hit. In addition this Command operated two convey escorts and 24 routine patrels. 2. German daylight aerial activities on December 8 were restricted to patrols over the Channel and recommissance flights over Bristel, Portsmouth, Seetland, and North England and patrols over the Channal. About TO planos were pletted. The attack that night started as 5:00 p.m. and was the most severe delivered in three weeks. The main attack was delivered against Lender and almost all of Southeast England, with raids over Deford and Peterborough and North Would areas. The attack - London lasted will 7:00 a.m. a total of 14 hours of centional operations. The seals of the attack is CONFIDENTIAL CONFIDENTIAL 368 3. There is no official report of the extent of the damage from the night attack but there was much damage from high explosive bombs and fires were reported in 22 police districts. 4. The British lost no planes. One German plane was destroyed during December 8. That night two additional planes were shot down by antiaircraft and one by fighters. 5. The destroyer CAMERON (ex-U.S.S. WELLES), which was damaged by the German attack on Southampton, is now a total loss. 6. The Minister of Economic Warfare, commenting on the reported resignation of General De Vecchi, Governor of the Dodecanese Islands, states that the food situation in those islands is approaching famine conditions and that there is also a shortage of water. He believes that these conditions will oblige the Islands to capitu- late within 60 or 90 days. He further states that the morals of the troops stationed there is extremely bad. 7. The following is a resume of a secret official statement in regard to British shipping as of December 8: To include December 4, the British have convoyed 45,816 merchant vessels since the war started. of the ships in convoy, one out of every 231 has been lost. (This would make a loss of 198 vessels. - 0-2.) The imports into Britain for the week ending November 30 were nearly twice the weekly average for the ten weeks ending November 16. The new merchant and naval building program is claimed to exceed expectations. LEE Distribution: Military Aide to the President Secretary of War State Department Secretary of Treasury Asst. Secretary of War Chief of Staff - 2 far Plans Division office of Naval Intelligence 0-3 AC 2 CONFIDENTIAL 364 CONFIDENTIAL SPECIAL BULLETIN MILITARY INTELLIGENCE DIVISION No. 28 G-2/2657-231 WAR DEPARTMENT Washington, December 9, 1940. NOTICE The information contained in this series of bulletins will be restricted to items from official sources which are reasonably confirmed. This document is being given an approved distribution, and no additional copies are available in the Military Intelligence Division. For provisions governing its reproduction see Letter TAG 350.05 M.I.D. (9-19-40) M-B-M. OPERATIONS OF THE FRENCH SEVENTH ARMY, MAY 10-JUNE 24, 1940 SOURCE This bulletin contains a report signed by the commanding general of the Seventh Army on June 27, 1940. American official observers believe it gives a good picture of the rapid retreat effected by the French force and the energetic manner in which the Germans followed up this retreat. It will be noted that some units of the Seventh Army escaped, whereas the Third and Fifth Armies were completely surrounded. In order that the exact ideas of the author may be preserved, the document as presented here is a verbatim translation, unedited and unrevised. CONFIDENTIAL -1- 365 CONFIDENTIAL Army Headquarters, June 27, 1940. VII ARMY GENERAL STAFF NOTE ON THE OPERATIONS OF THE SEVENTH ARMY 3rd Bureau No. 3036 : 3/3 FROM MAY 10 TO JUNE 24, 1940. On May 19th, General FRERE, who two days previous had been entrusted with the mission of directing the concentration of the Large Units charged with protecting the region ST. QUENTIN - PARIS, took command of the Seventh Army. The Staff of this army, which the night before was still functioning in the neighborhood of GHENT, was moved in great haste to the region of BEAUVAIS. A new period was beginning for the VII Army. The situation was as follows: The effort of the German Army was obviously directed toward the coast with a view to taking possession of the ports and definitely cutting in two the French Armies. Nevertheless, facing South, the enemy had strong covering forces consisting of armored vehicles and motorized troops, certain elements of which had already gained a foothold South of the Somme, above ALIIENS. On the other hand, it was to be feared that the action might extend along the Somme in the direction of the sea. The Army consisted of the 24th Army Corps (23rd Infantry Division and 3rd Light Infantry Division) situated between the OISE from CHAUNY and BETHANCOURT. Further to the West, the divisions of the 1st Army Corps (19th Infantry Division and 7th North African Infantry Division and the 4th Colonial Infantry Division) were detraining. However, the threat from the North must immediately be coped with; the enemy armored vehicles must be stopped and - a matter of vital importance - the concentration of the Army must be possible of accomplishment. The sapper-engineers of the General Reserve had already been sent forward without infantry protection, to prepare the bridges for destruction. On May 20th the anti-tank barrages were established thanks to the help of the Reconnaissance Groups. The Army reinforced them with armored-cars, tanks, and anti-tank guns which came from the Eleventh Army, as well as with 75 mm. guns from the Portes Battalions of the General Reserve. Certain of these guns offered an heroic resistance to the enemy, the gunners preferring to be killed on the spot rather than abandon their materiel. A considerable effort was demanded of all these elements; it was thus that the Corps Reconnaissance Group of the 1st Corps, CONFIDENTIAL -2- 366 CONFIDENTIAL returning from HOLLAND, where it had participated from the outset of operations in severe combats, was immediately thrown into the battle southeast of AMIENS and succeeded in stopping the enemy at the cost of severe losses. Another cause for much concern was the enemy aviation which was relentless in its attacks on railway lines and, as a result the detraining of Divisions was effected at an irregular rhythm, 4 to 5 days behind schedule. Beginning May 22nd, the German onrush was stemmed; however, the enemy had gained the necessary bridgeheads south of the Somme to enable him to launch easily an offensive at a later date. For the moment, he had to be satisfied with the results obtained, for he had to concentrate his efforts on the annihilation of the First Army and the British Army. The Commander-in-Chief ordered the Seventh Army to border the Somme river and make a series of energetic attacks. Then it was to cross the obstacle in order to assist the Armies fighting in the region of ARRAS and in FLANDERS. The execution of these orders was immediately undertaken, but owing to the feeble means available to the Army, whose divisions were deployed on extended fronts: 15 kms or more on an average, it soon became obvious that it would be impossible to give satisfaction to the High Command. The German troops opposed a strong resistance and counter-attacked every time to regain lost territory. German reaction was particularly active in the region of ABBEVILLE where the 4th Armored Division made but slight advances. The enemy, well entrenched and camouflaged as well as abundantly equipped with anti-tank weapons, inflicted very severe losses on our tanks. In certain cases, the enemy used its bombing aviation whose effects were dreadful particularly insofar as the black troops of the 7th Colonial Infantry were concerned. On May 29th it became evident to the High Command that it would be impossible to reduce the German bridgeheads south of the Somme. In view of the attack that everyone knew was imminent, it was only a question of organizing the position defensively in order to oppose the enemy thrust. First of all, and above everything else, the armored vehicles must be stopped. Consequently the troops were ordered to form themselves into strong points which would be made impenetrable CONFIDENTIAL -3- 367 CONFIDENTIAL to tanks. Part of the artillery was used as anti-tank guns. Echeloning in depth was effected as far as the weak effectives available to the Army permitted. Instructions were issued to resist on the spot. Insofar as armored means would permit, the strong points would be delivered by means of counter-attacks. On June 5th the attack was launched. It started by a violent bombardment along the entire front. The 19th Division, deployed northeast of the bridgehead of PERONNE, bore the brunt of a Panzer Division attacking on the axis PERONNE - ROYE. The action of the tanks was prepared and supported by extremely violent dive- bombing on the strong points, the C.P's and generally on all villages. In spite of the violence of the attack, the strong points were held; it was even possible to supply most of them by means of small track-laying cars during the night of June 5th-6th. Enemy infantry in this region did not prove to be very aggressive; a counter-attack made June 5th by the 41st Infantry (19th I.D.) resulted in the capture of 150 prisoners. It would seem that at this time the unity of the front could have been maintained if the intervals between the encircled strong points could have been cleared by armored units. On June 6th, the attack was resumed with renewed strength on the 19th Infantry Division and the left wing of the 29th Division. An enormous mass of tanks - almost one thousand - said the observers, was reported. During the night June 7th-8th by order of the Army the 19th and 29th divisions withdrew in rear of the second position. It was then that the 7th North African Infantry Division and the 47th Infantry Division, occupying this second position, were to bear the brunt of the German assault. To cope with the enormous mass of German tanks, a powerful counter-preparation based on heavy artillery and aviation was executed during the nights June 7th-8th and 8th-9th. These fires had a very definite neutralization effect: the mechanized German forces did not interfore in the withdrawal as much as might have been expected. The thrust of the enemy armored vehicles in the direction of ROYE, combined with a German attack debouching from NOYON threaten- ed to pinch out the 23rd Infantry Division and the 3rd Infantry Division. These divisions were engaged in the salient formed by the CONFIDENTIAL 368 CONFIDENTIAL CROZAT Canal and the OISE. They were obliged to withdraw fighting their way through enemy columns. The 23rd Division in particular was saved thanks to the cool-headedness and maneuvering ability of its commanding general. On the right wing, the 87th Division, on the AILETTE suffered the assault of 4 enemy divisions. It withdrew to the AISNE after a splendid resistance. The withdrawal toward the OISE was carried out without major difficulties in spite of infiltrations of enemy units which threatened the western columns. However, the crossing of the river was for the Army a severe test. The bridges of CEEIL, PONT SAINT TIAXENCE and COMPIEGNE were blown up June 9th at about 4:00 P.M. as a result of a bombing which set fire to the prepared explosive charges. A little later the bridge of VERBERIE blew up. In certain places, enemy armored vehicles reached the bridges ahead of our troops. As a result, in spite of the devotion to duty of the sapper engineers who endeavored throughout the night to insure the passage of troops only one heavy bridge company succeeded in offording passage for 1200 men - a large number of men and a great deal of materiel remained in enemy hands. The Infantry, in particular, was obliged to abandon part of its organizational equipment and its anti-tank armament. Owing to the severe combats which had taken place ever since June 5th and to the fatigue of the withdrawal, the exhaustion of the men was extreme. The German menace south of the Cise, by way of the VERBERIE bridge, as well as the enemy advance on the front of the Sixth Army, obliged the elements that were still in the forest of COMPIEGNE, threatened on three sides, to withdraw. This operation was carried out under enemy pressure and very difficult conditions. During this period, transport means were used to the fullest extent. It was under the fire of enemy automatic weapons that certain transport groups went to get the Infantry in the salient of HAM and in the forest of COMPIEGNE. The losses of these five days of combat were very heavy: 5 divisions were reduced each to the value of one, two, or three battalions and a few batteries of artillery. During the following days, always without protection on its right flank due to the German advance on the front of the Sixth CONFIDENTIAL -5- 369 CONFIDENTIAL Army, the Seventh Army started a continuous withdrawal the stages of which were as follows: Night of June 10th-11th: Position marked by the OISE above BORAN, the NONNETTE, northern edge of the ROI Woods, LEVIGNAN - RETZ. Night of June 12th-13th: Night of June 13th-14th: OURCQ - MARNE Canal. MARNE above ESBLY - the GRANDMORIN. Night of June 14th-15th: line VILLENEUVE ST. GEORGES - BRIE COLTE ROBERT, VERNEUIL L'ETANG, NANGIS, MAISON ROUGE. June 14th, the enemy, not very aggressive on the front of the Army, crossed the SEINE at NOGENT. It was therefore indispensable to contemplate a large scale withdrawal in rear of the LOIRE (90 Kms). The following decision was taken: the divisions still north of the Seine were to be transported by rail. The break-off of the divisions left on the Seine to defend the passages would be effected by using available motor transport to the fullest extent. It should be noted that between the SEINE and the LOIRE, the movement of troops was rendered impossible by the refugees who congested the roads: several lines of motor cars and horse-drawn wagons. Villages and crossroads were the center of a nondescript congestion. In many places it took several hours to cover a few kilometers. Furthermore, the bridges on the Loire were badly damaged by bombardment. While the Infantry on foot crossed easily, the same was not true of the trucks left without support on the right bank of the Loire; their passage across the river was made possible in part by the train. June 17th, the Germans crossed the LOIRE at ORLEANS and at LA CHARITE. The Seventh Army threatened on both wings, continued its withdrawal on the CHER. The same day the French Government started negotiations with the enemy with a view to concluding an armistice. The news was soon known by all. Its effect upon the Army, tired out by exhausting marches during this uninterrupted withdrawal, was easy to foresee. It was rendered worse by the fact that the Germans tried to use the prospect of an imminent armistice to disarm our troops, or to force them to make a hasty withdrawal. Hence, it was absolutely necessary to remove the Army from 370 CONFIDENTIAL German pressure. The only objective to be attained was to prevent the maximum number of elements from capitulating in the open. In spite of the activity of the motor transport groups working night and day; in spite of unimaginable fatigue, it was impossible to transport by truck all the Infantry of the Army. On June 18th, the remains of the 19th Division, and on the 20th those of the 29th and 47 divisions, surrounded north of the Cher River by numerous armored vehicles, were captured. That very same day the Army started its withdrawal on the CREUSE. On June 21st orders were issued to the Army artillery and engineers to make available to the infantry, insofar as possible, the trucks previously used for the transport of materiel. The Army withdrew on VIENNE-de-LUSSAC, la FRANCHE LOIRE and the course of the GARTEMPE. June 23rd orders were issued to continue the withdrawal on the VIENNE. June 24th, a withdrawal on the DRONNE and the AUVENERE was contemplated. During the evening, the news of the cessation of hostilities interrupted the operations of the Seventh Army. After having fulfilled with discipline and a spirit of sacrifice its difficult mission on the SOMEE, the Seventh Army successfully carried out a withdrawal maneuver of more than 500 kms. It thus avoided capitulation in the open, and brought back all of its Large Units, having suffered losses and exhausted to be sure, but having maintained their unity. Therefore, the German command can not say as it had announced - that it had annihilated the French Army. One must go far back in French history to find examples of a withdrawal on such a large scale. The action of aviation and of armored vehicles rendered incomparably more difficult the execution of such withdrawal. The results - so vital from the national point of view - were obtained only at the cost of severe losses of life, and also at the cost of superhuman efforts on the part of the troops. Future generations must know this. Commanding General, Seventh Army, Signed: FRERE. CONFIDENTIAL -7- 371 RESTRICTED G-2/2657-220 M.I.D., W.D. SITUATION REPORT No. 265 December 9, 1940. 12:00 M. This military situation report is issued by the Military Intelligence Division, General Staff. In view of the occasional inclusion of political information and of opinion it is classified as Restricted. I. Western Theater of War. 1. Air Force Operations. The German Air Force was practically inactive offensively from dawn on the 7th to dusk on the 8th. Last night a particularly heavy attack was concentrated on London. This appears to have been the most powerful night raid since the attack on Coventry, November 13-14. During the nights of the 7th-8th and 8th-9th the R.A.F. operated apparently in normal strength against airdromes and posts in the occupied territory and also against Dusseldorf in Germany. Dusseldorf has now been attacked three times in one week. II. Greek Theater of War. Capture of Argirocastro, which is located 15 miles northeast of Porto Edda, has been announced by the Greeks. The Italian Government has informed its people of this loss. Argirocastro was an important Italian base for the invasion of Greece, with the only air base in southern Albania. The nearest air fields are now at Valona and Berat, and further Greek advances may force the Italian Air Force to operate from the Italian peninsula. The Greeks are continuing the offensive, with Tepeleni and Elbasan as the next objectives. Air activity was minor in character. III. Mediterranean and African Theaters of War. All operations reported were on a minor scale. However, the R.A.F. raided an important Italian air base at Castel Benito, near Tripoli, Libya. RESTRICTED These tables prefered 372 by Dr White were rensed as of 12/17/40 and are filed that date in deary DOLLAR EXPENDITURES AND RECEIPTS OF STERLING AREA FROM DECEMBER 1, 1940 TO SEPTEMBER 1, 1941 (IN MILLIONS OF U.S. DOLLARS) Dollar Expenditures of Sterling Area Dollar Receipts of Sterling Area A. Dollar receipts by U.K. from U.S. U.K. payments to be made on total purchases from the U.S. 1. Sume to be paid between December 1, 1940 and Sept. 1, 1941 on orders already placed (In addition, $266 million is expected to fall due after Sept. 1, 1. U.K. exports of merchandise to U.S. 2. Net balance from U.S. to U.K. on invisible items 8 1,035 3. Summ to be paid by Sept. 1, 1941 on contemplated "X" program 4. Imports from U.S. not purchased through the British Purchasing Commission U.S. 541 1. Commodity exports 2. Australian gold exports to U.S. 3. South African exports of gold 959 Total C. Canadian assistance to U.K. 210 Total dollar receipts of U.K. and sterling area Total payments to be made on U.K. Items 2 and 3 above do not in- Total dollar deficit of sterling area clude $709 million of capital assistance. Whatever part of this 1s to be paid before Sept. 1941 must be added to this total. with U.S. Total dollar deficit of sterling area with Canada (in U.S. dollars) B. U.K. purchases from areas outside the U.S. Total U.S. and Canadian dollar requiring gold or dollars 1. Purchases by sterling area (mostly deficit of sterling area U.K.) outside the U.S. and Canada 1& 2. Payments by sterling area (mostly 660 U.K.) to Canada and Newfoundland Total U.K. payments outside U.S. 56 360 36 195 1,166 2,213 465 $2,678 g46 requiring dollars C. 420 $ 2,745 purchases from U.S. requiring dollars $ 135 B. Dollar receipts by sterling area from 2. Sums to be paid in next nine months on additional orders now under (It is expected that $6m4 million will be payable on this program after Sept. 1, 1941) 12 Total 1941) negotiation $ 123 373 Purchases by sterling area (excluding U.K.) from U.S. (Dec. 1940 to Sept. 1941) 1. Commodity imports 2. Invisible items Total payments to U.S. by sterling area (excluding U.K.) 250 3 253 GRAND TOTAL Dollar requirements of sterling area for all transactions $ 3,844 Treasury Division of Monetary Research. December 9, 1940. *This Department, in the balance of payments have been taken as three-fourths British. of the corresponding figures in the estimated figure balance and other of payments figures for the second year of the war, submitted by the 374 as of hac! 1940 UNITED KINGDOM FOREIGN EXCHANGE ASSETS AS REPORTED BY MR. PINSENT (In millions of dollars) 1. Gold 450 2. Dollars (a) held by Bank of England $64 (b) held by authorized dealers 60 Total 3. U. S. dollar securities held by United Kingdom 124 about 4. Latin American securities and investments held by U.K. nominal value (Market value of 1.7 billion of these was given as $630 million) 750 660 2,825 5. Gold of British Allies Held in U.S. and British Empire Norway 76 Nethorlands 464 Belgium 516 Czechoslovakia 6. French Gold in Canada or United Kingdom 30 650 The above items cannot be totalled because: (a) On certain of the items such as gold and dollar balances the British have indicated earlier that there are certain minimum reserves which have to be maintained and their reported balances are below that stated minimum. (b) No estimate was given as to the liquidation value of the Latin American investments. (c) No indication was given as to the availability of the gold of British Allies held in the United States and British Empire, nor as to the French gold in Canada or the United Kingdom. (d) On numerous other categories of assets for which WC have asked informa- tion, British Treasury representatives either have not yet submitted data or have indicated that they will not be able to do so. There is appended a list of the categories of assets which we had hoped the British Treasury would be able to supply data for. 375 -2Some of the British figures diverge in minor ways from the United States Treasury reported data and others diverge more substantially from United States Treasury estimates. It was agreed to iron out these divergencies in subsequent conversations. 376 UNITED KINGDOM HOLDINGS OF GOLD AND EXCHANGE The table below completes, up to the end of November 1940, the statement dated 7th October which was handed to Mr. Cochran on 14th October 1940. Monthly balance and loss Balance of gold and exchange at beginning of month Loss of gold and of U.S. and Canadian dollars Write-off of French francs, etc. Balance of gold and exchange at end of month Sept. Oct. Nov. (million i) July Aug. 1572 1293 1062 897 781 235 231 165 116 197 1062 897 781 584 X 44 1293 Resources utilized Gold, and U.S. and Canadian dollars (as above) Proceeds of sale of securities 24 9 8 4 7 173 235 242 125 This loss of $197 million is composed as follows:Loss of gold: Gain of dollars: Net loss 233 million " x 197 116 165 231 235 36 8197 BRITISH EMBASSY, 7th December 1940. 221 377 ESTIMATE OF VALUE OF U.S. DOLLAR MARKET SECURITIES HELD BY THE UNITED KINGDOM Securities sold from 1st September 1939 to 30th November 1940: & 78,000,000 Vested. 210,000,000 Unvested. 268,000,000 Securities unsold: 164,000,000 Vested. 637,000,000 Unvested. (say) 800,000,000 Note. Values of vested securities taken at dates of vesting (February and April 1940). Values of unvested securities taken at 29th June 1940. of the total of $800,000,000, circa 140,000,000 consists of Australian, Canadian and Foreign issues with U.S. dollar options which would be difficult to sell in the United States. The value of the marketable securities can therefore be taken at circa $660 million. BRITISH EMBASSY, 7th December 1940. 378 ALLIED GOLD RESERVES Norway holds £13 millions in Canada and perhaps £6 millions in the U.S.A. Holland holds £22 millions in Canada, which we vested in our Custodian of Enemy Property and subsequently released to the Dutch, and some £94 millions in the U.S.A. or South Africa. Belgium owns £87 millions in the custody of the Bank of England, and a further £42 millions in the U.S.A., which is at present blocked. Belgium also has £46 millions at Dakar. Czecho Slovakia holds £7 millions which is in the custody of the Bank of England. Poland has about £20 millions at Dakar. BRITISH EMBASSY, 25th November 1940.