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B-17E IRELANES OUTBACT 1535 A015677 Aluminum material requirements on order with the Aluminum Company of America for maich antisfectory delivery dates have not been established. Hoymed A Item Ent's Hel'd D-5029 08-4764 6/11 9/6 (2) (7) D5031 32-1764 6/11 9/6 6/12 9/6 Wing : Body Comp. Strut Chorde 150 6/12 9/6 24SRT Root. Tube 150 6/12 9/6 6/12 9/6 6/10 0/6 6/h 4/6 (0.10) D=505M 1169767 (1.#.3) (14.14.13) n=6010 00767 D-9041 9 (1.0.4) (2.0.1.9) Ditto Ditto Ditto 24 150 Ditto Ditto Ditto 24 150 bitta Ditto Bitte (A) # 190 Disso DIVED Ditte a# 6/10 190 Ditte Ditte Ditto 24 # 6/h 150 Ditto Ditto Ditto a# 1/18.2/15 25% 14/28. 24 (28.23.25) P1767 (26.20.29) 1041767 10 150 (32.33.A4.35) -1: (2.0.9) bal. 11/20 26 (17-00. Inel.) D=9040 # 33% 12/2. /18.33%.12/28. 17 1/28.2/28.3/29 II (0.0.4.5) 12/26 H (4.5) 12/9 9 . 809767 12/13 bul. 12/16 . D-5037 12/4 25% 12/4, a (4.5) 11/5 . (0.1) Requi Trenent 33% 11/5. # CF-4767 Date Requirement 2/15 " D-5036 fleadline il (1,23) from Delivery 33% 10/21. 12/5. 1/6 4 7 (1,2.3) Aloon Fetimated 150 a 6 D-5035 SF-4766 150 leadline Delivery . 5 (17) of Please 17ST Forgings # 4 (2) Description of Meterial # 3 Delivery Order order Last Order Item A Item 2 Number Aleon Order flac 1 For liebedule . delay indicated in For initial partial shipment Artial Shipment 13% 11/9 1941 11/20 33% IIM Del. 10/16 100 DIESO Ditto DESSO in # # 150 little Diver DEGRO if # a il 190 Disso Disse Ditto in # ### NIA the sea Ando #######-#### belivery from Delay imediline (1.8.3) (6640. tuel) 6/10 9/6 6/10 9/6 6/h 9/6 u/m 0/10 - ######## 7/8 9/0 1780 instructed 190 we MM 1e/ee a 1/4 4/6 and assessed 190 11/6 14/4 10/us all 1/8 9/6 2450 lixtruded 150 11/9 1e/4 14/48 24 7/8 9/6 200 Extruded 150 12/18 12/us 12/28 9/6 app Extruded 100 11/6 wh 16/20 24 7/6 9/6 150 10/1 14/10 selve 10 1/6 1/n 9/6 150 w/w 14/10 2016 1/1 sheet int. 10/01 (4.5) 5 (6.0) HOUR (9.11) (14.19.19) 09/14 849997 (1.2) (1.0) . (1,0,0) . 05/13 . (1.3) ml 1/6 (1,2,3) If (1.3) www. (1) UNIVERSITY 19 150 (1) DOMIO (1.2) R (1,2,3) - . " if (1) . #- (91,900) igen H 08/767 (i) LIMIT Heat. Rate Date (62.43.44.45) n-5946 pp Insurance Alone 9/6 in if Registrament alivery 6/10 584767 20 of Closer of 1. Sorial benditon 109767 0=509 5 18 Lead Ivery D=0040 13 16 Gehedule Invoice Description Hel'd (@.3 4.9) 40 For Order late D-5044 IP Order A.Lise Lts Alises 11 Alece Order # DAO List Order #1 # net. 4/8 . delay LAM dates IN for INITIAL partial ehippent as mo 1174957 1/n 9/6 ano Distruded 150 (1.3) (3.2) D5216 009957 7/n 9/6 and Extruded 150 11/6 12/4 Ditto (1.2) (6.7) 09817 809.957 7/8 9/6 150 11/6 18/4 D1 Mo 27 # (8.3) (10.11) 7/8 9/6 150 12/5 12/11 Ditto 20 , 7/8 9/6 150 10/46 12/3 Ditto 28 # 7/8 9/6 150 12/10 12/16 Ditto 15 # 7/8 9/6 150 12/1 12/10 Ditto 21 # 7/8 9/6 Extruded 150 11/2 12/4 Ditto 27 I 7/8 9/6 2400 Extruded 150 11/6 12/11 Ditto 27 7/8 9/6 # 150 10/31 w/3 Ditto 28 9/6 # 7/8 150 11/8 12/5 Ditto 26 # 7/8 9/6 150 12/5 12/11 Ditto 20 , 7/8 9/6 150 11/22 18/9 Ditto 22 , 12/11 Estimated 50% 1/1 immittee Date 20 # MT # . # (22,23) 314957 (30.31.32) 3004557 (37.39.40) (46.47.48.49) 05831 034951 (1.3) (50,52) D5832 314957 # (1.2.3.4) # 004957 . 05230 # (44,45) # (1.2) " D5429 (2.3) # (1.3.4) # 110,957 D5227 # 05222 (1.2.3) 35 12/5 l'equirement Hal. w/a # (16.20) D5224 54 . (1.3) (2.3) 53 of Planes Inquirement (15.16) D5820 32 of Laterial # (1,2) 31 number (13) D5P19 30 leisvery 05/15 (a) 29 Atom Hel'd 024957 28 belivery Ent's 26 27 Delivery Alter # 24 Fur Description Order Atom 23 Aleon Order Order Order # List (54.55) -3- II - delay indicated is for initial partial shipment Aloon FOR Order Ent'd Hel'd 36 D-5-33 414957 7/8 9/6 D-5234 014957 (1,2,3) (58.59.60) D-5235 SF4957- (1.2) (61,62) D-5240 SF4843 (1,2) (7,8) D-5243 (2.3) 14/18 13 12/18 Ditto 150 Item , rush 12/11 Ditto 20 # 150 7/8 9/6 24ST 10/28 12/2 Ditto 29 # 150 11/2 12/4 Ditto 27 # 150 7/8 9/6 11/13 12/6 12/28 25 150 SF4843 7/8 7/8 7/8 9/6 10/30 12/3 30% 1/1 28 # 150 9/6 10/30 12/3 Ditto 28 150 9/6 150 10/30 12/3 Item 3 & 4 150 11/2 12/4 (10.11) 3F4843 7/8 9/6 (12.13.14.16) 1448 7/8 9/6 Bill. 2-8 Bal. 12/8 (26,28,29) (5,6) (1.2.3.4) 47 834957 (1,2) D-5242 Ditto (1,2,3 4) GF4843 (2.3) 46 314843 D-5439 D-5242 12/2 (67,69) a 45 10/25 29 # 150 # 44 9/6 If 43 Ditto a (1,3,4) 7/8 " D-5223 42 384957 " (1,2,3 4) 12/16 (64.66) # D-5238 41 12/10 15 il 150 a (1.3) 9/6 28 A 30% 1-1 a a D-5237 40 7/8 9/6 Delay from Leadline Date 12/9 a (1.3) SAY 957 7/8 9/6 # D-5236 39 7/8 Estimated Days 11/22 (56,57) . 38 Requirements Delivery 150 2010 Extruded . 37 of lanes . (1,2) of Laterial " Item Item Description Aleon . Order Delive ary . order & Item Deadline De livery Requirement " Order Gehedule . List Number # HAC Bel. 2/6 25 12/7 bal. 12/28 12/28 24 (18,19) -4- # - delay ino loated is for partial shipment 2 Normal Ent'd Hel'd 48 - D-5244 304843 7/8 9/6 7/8 9/6 7/8 9/6 7/8 9/6 7/8 9/6 7/8 9/6 7/8 9/6 7/8 9/6 7/8 9/6 7/8 9/6 7/8 9/6 7/8 9/6 I 324,843 D-5252 374813 (1,2) (45.46) D-5853 3474843 D-5254 (1,2.3) 57 59 - 05455 150 11/2 12/4 12/28 11/30 r/10 12/28 16 150 11/12 12/6 12/28 22 150 11/4 12/10 12/28 18 150 11/18 12/7 12/28 21 150 150 11/20 12/9 150 11/5 12/4 512 25% 11/5 25% 12/4 Part 11/16* Bal. 2/22 150 11/6 24/4 336 2/4 150 11/2 (47,48,49) mm 24 Item 4-12/7 Bal. 22/28 Item 2&3 24 24 19 12/7-Bal. 12/28 Item 1-12/7 Bal. 12/28 24 (50.51.52) 824844 " (1.8) (2.3) De5460 024014 (1.2) (11,18) . 56 12/4 . (1.23) . 55 (43,44) " 5 (1.2) " 384813 (41) " D-5250 " (34.36.37) # (1.3.4) D-5251 53 11/2 a D-5848 254,443 " (32.33) (1) 150 # 52 (3.4) . 51 12/4 (2.25.26) D-5247 50 12/28 Late 11/2 . (1,3 4) Estimated (20,21,22) If D-5245 49 Requirement Delay from Deadline 150 24ST Extruded # (1.2.3) of Material Delivery " a Item Delivery Days Aleon . Item & Item Delivery of Planes Requirement Description Deadline . Order Schedule . Order List Order For Number , Aloos Order RAC (estimated) #7 # a/1. 3/1 12/10.12/47 -5- 11 332 1/A.P/1. 3/1 - delay indicated is for partial e hi pment. - shipment not male as estimated. 27 BAC List Item Order 60 D-5261 Item Description Order Int's Hel's 7/8 9/6 7/8 9/6 7/8 9/6 1/4 9/6 7/0 9/6 7/4 9/6 1/a 9/6 1/9 9/6 7/8 9/6 7/6 9/6 7/n 9/6 1/9 9/6 Y/A 9/6 of Laterial AUT Extruded (1.2.3) (30.31.32) Number or Delivery ( Hanee imadiline Deal ivery Requirement # number - Alcide Delivery Estimated Leading Late 33% 1/1. @/1.3/1 150 12/5 12/11 150 11/9 12/14 150 11/6 12/4 Ditto 150 11/6 10/4 Ditte or 11/0 *** nittle or 190 190 11/4 su/4 190 HAM was Item 1/6 1/10 Item 4-10/14. Bel. 9/8 of 100 11/6 10/4 Items DAN 65 190 11/W 14/4 w/o 60 150 11/13 10/6 u/n 65 150 the 11/6 ⑉M e/a 6 100 11/4 ⑉A a/m 65 NO Ditto 11 07 (33.34.35) # (1.2.2) # and a 0-5266 " (17.18.19) " (6.00) . adidas . D-5868 --- -fill rehedu in For Order (14) (H) 61 Aleon Order (PM) (1.0.3) (2,3.4) TM / ($8,59.40) men (41.48.43.46) # " (50) # (3) mm # D-51185 . 70 10/14. bal. e/o (31.32.33) if (1.0.3) # 0.5284 # 69 " (estimated) (in) # (1.P.3.4) " (1.3.4) # adidas (0.11.18) a 0-9876 D-9879 48 1/5 (6) # 67 # (A) #9 nai. shipment not mide an estimates Data 11/6 12/1 150 11/2 12/4 1/25 150 11/6 12/4 Item 3-12/21 Bal. 1/25 490 41/6 with 1/45 " 150 11/13 12/6 1/25 51 150 1/1 w/4 1/45 96 . 100 11/6 w/A 1/95 at " . 190 11/5 w 1/25 at . 190 w/o 14/4 1/25 as 160 11/2 14/4 1/95 44 150 11/13 12/6 1/25 49 190 11/25 12/9 1/25 46 9/6 1/8 9/6 1/8 9/6 0446 1/4 4/0 7/8 9/6 its 9/4 1/4 9/9 1/8 9/5 1/2 9/6 in 9/6 1/0 9/6 1/8 9/6 2/8 69 51 51 (8.9.10.11) (13.00) ******** # " Requirement 100 UNIT retended t/m # (8,3) 1184 H 07406 (5.6.7) 11-5290 77 of Hame THINK *** " (1.2.3.4) (1.2.3.4) Bild UNITED Estimated " (1. 3 4) - TO I . 184.616 (1.2.5) balld thene 1 the us Material (16,47,88) D-5807 D-5285 75 Hedne " NUMBER (P.M.) TH litera HEART If 71 Unde+ # 1162 inter Sitem CHANGE Stain the " HAI term H HALL (15.16.17.18) washing bandy 184046 (1,2,8) - (22.23.23) amount #446 (3) (11) 0-5-94 4000 (1,8,9) (33.34.36) (26.26.29) man 0-5297 0.00 in (37.38) " Fiv (19,00) a 41 (1,2) a 19 Requirement 190 11/13 10/6 150 11/13 1/1/6 1/15 150 12/9 10/11 Item 1-12/1 Bel. 1/25 " . 150 11/2 12/3 1/45 52 " 150 11/13 14/6 1/45 49 . a Requirement " (1.2) Delivery - D-5296 65 of Planes Delivery " Alter Number - " IAMI order Item A Item Alain order 150 11/6 12/4 1/25 51 150 12/9 12/5 1/25 TO 150 12/10 12/16 1/25 39 12/16 1/25 39 12/4 1/25 51 the Order Order Eatto hel'd 1/6 9/6 7/ 9/6 1/m 9/6 1/8 9/6 1/8 9/6 lie 9/6 1/8 9/6 7/8 9/6 7/8 9/6 7/8 9/6 7/8 9/6 7/0 9/6 to 9/6 7/8 9/6 resertation of Material PHOT Extruded in ..... letter Estimated 1/95 bentities time 49 (11,482) D-5899 12 015.46.47.44 67 D-5500 small (1.2.3) (1.2.3) D-5501 66 4th (1.2.) 4.5) 01.5.6.7.8) 9.11) D-5303 SPECIAL (14.15.16) D-5307 SM4847 (1.2.3.4) (32.33.34.35) D-5308 024847 - (1,2,3, .5) (+) 96 11/6 11/15 O 12/6 1/25 49 150- 150 14/10 14/16 1/15 39 150 1e/10 12/16 1/25 37 150 11/6 11/4 A (38) # (39 40.41.431 with (4.7) (1,2,3,4) (1,20 . (1) 150 a (29.31) 12/10 . (3.5) 150 a 314847 " D-5306 " (23.25) " (1,3) a 95 304547 a 24 D-5305 . 93 (18.20.21.22) . 9 (1.3.4.5) . D-5304 91 at (1.2.3) " 90 (1.3) a #-5404 as . 30 (3) 101 102 014650 7/8 Hel'd of Planes 9/6 150 9/6 014650 D-5327 014 850 7/8 9/6 150 150 (13.14) 7/8 9/6 150 (17) D-5363 324 980 (2.3) (2.3) 8/22 9/6 Schedule Number (10) D-5316 (1.2) (2) 103 (5.6,7) 7/8 For Description of Material . 100 D-5315 SP4850 Order Delivery Requirement 11/6 Deadline Alcom Requirement Estimated 12/4 1/4 Delivery Delivery Dolay from Dondline Date 30 11/6 10/4 1/4 11/29 12/7 1/4 07 12/10 12/16 1/4 10 12/16 12/16 25%-1/11. 25 # 30 a (1,2,3) Order Knt'd . D-5324 & Item N & Alc Order . Item Order Item " BAC List 2430 Tubing 150 2/11.3/11.4/11 D-5370 3F4980 (1,2) (19,20) D-5371 8/22 8/22 SF4 980 (21) 8/22 (1) D-5372 354980 8/22 (1,2,3) (24,25.26) 9/6 9/6 9/6 9/6 a (16.17.18) 11/29 12/10 25% 1/11, 31 # 150 11/27 12/9 Ditto 32 # 150 12/18 12/23 Ditto 18 , 150 12/16 12/23 Ditto 18 II 11/4 12/4 Ditto 37 # 12/26 1/2 Ditto 9# 11/4 12/4 Ditto 37 # 11/4 12/4 Ditto 37 # 150 150 150 11 SF4980 (1,2.3) 9/6 a D-5369 8/22 . (13.14.15) 9/6 . SM4880 (1,2,3) 8/22 If (10.11,12) GST # 014980- (1,2.3) 9/6 . D-5367 8/22 . 111 (7.9) . 110 150 " 109 814980 (1.3) " 108 9/6 2/8,3/8,4/12 D-5366 D-5368 8/22 is 107 (4.5) # 106 334960 (1.2) a 105 D-5364 . 104 150 -the - delay indicated is for partial shipment. Alone Order Order & Item Eat's 324 90 (3) (32) 924980 (1,2,3) (07.38.39) D-5577 DV-4980 (1.2.3) (40.41.42) D-5378 8/99 D-5362 more 9/6 9/6 9/6 9/6 " 25 II 12/9 12/13 Ditto 28 A 150 12/11 12/16 Ditto 25 if 150 12/13 12/18 Ditto 23 # 150 12/7 12/12 Ditto 29 # 12/26 1/2 Ditto 9# 150 12/17 10/45 Disso 18 100 11/4 18A Disso 17 # 100 11/9 10/5 Disto 36 150 11/9 12/5 Ditte 36 # 11/6 or/4 Ditto 37 # 12/5 Ditto 36 I 150 (65.66.67) " 9/6 . 8/22 37 # Ditto 150 (68.69.70) 11/9 -10: 9/6 . B/H " (1.2.3) n/w A/W D-5386 25% 1/11. 12/16 (64) D-5381 12/4 Date 12/11 150 (54.55) D=5166 (1.2.3) 124 0/10 (99) Requirement Dolay term Deadline # 185 9/6 (50.01) (1) (1) 8/22 (17) D-5301 (1,0) 100 329 980 # 1/11 9/6 " 1WO 8/22 9/6 (13) D-5380 (1.2) 8/22 9/6 . 119 8/22 " (1) 150 1.50 # D-5379 Aloun Delivery Estimated # 116 9/6 # (1) 11/4 De 11 very # 117 8/22 9/6 # 116 8/22 (33.34.35) D-5376 Requirement Dendilue # 115 S14980 Delivery 2/8.3/8.4/11 If (1,2.3) Behedule Number 150 # D-5375 DUT Tubing " 224 D-5379 9/6 FOR of Please . 113 (27.29 Hel'd n (1.3) 8/22 Description of Material " we D-5373 Order . List Order Item & Item " BAC - delay Indicated is for partial shipment. BAG List Order Item 125 Item Aleca Order normal order A Lte into D-2349 124.00 (1.2.3) a/es (71.70.73) A order Description of aterial Hold 1/6 For lichedule Number belivery or Planea UPT Tubing 110 introment 150 11/9 Deadline Delly ary Requirement 14/5 Aleon Delivery Estimated linys Delay from Leadline Date and 1/11 56 2/8.3/6.4/18 (1) D-5395 (1) 129 - OPEN 01/19/19 n/a 9/6 10/4 10/10 Ditto 21 # 150 11/6 10/4 10/un # 150 12/11 12/17 12/88 11 11/0 14/4 1/85 51 90% " 1/4 29 # 100 HUT Reteuded 8/7 9/6 (2) 3174880 (1) (1) (1) (1) (2.3.4) 9/6 (1) D-5390 131 D-5400 #/HW (78.79) " 0-544 07-4980 . 128 (1.P) " - D-5391 " 120 0/9 4/00 124928 9/6 9/6 200RT Tubine 150 - Extruded 190 10/17 pal. 1/11 8/22 9/6 (2.3) 24st Extended 150 33th 11/11. 12/10.12/2 10/5 150 50/-11/9 D.I. 12/10 50% 12/9 Bal. 12/16 Dept 12/28 Comp. 1/11 12/11 12/16 12/25 10 11/6 19A 12/21 17 12/20 12/23 1/4 194995 # (1) 171 14.2.31 130 #1930 6/65 9/6 150 (1) 14/03 6/19 1/6 (1,233 DATION (2.3) o/s 8/30 9/6 HUIT Tibino 150 2450 Extruded 150 (1.2) =11 : (1) 8/22 a - +++ - 2022 (1.2.32) a (123) " D 5101 # 132 . delay Indicated 10 for partial shipment. 23 # 11 P 136 & Item D-5109 (1.2) 137 138 139 140 124931 9/5 9/6 (34) 024979 (2.3) D-5123 334979 (1,2,4) (4.5.7) D-5434 (1 2) 141 1101'd (2.3) (1) D-5459 (1) the 0F4942 9/6 9/6 375041 9/6 9/6 9/26 (1 & 2) SF4959 Description Number of Laterial Delivery requirement of Planes PIRT L'xtruded 277 5230 Rubing Go 12/11 50,6 11/20 150 nel. 14/25 9/6 9/6 (1) 9/9 9/26 9/9 (1) 014964 (1) Order Ent'd D-5422 D-5429 Order & Item 9/11 9/11 (1) . Item Aleon Order . List order 150 l'orging 150 173T Forgings 512 17ST Forgings 150 2404 Extruded 277 Delivery (lequirement Delivery Estimated 60 12/16 1/4 50/12/9 253.1/11.2/A. Bel. 12/23 Dendline Date 18 3P # 3/8.44/12 Ditto Ditto Ditto 12/5 12/11 2/20 70 25% 11/30 25% 12/10 2/20 71 11/13 12/6 2/15 70 60% 18/5 60% 12/11 33% 32 II 20 3/1 D-5464 3F5012 D-9165 (1) 146 9/18 014091 9/10 9/18 SV5010 (1,2) (1.2) 9/19 9/19 Ditto 277 277 (1) D-5468 60 11/25 277 (1) " 245 9/18 9/13 " (1) 9/13 . (1) . SM4998 (1) " 14th D-5463 . 243 2430 Extruded 12/11 30,5 11/25 512 60% 12/9 Ditto 22 Ditto 1/11 32 60% 12/15 1/1 30% 12/9 33% 1/1. 32 Ditto 32 2/1,3/1 D-5471 AF5000 (1) (1) 9/19 9/19 24ST Extruded 30 :11/25 512 -12a 147 50/> 12/9 15 - delay indicated is for partial shipment 299 HAG List order Item 148 & Item Alcon order Order & Item Order Ent'd Hel'd 9/10 9/13 D-5489 GF5023 (1) (1) For Number Description of Material Gebedule of Planen 24ST Extruded 277 Delivery Requirement Deadline Delivery Requirement 60/11/30 60% 12/10 Aloue Delivery Estimated 336 1/1. 2/1.3/1 (1) 152 153 154 155 156 157 3F5100 (1.2.3) (1,4.3) D-3581 125103 SF5085 (1) (1) D-5586 3F5087 (1,2) (1,2) D-5604 5F5106 (1.23) (1,2,3) D-5642 SF5123 (1) (1) 159 OF5127 (1) (1) D-5678 SF5131 (1,2,3) (1,23) 30 : 11/2 512 335 12/28, 30% 12/4 Date 21 6 - 30% 12/23, 24 80 bal. 2/1 10/8 10/8 Forging 10/10 10/11 10/10 10/11 240T Extruded (1.2.3.4) D-5565 D-5670 10/9 (1) D-557M (1.235) 10/9 (1) SF5070 50% 12/6 2/1. 3/1 10/10 10/10 10/14 512 30/3 11/30 30 12/10 2/28 512 30%12/5 30;12/11 336 1/1. 2/1.3/1 512 30512/5 30/12/12 Ditto 20 30% 12/18 2/28 72 2/14 60 33.6 1/1,2/1. 15 10/10 Forging 512 10/10 Forgingo 512 30/11/29 30/12/16 10/14 245 Extruded 512 30% 12/11 12/16 30% 12/9 20 3/1 10/16 10/19 10/18 10/16 24ST Extruded 10/19 512 Harging 512 10/18 24ST Extruded 512 -13- Note: Requirements listed on this pago could not be propered for purchase in advance of contract because of design changes re juired for B-17E specifications. i D-5542 10/5075 30/11/13 512 . 151 10/1 " (1) 10/7 (1) " 150 D-5525 HY5068 . (1) a -D-55-94 From Deadline 30% 12/5 30% 12/17 Ditto 14 30/12/10 00/12/16 e/25 14 30/11/30 30% 12/16 33612/28, 2/1,3/1 - delay and cated is for partial shipment. 12 HaO List Normal Aloon Order Order Item & Item & Item int'a Hel'd 160 D-5674 DF5145 10/22 10/22 10/18 10/21 (1) 161 L-5679 (1.2.3) 162 D-5683 (1) 163 164 D-5666 165 SF5131 SF5048 of atorial number Delivery of Planes Requirement Delivery Requirement Aloon Delivery Estimated Days Delay from Deadline Date 512 30/12/5 30% 12/17 2/28 10/18 as Extruded 512 30% 11/30 30% 12/16 3/8 81 10/21 2430 Extruded 512 30/$11/30 30 / 12/16 30% 12/28, 12 30/11/30 30% 12/16 33% 1/1. 15 30/3 11/30 30/12/16 30% 12/28. 12 30/12/10 30% 12/18 3/10 61 Forging (2) SF5152 D-5687 3F5156 (1) Description Deadline 73 (1,2,3) (1.2) D-5822 Order Schedule (1) (1.2) (1) Order For 10/22 10/22 10/22 213T Extruded 512 10/22 24ST Ixtruded 512 2/1,3/1 (1) SF-5196 10/29 10/29 For ging 512 bal. 3/8 bal. 3/8 (1) in -14- Hote Heart tornate listed on this pago could not be propared for purchase in advance of contract because of design changes required for B-177 specifications. 252 January 9,1941 To: The Secretary From: Mr. Young British Boeing B-17 Bombers The British Purchasing Commission tells me that delivery on the Boeing B-17 bombers which were promised them cannot now be promised before March 17th because of an inability to obtain lenk-proof gasoline tanks. They say further that if the United States Army would release tanks of this type over which it has control. the bombers could be delivered by February 10th. However. I understand that General Arnold has not considered it advisable to release these tanks. Day 253 January 9. 1941 Ny dear Mr. President: Attached herewith is the file which you transmitted to 100 a few days ago concerning the findings of the Administrator of Export Control with respect to the value of certain Republic planes requisitioned at the request of the United States Army Air Corps. It is my understanding that practically all of these planes have been delivered to the Air Corps and that the recommendation of the Administrater of Export Control needs your approval before the manufacturer can receive payment. Faithfully yours. The President, The White House. PY:bj . Pu 253 January 9. 1941 Ny dear Mr. President: Attached herewith is the file which you transmitted to,me a few days ago concerning the findings of the Administrator of Export Control with respect to the value of certain Republic planes requisitioned at the request of the United States Army Air Corps. It is my understanding that practically all of these planes have been delivered to the Air Corps and that the recommendation of the Administrator of Export Control needs your approval before the manufacturer can receive payment. Faithfully yours, The President, The White House. PY:bj Pr. 254 January 9. 1941 My dear Mr. President: Attached herewith is the file which you transmitted to me A few days ago concerning the findings of the Administrator of Export Control with respect to the value of certain Republic planes requisitioned at the request of the United States Army Air Corps. It is my understanding that practically all of these planes have been delivered to the Air Corps and that the recommendation of the Administrater of Export Control needs your approval before the manufacturer can receive payment. Faithfully yours. The President, The White House. PY:bj 255 THE WHITE HOUSE WASHINGTON December 31, 1940 MEMORANDUM FOR SECRETARY MORGENTHAU: What do we do next on this? F.D.R. 256 The President. The White House. Dear Mr. President: Pursuant to Section Two of the regulations prescribed by the President October 15, 1940, entitled "Regulations Governing the Requisitioning and Taking over for the Use or Operation by the United States or in its Interest of Certain Articles and Materials Issued Pursuant to the Provisions of the Act of Congress Approved October 10, 1940", hearings have been held in connection with the requisition under the act of October 10, 1940, Public No. 829, 76th Congress, 3d Session, of the following-described property: Requisitioned from the Republic Aviation Corporation, Farmingdale, Long Island, New York: 13 Type 2PA Two Seater Bombers complete with engines, accessories and equipment 15 Type EP1 Single Seater Pursuit Planes complete with engines, accessories and equipment. Submitted herewith are reports of those hearings and of my findings and recommendations thereon. In these reports it is recommended that the following determination of fair and just value be made: $1,071,457.80 28 Airplanes as described above This recommendation is concurred in by the Secretary of Mar. B.L. Marwell R. L. MAXWELL, Administrator of Export Control Recommendation approved and fair and just value determined accordingly. F. D. R. L 257 PARAPHRASE OF TELEGRAM RECEIVED FROM: American Legation, Stockholn, Sweden DATE: January 9, 1941, 4 p.m. NO.: 18 It is my understanding that on the third and fourth of this month there was large scale selling of dollars through banks in Stockholm by Swedish nominees for dollar accounts of Germans in the United States as well 2.5 by Germans who reside in Sweden. Germans who held dollars converted them into marks, and they transferred these marks to Germany. The reason for carrying out these transactions, it is believed, was the fear that the United States might freeze German funds held there, the recent strong public utterances of the President accelerating this fear. STERLING. EA:LWW 258 January 9, 1941 NEWORANDUM TO: The Secretary FROM: Mr. Young Re: Further Developments on Proposal to Eliminate Export Licenses on Goods Going to Canada You will remember that the proposed proclamation to eliminate exports to Canada from the export control system was tabled at Colonel Maxwell's Advisory Committee meeting on January 6 for further investigation. At Colonel Maxwell's request, Mr. Buckley has since been designated a member of the sub-committee which prepares these proclamations. He attended a meeting of this sub-comittee on January 8 at which the Canadian situation was considered. The following points are of interest: At the request of the Chairman, Mr. Buckley pointed 1. out that if the proclamation were issued in its present form there were the following dangers: a. The situation with respect to critical materials is steadily growing worse, and as a matter of principal this is ipso facto a bad time to release any of our controls. b. In the absence of information as to exports prior to shipment, substantial quantities of critical materials might go to Canada and into the hands of speculators there without the knowledge of either this Government or the Canadian Government. C. Exports to Canada night well be re-exported to other British dominions, since Canada apparently has a less rigid control on exports to other British dominions than we have. d. In the absence of a thorough study by the Defense Commission of our exports to Canada, it seens unwise to have a blanket elimination of control over exports since there are obviously items such as machine tools, aluminum, plans and specifications, etc., over which control must be continued regardless of this proclamation. 259 -2- e. From the standpoint of national policy it would seem desirable that approval of the heads of the interested United States departments be secured for such a drastic step before the proclamation be presented to the President. Concurrence with the points brought up by Mr. Buckley 2. was expressed by Mr. Alex Henderson, of the Defense Commission, Mr. Henry Chalmers, Chief of the Division of Foreign Tariffs of the Department of Commerce, and Commander Shaffer, of the Army and Navy Munitions Board, representing the Army and Navy. Mr. Yost, of the State Department, was quite insistent 3. that something had to be done immediately, although no particular case was made for urgent action. Apparently this entire proposal has been worked up between the State Department and Colonel Maxwell's office without previous reference to this working sub-committee. Mr. Yost did state that the proposal had been discussed with and was approved by Secretary Hull. 4. 5. In the course of a rather extended discussion it was brought out that the real need in the export picture at the present time was authority for the Administrator to issue general licenses. Apparently his present powers do not extend this far. If they did, then the Canadian situation could probably be taken care of quite simply without a complete elimination of export control as is proposed. As a result of this, the Committee opinion was divided between a group who felt the answer was to have a proclama- tion issued giving the Export Administrator power to issue general licenses and abandon the Canadian proclamation and those who felt that the Canadian proclamation should be issued. All the latter group apparently felt that a general licensing power was a desirable thing but appeared to feel that it would take longer to accomplish, and they were apparently influenced by the State Department's arguments for urgent treatment. P.4. continued on next page 260 -3- 6. It was finally agreed that they would make substantially the following recommendation to the main committee: a. That the main committee abandon the Canadian proclamation and forward to the President instead a proclamation giving the Administrator of Export Control power to issue general licenses. b. That if the main committee found this proposal inacceptable they recommended the issuance of the Canadian proposal with modifications which would require that exporters furnish information in advance of shipment on critical items to be exported to Canada, even though an actual license be not required. 7. The main committee will consider this report on Friday, January 10, at 3:00 P.M. Ry. 361 January 9, 1940 Suplemental on Planes for Greece Since the - dated January 6th was compiTed it has developed that the President advised Secretary Morgenthen that the Greak Minister had been promised sixtly planes. At a conference between Secretary Morgenthau and Mr. Summer Velles - January 8th, Mr. Welles stated that be was not sware that the number of planes promised had been increased from thirty to sixty. Mr. Velles also stated with respect to the offer made by Mr. Butler of the British Salassy - December 31st concerning the delli ary of American vilanes - an American steamer to Bases that the State Department was not in favor of an American ship maintaining to wike that delivery. Mr. Europe of the State Department advised Mr. Philipp Young this warning that Secretary Full feels that the original promise of thirty planes to the Greaks should the fulfilled before any American planes are diverted to other foreign parchaser. P.4 262 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE January 9. 1941 Secretary Margenthan Mr. Cochras STRICTLY CONFIDENTIAL Official sales of Gritish-owned dollar securities under the vesting order effective February 19. 1940: So. of Shares $ Proceeds of Nominal Value $ Proceeds Bonds Sold of Sold Shares Sold of Bands Sold 31 E January 1 2 3 ales from February 22 to December 25 TOTAL FACTURE 22, 1940 TO JANUARY 4. 1941 128,458 50,890 Fil 2,094,344 2,300,141 63,460 147,090 December 30 1 4,790,505 2,691,439 i Nil 38,000 33,045 45.500 Fill 28,048 day Kil Nil Nil 850 37,042 390.746 11,913,471 53,500 61,093 3,107,792 100.468.201 5,902,500 4,515,098 3,498,540 112,401,672 5,986,000 4,579,191 Mr.Pizsent reported sales of non-vested securities for the week ended December 28 totaled $455,000. K 263 TREASURY DEPARTMENT INTER-OFFICE COMMUNICATION DATE January 9, 1941 TO Secretary Morgenthau FROM Mr. Haas Subject: Price trends of securities acquired by British on December 15, 1940, in comparison with general market. American securities taken over by the British Government under its vesting order of December 15 (see list attached) inluded 42 common stocks, 17 preferred stocks, and 6 bonds. The attached chart shows the price trends for these three groups since the first week of October, in comparison with price trends for representative groups in the general market. The prices are Friday quotations, shown as indexes with October 4 taken as 100. Two general conclusions may be drawn from this chart: (1) As to the securities selected by the British Government for this vesting order, it 18 apparent in all three groups that securities were selected which had recently shown greater strength than the general market. This is particularly true of the selec- ted common stocks (upper section of chart), the average prices of which were about the same at the time of the vesting order as they had been early in October, whereas the Dow-Jones composite stock index had appreciably declined during that period. (2) As to the reaction of prices of the vested stocks to the announcement of the vesting order, .it will be noted (a) that the vested common stocks declined in the week following announce- ment of the order by practically the same percentage as the decline in the Dow-Jones composite index, and later gained some*hat more than the Dow-Jones index; (b) that the vested preferred stocks sagged slightly in the two weeks following the order while a selected group of closely similar preferreds held about unchanged, but that the vested stocks later regained practically all of the previous loss; and (c) that the 6 vested bonds, in the week following the announcement, were somewhat weaker than the Dow-Jones composite index of 40 bonds. but fully regained their previous position during the next two weeks. (In these calculations, 2 of the 42 common stocks and 1 of the 17 preferred stocks included in the vesting order are omitted, owing to a lack of adequate quotations. Also, two bonds of one issue which differ only in negotiability are here treated as one bond.) 264 American Securities Taken Over by the British Government Under its Vesting Order of December 15, 1940 Common stocks American Ges & Electric American Home Products American Rolling Mill Atlantic Refining Atlas Corporation Bankers Trust Beneficial Industrial Loan Corporation Blaw Knox Boston Edison Chase National Bank Continental Can Crown Cork and Seal Detroit Edison Dresser Manufacturing Eastman Kodak General Motors Corporation Inland Steel Kalamazoo Stove and Furnace Lehigh Portland Cement Liggett & Myers Tobacco Liggett & Myers Tobacco Class in Lime Locomotive Works Macy & Company Marshall Field Mueller Brass National Dairy Products New Jersey Zinc Niles-Bement-Pond Owens-Illinois Glass Facific Lighting Pennsylvania Railroad Proctor and Gamble Sears, Roebuck Sherwin-Williams Socony Vacuum 011 Southern California Edison Timken Detroit Axle Union 011 California Walgreen Wayne Pump Woodward Iron Woolworth (New York) 265 2 Preferred stocks American Locomotive 7% cun. pref. American Smelting & Refining 7% cum. pref. Atch. Topeka & S. Fe 5% non-oun. pref. Atlas Corporation 64 can. pref. Blue Ridge Corp. opt. $3 cum. conv. preference, series 1929 Crown Zellerbach $5 can conv. pref. Electric Bond & Share $6 cun. pref. Goodyear T. & R. $5 cun. conv. pref. International Harvester 74 cum. pref. Loew's, Inc., $6.50 can. pref. National Power & Light $6 oun. pref. Niagara Hudson Power 55 OUR. 1st pref. Ohio 011 6% cun. preferred Pacific Gas & Electric 64 cum. 1st pref. United Gas $7 cus. 1st pref. United States Steel 76 cun. pref. Cleveland & Pitts. R.R. 76 regular Bonds American Power & Light 6% gold debs., American series Ches. & Ohio R. at 416 gen. stge. cold reg. and bearer bonds of 1992 Pennsylvania R. R. 416 gold debe.. 1970 Southeastern Power & Light 66 gold debentures, series A of 2025 Southern R. R. dev. & Gen. atge. 6% gold bonds, series A of 1956 Standard Gas & Electric Co. 64 gold debs., series B of 1966 266 PRICES OF STOCKS AND BONDS BY THE BRITISH GOVERNMENT OF DECEMBER 15, 1940VESTED COMPARED WITH SELECTED AVERAGES ORDER OCTOBER 4, 1940 100 UNDER I 94 I 1940 MARCH FEBRUARY JANUARY DECEMBER NOVEMBER 14 10 3 20 13 27 24 17 28 7 29 6 B 15 22 31 7 OCTOBER PER 14 25 CENT 18 T T 4 PER FRIDAY QUOTATIONS CENT Common Stocks 106 106 Dcc. 15 104 104 40 VESTED STOCKS 100 107 100 100 96 x 96 se Dow JONES. COMPOSITE 65 STOCKS 94 94 92 DECEMBER NOVEMBER OCTOBER FEBRUARY JANUARY 92 MARCH 106 16 Preferred Stocks FRIDAY QUOTATIONS 106 100 16 VESTED Stocks 104 104 102 102 COMPOSITE. 16 SELECTED STOCKS 100 100 96 JANUARY 98 DECEMBER NOVEMBER OCTOBER MARCH FEBRUARY 103 103 FRIDAY QUOTATIONS Bonds 102 102 6 VESTED BONDS 101 101 100 100 99 99 Dow JONES, COMPOSITE. 40 BONDS 96 1 6 13 1 NOVOMER 20 27 14 FEBRUARY 21 20 14 NARCH JANUARY a , 1 1 4 States I - Public 1 Office of the Secretary of the Treasury 29 3 OCTOBER 10 22 15 7 - 11 18 25 31 7 96 24 17 DESCRIBER AVERAGE of INDEXES BASED ON OCT. 4, 1940 . 100 ro 151 , 267 WILLARD HOTEL WASHINGTON. D.C. TELEPHONE REPUBLIC 7860 BRITISH PURCHASING COMMISSION Returning Lee this An January 9, 1941. AND Dear Mr. Secretary: I inclose a summary statement of cash payments required against contracts: (a) during next week (b) during the balance of January (c) during the month of February on the assumption that this would probably cover the period of the Congressional debates. None but vital contracts are covered in the statement. Priorities are expressed by the periods in which financial payments are necessary. Yours sincerely, arous Brond 10 Bill The Secretary of the Treasury, Washington, D. c. - FIREMENT NOTIVAL to 268 List of Contracts on which Prompt Action with Contractors is Necessary if Actual -Prejudice to the War Effort is to be Avoided. In millions US Dollars JAN. 9-16, 1941 Cash Value of Orders Payments JAN. 17-51, 1941 Cash Value of Orders Payments TOTAL FEB. 1-28. 1942 Cash Tajue of Orders Payments Orders Required to be Placed. Aircraft Products 1942 Talue of Cash Orders Payments 51 123 51 234 54 461 116 124 55 2007 55 528 50 221 140 100 23 107 51 96 Tanks & Ordnance 11 2 - 6 Merchant Ships Miscellaneous TOTAL -8 as 30 20 -2 00 50 -5 117 405 1146 SCT 65 460 125 240 Cash required to meet obligations on existing contracts. 50 TOTAL PAYMENTS 115 68 185 "Miscellaneous" represents running requirements of numbeous items relatively mail individually, but of an urgent character coming in daily such as chemicals, meiline tools, fire hose, electric cables, etc. Detail lists supporting this statement are being prepared. The payments on orders to be placed are partly actual and partly estimated from past experience. Capital assistance is included both in the total value and down payment figures. British Supply Council in North America, Washington. January 9, 1941. 145 258 262 568 269 THE SECRETARY OF THE NAVY WASHINGTON January 9, 1941. CONFIDENTIAL My deer Heary: I here your note addressed to Stimson and myself, concerning the allocation to the Greeks of 50 fighting planes. I should be very happy to cooperate with you in carrying out the President's desires in the matter. Yours sincerely, Transaction Eon. Senury Horgenthau, Jr., The Secretary of the Treasury. 270 WAR DEPARTMENT OFFICE OF THE CHIEF OF STAFF WASHINGTON January 9, 1941. Honorable Herry Morgenthan, Jr., Secretary of the Treasury, Washington, D. C. Dear Mr. Morgenthau: Thank you very much for the following reports, which you sent me this date: Part I - Airplanes Deliveries of and New Orders for Airplanes, June 9, 1940 - January 4, 1941; Unfilled Orders and Estimated Deliveries on January 4, 1941. Part II - Airplane Engines Deliveries of and New Orders for Airplane Engines, June 9, 1940 - January 4, 1941; Unfilled Orders and Estimated Deliveries on January 4, 1941. Faithfully yours, Extracture Chief of Staff. 271 PARAPHRASE OF TELEGRAM RECEIVED FROM: American Embassy, (Paris) Vichy DATE: January 9, 1941, 3 p.m. NO.: 30 FOR THE TREASURY DEPARTMENT FROM MATTHEWS. Reference is made to telegram of December 16, 5 p.m., No. 1144 from the Embassy, and telegram of January 8, No. 38 from Paris. A circular has just been issued by the Union Syndicale des Banquiers to its members. In it they are informed that the date on which the German authorities will begin opening safe deposit boxes by force has been postponed until the thirty-first of this month. In addition the circular states that since people desiring to return to the occupied territory in order to be present when their boxes are opened and examined are unable to get permits from the Germans to return, those banks which have branches in the unoccupied territory should ask their customers to give the branch bank the keys and combinations of their boxes and powers of atterney for opening the boxes. In case there are no branches in the unoccupied territory, the customer is asked to forward to the Vichy office of the Union Syndicale des Banquiers the keys, combinations, and powers of attorney "in blank LEAHY. EA:LNW 272 TREASURY DEPARTMENT INTER-OFFICE COMMUNICATION DATE January In I Secretary %orgenthan Subject: Mr. East A Trend of benk stock prices in response to January I Federal Reserve statement. The attached chart, prepared in response to your request. shows the trend of prices for 6 individual bank stocks before and after publication of the statement by With FeBeral Reserve Board on New Year's Day. in comparison with With acricet trend of the Dow-Jones infustrial stock index. The flime largest banks in New York and the largest bank in Chicago have 15 infexes, with December 2, 1940 taken as 100. been selected for this comperison. All prices are expressed You will note that all 6 of the bank stocks showed great= strength than the general market on the day following the Federal Reserve Board assouncement. This strength, however, 135 not confined to the period following the release of the statement. During the week preceding that date, the stocica If certain banks advanced sharply. In the 5 market days precedlag New Year's Day, for example, stile the Dow-Jones avenage 125 déventing 1.7 per cent. stock of the National City Banic rose 6.7 per cent, stock of the Continental Illinois Bank 23 per cent. and stock of the Chase National Bank 2.3 per cent. In over-all price trends, the Guaranty Trust and Bankers Trust stocks have been noticeably weaker than those of the other four banks. 272 TREASURY DEPARTMENT INTER-OFFICE COMMUNICATION DATE January 9, 1941 Secretary Morgenthau TO FROM Mr. Haas A Subject: Trend of bank stock prices in response to January 1 Federal Reserve statement. The attached chart, prepared in response to your request, shows the trend of prices for 6 individual bank stocks before and after publication of the monetary-control statement by the Federal Reserve Board on New Year's Day, in comparison with the market trend of the Dov-Jones industrial stock index. The five largest banks in New York and the largest bank in Chicago have been selected for this comparison. All prices are expressed 8.5 indexes, with December 2, 1940 taken as 100. You will note that all 6 of the bank stocks showed greatet strength than the general market on the day following the Federal Reserve Board announcement. This strength, however, WAS not confined to the period following the release of the statement. During the week preceding that date, the stocks of certain banks advanced sharply. In the 5 market days precedlag New Year's Day, for example, while the Dow-Jones average was advancing 1.7 per cent, stock of the National City Bank rose 6.7 per cent, stock of the Continental Illinois Bank 2.3 per cent. and stock of the Chase National Bank 2.3 per cent. In over-all price trends, the Guaranty Trust and Bankers Trust stocks have been noticeably weaker than those of the other four banks. 273 PRICES OF SELECTED BANK STOCKS COMPARED WITH DOW JONES INDUSTRIAL STOCK INDEX DECEMBER 2. 1940-100 TTTT TTIT 28 TTT 4 21 14 TT I 941 1 940 JANUARY DECEMBER TT 25 18 11 TTTT TTTTT PER 7 1940 DECEMBER PER PER CENT CENT TTTTT TRUE 94 JANUARY 21 14 28 TTLE TTTTT TT TTTT 25 18 TTTT TTTT DEST 106 106 104 PER CENT IX Dow JONES INDEX Mach 102 100 104 CENTRAL HANOVER 104 102 102 102 100 100 100 98 CHASE NATIONAL 98 98 110 98 108 96 110 Dow JONES INDEX 96 109 106 106 106 106 104 104 104 104 NATIONAL CITY 102 102 102 102 100 100 100 100 98 98 98 96 GUARANTY TRUST 96 96 96 96 106 94 106 94 104 102 104 102 CONTINENTAL ILLINOIS 102 100 102 100 100 98 100 98 96 96 96 96 96 BANKERS TRUST 94 96 IIIL 94 11111 14 7 92 7 DECEMBER 1940 21 28 18 11 25 - and Statistics 28 JANUARY 1940 JANUARY 1941 PEX DIVIDEND Office of the Secretary of the Treasury 21 DECEMBER 4 14 94 25 18 11 4 92 94 P 196 274 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION CONFIDENTIAL DATE January 9, 1941 Secretary Morgenthau TO Mr. Klaus FROM 351 reports: January 4. Further on Rueckwanderer Marks. Agent's report contains a com- plete list of the names and addresses, dates, and amounts of Rueckwanderer Mark plications covering approximately 2,800 individuals; records found at the Chase Bard covered the period between September 1, 1936, and November 30, 1940, and SIOK that approximately $5,581,997.07 in American dollars was made available in this way for the use of the German government, being deposited in the German Gold Discount Bank account at the Chase. Applicants show addresses not only throughout the United States but also in Canada, Germany, Guatemala, Mexico, Panama, and Tezezuela. The report suggests that all the individuals made what is "tantamount :: a out of allegiance to Germany" in stating intention to take up permanent residence in Germany after approval of the application. The report further states with reference to the 3% German Reichsmark Funding Bonds sold in the United States issued in payment of dividends due subsidiaries of American corporations that lection 5 of the Neutrality Act is thereby violated. Investigation is continuing. January 4. Officials of the German Consulate in Chicago are trying to arrange for Shipments of metals (tungsten, nickel, sodium, tin, columbium, tantalum, molybdenum, zirconium, zinc, copper, and magnesium) through South American and Lexicus oints for transshipment to Germany, probably via Japan; they are attempt10g to interest Americans in the organization of an export corporation for this trose. January 6. It appears that FBI has Known about Verites Press (the organisetion which imports, prints, and distributes Nazi propaganda material and to TEOM 1,000 bills have been traced) at least since January 1939 but has begun intensive investigation since hearing from us; we will be informed of develop- meats. January 7. "A source close to the German Enbassy" has stated that the Embassy accurately advised the German Foreign Office a year ago that the United States would not be prepared for war at this time; that the reports concerning troops in Rumania are silly since there are not available barracks to house the soldiers (400,000 to 500,000); that Germany would not go to war with the United States even if the United States took over 35 Danish merchant ships for in the United States. He further said that in a recent conversation with Beary Luce be had learned that Luce is convinced now that a Nazi invasion of the sited States via South America is a great illusion and Luce "appears to be leanin more and more toward isolationist tendencies." SIT 275 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION STRICTLY CONFIDENTIAL DATE January 9, 1941 Secretary Morgenthau Mr. Klaus #: reports: January 9. On December 21, 1940, the Royal Norwegian Legation presented to the Dupont Circle Branch of the Riggs National Bank a check in the amount 105,470.23 of the Government of the Commonwealth of Australia drawn on the Chase National Bank, Rockefeller Center Branch, New York; they received $105,000 1,000 bills and the balance in miscellaneous currency; FBI has the serial numbers of these bills. January 9. Newspaper reports to the contrary - notwithstanding, Princess Stefanie is still in California and not in Mexico City. Su 276 PLAIN JR Nanking via N. R. Dated January 9. 1941 Rec'd 1:40 p.m. Secretary of State, Washington. 7. January 9. 3 p.m. "Central Reserve Bank". The local Chinese press this morning carried an item to the effect that the highest authorities of a certain American bank in Shanghai had stated their willingness to accept the new notes if they are supported by the Chinese people; that a certain large department store the same city had agreed to accept them and that, since the French Concession authorities are on good terms with the Nanking "Government", their readiness to accept the new issue is beyond doubt. Sent to the Department. Repeated to Chungking, Peiping and Shanghai. By mail to Tokyo. 10 TFV eh:copy PAXTON 277 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION Mins DATE January 9. 1941 For Secretary Morgenthau TO FROM Mr. Cochren CONFIDENTIAL Registered sterling transactions of the reporting banks were as follows: 65,000 Sold to commercial concerns Purchased from commercial concerns L 3,000 Open market sterling was steady at 4.03-3/4. Transactions of the reporting banks were as follows: 13,000 Sold to commercial concerns Purchased from commercial concerns 15,000 Only minor changes took place in the other currencies, and closing quotations were: Canadian dollar Swiss franc Swedish krona Reichamark Lira Argentine peso (free) Brazilian milreis (free) Mexican peso Cuban peso Chinese yuan 14% discount .2321 .2385 .4005 .0505 .2355 .0505 .2066 7-11/16% discount .05-5/8 There were no gold transactions consumated by us today. No new gold engagements were reported. No gold or silver prices were received from Bombay today. The New York banks, however, received quotations late yesterday afternoon, wherein gold was priced at $33.96, off 3# from Tuesday's level. Silver was unchanged at the equivalent of 43.97 The prices fixed in London for spot and forward silver were both 1/16d higher, at 23-3/8d and 23-5/16d respectively. The dollar equivalents were 42.44 and 42.334. Handy and Harman's settlement price for foreign silver was unchanged at 34-3/46. The Treasury's purchase price for foreign silver was also unchanged at 354. 278 THE safe three purchases of silver totaling 350,000 ounces under the Silver Purchase Act. of this amount, 150,000 ounces represented a sale from inventory. -forthe other delivery. 200,000 ounces consisted of new production from foreign countries, forward B.M.S. CONFIDENTIAL 279 BRITISH EMBASSY, WASHINGTON, D.C. January 9th, 1941 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, Work Bother The Honourable Henry Morgenthau, Jr., United States Treasury, Washington, D. C. 280 TELEGRAM FROM LONDON DATED JANUARY 7, 1941. Navel. Two destroyers were in collision when leaving Pe (some words undeoppherable) yesterday morning. Considerable damage occurred to both shipe. 3. During the Libyan operations besides covering the passage and unloading of supply ships running from Alexandria to Sollum navel units have supplied 250 tons of water to the army. 18,136 Italian prisoners have been avacuated from Mersa Matruh. 3. A convoy of 12 ships has arrived in home waters from Sierra Leone without loss. 4. Royal Air Force, January 6th a Blenheim sent on a task to North West Germany was obliged to abandon it but instead attacked 5 5,000 ton tanker off the Dutch coast and obtained a direct hit with a 250 1b. bomb. 5. Night of 6th/7th. All operations were cancelled owing to weather. 6. Libys. on 4th and 5th January our Hurriennes shot down 7 enemy bombers and 7 fighters. One Hurricane failed to return. During the same period heavy and medium bombers dropped 17 tons of bombs on military objectives and shipping at Tobruk and at Tripoli where they also dropped 9,000 copies of the prime Minister's speech. 7. Home Security. All railway services in the London arec are now practically normal again and at Cardit normal traffic has been resumed. 8. Italy. There still.is not sufficient evidence/ 281 2. evidence to any whether there are any German combatant troops in Italy. There scens no doubt however that a large military mission consisting of specialists and technicians is in Italy and that the Gestapo is extending its influence. 282 RESTRICTED G-2/2650-220 SITUATION REPORT No. 288 M.I.D., W.D. January 9, 1941. 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 Mar. 1. Air Force Operations. The German Air Force made numerous small scattered raids during daylight of the 8th. It was inactive last night, probably because of local weather conditions in its base areas. Last night the R.A.F. operated normally against the northwest coastal area of Germany. Wilhelmshaven, Enden and Bor- kum Island were attached. II. Greek Theater of Bar. 1. Local ground actions reported. Success in these actions claimed by both the Italians and Greeks. 2. Italian air offensive activity increased, both along the front and in the back areas. Salonika was bombed. This may be the forerunner of an Italian attempt to revert to the offensive on the ground. III. Mediterranez and African Theaters of War. 1. The British report the concentration of their forces in the Tobrult area is continuing. Active petrolling is reported on the Sudan and Kenya frontiers. 2. The Italians claim to be attacking actively the British ground forces in Libya. R.A.F. pressure on Tobruk evidently continues. Tripoli and Bengazi, in Lilya, and Naples and Palermo, in Italy, were also bombed. RESTRICTED CONFIDENTIAL Paraphrese of Cade Ballagree 283 Received as the - Department as 14.51. January 2, 1962 Athona, filed 18.00, January c, 1962. Major Grew of the Air Garge has - the fallening reports I want out with three Willington - Individual please miking night raids over Brindial - the sign of December so. These please were - the dty. In view of weather conditions, they flow at only - South I also flow with sine Blenheim formations without assort, - day mids over the city and aircress of Serati in clear weather - the - date. The pilote, who averaged a thousand hours, were essellent in all respects. They food heavy - accurate might antiairwant and day fighter opposition from fifter please They conferent to American tastical school destriess - - that they had to waste mediess time over their targete to - area booking results. This was - to their checkets - / a please were last. They were using nothing but see 1 base and light The methods of operation 1 by the British-dreat air fures have not changed materially since I reparted last. Exither has their strength. The British will and so Break plate to operational train ing write in Iraq - January 18. This - the idea that insured to give the Greek air fores the Italiana have a certain degree (not calculated) of air separitarity. They are operating from / bases is Albais. Their operations are both continuous - effective - are directed against attack objectives of a typical sert in - - areas. They operate CONFIDENTIAL CONFIDENTIAL 284 against areas in rear of the central and southern sectors. Share have been - attach - Athess or - the - sinkness - - they are only working defended. These signase I - all three of the British bember against since the - begin - operations against Salesion have been record by using a restre through Togetherin, the Italiana - cooraged employee by the six checkets Greek airplanes, all that - be spared to operate from the sintress there. The British air - - able officer, is openity warried about the unsolved problem have to employ his present wall fores properly from sindress with limited fauilities against the present - air superiority, the handlerg of under air- - - - with a weather handlerg added. Reported strengthening of 10gm air Suress by the Germans threatuse him with - increase of those bookille efforts. as - the sight action of the British flose off Telem Number 17 is the only effort to seise separiarity in the Milistic - Section - of which I have information Italian - still carrying - Independent day operations against - - villages along the - as that the results of the British offers - be considered desisive. Do Italian floor, cooperating with their artillary - air, has assisted heavy combined operations against the village of - affeining - during the afternoon of - so. This - - effort to halt the Greek / which had started at - that - at a - of - miles. The Italian - - a failure I the - had - reserves - the villages shalled - - & CONFIDENTIAL CONFIDENTIAL 285 tiently From December as to - 2, I visited the from in the Elears - - They were compled by - sarge of three division - fourth of the Greek fighting force. I was able personally to cheers all the air, I and sea operations nectioned above. IS was Increase that - - has empelled containment of operations in the with a the hope of foreing evacuation of Albania, the Greaks are making desperate efforts to roll up the Italian right and seins Talem The Italians are being slowly forced back by the Greeks, though they - resisting stubbornly from prepared positions with - of all ame. The Greeks are married, badly equip- pm and badly elected - their - as well as their from are structuded to the breaking point. The - of the British deposited mission General Reports said today that the purpose of his mission is a to adrice the Break - and to supply is. No is seriously conserved - the Greek opposity to continue unless they - be large in - the Greate have - treasures requests for arms, which be is trying to apply. no applies have been received as yet, alass the shipping problem is very difficult. Impliate critical mode are 2,000 Highe - pack eminals by the thousands, and - million for the TO - 300 - - Less priority to other mode, which are, a smale Distributions Baber Chief of Staff .2 Secretary of - Mar Plans Division State Signature Secretary of Treasury A Secretary of - + CONFIDENTIAL CONFIDENTIAL 286 Paraphrase of Code Cablegram Received at the War Department at 12:24, January 9, 1941 London, filed 15:00, January 9, 1941. 1. On January 8, thirteen British convoys were escorted by planes of the Coastal Command which engaged in one photo-recommais- sance mission and three special and five routine patrols. On that day raids by bomber planes on targets in Holland had to be cancelled. During the preceding and following nights adverse weather conditions caused the cancellation of all flights. 2. There were no German planes over Britain on the nights of January 7-8 and 8-9 because of unfavorable weather. 3. Details will be cabled later on the movement of two additional British divisions from England to the Middle East which is now being carried out, During the night of January 8-9 British planes based in Malta were sent on bombing missions to Maples. The results of this mission are unknown. During the night of January 6-7 one large merchant vessel was hit in the British bombing attack on Tripoli. 4. Ice has caused the closing of ports on fierds in Demmark and in the northern part of the Gulf of Bothmia. LEE. Distribution: Secretary of - State Department Secretary of Treasury Asst. Secretary of - Chief of Staff WPD ONI AC 0-3 CONFIDENTIAL 287 CONFIDENTIAL Perephenes of Code Ballegree Received at the War Department 22:19, January 9, 1961. Belgrade, filed January 9, 1941. The Tageslav Intelligence Chief says that probably digits (and as loant six) German divisions have already entered Business - pasteen detechments are - the Demobe between Carabia Citenita, according to reports. German troop movements into Rumania have been almost winterrupted since December 30, casing German strength in Resenia is new estimated mostly from at 120,000. The Yugoslav Intelligence Chief is new inclined to take the theory that the German would move troops into Bulgaria, seriously than hitherto. On the other hand, he thinks that se for as anjer operations are conserved, investion of Britain resides as the most likely idea. PORTIER Distribution: Secretary of War State Department Secretary of Treasury heart. Secretary of War Chief of Staff Yes Plane Division office of Neval Intelligence CONFIDENTIAL CONFIDENTIAL 288 of Date Indiagnos Reserved n - - Department as 15.00 - I sm Filed me January sm In reply to you - w - no. a the Signature below have been functioned w - what - which 18 is believed is desidintly reliable - - on my 10, 1940, / - 11,11,000 first line and 30,000 reserve canbet planes. Since that time 18,000/30 have been produced. Information as to I is - millable - the Health and Military Attaches are continuing this instigation with the cooperation of the Minister. the - has - other them that given above. IS is estimated - the - - materialing expective is Destitution NATURAL e- State Department Secretary of Treasury 1 Security of Chief of Staff - Plans Division office of x AT CONFIDENTIAL 289 January 10, 1941 9:30 s.m. GROUP MEETING Present: Mr. Young Mr. Pehle Mr. Wiley Mr. Cochran Mr. Sullivan Mr. Graves Mr. Gaston Mr. Haas Mr. Thompson Mr. Bell Mr. Kuhn Mr. White Yr. Foley Mrs. Klotz H.M.Jr: Glad to get reacquainted with everybody. Mr. Foley and I have been busy. I didn't see you (Foley) come in. Harry has a message for you. thite: It is about your bacon and coffee. E.M.Jr: Herbert? Gaston: I haven't anything. H.M.Jr: Foley? Foley: Here is a memorandum for your diary about the meeting yesterday. 290 -2H.M.Jr: What do you mean? Foley: At the Thite House. H.M.Jr: For Irey Foley: Diary. There is a press release. H.M.Jr: that a man. Foley: Ferdie Kuhn and I got that up last night. H.M.Jr: Tonderful. I will read it with much interest. Foley: Sure, he was here until after twelve. He says Did you make Ferdie work last night? he likes it. (Laughter) Kuhn: It is habit. H.V.Jr: Good. Foley: It was funny. When I got back to the office, Rayburn called and said that he wanted to hold a press conference too, and I said, "Well, McCormick said that Barkley was going to do the whole thing." He says, "I know, but I don't want the House press gallery to have to go way over to the Senate side. That would be inconvenient. H.M.Jr: You gave him the same thing? Foley: Said he wanted the same thing at a quarter past eleven. He is going to hold one at twelve and so is Barkley. H.M.Jr: It will be like when the President talks you hear these three or four radio announcers all in the same room, each one talking into the mike before he talks, so it sounds like bedlam. 291 -3 That looks good. Did Kuhn know what it was about? Foley: Sure. H.M.Jr: He will learn to have an answer. He will have Kuhn: On having answers H.M.Jr: I got off something at your expense, and I got no answer back. I said you would have to to take a few lessons from Harry White. take a few lessons from Harry White. John, I am accepting an invitation to go down to Mobile, Alabeme, from Mayor LaGuardia, on the 21st of February. Kuhn is writing a speech and I wrote him that in case something happened that I couldn't go, you would be delighted to. Sullivan: Are you going? H.M.Jr: Yes, I am going to try to. (Laughter) Foley: If he can't go, I will go. H.M.Jr: Try to keep Sullivan away. I just wanted you to know, I am completely relaxed until ten o'clock when the British come. Then I have got to go to work, so go ahead. Sullivan: Do you want us to keep you relaxed, or de you want to go to work H.M.Jr: Relaxed. Sullivan: The Bureau has recommended that we not have non-application reports in section 102 in cases of corporations with an income under $25,000. It will save a great deal of non-productive work. I think it is quite all right, but I 292 -4wanted to mention it to you Before approving it. I think there was un the with once before E Treasury decision revising our treatment of insurance policies. There have been E number of different decisions Tity the courts and I think it came up to you before and you disapproved it. Do you receilth afhether or not insurance policies that TELE non-assignable were to be included as trace of the gross estate for state tax purcoses? H.W.Jire I refuse to commit myself. Sullivance Tell, is it all right for USE the go shead with H.M.Jre Sulliver: what they think is right on in If you think it is right, it is all right with - I don't know what it is all about... The only reason I brought it - is because I understood it had been III before you. If you think it is all right, it is all right with me. Sulliver: # company in Philadelvhia is entirus to bring isopronyl alcohol into its industrial alcohol and convert. The Alcohol The Unit doesn't think that should be allowed... The have had trouble with them before. They have gotten every with things = there. Mr. Traves disenseves it and we disapprove it. The only reason I mention it is that they manter the do that for the Nevy Department, and I TERMS afraid that Secretary Knox might month the you about it - it is just one of those things - can't vermit to be done. If the talks to =,I will reder Him to you. 293 -5Sullivan: Right. That is all I have, sir. E.T.Jr: Yesterday in Cabinet, Bob Jackson went into 3 long talk. Be had a list of various American companies where the patent situation was more or less controlled by the Germans, and through that they controlled production. He got approval of the President to go ahead and draft a bill that not only which would have patents, but which would list investments in this country; and he called me up later on last night and asked who should go on what seemed to be a legal matter, and I said Foley. Foley: Be got a draft of that. Leon left one over here, too. There are two drafts around, ours and Leon's. E.F.Jr: All right. Anyway, I am telling you about it. You are on a new committee. And while I an on that, Dan, I wish that you personally would talk to Freston Delano and I expect him to have about tem times as much material as I could use on the bank holding situation, and I an looking to him, you see. I want good cases. I expect him to feed the stuff to me. Bell: In what form Do you mean for a hearing? L.L.Jr: Yes, when I go up -- Fell: To read before a hearing? E.W.Jr: Yes, in testimony. They can just pump the stuff into me but I expect - and I think he ought to be thinking about - he ought to follow all the newsmapers, any comments, and the possibility of answering the thing. I mean, the battle is on and I am looking to Preston Delano to watch it. Be hasn't got much to do, and he might just 294 -6as well watch this. He says he hasn't got much to do there. I see in the bill according to the Wall Street Journal that it is also going to control dividends, which I didn't know before. Give him the right to control the dividend policy of all insured banks. H.M.Jr: That is right. I didn't know that, but that is swell. Foley: "ie out that in to take care of Bank of America Foley: H.M.Jr: between now and the time Trans-America has to get rid of the bank stock. I thought it was swell. Tell Preston I am going to look to him. I expect him to watch all the newspapers and watch this whole situation, and it is up to him to run to see me if he needs any help. Foley: He has already started it. H.M.Jr: I would just like Bell to tell him that I am Bell: No indication as to when this thing might break on the Hill? H.M.Jr: I think it will be introduced today. Bell: I mean the hearings. H.M.Jr: I don't know, but I want Delano to watch the papers and the various things. He should be proud to do something to get the bill through. Foley: Glass was supposed to do it yesterday. H.M.Jr: That column in the Wall Street Journal on Friday counting on him. morning is pretty good. I was interested in it. 295 -7That they do is, they all get together on Thursday night and pool all their gossip, and they write it once a week, Friday morning. Cochran: Alphand and Lacour-Gayet have talked to Fehle and also to Atherton over in the State Department about using the gold which they have down in Vartinique. They wanted to have a certain amount of that transported to Puerto Rico and that part came to me and I told them we would accept it in New York if they wanted to sell it OF earmark it there. Then before a committee which Pehle might describe -H.M.Jr: A little louder, please. Cochran: The Committee of Control has the question as to how we should handle this. They would like to either earmark it and have the facility for selling it and getting free dollars, which they could use to finance shipments from this hemisphere, via Martinique, to northern Africa. They perticularly want to send petroleum products. They say they need this for their harvesting and so on. So the State Department seems to like the idea of their using part of that gold and - but the State Department would like an answer from us as to whether we favor it. They don't anticipate moving the big bunch, but only ten million dollar lots; but they would like the proceeds to be free; or if they leave it earmarked, then an equivalent amount from their dollar account be free. H.M.Jr: well, I think it is - I would like to see the Cochran: I have a memorandum on it. whole thing down on one piece of paper. 296 -8E.M.Jr: And Yr. Bill is approving this Cochran: Tell, they want our idea on the technical side and it was our idea here to say we would buy the gold or hold it under earmark. H.M.Jr: If you give it to - and I feel better than I Cochran: I have had it two or three days. H.M.Jr: Well, a coule of days more won't make any difference. Gaston: So far, on the advice of the State Department, we haven't been permitting any shipments at all to Casa Blanca, France, by way of Martinique or any other way. Cochran: This would be conditional upon the British giving them navicerts, of course. H.M.Jr: Put it on the eile. All right. Anything else? Cochran: No. E.V.Jr: I was very elad that you (Wiley) were able to Filey: I SEE Mr. Schmbert yesterday, Vice-President of the Bank of Manhattan, and he says in recent months cash withirswals have been five times do now, I may read it. help Yr. Fallitt. I didn't answer him. anything in the past, and that foreigners who have large holdings of cash keep them in hotel vaults instead of safety deposit boxes in the banks. H.M.Jr: I thought I had the thing licked. I thought Mr. Bull and Yr. Felles were satisfied, but they now aren't. I sent you (Kuhn) a memo. 297 -9 Fuhn: E.M.Jr: I got your message. That is wonderful service on that machine. I mean, the State Department - I don't think they reversed themselves. I just think it has come to the surface. They SEE it was imminent and was going to be signed yesterday. So I don't know. Pehle? Phele: If that freezing matter is coming to a head, me have been working on the thing, the committee, and the committee feels that before anything is done there are a number of very large policy questions that have to be settled, and we have to have your time on it. H.M.Jr: Well, you will have plenty of time, don't worry. Pehle: Mr. Pickett came in again about additional release of French funds, $50,000 to buy milk in Switzerland. F.M.Jr: Tell him to get the 70 tons out of Switzerland Pehle: I think that is right. You notice that in the he has already bought. State Department's memorandum on the Hoover troposal, they thought that the Hoover proposal would involve a very unfortunate precedent. Of course, this is exactly the same type of thing and we didn't consult State about it before we did it. H.M.Jr: Well, I wouldn't move until they get the 70 tons Cochran: I asked about that and -- Pehle: Tie got a report from Matthews and Matthews said of milk out. Somebody was to ask the Swiss Minister. 298 - 10 they haven't gotten it out and they agree they haven't gotten it out. They say they have to get it out. E.M.Jr: I am going to sit tight until they get it out. Pehle: And on the Hoover proposal, as far as I know he hasn't come back since State referred him to you and done anything about it. H.M.Jr: Herbert Hoover was referred to me? Pehle: Yes, sir. You remember that is the letter that Cordell Full sent over here after Hoover had written him, and the State Department attached a memorandum that apparently Feis' office had prepared which was against the pronosal. I should think it would be one of the worst of the Hoover proposals. H.M.Jr: Anything I should do about it Pehle: No, sir. H.M.Jr: I am going to skin to the people that I haven't Thomson: seen and give them a chance. I have that Albany closing matter which Mr. Gaston has cleared with the politicians. The Albany Emergency Relief Accounting Office. H.M.Jr: Wonderful. that a man, Herbert. Thomsson: The probably will get lots of kicks. H.M.Jr: Wonderful. Thompson: Mr. White would like you to accoint Professor Southard. He has a leave of absence from Cornell University. He was here with us in the summer of 1938. 299 - 11 Assistant Secretary Tracy of the Labor Department asking if we could loan him a car for three or four days during the inauguration period. He is going to be very active in that parade and running we and down the Avenue and wants something with tags. I gave Frazier cards for your car yesterday. H.M.Jr: Tracy, what is he? Thompson: Assistant Secretary of Labor. H.M.Jr: Isn't that an unusual request? Thompson: It is a little unusual, but I don't see any difficulty about it. H.M.Jr: Got anything we want from them in return? Thompson: Nothing I can think of. O.K. We can kind of rub the car in the palm H.M.Jr: Thompson: of his hand. You wanted me to tell you about the retirement case of this Internal Revenue man. He is one of Ire's men who reached the age of 70. He is in the Washington District. H.M.Jr: How did that get to the President without going Thompson: These cases don't 20 over your desk, and we have about 50 of them a month and 49 of them over my desk. are retired and one retained. There is no letter to the President. It goes right to the Civil Service Commission. H.M.Jr: What else? Thompson: That is about all I have. 300 - 12 H.V.Jr: Dan? Bell: Do you want an open market meeting for this E.M.Jr: Yes, and just -- Fell: You don't need it, I don't think. F.M.Jr: Yes, I don't want them to say - there are two financing? things. I will give you an answer in a minute. I want to do this first, and I want to tell you something very interesting. For about the 15th at eleven o'clock? H.M.Jr: That is all right. will you take care of it? Bell: Yes. E.V.Jr: George Haas made a study for me of bank stocks before the first of January when that announcement Bell: came out, and there is no question about it, that they were counting on it, and I wish you would see the way National City and Chase Bank stock acted for two days before this announcement. Haas: The two Morgan banks didn't do anything. H.V.Jr: But the Chase and the National City? Eaas: The Bankers and the Guaranty didn't show up. H.V.Jr: Do you remember how nervous Eccles was about getting that out? Not that I am implying anything, but it is interesting. Now, what I want you to do, I want you to watch those and if these fellows are convinced there isn't going to be any legislation, let's see 301 - 13 what happens to those stocks, but there is no question in the world that the banking fraternity knew about these, that they were going to go through, and did they go in and buy those stocks! The old hunch was right. We will just watch them. And then you continue to watch the English for me. Have you any doubt at all that it must have been - that they went in and bought those just before the statement came out Haas: I have got the chart of the general market and the chart of those stocks and it shows right before it that it went sharply up. H.M.Jr: You are just basing it as I did yesterday in White: Facts don't lie, do they? (Laughter) H.M.Jr: Harry took opposition to my statement to the press yesterday where I said Congress wasn't going to take the Eccles statement seriously. He my argument on & pure matter of statistics. thought I was too flippant. Pell: T thought you said if they did, you would have something to say. H.V.Jr: Harry liked it. Bell: That became of the chart? H.M.Jr: The chart was there. Bell: And they never saw it, did they? H.V.Jr: No, I had it over, but I listened, and sometimes a little grumpy, but I listened. Nobody asked me anything, nobody asked me whether I thought Jones was right or wrong, nobody asked me 302 - 14 whether I thought we were having inflation and nobody asked me about the President's budget except did I agree with him that there was no such thing as a debt limit. That was the only question that was asked. Bell: It was a pretty good press. H.M.Jr: Well, I had a pretty good - you have got, "The Secretary of the Treasury is just clay in the hands of his associates. White: Baked clay. (Laughter) H.M.Jr: As long as it isn't a crackpot. (Laughter) In line with that you will be amused at the British press stating that the F.R.B's request White: for more extensive monetary powers to control inflation is an economic anachronism. Haas: Go on. (Laughter) White: All right. On the ground that it is more than monetary powers that is needed to prevent inflation. Bell: Well, I awaited the press with eagerness, but it came out very dull. I wondered what happened. H.V.Jr: That is just what happened. Harold? Graves: Nothing. H.M.Jr: I am still waiting for you and Norman to ask to see me about that personnel director. Klotz: They know better. Thompson: We have been on McKay's list, but we can't get to you. 303 - 15 White: Jerry Frank called up yesterday to say that they had had this meeting and he had something that he wanted to communicate -- White: I talked to him last night. All right. H.M.Jr: Ferdie? Kuhn: Would you like to reconsider that American H.M.Jr: Institute of Banking invitation for the first of February? H.M.Jr: I won't be here. Kuhn: You won't be here? H.M.Jr: No. Everybody will please note. White: They have. H.M.Jr: I plan to be gone from the 31st of January until February 10, the night of the 31st. White: Do you think that is long enough for a good rest, Mr. Secretary? H.M.Jr: No, I don't, but if I get away I will consider myself extremely lucky. Kuhn: I have nothing else except that I hope to see the Herald Tribune's leading editorial this morning, apropos of the press yesterday. H.M.Jr: About Jones and me? Kuhn: Yes, also a piece in the Times about the behavior of the bonds following your statement and how the brokers are all blessing what you said, 304 - 16 because anyway it gave them increased turnover and that is what they wanted. Fell: Increased business. H.M.Jr: I don't want to embarrass you, but when you read some of that stuff, it is - well, I won't say it. Kuhn: Come on, come on. H.M.Jr: Well, I just don't - that is why - when I read that stuff, that is why I read PM every night. I like to get something that is really original. White: He doesn't mind that. He has been writing for -- H.M.Jr: Oh, PM. White: No. H.M.Jr: If anybody doesn't, it is refreshing to read PM at night. The job they are doing on the public schools in New York is really amazing. They really go out and get fresh stuff. They have got this campaign on retail sales. They are doing a marvelous job on that, comparing New York retail prices with Vermont. I mean, they have got this campaign on Mexico, this fellow Boyer taking the thing, and we are imperial in our attitude, they think we are and he doesn't believe it, and they gave him a chance last night to write a full editorial answer to Ingersollcontradictinghim. It is an interesting paper. Gaston: I hope they can get some circulation. H.M.Jr: Well, they have got enough money to keep going for awhile, but It is refreshing to read it. 305 - 17 Bell: It is Marshall Field's paper, isn't it? H.M.Jr: Yes. Gaston: By the way, George Field was in town this week. He has been in Mexico. He came in here to get some figures. H.M.Jr: All right. Does he use - before I see him Gaston: He had his teeth fixed. H.M.Jr: He needed something. (Laughter) Sullivan: There is an appointment in the wind. Kuhn: Mr. Secretary, I just wanted to tell you that H.M.Jr: Grand. Kuhn: With some stuff written and some more work H.M.Jr: He is a breath of fresh air. I like that man. Kuhn: Very good. H.M.Jr: I want you all to meet him after he gets started. again, does he use Listerine? Odegarde was here and worked hard all yesterday. He is going to be back Tuesday. to do here in the building, seeing people and getting information. Have you had a chance to meet him, Bell, Odegarde? Bell: No, I haven't seen him. H.M.Jr: He has been working with Kuhn. You will like Thompson: He declined a salary. him. 306 - 18 H.M.Jr: That is up to him. I told him to talk to Viner and find out what other professors are doing. But he doesn't want any salary? Thompson: No. Sullivan: Have you had any talk with either Doughton or Harrison about getting together on the tax program? H.M.Jr: No, because there was nothing left for me. You can't imagine what Foley and I have been through. Foley is a young man. He can take it. He can't run from here to the White House. Sullivan: He puffs, doesn't he. H.V.Jr: That is a polite word for it. (Laughter) Well now, let me see; at this meeting with the English, I want Mr. Bell and Mr. White and Mr. Cochran and Mr. Foley. 307 January 10, 1941 10:00 a.m. RE AID TO BRITAIN Present: Mr. Bell Mr. Cochran Yr. Frank Yr. Schenker Yr. Purcell Yr. Foley Mr. Cochran Mr. White Sir Frederick Phillips Yr. Gifford Yr. Pinsent Yr. Young H.V.Jr: The reason I asked you gentlexen to come down Schenker: I know where it came from. Mike Flynn called me and said he had gotten the story from Pat Earrison. First he had it wrong, and then Jimmie Byrnes set him straight. There he got is this. The SEC, Chairman Frank and his associates, have been talking with this group of investment people. Before you came in, they informed me that they hadn't given out any publicity; and the investment trust people hadm't. Where it came from, I don't know. it from, I don't know. H.M.Jr: You know where the best leaks come from in Washington Schenker: No. I have been here seven years and don't know. 308 -2H.M.Jr: Well, some time I will tell you. So, if Mr. Frank would tell us - I haven't heard yet either - just what the situation is. We are talking now about this group, the idea of their being in a position to buy some of your direct investments if you want to sell. Frank: At the Secretary's request, we got in touch with Mr. Quinn, of Tri-Continental. Mr. Schenker went over to New York and conferred with a group of investment trust representatives, and with an exception which I will presently indicate, they will be delighted to negotiate on any direct investments that you care to sell. They have quite a fund of capital, and the virtue of their dealing - Mr. Gifford would know much better than the rest of us - would be that you would have real underwriting. That is, they would be able to put the money right on the table, whereas the investment bankers would have to do a selling job. The securities they sold would have to be registered with the SEC. Their price would depend upon the market conditions at the time. They can't give you a very long commitment, whereas the investment trusts wouldn't have to bother about that. Now, of course, they can't - if the job gets to any terrific magnitude, they couldn't handle it alone. Moreover, they are not suggesting and we certainly wouldn't that they - you should limit your negotiations to them because you might get a much better price by dealing with a variety of persons, and they are not suggesting it. They would just like the usual method of dealing, opportunity to investigate, and the like. Mr. Schenker can tell you more adequately than I the approximate 309 -3amount of funds that they would have at their disposal. Schenker: Depending upon the group that we wanted to include in these negotiations, I think it would range from 15 million to a hundred million in that group. However, Mr. Quinn has already told me that certain insurance companies have called them and said, "He will be willing to participate in your group. Gifford: May I just ask one question to clear my mind? My impression is that the investment trust companies themselves would not have resources of that magnitude in their own coffers, but they can get them by, as you say, bringing in the insurance companies, borrowing on the securities and so on. Schenker: That is not strictly accurate, Mr. Gifford. They have available in that small group about 50 million dollars in cash. Frank: That is without any disinvestment of what they have now. Of course, they could disinvest. Now, to make clear what we mean about the small group, there is among the investment trusts three that are affiliated with investment bankers. They do not want to go along with this plan, and if they went along - if they did, it would be a still larger sum, but those three would prefer to - I think they will conclude - they spent some time with us yesterday - that they would rather go it alone. That is the Lehman Corporation, the Dillon Read affiliate, Lazard Feres, and Dominick & Dominick. They would prefer to do it as an investment banker's job and nobody would dream of suggesting that they shouldn't have the chance; but the 310 -4 fact is that by grouping these investment trusts you don't reduce competition but you increase it, because they have not heretofore done that sort of work with the exception of a recent job done by Chimm of Tri-Continental in Newport News. Gifford: Frank: That is right. You know the situation has not been as it is in England. Investment trusts have not done real underwriting and I think you will get more competition out of it. Schenker: And I think it is only fair to state, Yr. Gifford, the objection of these investment banker streasored investment companies is that if any group gets together, it cuts down the competitive element and that therefore you may not be getting the best price. However, they do say that they have been harassing the British Government to get a look at these things, and they will say there are 20 OF 30 or 40 groups (Mr. Young entered the conference.) Frank: That is, the investment bankers said that they had - Lehman has been to you about some mining property and others. Gifford: Mr. Cochran at least will have seen the effect on our work since I WES here three or four weeks ago. There has been a mericed change, hasn't there Cochran: Yes. Frank: well, that is about the story. I am sure the Secretary - he wouldn't dream of suggesting to you that you should limit your negotiations to any group, but this will add to your bergaining 311 -5canacity rather than otherwise, and to the extent of the funds they would enable you to have . firm over whereas the investment teathers couldn't do that for you. tell: They have got a hundred million capital, you Trans: Ch, what is their capital* It is considerably Schemiter: The group that we looked at, and we haven't included compenies like United Corroration and others who would go alone, see, of total assets of emposimately 600 million dollars and there are about 10 to 15 per cent in cash. say, BE E maximum. Can they borrow greater them that. There is E big sum available. Schetier: They are making trovision for a reservoir of 10 TEL Dent to take care of the little commanies maring from 1 to 2 million, who could get a certification in this too if they so desired to mike it EI equitable distribution. Effect: Them just to get the thing further cleared, Schemeter: Tri-Omtinental Yr. Crim of Tri-Continental. Be will also have who would be the person representing them, on E committee of three, one of the Boston grown, which are the so-called open end companies. Terrill Priswold, probably. Cabot, somebody like that. Schemer: Cabet and probably one other. Ee wanted Yr. Funker to come along; but since Mr. Bunker has fundamental difficulties with the plan, he will not go along. 312 -6Gifford: But it is where Earl Bailey used to be. I knew Earl Bailey very intimately, and I knew the people. H.M.Jr: As I understand it, it isn't just Quinn, it is a whole group. Gifford: But he will be the person to speak to. Frank: He will speak for that group. E.M.Jr: Ee and two others. Schenker: He and one or possibly two others. E.M.Jr: Have you got a list of who is on that group? Schenker: Yes, I have got a list here. People who have indicated an intention to manifest an interest is State Street, with 35 million of assets, Incorporated Investors, that is the former Governor of Maine, Massachusetts Investors, Dividend Shares, that is Hugh Bullitt, Calvin Pullitt, Equity Corporation, that is Dave Milton, who is John D. Rockefeller's son-in-law, Tri-Continental Corporation, Chicago Corporation, that is Field, Glore & Dick, Blue Ridge Corporation, American International Corporation, Pacific Southern Investors. We want to get some people from the Coast. That is John Lovelace. Gifford: The is that? Schenker: Lovelace. The Atlas Corporation is Floyd Odlun and the Phoenix Securities Corporation. We have got Railway and Light, that is Jim Orr of Boston, and we have got the Amherst Express Company, and there will be a few others, but this is the people who -- 313 7- Frank: That is excluding United -- Schenker: Excluding United, and a great many other Gifford: But that is quite enough. Certainly the Tri- H.M.Jr: And I say that they have the blessing of the corporations. I think -- Continental have got a group behind them. Securities and Exchange Commission. , Frank: There would be one minor problem which we will clear which would be a possible objection by the Anti-Trust Division of the Department of Justice. I am sure they wouldn't, because apart from restricting competition, this would really create more competition. H.M.Jr: But you can take care of that. Frank: Yes. Schenker: If I may make this observation to the Secretary, when you say it has got the Commission's blessing, we don't even want to remotely infer that the British Government should confine its negotiations to this group. Gifford: I quite realize that. You made that very plain. Frank: They are under our jurisdiction in certain respects under a certain statute, and I am sure these fellows will be very easy to deal with. H.M.Jr: Before I get on the next thing, I want to say to Sir Frederick, is there any question you want to ask about this setup. Phillips: Mr. Frank cleared the main point at once when he said there was no question of restricting 314 -8 commetition but of extending it. is you know very well yourself, in Democratic countries you have got to browe to your Parliament that there was competition. That is the most important thing, that we should have that. H.M.Jr: Well, you have got the group and you have got the group that doesn't want to COME in represented by three or four houses, se you have got competition there and then you have got anybody else that wants to talk to you, but at least -- Gifford: H.V.Jr: Te have got one solid one realy to act. Solid one that wants to act and if the other people want to come in -- Frank: Tell, they have been - H.M.Jr: You have got at least two groums. Schenker: Two groups, and there was STATE intimation once, Mr. Secretary - we had knowledge of the fact that at least 10 to 20 banking houses had been contacting the British, manifesting ET interest in those securities. I think the only thing we would like to say is that here is E group that may be an additional purchaser - Gifford: I quite understand. I understand absolutely. H.M.Jr: They have never been in this there before. Schenker: That is right, never done that tyme of thing. H.M.Jr: that we have done is, we have really created Frank: And Mr. Gifford knows the character of them because it is like the ones be has at home. an additional buying source. Is that right? 315 H.Y.Jr: Tell, I think the SRC has done a rood job, and Phillies: Tell, I already suggested that tending I went to them them for getting this lined - for pm New what are you going to do about its - alteration of the character you know about, sir, that Hr. Hifford should be in TOWER to get - with this list of these verticular securities. E.M.Jr: Do you think that possitly by Monday that - by Terring you could get word from the Treasury Phillips: Surely. H.M.Jr: Receive the last time I pointed this out, I don't into when it was, but I have been from Therefar the Thursday just running around this town like minuty's business getting this till realy for the President. It is realy. New, I have rat the - un there and testify, and I - not in want FOOD share because the memie in the liministration in very high miaces and certainly memie on the Hill who think that THE have smile securities - and one of the things i - minr the have to talk to you about before I g. - there is just how much I can divilge. Phillips: Tes, That THE it you who suggested Honday, sir, H.W.Jr: Time through you mean - have I said Monday before this morning" Phillips: To, sir, Unit you said this morning, could I you said II multi be as late as that. let I innow before Monday. I can certainly do much beliber than that. E.M.Jr: The good Receuse as I said, I don"t know 316 - 10 - when I did say this last, that even if you would sell one thing - I don't know when that was. Gifford: That was when I was here. H.M.Jr: That was at least three weeks ago. And from the standpoint of getting this legislation through, if for no other reason, I mean that this thing could be started. It would help a great deal, aside from everything else the cash would provide. Now, I would like to also, while these gentlemen are here, bring un another one, and that is the possibility - whether you could get the authority to talk on these 600 million dollars worth of American securities - I think you call them listed securities, don't you? Gifford: Marketable securities, we call them. H.M.Jr: We are working on another plan which has nothing to do with this, but we would like you to have the authority so that you can talk, that we take those over en bloc, at a price. Now, there are several ways that we can do that, we think. We are working on it. If you could get that authority so that you could talk to me about selling those en bloc to us -Phillips: Yes. You are talking about a Government organization now. H.M.Jr: Government or private group. I am going to ask the SEC to think about that. Now, that is No. 2. No. 3, the suggestion also has been made - this, I think, came to me from Mr. Lovett, who is now with Mr. Stimson, formerly of Brown & Harriman 317 - 11 but he resigned. He severed all connections. The possibility of forming a private corporation or a Government corporation - maybe you know about this - to buy things like wool and tin for cash while they are in transit, or you can buy them in Australia, Malay Streits, wherever they are. Wasn't that the other suggestion? White: That was the one he made, and then pay in H.M.Jr: Yes, pay in advance. White: For subsequent deliveries. H.M.Jr: I mean to buy the stuff, the wool in Australia or the tin in the Malay. I don't mean to buy advance. what is underground -- Gifford: That is in shipment. H.M.Jr: Well, to buy -- White: For future delivery over a period undetermined. H.M.Jr: Now, weren't those the two principal things White: I think you have mentioned them. H.M.Jr: Now, we are working very hard on those, but you on that list? gentlemen haven't, I take it, got the authority to talk to us about it, but we will be ready in a couple of days. Phillips: Yes, I will undertake to be ready in a courle of H.M.Jr: With the possibility of buying commodities at days. 510 12 the source and Daying you cash, the possibility of taking over your marketable securities em bloc, and then while I give you the whole thing, I want to say again that I sent word to you two days RED that Mr. Bull has - be is even more sure of this than ever, although his own people, like Dr. Feis - I wanted to find out There he ESS - don't agree with Yr. Ball that we are to ask you to tut us two or three billion dollars worth of securities as colleteral against the loan of this material. Non, I SII passing it alone to you. I have told Yr. Bull - asked whether I could do it here. I have tried IF best. I don't want to be critical, but I an just civine you the facts so that you will be prepared. Ee reteated it again yesterday, that be thought it would help very much on the E:11 if you could ret up that two or three billion. I - not recommending it, but I - massion it alone as something that he seems to feel very keenly about; and as I am sitting here, the thing that occurs to me is that it night be worthwhile if Sir Frederick could see Mr. Bull this week-end. illies: Jr: Yes, I will. Because be has also - I told Herbert Fels Mr. Ball has the figure which he also gave the President and left me in s very embarrassing position, that YOU have got 18 billion dollars worth of securities and therefore what is two or three billion as collateral. I mean, we are talking very much here in this room, but I want to rive them the chance - if he goes - on the 3:11 and says, "They have got 18 Million dollars worth of securities, there is no PEASCE why they couldn't out at & counte of billion - you see. So I really think, as I sit here, if you could ask to see Mr. Full and get to him, the sooner the better for your sake. 319 - 13 Phillips: I will. R.M.Jr: But I had Mr. Welles here, and Mr. Feis here when we had everything on the blackboard for them, and gave then all the figures you had given us, and I thought we had gotten across the information. Phillips: well, I will do that. H.M.Jr: Evidently I have done a very bad job. Certainly Mr. Telles and Mr. Feis know what it is. Phillips: Yes. H.V.Jr: But Mr. Full doesn't. Then the other thing, Gifford: I am afraid that you must still think that my Phillips: Was this yesterday Gifford: No, it was the figure I gave you rather casually in conversation, not knowing it ESS going to be used to give information to the Secretary, I want to congratulate you (Gifford) on the acceleration of your sales. words were unreliable. of three and a half million. At least I can claim that my deeds were better than my words, once I knew where I was. H.V.Jr: It is a nice position to be in. the don't all find ourselves in that position. But what I have read in the Dress and I have heard since the way you did it - in fact, it encouraged the market, because nobody in the market had any idea that -- Gifford: The market was -- H.M.Jr: That they could absorb as much and it has cheered 320 - 14 everybody up, and I have been running a graph on the stocks that you sold, going back a month before and since in relation to the market, and, of course, it is very interesting to watch, but it has been very good for the market, plus the thing I kept saying would give underpinning to the market. I said that. It is nice to be right once in awhile. Schenker: May I ask a question, Mr. Gifford Then you talk about your marketable securities, do you include situations like Lever Brothers? Gifford: Oh no. Schenker: Those are in the categories of unmarketable. Gifford: Those are fixed. Phillips: What about Lever Brothers Gifford: It doesn't belong to us at all. Phillips: My belief is that it is under Dutch control. Frank: It certainly is a misconception. Schenker: Is Brown & Williamson marketable or unmarketable? H.M.Jr: What they do, they divide the thing as those which are listed. Gifford: Those which we can sell are confined in the marketable securities to things that could be sold on the New York Stock Exchange or through the distribution houses without any more ado, just in the case of a courle of days. H.M.Jr: The investment trust thing, where some individual owns a factory -- 321 - 15 gifford: Frank: Gifford: E.M.Jr: ?ifford: We had a situation like that just yesterday, a transaction, with one of the investment trusts. of listed securities? Of listed securities. But the thing the investment trust does is where an individual or a partnership I E factory or a business -The best example is Viscose. That is the one you all know. Be all know that and it does belong to a British company. Lever Brothers has led to a great misconception. It is absolutely not owned by Great Britain, but in Amsterdam. Pinsent: The Shell Union has also been mentioned in the cress. There it is again. Althouch WE have a participation, it is the Dutch that have control, I think. Frank: Does that mean that the Germans today centrol it? Phillips: No, I think the Dutch Government centrals it. It ought to be so anyhow. H.M.Jr: Jerome, can you think of anything" Frank: No, I don't think of anything. H.M.Jr: How about my gang Have I covered the thing we were working on White: Those were the major points. H.V.Jr: Dear Bell: I think it is all right. 322 - 16 E.W.Jr: Anybody? You don't have authority to recomend an immediate vesting of the whole balance -One thing I ought to say on that, gentlemen, with regard to vesting, we must not omit the physical difficulty. I had a letter from Mr. Bernard of the Bank of England, in July last, that has nothing to do with what is going on today, saying that he did not feel that they could tackle under the circumstances now existing more than individual vestings of roughly 85 securities involving a value of roughly 85 millions at one time, just because of the physical difficulty in getting it down, and that, of course, with the bombings in London and the difficulty of stock getting in and out, it must have been increased rather than decreased, and you see the physical labor in the vesting of a small holding is just about as great as if you have got one fellow holding five millions. It takes as much work to do 50,000 held in 3 or 4 hands and then another thing that we are noting very much this time, we had a vesting beginning in December, and the stuff has come forward very slowly, which I think is undoubtedly due to the fact that both the Clippers and the sea mail are taking so very much longer. The Clipper service has been unfully unsatisfactory this last month. Phillips: We have got one man who left London on the 20th of December and got to Lisbon the same day. There he is now, urgently wanting to go to Washington. Effect: Phillins: These are physical difficulties. The mails aren't quite as bad as that, but they are pretty bad. 323 - 17 (Mr. Frank and Mr. Purcell left the conference.) thite: Could the physical delivery of stocks be strung out over another month or two Schenker: Yes. As I understand it, one of the advantages of an investment trust is that on a preliminary negotiation, they will conclude the price, make the contract at that price, and make it subject to an investigation. White: No, I am speaking of the marketable securities Schenker: Oh, if they dealt with the investment trusts. Gifford: No, you are making two things. White: No matter whom they dealt with, supposing a contract for purchases was made and the and there is a difficulty that has been -- securities were not physically all available, owing to the difficulties of transport and the difficulties of vesting so that they might not be forthcomin- for even several months in toto after the contract has been completed. Is that something which is feasible. Schenker: Yes. The fact of the matter is, you can do that under New York Stock Exchange's code of delayed delivery, and it.is reflected in the price. It usually sells a little cheaper because the fellow hasn't got the physical possession of the securities to sell immediately. White: So the fact that there are difficulties in the vesting need not if they so desire delay any arrangement. Schenker: That is right. A delayed delivery sale is not unusual on the New York Stock Exchange. 324 - 18 H.M.Jr: Look what we authorized the people to do in Holland. My God, tell them what we authorized the Central Bank - Bank of Holland, or whatever you call it, to do before the Germans came in, what we were willing to do. Cochran: To have them burn their securities? H.M.Jr: But tell them how we were willing to have them list them and the Consul simply take a whole list and simply sign. White: And have them therefore regard -- Gifford: I think we are really mixing two things. H.M.Jr: But it is a question, if you took your securities, you couldn't get them over here physically - in the case of Holland, we told Tripp, the President of the Government Bank there, "You can take these securities and just take a whole batch of them and get some Consular office and whatever the lo callegal authority should be, the judge, and simply burn these things and sign and me Gifford: will give you new securities on this side. If we did it for Holland, why wouldn't we do it for you? I think there has been a little misunderstanding. H.M.Jr: They never did it though. The Germans got Gifford: I was answering Mr. Cochran's question about I was really answering Mr. Cochran's question. there first. vesting, you see. I wasn't really suggesting that an arrangement of that kind couldn't be made. Of course, it could be made, particularly getting the United States Government, as you were suggesting. I think that these gentlemen here were a little at cross purposes, because 325 -19 - you have been discussing for the investment trusts, the direct investments. Schenker: No, the marketable securities. There is no reason why they can't make & contract, pay for it, and you delay delivery for securities. Gifford: No, no. They divided it into three, there is the direct investment trusts, with the arrangement the Secretary was speaking of, possibly some government department taking over the whole on block, and then thirdly, the - keeping to the direct investments which the investment companies may be interested in, I can't imagine there would be any difficulty there, because a contract with Courtauld to sell its Viscose holding, you obviously wouldn't worry about the delivery of the title deeds as long as you had a proper and good contract. Bell: Do you know the names of these securities now? Gifford: I don't, personally. Bell: Are they available That might be some difficulty. Thite: There is a list. Pinsent: We have a list, but I don't think it coincides Gifford: That doesn't come within my purview. H.V.Jr: Mr. Schenker asked how I felt if Lehman Brothers Schenker: I am authorized to tell these people like Funker, If you don't want to go along with with yours. wanted to form their own group and I said fine. Cy Quinn's group, you can organize your own" and "Mr. Dillon, you can organise yours," and 326 - 20 you can have competitive bidding from these people or anybody. Gifford: Well, don't just commit one too deeply as to what the method would be, but I am certainly seized of the point that you want to make that the investment trusts are available as competitors to buy the direct investments. That is the important thing. F.M.Jr: And we don't want to keep any group out. Gifford: No, clearly. E.M.Jr: If there are four or five that have a little bit different setup and they want to group themselves together and bid on this thing, that is to your interest also. Gifford: Of course. E.V.Jr: Well then, I will wait until I hear from you. (Phillips) I am leaving town when the President leaves at three, and will be back Sunday night or Monday morning. Phillips: Yes, sir. Could we go on a little with the point you have mentioned I think we might if you could give me the time. S.M.Jr: Surely. (Mr. Schenker left the conference.) E.M.Jr: I am at your service. Phillips: When you mentioned that third point, it carried my mind back to July. There was a scheme of that kind then, something resembling it, whereby the United States would buy certain quantities of tin and rubber and give credits on it, which 327 - 21 - only broke down, if my recollection is right, because it appeared to the legal powers that the responsible department was limited to spending that money on commodities. H.M.Jr: You are talking about your people? Phillips: No, your people. White: That was the bill in its original form, and it may be at that point it was discussed with you. As the bill finally emerged, that was not an essential requirement, although it was one of the things they hoped to accomplish by the bill, and a compromise was reached between the various groups that were interested in the bill, so that I think as it stands now, that is not an essential condition. Phillips: Well, I understand that might have gone through much earlier this year if we hadn't been held up by the stipulation about buying agricultural commodities. White: I see. I didn't know that they had had those discussions, but that definitely was the intent of the bill when it was first presented. Pinsent: I took some part in those discussions and we White: Well, it must have been before the bill passed. Pinsent: No, it was after. H.M.Jr: What bill is this, Harry? White: That is a bill, you remember, in which there realized the bill did not require that particular proceeding. In fact, we found that your departments did require it. was some discussion of the Department of 328 - 22 Agriculture, State, Commerce, and so on, Jesse Jones, in which it enabled the RFC or some special corporation to purchase materials, pay for them in advance -H.M.Jr: Particularly for the English^ White: No, it wasn't specified, and I don't-I imagine the English were one of those they had in mind, but they also had Chine in mind and others, and the Department of Agriculture had honed to make credit available to England and other countries with which to purchase agricultural commodities through that device, a credit which would not be available in any other way, and then, unless I am grossly mistaken, the way it TES finally pessed it was so worded that they didn't necessarily have to buy agricultural products. H.M.Jr: Well, you will have to start all over again, whatever it is. White: The bill is there, and I think it permits -- H.M.Jr: Start all over again fresh. Pinsent: I think Dr. White is right, Mr. Secretary. The bill does not make that requirement. It is at the discretion of the United States Government departments concerned either to make that requirement or not to make it, but we found when we discussed that they did wish to make it. White: That might be very true. That is a matter of Bell: That was true. Grady headed the committee, you may recall, and he tried to get them to purchase policy. agriculturel materials with the dollars made 329 - 23 available. E.M.Jr: Foley, get into this thine and dig it all up. Foley: This whole thing about buying wheat futures and buying against future delivery of tin bothers me a little bit, because it runs across the Neutrality Act, and it is in the nature of an extension of credit, which we can't do. Te can buy and pay in cash. F.M.Jr: But that wasn't Lowett's suggestion. Lovett's suggestion was to do it through e trivate corporation. Foley: H.M.Jr: Foley: Tell, it is the same thing. But they could do it. If it is a normal commercial transaction and they are paying for somethine in cash so that it is a sale rather than ET extension of credit, it is all right; but the line is a narrow line and we have to be terribly careful that we are not extending credit against something that will be delivered a year or two years from now, which is out of the realm of the ordinary commercial transaction. H.M.Jr: Well, Ed, nothing is easy these days. That is why I ar asking you to do it. Get into it, will you? Foley: Yes. H.M.Jr: If anything is easy we - it would have been done before this, but emlore the thing. If Agriculture is interested, if State is interested, and so forth and so cm. Harry has got some 330 - 24 - ideas he will give you. Pinsent: We understood that that act of July overrode E.W.Jr: I - not familiar with it. I don't know about Phillips: We will get right down to it. F.M.Jr: Well, the first thing to find out is what have you got, where is it and who owns it, and is it for sale, you see. Pinsent: There are running contracts in existence for tin and rubber. H.W.Jr: I see. White: Pleane: Wool also might be a possibility. Yes. I an not so sure about that. Phillips: Tin and rubber. Have you got any other White: Wool was the one that might run into something, but there might be something there. Phillips: Jute. H.M.Jr: Jute, burlap. As I say, where is it, who owns to that extent. it. commodities? it, and is it for sale. Now, what else do you want to ask Phillips: Well, about the other proposition, sir, about the marketable securities, I wasn't following your thought quite clearly, I am afraid. 331 - 25 H.M.Jr: Well, the thought is simply this, that we are thinking in terms of ruling some of the uncertainty of your financial situation and relieving you of some of the worry, that through some device which we haven't yet been able to work out that we simply, as I say, buy these on block. Now, on what terms and basis I haven't thought, but the boys are thinking about it and I have got both Forrestal and Lovett thinking about it and their previous connections - the fact that they are in the Army and Navy - there is more and more military matter, so I am asking you to think about it, what do you think about it; if you could find a device, would you be prepared and what would you think a fair way to do it, you see. Phillips: How is this linked up so with the finances of the interim period. H.V.Jr: Well, it is all part of the same thing. Phillips: Well, there was certain expenditure, was there not, for existing commitments in this interim period, certain other expenditure for new orders which we strongly hoped we should be able to place. Was it your thought that any money obtained by selling these securities on block should be used up in paying during the interim period for those? Phillips: I haven't thought it through. That seems to be the vital point. H.M.Jr: Well, I don't know -- Foley: Well, it can or can't be. I mean, it seems H.M.Jr: to me if you have got orders and you need cash 332 - 26 - to pay for the orders, this is a means of meeting those commitments. In so far as new commitments are concerned, it would be possible to meet your existing orders, pay for them, and then set this aside and hold it until such time as the legislation is obtained and the Army has material that you want to sell, or the Navy has material that you want to sell. You have got to have cash. Phillips: That is absolutely true if that is the only Foley: Well, I think he wants to know whether you want him to hold this money for purchase here or -- H.M.Jr: I can't answer that. Here is the situation. Foley: For purchase here or for other purposes. H.M.Jr: I can't get anybody outside of the Treasury to believe that your financial situation is what source of cash, but not necessarily if we have other sources of cash. This way the whole of our cash is used up in the interim period. That was the point. it is. Certainly the Navy doesn't believe it, Forrestal doesn't believe it, Hull doesn't believe it, and now they have got the President on it, and I have got a very, very difficult situation. Now, I have just completely burned myself out to get this legislation ready in one week, and if we hadn't done it in the Treasury, God knows when it would have gone un on the Hill. We did absolutely the impossible. It has never been done before, the speed with which this thing was done. And I can't do but one thing at a time, and I hope to rest the brain - I am taking Harry White along on the train with me to keep me from sleeping, and I hope to come 333 - 27 - back Monday a little bit refreshed, but here are certain devices of getting you some cash. You asked me what the first thing was. In these many memoranda that come in from the British, somebody has written me several times that it would be a tragedy if you could not meet your daily bills. Now, I agree with you. Now certainly this would provide the cash for your daily bills. If you pressed me as to whether this cash was to be used for new orders, I would say, 'Well, the first thing it will be used for is to pay your day to day bills. Now, if there is enough to do something else with, I don't know. Now, my own position is and I want you to know this, and I haven't changed one iots - there is nobody here in the Treasury that wants to strip the British Government, so that when this war is over and you people win it that you will be in a position to carry on. Now, there is that thing and I am as strong an advocate to see that that position - that Britain will have that position when the war is over. In the meantime, there are some very difficult cross currents which I am trying to overcome, and that is why I think it is terribly important that you see Mr. Hull. He is going to be the first person. And somehow or other, he has got this entirely erroneous idea in his mind as to what your position is. So don't press me too much other than I want you for your own sake to have the necessary authority so that we can continue making the money available for you to pay your daily bills. The President said to me yesterday, "Henry, 334 - 28 what about the first of March?" I gave him the figures you gave me, showing him you would be short 250 million dollars. I said, "Mr. President, I don't know. I just don't know." So I said, "The billion and a half that they have got of direct investments and listed securities is the figure that I have kept in mind," is the money to be used to pay for what you now have on order. Then to show you how the thing was, what I am up against, there were some people there that suggested that if you were going to place - the first suggestion was - you check me, because Foley was there - that if you placed two billion dollars worth of orders, that you could pay for half of them, under the new plan, under this new legislation, then we would go fifty-fifty. Got 18 billion dollars worth of securities. If you are going to place two billion dollars worth of orders here - if we placed two billion for you, there is no reason why you can't pay for half. They are just pulling the wool over Foley: my eyes. Isn't that the way it was first That is right. H.M.Jr: Then after dragging me through that knothole, then the next thing was well, if you place an order for 5 billion, there is no reason why they can't put up two or three billion as security. Is that right? Foley: That is right. H.M.Jr: And then poor old Bill Knudsen, who sat here when the others did and knows the figures, he kept saying to me, "No, no, no, and I said, "Yes, you are right, but I can't get it over. So finally I got over to them that the billion and a half, the total of the 6 and the 9, 9 direct investments and 6 - I had that memorandum 335 - 29 - before me, was the billion and a half which I had in mind for the orders that you already had placed. Now, you might say well, you want to save that, but I just want to let you know the steps that I was dragged through yesterday, from fifty- fifty, a couple of billion dollar securities, and then as a final thing I said we will - but Knudsen said, 'Well now, he kept - because I have told him this, 'that you have enough money for the orders that you have on hand," so there is an awful lot of educating to do. I can't do it all alone, and you fellows have got to keep up my morale too. Phillips: We will do our very best. H.M.Jr: It hasn't weakened yet, but I don't know anything that you can do to help your own selves, your own Government better, other than to ask for an hour with Mr. Hull; and then I think after you have done that and got to him, I think you had better ask to see Secretary Knox. I mean, I think you had better see Secretary Stimson. I mean, I would go right down the line and tell each one of them the story. I have done it until I am hoarse. Now, I don't know what is the matter, but I certainly would ask for appointments to see Hull, Stimson, and Knox in their order, and then just deliver this thing home and help me do what I am doing single-handed; but it isn't that they don't want to understand, it isn't that we haven't - somebody else keeps feeding this to them. Jesse Jones, another fellow - "Oh, they have got lots of money. Jesse Jones - "Oh, they have got lots of money." Cochran: Don't you think he ought to include Mr. Jones in his talk? 336 - 30 Phillips: Very well. H.M.Jr: Yes. "Yes, they have got lots of money.' We had them all here and put it all on the blackboard. We explained it all. Yesterday, Jones, "Oh, Henry is just a softie, he is too friendly with the British. Phillips: Well, I will get onto that immediately. H.M.Jr: They just think you have taken me into camp instead of knowing how rough I am with you. Phillips: Yes. H.M.Jr: But there is the situation. Gifford: May I make one remark, Mr. Secretary? It is a great pity you have got a Neutrality Act, that we can't borrow against that supposed credit. That would be the easiest solution. 337 January 10, 1941 11:37 a.m. H.M.Jr: Cordell Hull: those English people in here. Oh, yes, that's all right. I didn't have time to wait as it happened because I wanted the President to think over it too, but I was aiming to - I called you before breakfast and you had just left. I missed you there and then called you here. I said this to the President: this thing has been moving fast because everything is moving fast this matter over at the Capitol today - and I said it might be worth considering whether you could without using dollars and cents indicate some fairly definite limitation of this British aid that would range somewhere between $5 billion without saying so in dollars and then as we go along you wouldn't have any trouble to extend it, and that would be a real saving thing here in this present situation. H.M.Jr: H: What did he say? He said that he thought very well of it and would - I asked him to talk with you, that I had happened to miss you in talking and there was no time to wait. So he said he would indicate something to his press. Well I said if you could work out formula before they introduce the bill - I said, I don't know that it's posal ble, it's something that takes time and study, that would approximate it in some way, why you would shut off an awful lot of demagoguery and so on, and so on and would serve the same purpose anyhow by extending it in the future. H.M.Jr: H: I see. But anyhow, he said he thought well of it and would bring it out to the press in his statement to the press today. Now, I don't know, I just mentioned it as a matter of precaution. H.M.Jr: O. K. Now while I have you on the wire, I suggested to Sir Frederick Phillips that 338 -2he ask for an appointment to see you, and I would appreciate it if you would see him, because I'd like him to tell you himself what their financial situation is. Yes. Well, now, I tried to make it clear H: yesterday that - just as we had talked before that the last thing I would have in mind would be to strip them to the bone, you know, and seriously impair their situation to rebuild as this thing eases up. The only thing is that if we are to give them that full measure of help that they are going to need I think and do it with great speed and without opposition and so on and so on. They could indicate that they haven't quit, that they are not going to ask us for more than we would feel that was our proper position in the matter and so on and 80 on. You see, there is going to be an increasing demand to know just how far we are going and how we're going and how far the British are going and what part they' re going to play hereafter or whether it's all going to be dumped on us. Now I don't mean that literally - we understand that we won't let then dump it all on us: that is, disproportionately, but that's what the public will think if we re not careful. H.M.Jr: H: Well, I had this meeting over at my office two or three weeks ago where I explained it to Knox, Stimson, and Welles and Feis were all here and I gave them the picture as the English gave it to us and our interpretation of their financial situation, and of course I think yesterday you used the figure $18 billions worth of securities. Well, of course, they don't have anything like that. Well, what I mean 18 that they - Great Britain proper has somewhere between $15 and $18 billions of property interests of all kinds in the world outside of Great Britain and she has been getting all the way from $700 million to, a few years ago, as high as $1 billion annual income from it. That's dividends, interest, returns from one kind of property or another. Take their 339 -3- rubber, their tin interests, their gold interests, their utility interests, their woolen interests, their interests in all kind of industrial establishments and property they own of one kind and another in foreign countries or in the British Empire, Crown Coloniee or the Dominion. Now that's what I mean - all together. Like you say in this country it is $900 millions of properties and $600 of the other, so altogether they've got $15 or $18 billions invested abroad. H.M.Jr: Well H: That's what I meant. H.M.Jr: Yeah. Well, when the question comes, I mean, for them to put up some of their security owned outside in the world as collateral, I think it is something we ought to think over very carefully because, as I say, I'm convinced that these people have been giving me the facts as to what their salable securities are. H: H.M.Jr: H: I know, we're not asking for salable The other thing is just a question of how far we want to make them strip themselves. Well, I know. The only thing is you're going to see as this thing goes on - you're going to see more and more controversy about everything being dumped on us. H.M.Jr: Well, I'm afraid we're going to have to do it anyway and after we've taken all their gold and a billion and a half of their securities in this country, I don't know how much the rest of the stuff is worth. H: Now, by the way, I noticed a quotation from The London Economist to the effect that the British, after allowing for the gold they've got over here - two hundred odd million that they've still got $1 billion of gold that has accumulated in Africa. 340 H.M.Jr: Well, that E: Did you see that? H.M.Jr: No, I didn't. So that's why I'd like you to seefrom Phillips direct him.and then you can get it H: Yes. H.M.Jr: He can give it to you direct. H: Well, then, what I'm driving at, Henry, if they can't do anything else then we ought to see how much they can do at home in production and then let the country know frankly that we've got to take on H.M.Jr: E: H.M.Jr: Well, I'm in favor of telling the country exactly what situation is. It's going to be a hell of the a shock. Yes, that's why I say it may shock us out of the Capitol over here, that's the reason I'm feeling &round this way. Yeah, but where I differ a little bit from you, and you're most likely right, is that if we tell on the Hill what the actual facts are and realize that these people are worrying where they're going to get the money from to pay their bills two weeks hence, that the chances of getting the thing through is better than if we let then think that there is $18 billions worth of securities around. Now that's an honest difference of opinion, but I say you're most likely right but I would like you to just think about my angle on it. H: Well, I'm just trying to - of course, I'm sorry I was in that conference yesterday because it's new stuff and I just butted in with those statements like I did with you the day before. H.M.Jr: Well, what we're trying to do is to be helpful and I think your being there was most important. 341 -5H: Well, it's all right to raise these questions H.M.Jr: Well, I'm raising it now with you and I say H: Well, no. anyhow, I think. H.M.Jr: you may be right There are two definite ways to go up there: One way is to get England's permission to tell the true story of their Treasury and H: H.M.Jr: I think if you do that you're liable to cause a collapse in the whole British fighting situation. Well, I'm not going to do anything without talking it over with the President and you first. H: H.M.Jr: H: Yeah. That's my - they'd say, well, the bottom is out and Canada was right that we have stepped in just in time to take on our lap a lost war. Well, Cordell, before I go on I'm talking, you know, in terms of these fellows who'11 be bringing out things critically. H.M.Jr: Well, before I go on the Hill, I'm going to ask you to let me have a dress rehearsal with you. H: H.M.Jr: Well, of course, I'm at your service. So I'm not going up there until I have a dress rehearsal with you and then I want your advice. H: All right, Henry. H.M.Jr: Thank you. 342 January 10, 1941 12:17 p.m. H.M.Jr: Hello. Operator: Postmaster General. Frank Walker: Hello, Henry. H.M.Jr: Yes. W: This is Frank Walker. H.M.Jr: Good morning. W: How are you? H.M.Jr: I'm all right. W: H.M.Jr: Say, Republic Aviation fellows called me to say that they have tied up $1,600,000 and that they're in hell's hole financially and need the money so I want to know if they can't get it right away. Well, they can get it but that's one of the things that we had this thing fixed up in this Executive Order yesterday that Hull was complaining about - put it all in one place, but this fellow, Colonel Maxwell, who is under the President sent it to the President sent it over to me and now I've sent it back to the President and that's where it is. W: Will that go out today, do you think? H.M.Jr: I doubt it. It'11 go out of here today. W: Well, when do you think it'11 get to them? H.M.Jr: Oh, I don't know, Frank. W: H.M.Jr: They say they're in hell's hole for money and that is a lot of money for them to carry. It'11 go back to the President today, will it? Oh, yes. I signed it. It's on the way now. 343 -2W: Uh-huh. They're keeping you pretty busy, Mr. Morgenthau. E.M.Jr: What? : They're keeping you pretty busy, aren't they? H.M.Jr: Me? W: Yeah. H.M.Jr: Too busy. W: Uh-huh. H.M.Jr: W: E.M.Jr: Well, I'm glad you brought it to my attention. All right, Henry. Thank you. So long. 344 January 10, 1941 12:37 p.m. H.M.Jr: Hello. Herbert Feis: I've just had a long and not-too-easy session. H.M.Jr: Yeah. Would you talk a little louder? F: H.M.Jr: F: Did you hear what I just said? I just had a long and not-too-easy session. Yeah. You heard the Secretary's presentation at the meeting at the White House yesterday so there 18 no use in my reciting that again, and he went over it with me. Now I found this most nearly expressive of both my own judgment and of the most immediately useful. I tried to convince him that the issue was financial assistance to Britain to enable them to continue the war, that that has been put before the American people in these terms, that we would become the arsenal of democracy, that the immediate task was to get for the Executive enough authority to carry out that task. Congress is being asked to give that authority, that I thought it would be extremely unwise and greatly add to the burden if our discussion of that problem with 6ongress was complicated by a discussion of what security, collateral or otherwise, we were going to seek from the British in return for this financial assistance H.M.Jr: F: Yeah. that there were two problems connected but not necessarily connected in dealing with Congress and 1f the matter could be put before Congress without raising/ sharp or important fashion the second question, the business of getting the legislation through, which is all important at this present time, would be much simpler. I think I made a certain impression on him along that point of view and that's the main thing I'd like to get across to you. 345 -2H.M.Jr: Yeah. Swell. Now beyond that I then said as this help is extended to the British under this legislation, the Executive can discuss F: questions of collateral security in any form it so wishes. When that comes up perhaps you, Mr. Hull, are correct in your judgment that security of a type and amount should be had, and we can do it and perhaps should do it, but, then you'll have to reappraise your statistical material and then I went over the character of that estimate of $16 or $18 billions, the fact that it was based on par values and that it was related to a period quite far in the past, et cetera, et cetera, et cetera. E.M.Jr: Right. F: So that's what I've done so far. H.M.Jr: O. K. Thank you. F: Right. Have you got another minute or two? H.M.Jr: Yeah, just a second, I've got people in but F: He's going to see Phillips tomorrow and go ahead. Go ahead. I think he's trying to wonder whether this way of proceeding that I put forward is feasible or whether we're going to rush so quickly in giving authorization to the British to place these orders that any chance to get collateral is going to be lost. Am I making myself clear? H.M.Jr: Yeah, but nobody can answer that. F: No. I couldn't. I didn't know. H.M.Jr: Nobody can answer that. Is he afraid the F: bill is going to go through too quickly? No. He's afraid that, presumably you - I take it it would be you or the President would so quickly authorize the British to 346 3- place their whole'41 and 42 and 43 program that the possibility of seeking collateral would be lost if he follows the line of action I suggested, of leaving that out of account during the discussions down in Congress. You see? H.M.Jr: Well, the whole idea of collateral anyway I mean it's obnoxious unless you want to so destroy these people's morale that they're going to make peace. Now if that's what they want this is a beautiful way to do it and I don't think Congress is going to ask for it. I - and I said to him - in my judgment, 80% of the American people would stand behind the passage of this bill without at the time of passing the bill raising the question H.M.Jr: of collateral. Well, I think you're right. F: When you once get the authority, it might well be that the President or yourself or Mr. Hull will want to sit down. For example, there is one item - I must confess it's new to me, Henry - in The Economist that asserts that Great Britain has an unrecorded stock of gold down in South Africa of 200 million pounds. H.M.Jr: F: H.M.Jr: F: Well, it isn't true. Well, I just couldn't say - I said I hadn't heard of it, but there it was. Well, if it's there, it's either The Economist or Phillips isn't telling the truth and I'll take Phillips' word for it. Well, that's what I've done so far; I'll H.M.Jr: keep working at it. Thank you so much. I think it's very helpful. F: Right. Good-bye. 347 THE BILL AS IT WAS DISCUSSED AT WHITE HOUSE ON JANUARY 9 WITH CONGRESSIONAL LEADERS AND AS IT BEING INTRODUCED TODAY ,JANUARY 10. For Immiliate Release January 10, 1941. 12 2008 The attached bill giving effect to President Dent-Classe proposals will be introduced simultaneously when Congress seets at noon contage by Senator Barkley at impresentative McCormack, the two Majority Leaders. The bill simply translates into legislative form the military of making this mustry the arsenal for the democracies, and seeks to CAFTY min President Roosevelt's ileigh IT send to these countries, "is ever increasing numbers, planes, tanks, quart' It follows the precedent established by Congress last June when the President - amounted to authorize the Secretaries of War and Navy to manufacture, purchase and remain WELT materials for the American republica. Under time bill, this mustry is enabled to furnish war materials of every idid to any mountry whose defense the President considers to be vital to the defense of the United States. The chief pro- of this bill enable the United States To manufacture war defense materials for such countries in Government-owned anneals, factories, and shipyards; Our Government will only order for foreign governmental such materials as our Army and Savy can use. This - that we shall be producing the same material for our friends DE for surselves. It should eliminate double assembly Illinois in our factories and should help to standardise our war materials among the democracies. The power to manufacture unliest this provision does not carry with it a waiver of the Right-Hour Act. the Walsh-Healy Act, the Wagner Act. and station timestic legislation. To procure or purchase any war materials from our - airplane plants, signaria, or other factories; It will be for the President to decide the conditions and the manner in which foreign governments can obtain WAST materials under this provision. To sell, lease, lend. or otherwise dispose of any - manuals to any country where Before is vital to the defense of the United States: 348 2- The President can, under this section, dispose of new material as well as equipment now in the hands of our Army or Savy, according to our ONE needs as he sees them. A sale or lease of such articles can provide for payment in kind, or for any direct or indirect benefit to the United States. A certificate from our Chief of Staff or Chief of Naval Operations will as longer be needed. A transfer of defense material can be made, in the President's discretion, without the formality of public advertisement or without the other restrictions which now apply to the disposition of Government property. To test, repair, outfit, or otherwise to place in good working order any technology article; This would apply equally to defease articles whether manufactured in the United States or not. It could con- crivably mean, for example, that the British battle cruiser RESONE could be repaired is the Brooklyn Navy Yard if the President considered it in the interest of our national defense to do so. The provision is broad enough to permit the use of any of our military, naval, or air bases to outfit and repair the weapons of countries whose defense is vital to the defense of the United States. to communicate to any such government information pertaining to any defense Article furnished to such government under the proposed bill; This section gives the President the discretion to make available designs, blueprints, and other information for using particular equipment. Such information would re- late only to defense articles actually supplied to foreign nations under this bill. To release any defense article for export: This eliminates restrictions in the Sepionage Act of 1917 and in the Behargo Act of July 2. 1940 against the exportation of certain war materials. It does act, however, authorize the use of American vessels to deliver war materials to combat areas. In addition, the proposed bill forbids any foreign country which obtains defense articles or defease information from the United States from transferring these to any other country without the President's consent. It also enables the Inited States to buy war materials in the American republics, Canada, or other matries whose defense is vital to ourselves, if such materials are not readily obtainable in this country. 349 -3While the bill centalas - authorization for an appropriation, full effect cannot be given to its provisions watil appropriations are actually provided by Congress. 350 A BILL To further promote the defense of the United States, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as "An Act to promote the Defense of the United States." Sec. 2. As used in this Act (a) The term "defense article means: (1) Any weapon, munition, aircraft, vessel, or boat; (2) Any machinery, facility, tool, material, or supply necessary for the manufacture, production, processing, repair, servicing, or operation of any article described in this subsection; (3) Any component material or cart of or equipment for any article described in this subsection; (4) Any other commodity or article for defense. Such term "defense article" includes any article described in this subsection: Manufactured or procured pursuant to section 3: or to which the United States or any foreign government has or hereafter acquires title, possession, or control. (b) The tera "defense information means any plan. specification, design, prototype, or information pertaining to any defense article. 351 -2- Sec. 3al the provisions = - - Inc. President - - - to time - - - = = = Information = national - - the Secretary of - = - I Jarry. = - I of - other dreatment - - of - w is - in annuals, factories - - parties under their = i I - defense article = - of any country whom - = / # the defense of = I (a) = will transfer, eschange. I I - attendine - = = - - - - - article, (3) a text. impact - - - dition - attendine = place = - writer any defense article the - - - aInformation = - =pertaining - - -= -- - -Sundated # - - - angel (a) of this subsection (5) is - for - - - and = - with - as A Service and militions - - - - - - - are authorized - - (a) - - those - the President - - - I = - 352 -3Enited States - - - - - in kind or property, - any - direct = Institution I - the President deems satisfactory. Sec. A - - = agreements made for the disposition of = - article = - information mursuant to section 3 stall contain . classe A - - Suretige government undertakes that it will mt. - - - If the President, transfer title to or - of - - antide - defense information by dift, sale, = standre, - - - - # movome not an officer, employee. or - = - Sunday - Sec. 5. A Section of Nc. the Secretary of the Merry. or the - of - the - = agency of the Government involved shall, - - - - I = defense information is exported, implicating - - - = agency designated by the President = section 6 of = - of July 2. 1940 (5b Stat. 714). of the damate miles. - of disposition. and destination = the article - Information Sec. Sal - is authorized to be appropriated free time the - = - - # - Treasury not otherwise appropriated. - - - = - # marry out the provisions and accuration the - If I as a - - - in - which is converted into money received - section B - - government shall, with the approval = the Director of - - to the respective appropriation or corporations - of - - were expended with respect to the 353 - 4 - defense article or defense information for which such consideration is received, and shall be available for expenditure for the purpose for which such expended funds were appropriated by law, during the fiscal year in which such funds are received and the ensuing fiscal year. Sec. 7. The Secretary of Mar, the Secretary of the Navy, and the head of the department or agency shall in all contracts or agreements for the disposition of any defense article or defense information fully protect the rights of all citizens of the United States who have patent rights in and to any such article or information which is hereby authorized to be discosed of and the payments collected for royalties on such patents shall be paid to the owners and holders of such patents. Sec. 8. The Secretaries of Mar and of the Navy are hereby authorized to purchase or otherwise acquire arms, ammunition, and implements of war produced within the jurisdiction of any country to which section 3 is applicable, whenever the President deems such purchase or acquisi- tion to be necessary in the interests of the defense of the United States, Sec. 9. The President may. from time to time, promulgate such rules and regulations as may be necessary and proper to carry out any of the provisions of this Act; and he may exercise any power or authority conferred on him by this Act through such department, agency, or officer as he shall direct. 354 January 10, 1941 Press release prepared for Senator Barkley and also requested by Speaker Rayburn (and also furnished to him) for use at press conference today explaining the Lease-Lend Bill. 355 For Immediate Release January 10. 1941. 12 IMM The attached bill giving effect to President Roosevelt's lend-lease proposals will be introduced simultaneously when Congress meets at noon today by Senator Barkley = Representative McCornack, the two Majority Leaders. The bill simply translates into legislative form the policy of saking this country the arsenal for the democracies, and seeks to carry out President Reasevelt's aledge to send to these countries, "in ever increasing numbers, ships, planes, tanica, guns' It follows the precedent established by Congress last June when the President WES amovered to authorize the Secretaries of War and Nevy to manufacture, purchase ad repair war materials for the American republics. Under the present bill, this country is enabled to furnish war materials of every kind to any country whose defense C President considers to be vital to the defense of the United States. The chief visions of this bill enable the United States To manufacture war defense materials for such countries in Government-owed arenals, factories, and shipyards; Our Government will only order for foreign governments such materials as our Army and Navy can use. This means that we shall be producing the same material for our friends as for ourselves. It should eliminate double assembly lines in our factories and should help to standardize our war materials among the democracies. The power to manufacture under this provision does not carry with it a waiver of the Eight-Hour Act. the Walsh-Healy Act, the Wagner Act. and similar domestic legislation. To procure or purchase any war materials from our private airplane plants, shipyards, or other factories; It will be for the President to decide the conditions and the manner in which foreign governments can obtain war materials under this provision. To sell, lease, lend, or otherwise dispose of any war materials to any country whose defense is vital to the defense of the United States: 2- 356 The President can, under this section, dispose of new material as well as equipment now in the hands of our Army or Navy, according to our own needs as he sees them. A sale or lease of such articles can provide for payment in kind, or for any direct or indirect benefit to the United States. A certificate from our Chief of Staff or Chief of Naval Operations will no longer be needed. A transfer of defense material can be made, in the President's discretion, without the formality of public advertise- ment or without the other restrictions which now apply to the disposition of Government property. To test, repair, outfit, or otherwise to place in good working order any defense article; This would apply equally to defease articles whether manufactured is the United States or not. It could conceivably mean, for example, that the British battle cruiser RESONS could be repaired is the Brooklyn Eavy Yard if the President considered it in the interest of our national defense to do so. The provision is broad enough to permit the use of any of our military, naval. or air bases to outfit and repair the weapons of countries whose defense is vital to the defense of the United States. To communicate to any such government information pertaining to any defense article furnished to such government under the proposed bill; This section gives the President the discretion to make available designs, blueprints, and other information for using particular equipment. Such information would relate only to defense articles actually supplied to foreign nations under this bill. To release any defense article for export: This eliminates restrictions in the Employee Act of 1917 and in the Behargo Act of July 2. 1940 against the exportation of certain war materials. It does not. however, authorise the use of American vessels to deliver war materials to combat areas. In addition, the proposed bill forbids any foreign country which obtains defense articles or defease information from the United States from transferring them to any other country without the President's consent. It also enables the United States to buy war materials in the American republics, Canada. or other Countries whose defease is vital to ourselves, if such materials are not readily obtainable in this country. 357 -3While the bill contains an authorization for an appropriation. full effect be given to its provisions until appropriations are actually provided by Desgrass 358 A BILL To further promote the defense of the United States, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as "An Act to promote the Defense of the United States." Sec. 2. As used in this Act (a) The term "defense article" means: (1) Any weapon, munition, aircraft, vessel, or boat; (2) Any machinery, facility, tool, material, or supply necessary for the manufacture, production, processing, repair. servicing, or operation of any article described in this subsection; (3) Any component material or part of or equipment for any article described in this subsection; (4) Any other commodity or article for defense. Such term "defense article" includes any article described in this subsection: Manufactured or procured pursuant to section 3: or :0 which the United States or any foreign government has or hereafter acquires title, possession, or control. (b) The term "defense information means any plan. specification, design. prototype, or information pertaining to any defense article. 359 -2Sec. 3(a). Netwithstanding the provisions of any other law, the President may, from time to time, when he deems it in the interest of national defense, authorize the Secretary of War, the Secretary of the Navy, or the head of any other department or agency of the Government: (1) To manufacture in arsenals, factories, and ship- yards under their jurisdiction, or otherwise procure, any defense article for the government of any country whose defense the President deems vital to the defense of the United States. (2) To sell, transfer, exchange. lease, lend, or otherwise dispose of, to any such government any defense article, (3) To test, inspect, prove, repair, outfit, recondition, or otherwise to place in good working order any defense article for any such government. (4) To communicate to any such government any defense information, pertaining to any defense article furnished to such government under paragraph (2) of this subsection. (5) To release for export any defense article to any such government. (b) The terms and conditions uson which any such foreign government receives any aid authorised under subsection (a) shall be those which the President deems satisfactory. and the benefit to the 360 -3United States may be payment or repayment in kind or property, or any other direct or indirect benefit which the President deems satisfactory. Sec. 4. All contracts or agreements made for the disposition of any defense article or defense information pursuant to section 3 shall contain a clause by which the foreign government undertakes that it will not, without the consent of the President, transfer title to or possession of such defense article or defense information by gift, sale, or otherwise, or permit its use by anyone not an officer, employee, or agent of such foreign government. Sec. 5. The Secretary of War, the Secretary of the Nevy, or the head of any other department or agency of the Government involved shall, when any such defense article or defense information is exported, immediately inform the department or agency designated by the President to administer section 6 of the Act of July 2, 1940 (54 Stat. 714), of the quantities, character, value, terms of disposition, and destination of the article and information so exported. Sec. 6(a), There is hereby authorized to be appropriated from time to time, out of any money in the Treasury not otherwise appropriated, such amounts as may be necessary to carry out the provisions and accomplish the purposes of this Act. (b) All money and all property which is converted into money received under section 3 from any government shall, with the approval of the Director of the Budget, revert to the respective appropriation or appropriations out of which funds were expended with respect to the 361 -4defense article or defense information for which such consideration is received, and shall be available for expenditure for the purpose for which such expended funds were appropriated by law, during the fiscal year in which such funds are received and the ensuing fiscal year. Sec. 7. The Secretary of War, the Secretary of the Navy, and the head of the department or agency shall in all contracts or agreements for the disposition of any defense article or defense information fully protect the rights of all citizens of the United States who have patent rights in and to any such article or information which is hereby authorized to be disposed of and the payments collected for royalties on such patente shall be paid to the owners and holders of such patents. Sec. 8. The Secretaries of War and of the Navy are hereby authorized to purchase or otherwise acquire arms, ammunition, and immlements of war produced within the jurisdiction of any country to which section 3 is applicable, whenever the President deems such purchase or acquisi- tion to be necessary in the interests of the defense of the United States. Sec. 9. The President may, from time to time, promulgate such rules and regulations as may be necessary and proper to carry out any of the provisions of this Act; and he may exercise any power or authority conferred on him by this Act through such department, agency, or officer as he shall direct. 362 77TH CONGRESS 1st SESSION H. R. 1776 IN THE HOUSE OF REPRESENTATIVES JANUARY 10. 1941 Mr. McCorMack introduced the following bill; which was referred to the Committee on Foreign Affairs A BILL Further to promote the defense of the United States, and for other purposes. Be it enacted by the Senate and House of Representa- 1 2 tives of the United States of America in Congress assembled, 3 That this Act may be cited as "An Act to Promote the 4 Defense of the United States". SEC. 2. As used in this Act- 5 (a) The term "defense article" means- 6 (1) Any weapon, munition, aircraft, vessel, or 7 8 9 10 boat; (2) Any machinery, facility, tool, material, or supply necessary for the manufacture, production, proc- 363 2 3 essing. repair. servicing. or operation of any article otherwise dispose of, to any such government any defense 1 1 described in this subsection: 2 2 article. C (3) Any component material or part of or equip- 3 3 ment for any article described in this subsection; (4) Any other commodity or article for defense. 5 4 6 Such term "defense article" includes any article described (4) To communicate to any such government any 6 defense information, pertaining to any defense article 7 7 in this subsection: Manufactured or procured pursuant to 8 section 3. or to which the United States or any foreign 8 9 government has or hereafter acquires title, possession, or 9 10 control. 10 11 11 (b) The term "defense information" means any plan, tion, or otherwise to place in good working order any defense article for any such government. 5 4 (3) To test, inspect, prove, repair, outfit, recondi- furnished to such government under paragraph (2) of this subsection. (5) To release for export any defense article to any such government. (b) The terms and conditions upon which any such 12 specification, design, prototype, or information pertaining to 12 13 any defense article. 13 foreign government receives any aid authorized under sub- 14 SEC. 3. (a) Notwithstanding the provisions of any 14 section (a) shall be those which the President deems 15 other law. the President may, from time to time, when he 15 satisfactory, and the benefit to the United States may be 16 deems it in the interest of national defense, authorize the 16 payment or repayment in kind or property, or any other 17 Secretary of War, the Secretary of the Navy, or the head 17 direct or indirect benefit which the President deems 18 of any other department or agency of the Government- 18 satisfactory. 19 19 (1) To manufacture in arsenals, factories, and ship- SEC. 4. All contracts or agreements made for the dis- 20 position of any defense article or defense information pur- 20 yards under their jurisdiction. or otherwise procure, any 21 defense article for the government of any country whose 22 defense the President deems vital to the defense of the 22 government undertakes that it will not. without the consent 23 United States, 23 of the President, transfer title to or possession of such defense 24 (2) To sell, transfer. exchange, lease, lend, or 21 suant to section 3 shall contain a clause by which the foreign 24 article or defense information by gift. ale, or otherwise, 364 4 5 1 or permit its use by anyone not an officer, employee, or 1 by law. during the fiscal year in which such funds are 2 agent of such foreign government. 2 received and the ensuing fiscal year. 3 SEC. 5. The Secretary of War, the Secretary of the 3 4 Navy, or the head of any other department or agency of SEC. 7. The Secretary of War, the Secretary of the 4 Navy, and the head of the department or agency shall in all 5 the Government involved shall, when any such defense arti- 5 contracts or agreements for the disposition of any defense 6 cle or defense information is exported immediately inform 6 article or defense information fully protect the rights of all 7 the department or agency designated by the President to 7 citizens of the United States who have patent rights in and 8 administer section 6 of the Act of July 2, 1940 (54 Stat. 8 to any such article or information which is hereby authorized 9 714), of the quantities, character. value, terms of disposi- 9 to be disposed of and the payments collected for royalties on 10 tion, and destination of the article and information so 10 such patents shall be paid to the owners and bolders of such 11 exported. 11 patents. 12 SEC. 6. (a) There is hereby authorized to be appro- 12 SEC. 8. The Secretaries of War and of the Navy are 13 priated from time to time, out of any money in the Treasury 13 hereby authorized to purchase or otherwise acquire arms. 14 not otherwise appropriated, such amounts as may be neces- 14 ammunition. and implements of war produced within the 15 sary to carry out the provisions and accomplish the purposes 16 of this Act. 15 jurisdiction of any country to which section 3 is applicable, 16 whenever the President deems such purchase or acquisition 17 (b) All money and all property which is converted 17 to be necessary in the interests of the defense of the United 18 into money received under section 3 from any government 18 States. 19 shall, with the approval of the Director of the Budget, 19 SEC. 9. The President may, from time to time. promal- 20 revert to the respective appropriation or appropriations out 20 gate such rules and regulations as may be necessary and 21 of which funds were expended with respect to the defense 21 proper to carry out any of the provisions of this Act: and be 22 article or defense information for which such consideration 22 may exercise any power or authority conferred on him by 23 is received, and shall be available for expenditure for the 23 this Act thromoth ench department, agency, or officer as he 24 purpose for which such expended funds were appropriated 24 shall direct. ) 366 77TH CONGRESS 1st SESSION S. 275 IN THE SENATE OF THE UNITED STATES JANUARY 10,1941 Mr. BARKLEY introduced the following bill: which was read twice and referred to the Committee on Foreign Relations A BILL Further to promote the defense of the United States, and for other purposes. Be it enacted by the Senate and House of Representa- 1 2 tives of the United States of America in Congress assembled, 3 That this Act may be cited as "An Act to promote the 4 defense of the United States". 5 6 SEC. 2. As used in this Act(a) The term "defense article" means- (1) Any weapon, munition, aircraft, vessel, or 7 8 9 10 ) boat; (2) Any machinery, facility, tool, material, or supply necessary for the manufacture, production, proc- 367 2 3 1 essing, repair. servicing, or operation of any article 2 otherwise dispose of. to any work - MIN orime 1 described in this subsection: article. 2 3 (3) Any component material or part of or equip4 3 ment for any article described in this subsection: 5 (4) Any other commodity or article for defense. 6 Such term "defense article" includes any article described 4 5 6 7 in this subsection: Manufactured or procured pursuant to 8 9 government has or hereafter acquires title. possession, or 10 control, tion. or otherwise to place in good riding not defense article for any work (4) To communicate to any worth government an defense information pertaining Sex in unfirth 7 8 section 3. or to which the United States or any foreign (3) To test, inspect. peace. unar - 9 10 furnished to such government mober partigraph (2) is this subsection. (5) To release for expert 107 understand 3+ 11 (b) The term "defense information" means any plan, 12 specification. design, prototype, or information pertaining to 13 any defense article. 14 SEC. 3. (a) Notwithstanding the provisions of any 11 12 14 section (a) shall be there which the & 15 other law, the President may, from time to time. when he 15 satisfactory. and the benefit Tax the Tained THAT in 16 deems it in the interest of national defense. authorize the 16 payment or repayment in kind or property. if not - 17 Secretary of War, the Secretary of the Navy, or the head 17 direct or indirect benefit which the President dream 18 of any other department or agency of the Government- 18 satisfactory. (1) To manufacture in arsenals, factories, and ship20 22 19 SEC. 4. All contracts or agreement the the d- yards under their jurisdiction. or otherwise procure, any 20 position of any defense article - inéurance party defense article for the government of any country whose 21 stant to section : shall contain 3 dam by which the herign defense the President deems vital to the defense of the = government undertakes that in will THE without the - United States, 23 of the President. transfer title to it - of warth ordered 21 24 (b) The terms and conditions I which an - 13 foreign government receives any in satisciant mides 4m 19 23 any such government. (2) To sell, transfer, exchange, lease, lend. or 24 article or defense information by gift. at are 368 4 5 1 or permit its - by anyone not an officer, employee, or 1 by law, during the fiscal year in which such funds are 2 agent of such government. 2 received and the ensuing fiscal year. 3 Sex in The Secretary of War, the Secretary of the Sec. 7. The Secretary of War, the Secretary of the 3 4 Navy or the limit of any other department or agency of 4 Navy, and the head of the department or agency shall in all 5 the Government involved shall, when any such defense arti- 5 contracts or agreements for the disposition of any defense 6 de or define information is exported immediately inform 6 article or defense information fully protect the rights of all T the department NT agency designated by the President to 7 citizens of the United States who have patent rights in and 8 administer section 6 of the Act of July 2, 1940 (54 Stat. 8 to any such article or information which is hereby authorized 9 714) of the quantities, character, value. terms of disposi- 9 to be disposed of and the payments collected for royalties on 10 tion. and institution of the article and information NO 10 such patents shall be paid to the owners and holders of such n exported. 11 patents. 12 13 will Sex. 6. (ini) There is hereby authorized to be appro- 12 printed from time to time, out of any money in the Treasury SEC. 8. The Secretaries of War and of the Navy are 13 hereby authorized to purchase or otherwise acquire arms, ( 14 not otherwise such amounts as may be modes- 14 ammunition, and implements of war produced within the 15 sary to - - the provisions and accomplish the purposes 16 of this Net 15 jurisdiction of any country to which section 3 is applicable, (b) AM - and all property which is converted 17 to be necessary in the interests of the defense of the United 17 16 whenever the President deems such purchase or acquisition IS into money received under section 3 from any government 18 States. 19 shall. with the approval of the Director of the Budget, 19 SEC. 9. The President may, from time to time, promul- 20 revert - the regreetive appropriation or appropriations out 20 gate such rules and regulations as may be necessary and 21 of which funds were expended with respect to the defense 21 proper to carry out any of the provisions of this Act; and he 23 article or défine information for which such consideration 22 may exercise any power or authority conferred on him by 23 is received and dail be available for expenditure for the 23 this Act through such department, agency, or officer as he 24 purpose for with such expended funds were appropriated 24 shall direct. 370 69 77TH CONGRESS 1st SESSION H. R. 1776 IN THE HOUSE OF REPRESENTATIVES JANUARY 10,1941 Mr. McCorback introduced the following bill: which was referred to the Committee on Foreign Affairs A BILL Further to promote the defense of the United States, and for other purposes. Be it enacted by the Senate and House of Representa- 1 2 tives of the United States of America in Congress assembled, 3 That this Act may be eited as An Act to Promote the 4 Defense of the United States". SEC. 2. As used in this Act- 5 (a) The term "defense article" means- 6 (1) Any weapon. munition. aircraft, vessel, or 7 : 8 9 10 boat: (2) Any machinery, facility, tool. material, or supply necessary for the manufacture, production, proc- 371 2 3 essing. repair. servicing. or operation of any article 1 described in this subsection: 2 (3) Any component material or part of or equip- 3 ment for any article described in this subsection: 4 (4) Any other commodity OF artäcle for defense. 5 6 Such term "definess article" includes any article described 7 in this subsective: Manufactured or procured pursuant to 8 to section 3. - to which the United States or any foreign 9 government has or hereafter acquires title, possession, or JI otherwise dispose of, to any such government any defense 1 article. 2 (3) To test, inspect. prove. repair. outfit. recondi- 3 tion. or otherwise to place in good working order any 4 defense article for any such government. 5 (4) To communicate to any such government any 6 defense information pertaining to any defense article 7 furnished to such government under paragraph (2) of 8 this subsection. 9 10 control, 10 11 11 (b) The serve "defense information" means any plan, 12 specification. design, prototype, or information pertaining to 13 any defense article. 14 SEC. 3. (a) Notwithstanding the provisions of any 12 (5) To release for export any defense article to any such government. (b) The terms and conditions upon which any such 13 foreign government receives any sid authorized under sub- 14 section (a) shall be those which the President deems 15 other law. the President may, from time to time. when be 15 satisfactory, and the benefit to the United States may be 16 deems it in the interest of national defense. authorize the 16 payment or repayment in kind or property. or any other 17 Secretary of War the Secretary of the Navy, or the head 17 direct or indirect benefit which the President deems 18 of any other degraptment or agency of the Government- 18 satisfactory. 19 19 20 (1) To manufacture in arsenals. factories and ship- SEC. 4. All contracts or agreements made for the dis- yards under their jurisdiction. or otherwise procure, any 20 position of any defense article or defense information pur- 21 defense article for the government of any country whose 21 stant to section 3 shall contain a clause by which the foreign 22 defense the President deems vital to the defense of the 22 government undertakes that it will not. without the consent 23 United States 23 of the President. transfer title to or possession of such defense 24 (2) To sell transfer. exchange, lease, lend. or 34 article or defense information by gift, sale. or otherwise. 372 + 5 1 or permit its use by anyone not an officer. employee. or 1 by law. during the fiscal year in which such funds are 2 agent of such foreign government. 2 received and the ensuing fiscal year. 3 SEC. 5. The Secretary of War. the Secretary of the SEC. 7. The Secretary of War. the Secretary of the 3 4 Navy, or the head of any other department or agency of 4 Navy, and the head of the department or agency shall in all 5 the Government involved shall. when any such defense arti- 5 contracts or agreements for the disposition of any defense 6 ele or defense information is exported immediately inform 6 article or defense information fully protect the rights of all 7 the department or agency designated by the President to 7 citizens of the United States who have patent rights in and 8 administer section 6 of the Act of July 2. 1940 (54 Stat. S to any such article or information which is hereby authorized 9 714). of the quantities. character. value. terms of disposi- 9 to be disposed of and the payments collected for royalties on 10 tion. and destination of the article and information so 10 such patents shall be paid to the owners and holders of such 11 exported. 11 patents. 12 SEC. 6. (a) There is hereby authorized to be appro- 13 priated from time to time. out of any money in the Treasury 12 ') SEC. 8. The Secretaries of War and of the Navy are 13 hereby authorized to purchase or otherwise acquire arms. 14 not otherwise appropriated. such amounts as may be neces- 14 ammunition. and implements of war produced within the 15 sary to carry out the provisions and accomplish the purposes 15 jurisdiction of any country to which section 3 is applicable. 16 of this Act. 16 whenever the President deems such purchase or acquisition 17 (b) All money and all property which is converted 18 into money received under section 3 from any government 17 to be necessary in the interests of the defense of the United 18 States. 19 shall. with the approval of the Director of the Budget, 19 20 revert to the respective appropriation or appropriations out 20 gate such rules and regulations as may be necessary and 21 of which funds were expended with respect to the defense 21 proper to carry out any of the provisions of this Act: and he 22 article or defense information for which such consideration 29 may exercise any power or authority conferred on him by 23 is received. and shall be available for expenditure for the 23 this Act through such department, agency. or officer as he 24 purpose for which such expended funds were appropriated 24 shall direct. SEC. 9. The President may. from time to time. promul- is - Referred to the Committee on Foreign Affairs JANUARY 10,1941 A BILL By Mr. McConMack States, and for other purposes. H. Rx1776 Further to promote the defense of the United - January 10, 1942. 374 Congress Gets Bill Today Giving Roosevelt Full Power -I-1- For All-Out Aid to Britain THE - - = till Cabinet, Capital Chiefs Agree on --- - mitch eliminated # was believed - Actually - the IC - - - aten - - all would seek to give - Howeverth - Custom for way the resterday late conference White introduction provide allou material aid Britain - - -- - and Navy full authority = meeting The thetheClaime = Loan-Lease Method BY ERNEST extraerdinary An - With the corporation plan des office - Date M: Roosevel: saidBritain, in his budget = I that would aid appropriations authorizations over call and and above" cress today of - - 1510,811,000,000 national out President - tenar budget for the 1942 Smith case proposal - THE: billions of dollars - MFL There reports that the -- - The ACTIVE immitties am General agreement reached after ference between . Mr. on all Homewell - loan-lease from be billing indicate THE march request contained for Cabinet congressional - = measures chiefs Details were - revenue - = the the possibly the MT mil - first a - # - = Item BUT TAUL - will traffers will the Sense - In that event the bill weil mercis = --- - / of all Legislative - Billion Removed Corporation Discarried to = I - = I- supplies to Great State - (first request carry - Deat Do Declarges other embattled demonstrates. = = Relations Time and affairs committees authorization mediately not : money for munitions places Neither Bartier = that the idea of . - ships to Britain and - item their whether That - mater - = = corporation to mannie - - other measured - = - rese plan had been disearchen = appropriations would There -==transition Institution - legislation favor of . direct - * - - 4 come late whether - - - therity to the War - Start Reports circulating in - United States NITE I departments whose = some quarters are that the - eramenta - = - chief is the President: - will amount to as much as whether mult specific - the- --- - Companion milk - - at million dollars plan will be introduced - Participants in the extraction ously at noon today - Strict - conterence were jerity Leader Albert V. Becretary of State Cordell Hall = projecting - - WE House Democratic Conder I . the Treasury Heart Regevert - - = McCormack two of - - Mercentisan II. Secretary of War mental multi - - = - = House conferres Stimson Secretary of the - mont other # - und star - - - - There s nothing - DRE - Frank Knox Secretary terrais when - - I the bill. Barking Loan Adminis- There - - the men regarding the corporation ISSUE Jesse H. James Chairman mill will - = - emt - I - at: Waiter George of the Senate F almod amt - - - = Barkier said ail participants - Relations Committee: Chan amprications - - - - proposal the conference militare - - Bo Bloom of the House F view of limitative amt these - - Affairs Committee Charg = the President's - - Re: Barrison of the Security make this country - - - Committee House of - for (Speaker Sam Rayburn OPM A oral agreement" - of- William Knudeen Term Dennally a of Texas. 5. bill Statement Promised He declined to discuss - - - Representative Lather John a of Texas members of Form Affairs groups in their - - menious measure - specifies chambers and Backler McDermack ment would be = is introduced another conterer - Treasury Deneral Counsel Edward E. Paid 375 January 10. 1941 To: Mrs. Ilats From: Mr. Timing Attached herewith are five - for the Secretary. all dated January 10th. and all for his information. There are also attached two letters attached addressed to Secretary Bull for the Secretary's signature, cost concerning the Tatinal Munitions Control Board, and the other in respect to the note which you transmitted to = this morning. With respect to this letter to Secretary Hall on the 300 F-00 planes. there is attached I conference notes - that meeting in case the Secretary should like to send them along too. Dy. 376 CONFIDENTIAL TO I YOU POSTED January 10. 1941 To: The Secretary From: Mr. Young Subject: French No As . result of your conference with Sir Engh Dowding the other day. you asked for information concerning the number of French RJ40s taken over by the British. I attach hereith a memorandum which I received from the British Purchasing Commission giving ad- ditional information. Ry 377 P-40 AIRCRAFT 1. Te took over 315 P-40s ordered by the French and our own contracts cover 765. The French type planes were scheduled to be delivered first. 2. The French planes were being built around French type guns, radio, etc., and had to be adapted to meet British requirements, since the French had intended to instal their equipment on arrival in France. It was not found possible to complete the modifications in the U.S.A. and an appreciable amount of work had to be done in England. 3. The 316th plane was shipped late in November. Allowing for shipping and re-assembly time, together with the necessity of forming E complete squadron before commencing the required intensive personnel training, it is estimated that these planes will not be in combat before late in February. 4. Approximately 500 P-40s have been shipped to England. It is believed the remninder will be shipped to the Middle East via Takoradi. Washington, D.C. January 7, 1941. 03/13038 t 378 CONFIDENTIAL TO KEEP YOU POSTED January 10. 1941 To: The Secretary Fron: Mr. Young Subject: Priorities This office has had no comment and received no information from Mr. Knudsen since filing 13 foreign priority requests with him last Tuesday. Seven of these requests were British, 5 were Dutch and 1 was South American (Pan American Grace Airways, Incorporated.) We are planning to continue this procedure and file a number of additional requests by Monday. P.4. 379 CONFIDENTIAL TO I YOU POSTED January 10. 1941 To: The Secretary From: Mr. Young Re: Availability of Unexpended Mary Appropriations. I had a chat with Mr. Forrestal last night concerning the possibility of the Eavy finding unexpended appropriations which might be used to help the British. This morning Mr. Vise in Secretary Knox' office called to say that he had been looking into the matter and that the Savy would have some money available. I told him briefly about the memorandum I sent you yesterday with respect to the 11 million dollar bid which the British submitted to the Maritime Commission for twenty cargo vessels. Mr. Vise said that he would investigate the possibility of the Bary requiring such ships and so relieve the British from this bid. Day. 380 CONFIDENTIAL XX TO KEEP YOU POSTED January 10, 1941 To: The Secretary From: Mr. Young Subject: 9 orghan bembers Sometime ago you asked Mr. Parvis to find out what the British would give = in return for the additional 9 Co solidated 3-24 bembers. At that time the British made the suggestion of 100 Allison C engines. Since that time the Army has requested that the British release 230 Wright 1820 engines. It is I feeling that the British should not have to give - anything immediately for these planes. The original theory. as I understand it. is that the British should give up something in return in order that General Marshall may make out a certificate showing that the release of these planes is is the interest of national defense. This certificate, however, will not be necessary if the new legislation goes through providing for other methods of transfer. The impression I get is that the Air Corps is attempting to use this as a lever whereby they can pry out of the British, Wright 1820 engines prior to the passing of the new legislation. If the British give up these engines they estimate it will ground about so British planes. As you will note from the attached the last 9 of these 3-24 bombers will not be delivered until the last part of May so that there would seen to be plenty of time to work out the details of the transfer although in the meantime, it should be understood that these planes will be turned ever to the British in order that the necessary changes. such as the Sperry stabilizer. may be made. Ry. Consolidated 381 PRODUCTION SCHEDULE CONSOLIDATED B24 BOMBERS Present estimate by our West Coast Production Manager: First 6 by February 17th 7th by March 14th 8th by March 21st 9th by March 28th 2 per week through April 4 per week through May Last 2, say, in first few days of June 6 1 1 1 8 16 2 35 The following two points of immediate interest can be developed from the above table: 1. Delivery of the first twenty-six (26) will be completed soon after the middle of May. 2. The last nine will probably be delivered during the last ten days of May and first few days of June. January 7, 1941. 382 CONFIDENTIAL TO KEEP YOU POSTED January 10, 1941 To: The Secretary From: Mr. Young Re: Planes for China. Several snags have come un in connection with the pur- chase of the 100 P-40 planes by China. I think all of these have been ironed out with the exception of one, namely, the relationship of the Inter-Continent Corporation to the Curtiss Wright Corporation. This factor has to date kept the deal from going through, so that planes have not yet been delivered to the Chinese. Inter-Continent Corporation has a legal contract for the exclusive agency for Curties Wright in China, to which Curtiss Wright is legally bound. Thus, if Universal Trading purchases the 100 planes from Curtiss Wright, under the contract a commission should be paid to Inter-Continent. Inter-Continent has taken the position that it will not waive this commission fee in this instance. I have taken the stand that as Inter-Continent is the only company which can erect, maintain, and service planes in China the payment to Inter-Continent should represent a service charge for those operations and should not include any additional fee for getting the business. If this plan is accepted, then it is only A question of determining the method of payment. Payment could be made as part of the contract price between Universal and Curtiss, by a separate contract between InterContinent and the Chinese Government, or by a separate contract between Universal and Inter-Continent. The only other alternative would be for Universal to buy the planes directly from the British rather than from Curtiss Wright, thus eliminating the contract relationship between Curtiss Wright and Inter-Continent. This latter solution. however, seems to present some difficulties 383 -2- on the British side although, to be sure, it would return to the British a small amount of dollars. I have talked with Guy Vanghan, Archie Lochhead, and Mr. Brophy, counsel for Inter-Continent. The status as of today is that Archie Lochhead is securing from Inter-Continent and Curtiss Wright a breakdown as to the price of the planes, the cost of erection, maintenance, servicing. etc. It may be that Inter-Continent will have to be told in no uncertain terms that in this instance it cannot charge any commission over and above the actual cost of erection and maintenance of the planes in China. I might add that the Chinese have agreed to accept the British P-40's just as they are coming off the production line without a single change. I have also told Guy Vaughan and Inter-Continent that I would like to see the planes started for China regardless of of whether or not satisfactory negotiations had been completed. R.4. 383-A January 10. 1941 Dear Gerdell: At a conference hold is year office ea December 22rd, at which were present Secretary Stinees, Secretary Keex, and I. there was discussed the allocation of the 300 extra Carties P-00 pursuit planes to be produced this spring over and above those already on order. As the United States Army Air Gorps was understood not to be interested is this extra production. it was generally agreed that the balk of these planes should go to the British-say 150 to 200. Suggested destinations for the remainder included China, Greece, and South America. However, after considerable discussion 18 was agreed that the allocation should be limited to China and Great Britain: that Great Britain should give up 100 please to the Chinese out of her January. February. and March deliveries and receive is compensation 300 is May. June. and July-a not gain to her of 200 please. This proposal was presented to the British Government and has been agreed to by them as a basis of operations. Likewise the Chinese Government is prepared to receive its alleted number of planes is this and the next two months. In view of these decisions. neas of the 300 Ourties P-40s diseased is now available to other purchasers. Sincerely, (Signed) E " The Benerable. 154 The Secretary of State. By - 383 - B January 10. 1941 Dear Cordell: At a conference held in your office on December 23rd, at which were present Secretary Stimson. Secretary Knox. and I. there was discussed the allecation of the 300 extra Curtise P-40 pursuit planes to be produced this spring over and above those already on order. As the United States Army Air Corps was understood not to be interested in this extra production. it was generally agreed that the bulk of these planes should go to the British--say 150 to 200. Suggested destinations for the re- mainder included China, Greece, and South America. However, after considerable discussion it was agreed that the allocation should be limited to China and Great Britain: that Great Britain should give up 100 planes to the Chinese out of her January, February, and March deliveries and receive is compensation 300 in May, June, and July--a net gain to her of 200 planes. This proposal was presented to the British Government and has been agreed to by them as a basis of operations. Likewise the Chinese Government is prepared to receive its alloted number of planes in this and the next two months. In view of these decisions, none of the 300 Ourties P-40s discussed is now available to other purchasers. Sincerely. (Signed) E Morganitan Jr. The Henorable. The Secretary of State. By - 383 c January 10. 1941 Dear Gordell: At a conference held in your office on December 23rd, at which were present Secretary Stimson. Secretary Knox. and I, there was discussed the allocation of the 300 extra Curties P-40 pursuit planes to be produced this spring over and above those already on order. As the United States Army Air Corps was understood not to be interested in this extra production. it was generally agreed that the bulk of these planes should go to the British--say 150 to 200. Suggested destinations for the re- mainder included China, Greece, and South America. However. after considerable discussion 11 was agreed that the allocation should be limited to China and Great Britain: that Great Britain should give up 100 planes to the Chinese out of her January, February, and March deliveries and receive in compensation 300 in May, June, and July-a not gain to her of 200 planes. This proposal was presented to the British Government and has been agreed to by them as a basis of operations. Likewise the Chinese Government is prepared to receive its alloted number of planes is this and the next two months. In view of these decisions, none of the 300 Ourties P-40s discussed is now available to other purchasers. Sincerely, (Signed) R. Jr. The Honorable. The Secretary of State. By Manager 5. 383-D January 9, 1941 At Cabinet, Cordell Hull made a statement about how we were going to divide up the Curtiss P-40 planes, showing how confused the matter is in his mind. Therefore, I better write him a letter telling him that we have gotten the English to give the Chinese 100 planes and they are to get the 300 later on. By advising him of this, it may clear up his mind so that he won't again make a misstatement. Have Chilip Young peacer feets 384 January 10, 1941. MEMORANDUM FOR THE SECRETARY'S DIARY At 5:00 p.m. today, Mr. Foley saw Associate Justice Trankfurter, and left with him a copy of the letter of transmittal together with a copy of the Executive Order extending freeze control and cresting a Board for Economic Defense. The Justice said that be would read the Order and digest it, and then get in touch with his friend, Herbert Feis, and fini out what was holding up its execution. Mr. Foley also left with the Justice for his information = copy of the legislation to provide material aid to Great Britain together with a copy of the press release. E.N 7L. 385 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE January 10, 1941 TO Secretary Morgenthau FROM Mr. Cochran CONFIDENTIAL Registered sterling transactions of the reporting banks were as follows: Sold to commercial concerns 64,000 Purchased from commercial concerns $10,000 Open market sterling remained at 4.03-3/4. Transactions of the reporting banks were as follows: 19 3,000 Sold to commercial concerns Purchased from commercial concerns 19 2,000 Closing quotations for the other currencies were: Canadian dollar Swiss franc Swedish krona Reichamark Lira Argentine peso (free) Brazilian milreis (free) Mexican peso Cuban peso Chinese yuan 14% discount .2321 .2385 .4005 .0505 .2360 .0505 .2066 7-13/16% discount .05-5/8 There were no gold transactions consummated by us today. The Federal Reserve Bank of New York reported that the Central Bank of 31 Salvador repaid $55,000 of the three-month loans previously made to it by the Federal. Upon repayment, the Federal transfered $70,744.09 worth of gold from the collateral account to the Salvadorean bank's own earmarked account. The amount of loans outstanding is now $822,000. secured by $918,835.52 in gold. On January 4, we reported that the Commonwealth Bank of Australia had shipped $10,470,000 in gold from Australia to the Federal Reserve Bank of San Francisco, and stated that the disposition of this shipment was unknown. It was learned today that this gold will be sold to the San Francisco Mint, and that $6,324,000 of the proceeds will be credited to the Commonwealth Bank's account at the Federal Reserve Bank of New York, The remaining $4,146,000 is to be credited to the account of His Britannic Majestyla Government. 386 -2- The New York banks were advised by cable that the Bombay bullion markets were closed today, and no gold or silver prices were received from that center. The prices fixed in London for spot and forward silver were both 1/16d lower at 23-5/16d and 23-1/4d respectively. The dollar equivalents were 42.33# and 42.214. 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 354. We made two purchases of silver totaling 200,000 ounces under the Silver Purchase Act, both of which consisted of new production from foreign countries, for forward delivery. and CONFIDENTIAL 387 GRAY EH Santiago, Chile Dated January 10, 1941 REC'D 9:16 p.m. Secretary of State, Washington. 11, January 10, 6 p.m. The British Government trade mission concluded on January 8 a twelve day visit to Chile. Activities here included meetings with Chilsen Government officials, the press, members of the Chilsan and British business communities and attendance at innumerable social functions. The mission was received in all quarters with marked and apparently sincere cordiality and the press gave its movements and the utterances of its members EXTENSIVE and favorable publicity. According to my information the mission conducted no (repeat no) negotiations with the view to concluding commercial agreements. The successful accomplishments WETE, in my opinion, the intensification of the feeling of goodwill toward Great Britain, the creation of a more sympathetic understanding of her war trade problems and the inculcation of the belief that she is sincere in her wish to continue and expand her trade with Chile after the 388 EH -2- 11, January 10, 6 p.m. from Santiago. the war. I am told that the mission made it clear to Chilean authorities that because of the maritime transportation problem British purchases of Chilean products in the immediate future would be restricted chiefly to nitrate, iodine, hides, wool and hemp, that no Chilean mutton, meats, beans or lentils would be bought unless Chile could arrange for their transportation, that Britain could not approve of the sale of Danish VESSELS now tied up in Chilean ports to Chilean Government and their transfer to the Chilean flag, that she could not acquiesce to the passage through the blockade of goods still in Germany which WERE purchased and paid for prior to the outbreak of hostilities, that it would be recommended that the Bank of England grant a 11,000,000 overdraft to the Bank of London and South America in order that the latter institution may undertake forward Exchange commit- ments with wool shippers in Chile during the next three to four months, apply the proceeds of these sales to the unblocking of £700,000 now owned by Chilean importers to British shippers and make the balance available for the payment of future British imports. The mission at no time attempted to convey the impression that England was prepared to do business as usual. On 389 EH -3- 11, January 10, 6 P.M. from Santiago. On the contrary, in private conversations it was intimated that for the duration of the war Britain would only be in position to supply a limited number of items for Export and that its purchases would be restricted to those goods most urgently needed for the prosecution of the conflict. Repeated to Lima. BOSERS EMB 390 HSM PLAIN London Dated January 10, 1941 Rec'd 5:35 P. =. Steretary of State, Washington. 110, Tenth. FOR TREASURY. 1. A definition of the responsibilities of stockbrokers having accounts in the names of non-residents is given in E letter published today from the Bank of England to the Stock Exchange, the full text of which goes forward by mail. If such accounts STE in credit the permission of the Bank of England must be obtained before making the balances available in whatEver manner to non-resident clients. If the accounts are in debit steps must be taken as soon as possible to obtain the repayment of the advances and the debit balances must be reported to the Bank of England forthwith. Express permission is required for the grant of any over-draft or loan facilities to non-residents. The Effect of any change in E client's country of residente-since September : 1939, must be oscertained by the stockbroker from his banker before further investments or remittances are made. 2. Both this morning's London financial papers run 391 hsm -2- No. 110, January 10, from London run an article under Washington date-line stating that a group of landing investment trusts headed by the Tri-Contincntal Corporation has applied for approval of a tentative plan for the joint purchase of $600,000,000 worth of British-owned American securities to be held until disposable profitably. JOHNSON NPL 392 COPY TREASURY JR GRAY Shanghai via N. R. Dated January 10, 1941 Rec'd 11:07 a.m., 11th. Secretary of State, Washington. 41, January 10, 2 p.m. (SECTION ONE) Chinese currency stabilization at Shanghai. It has been pointed out in reports and despatches, particularly my 85 of December 9, 1940, that the thinking people in the past decided that continued support of the Chinese National currency on the Shanghai exchange market was motiveated by three principal considerations: firstly, that the expense involved should be regarded as part of the war costs; secondly, that it was highly important to protect the political prestige of the national currency in the Shanghai region; thirdly, that it was highly important to continue measures designed to prevent Jayanese success in economic and definite control of this region. The other person's opinion which opposes a continuance of exchange support at Snanghai, emphasizes the following points which elaborate further the views advanced pages 3 and 4 and pages 19, 20 and 21 (above mentioned despatch) : firstly, 'free' China can no longer export through Shanghai nor obtain substantial quantities of merchandise from Shanghai due to the effective Japanese naval blockade, a situation which has created a serious shortage of consumer goods in the Chinese controlled interior and contributes to the embarrassing rising price situation there; LOCKHART CSB STRICTLY CONFIDENTIAL JI 393 GRAY Shanghai Dated January 10, 1941 Rec'd 8:30 a.m., 11th Secretary of State Washington 41, January 10, 2 p.m. (SECTION TWO) Secondly, further unlimited support of the Chinese currency at Stanghai is beginning to be of increasing advantage to the Japanese and their consured region. as their economic and trade control measures in the Stanghai region are THE gratually achieving some success: thirdly, the contracts between the economic goverty and scarcity of goods in vast Chinese interior and the relative plenituie as Strengthd makes the appropriation of further funds from exchange resources for support of the currency at Shanghai seen illogical and out of proportion, as the mly purpose to be served would be to save vested interests at Shanghai which are - longer of any advantage to the economic life of territory controlled by Changiding: fourthily if is perhaps unique in world financial history for a country to saistain betting energy lines a free exchange market such as has been done at Shanghai, and = such action can no longer serve any usefulness. purpose or advantage, China should have an more hesitancy in doing away with the free market and establishing exchange entral the did Great Britain in its time of crisis: fifthly, as it appears manitable that China's unfavorable economic and financial situation will continue = affect conditions even after the present conflict is ended, it seems instrication to burdez China with further loan obligations as advanced by friendly powers for support of the currency, when it is patent that the ultimate outcome of the hostilities must be the determination of the future status of the Origine currency: sixthly, the trading interests of the friendly powers at Shanghai - best be served if China wins the war. (SND OF SECTION TTO). LOCKHART WSB 394 GRAY IF Singing via 3. 3. Dated January 10. 194 Sec's 9:10 a. - 11th Secretary of State, Washington 41. January a 2 pm = (Section three). Sence, costly gallitatives - SERVE certain fundamental standards, and China's resources be commerced to mike prolonged resistance possible and to more post war retaililitation earder: seventhly. the financial and economic welfare of China in the Stanging region is indeed important, but the welfare of the Chinese in from Online is - important: furthermore, the fate of the Chinese people in the - accupied regions depends upon the outcome of the conflict and - milling else; eightly. licensing and allotment systems for exchange are satisfictory, because there are bound to be loopholes, as conceded by foreign numerary expects, not to sention China's experience in 1935 in releasing in the agreements Limited States dollars 30 million in allot- ments at Shanghai fixer Import committee; furthermore, the introduction of allotment system for Imports = . fixed rate would prevent the development of - unofficial market = lower reter: ninthly. there is no certainty that the maintenance of the importing exchange market at Shanghai will be less costly than in the past, the temporary favorable technical position of the Shanghai market at - Infure Demores. Sent to the Department, to Chungking, air will the Pelping and Tokyo. (End of Message). LOCKHART CSB 395 PLAIN JR Shenghni vin N. R. Dated January 10, 1941 Rec'd 1:35 p.m., 11th. Secretary of State, Washington. 44, tenth. The second special district court in the French Concession has issued = proclemation stating that the public will be requested henetforth to pay court fees and crsh securities in notes of the DES control reserve bank and that "person who attempts to work against the circulation of those notes or refuses to accept SAME shall be punished without laniency". Sent to the Department, repeated to Chungking, Priping, mail to Tokyo. LOCKHART CSB 396 No. 37 THE FOREIGN SERVICE OF THE UNITED STATES OF AMERICA American Consulate General, Harbin, Manchuria, January 10, 1941 Subject: Shipments to and from Germany via Siberia. STRICTLY CONFIDENTIAL The Honorable The Secretary of State, Washington. Sir: I have the honor to enclose a copy of my despatch No. 24, dated January 10, 1941, addressed to the American Embassy at Peiping, entitled "Shipments to and from Germany via Siberia." Respectfully yours, L. H. Gourley American Consul Enclosure: Copy of despatch No. 24, dated January 10, 1941, to the Embassy at Peiping, with its enclosure. In quintuplicate. 800 ERJ:av 397 No. 24 THE FOREIGN SERVICE OF THE UNITED STATES OF AMERICA American Consulate General, Harbin, Manchuria, January 10. 1941. STRICTLY CONFIDENTIAL Subject: Shipments to and from Germany via Siberia. The Honorable Nelson Trusler Johnson, American Ambassador, Peiping, China. Sir: I have the honor to refer to the Consulate General's despatch In 11 of November 4, 1940 entitled Shipments to Germany via Siberia and recent despatches along the same line from other offices in this area, particularly Dairen, and to summarize the information on the subject which has - to the attention of this office since the time of its last despatch Summary Trans-Siberian traffic to and from Germany seens much heavier these expected a year ago. A firm in Fungary asked The National City 3anic have to help with Trans-Siberian shipments. Probably 100,000 tens of any I reached Germany via Mancheuli during 1940 and possibly a like amount wis Vladivostok, and current shipments are believed at least 1,500 terms daily. There is evidence of efforts to increase bean oil shipments. Studio is reported ly delivering 21 locomotives to North China and Krugg, machinery fur cement plants in Manchuria. The German transport company claim 14 Decrease in Manchouli, where a branch legation has been opened, and Germans - in evidence everywhere. Of unusual interest is the enclosed copy of a letter from a firm in Hungary to the Harbin office of The National City Bank of Few Test° Being . Original in the files of this office. -2- 398 Important - firm presumably represents German interests. = letter states in I 1 "Different importers and factories in Angacy States = If - attity through Russia raw leather, TEE guard, - cetter, - Jule, - stails, 15km copper, tin and lead." and that *there is a regular traffic from Derbin Strangh Russia and Germany - the Transalberte railred, as - informations considerable transports were casing already - this rata." Distriction the letter states that large quantities of the articles I - - nates the bank to recommend reliable firm, and to If = the Empir American Dollars for release to the shipper - presentstime = - Instit of proper evidence that an order has been despected The letter - be a bona fide atteact to do business = have I - out as a form of indirect progragia to impress Americans - the - of shipments via Siberia. Either intergretation of the letter is interesting, but, regardless of the active of the writer of = articular Better, this Consulate General is inclined to believe that - dis have been, and are, larger than generally anticipated as last in Barbin circles) a year ago. from the letter described above, which was received by this office today - WES not answered by the bank, various startes have been since - time of the despatch under reference regarding shiparate inti = ani from Bermany via Siberia. is initiated in the Consulate General's political repair for religilio - will informed persons is Earbin have began to thisk that exelier estimates of the amount of say beans shipped to Germany during 2967 - - law - that tons have been sent by way of in aftition, - - in whom this office has confidence believes that is is not at all that . similar quantity has gone by river to the - and thence to - via Valivastot. He SEYS that the small I = I - have "Barbin's Pulitical Report for November 1940. page 9. -3 399 appeared in normal channels from the Sungari River Basin lends credibility to reports of that nature which have - to him. The same informat states that be knows that the German firm of Kunet and Albers has bought - a large stock of oil drums for use in transporting soy best oil. Ea also mentioned that any been oil can now be made into a solid form which will sale shipment easier. Newspaper reports to the effect that Earbin and Heinking mills would be furnished 450,000 tons of beans this year and that those cities would replace Dairen as the center of the industry were discussed with him. Ee has = information to confirm these reports, despite his intimate knowledge of the business, but points out that if large amounts of oil are to g to Germany, such a development would be logical because shipp- ing costs would be reduced. Deliveries to date of beans to Harbin millers have, however, been far below these required to fulfill such a milling program. ... There are many allegations current about the quantity of soy beans lear ing Mancheali for Germany during the past month or two. Various well informed persons have given estimates running from two to as many as five trains a day. Even the misium estimate would give a daily total of some 1,500 tons. There seems to be ample ground for believing that the minimum figure at least is by no means an exaggeration. since there are also reliable reports of considerable movements of beans fres Earbia toward Nanchenli. Regarding shipments arriving from Germany, the Consulate General's infor- neats are less specific, but most think that a good deal is coming in. According to an item in the November 1. 1940 issue of the MANCHURIA DAILY NEWS, ** Reported also in Dairen's destated of December 17. 1940 to Tokyo, entitled Special Aspects of the Saybeen Situation in Manchuria. *** These press reports have been teached on in Harbin's Trade Conditions-Jorth Manchuria for November 1940 and in Dairen's despatch to Tokyo mentioned in the footnets above. 400 4- machinery from Krupp is on the way for two cement plants in North Manchuria. The Embassy may be in a position to verify one specific report: Several people have quoted the representative of Sicoda as saying that he has con- cluded a contract for twenty-one locomotives for delivery in North China, to be sent out via Siberia. A responsible officer of the German company in charge of Trans-Siberian shipments recently said in the presence of an officer of this Consulate General that his company has fourteen Germans in Manchouli, and that they have more work than they can handle. It is believed that his statement is at least substantially true. A German on the staff of the local German Consulate General recently said that a branch of the German Legation at Heinking was opened in Manchouli toward the end of December. During the past year there has been a very noticeable increase in the number of Germans living and traveling in Manchuria. Published hotel guest lists show that by far the greatest number of foreigners registering are German. Germans are much in evidence everywhere. While the information reported above and in previous despatches from this and other offices is not as factual as might be desired, it does nevertheless point to the conclusion that the Trans-Siberian route is operating with a greater degree of effectiveness than had been generally expected a year ago, and that the amount of cargo handled thereon is by no means insignificant. Respectfully yours, L. H. Gourley American Consul . H. A. Knsik. -5Enclosure: Copy of letter of November 12, 1940, Polgar, Lefkovite & Febate, Budgest, Hungary to The National City Bank of New York, Harbin. Copy to Enbassy, Chunging. Five copies to the Department by despatch No. 37. January 10, 1941. Copy to Enbassy, Tokyo. Copy to Embassy, Berlin. Copy to Embassy, Moscow. Copy to Consulate General, Muldien. Copy to Consulate, Dairen. 800 BRJ:JNO copy:bj:eh 401 Inclusure to despatch No. * dated January 30. 1941 from the American 402 Consulate General, Harbin, entitled Shipments to and from Germany via COPY COPY FORTANISE & FIRST Forwarding Agents Telefant To. 117-760. Serie, Telegramo T.. 24, the 12th November 1940 Your Inf.: Our Inf.: leasts Institute City Bank of New York, Charbin Gentlemens To are constantly working with your - and we call year attention to the following matter: Different importers and factories in Imagery intent to buy and ship through insain - Seather, new g raw cetter, IN jute, then metals, like copper lead and the You - the maket there very well naturally. therefore we beg you to recommend IS religible firms, which are willing and are able to furnish us with considerable if amounts of above mentioned materials. Te Inagine the effecting of these businesses SED that there is a regular traffic from Charlis through Russia and Germany - the Transsiberic railroad, and to our informations considerable transports were enating already on this route. The paying of the goods would be done naturally in USA Dollars that is to say the Fangarian Importers would credit the guais at your House so that if the firm in question certifies, that the ordered goods are mailed in Charbin at the railway company as per our instructions, the credited amount would be paid out to this firm. Faturally it would be necessary to have a 8 between third hand, because of the terrific distance and the high value of the goods in question, which third hand with control the quality of the goods. We beg you therefore to recommend Is such a person or firm, and inform - in the game time the tarif of such a firm as to the controlling of the qualities of the ordered goods, and what are the grandes of - Te - your re. kind replies very urgently. and therefore please give us your - via air will either through America or through Russia, the expenses of which - - materally surseives. Stooking - for your kindness is strance, - sign Gentlemen, hoping a prompt - from your part. Tery truly yours, Folger, Influvits & Pakete (signature illegible) THE - SET 403 FOR giss Chaunce January 10. 19th CONFIDENTIAL Dear Mr. Encite Permit - to acknowledge, on behalf of Secretary the receipt of year letter of January 9. 19th. enclosing your compiletion for the week water December 31. 19th above ing dollar disbursements - of the British Repire and French - at the Federal and the - w which these were finance. years. E. Berle Contrass Insistant to the Secretary L. W. Require. Viso President. Federal Beserve Bank of New York. New York. New Yesk. BC:1ap-1/10/41 copy for see - Files 40 FEDERAL RESERVE BANK OF NEW YORK January 9, 1941. CONFIDENTIAL Dear Mr. Secretary: Attention: Mr. H. Merle Cochran I am enclosing herewith our compilation for the week ended December 31, 1940, showing dollar disbursements out of the British Empire and French accounts at this bank and the means by which these expenditures were financed. Fe eightully yours, Wenner L. W. Knoke, Vice President. Honorable Henry Morgenthan, Jr., Secretary of the Treasury, Washington, D. C. Enclosure AHALYDIS OF BUTTING AUD FROM Aug. 31 - Sept.27 Sept.28 - Nov. 1 Nov. 2 - 29 Nov. 30 - Jan. 3 1940 Jun. 4 - 31 Feb, 1 28 1 Feb, 29 - Apr. 3 Apr. 4 - May May 2-29 Max 30 July 3 July 0 - 31 Aug. 1 - 28 First year of war Allas. E9 a Ont. Oct. 3 - 30 Oct. 31 Nov. Nov. no - Dec, WEEK ENDED Dec. 4 11 Gold (Et.) (b) adj'ts) -11.2(d) 86.2(e) 207.8 142.0 105.4 3.2 33.6 52.6 182.8 89.0 105.8 57.8 25.0 23.0 75.2 50.6 14.2 10.4 16.8 38.0 43.4 184.2 115.5 15.4 14.5 108.3 17.8 17.9 26.1 86.4 60.9 46.8 21.5 113.4 100.0 283.8 249.7 261.1 23.6 100.8 101.0 87.3 77.3 20.6 56.7 126.2 93.2 7.1 25.9 145.3 137.9 319.3 6.1 166.7 180.8 606.6 93.0 225.0 301.3 212.8 8.0 00.1 294.0 1.0 1,187.6 £44.3 92.5 267.4 356. 271.5 167.8 201.1 259.5 198.0 210.0 6.0 18.0 111.4 26.0 10.4 1.4 2.0 1.3 60.2 0.2 94.3 106.7 3.6 90.7 5.8 100.9 191.7 97.7 8.9 8.7 54.8 1203.8 316.0 196.7 241.0 234.6 206.8 E8.9 39.9 27.8 42.3 47.8 32.7 10.6 42.4 5.4 36.1 50.1 46.5 3.5 4.7 18 24 34.8 31 50.1 94.0 300.0 198.0 14.4 71.2 27.5 160.0 13.4 211.0 6.0 Dear. (-) in Balance Total Debits +113.5 19.4 35.3 88.6 85.9 74.5 lookly Expenditure Since Outbroak of War $19.6 million France (through June 10) 27.6 million England (through June 19) 57.9 million England (since June 19) 48.3 Expendituren(s) 6.0 78.6 Debits Total Credits 13.4 11.3 Other 25.5 57.0 12.9 36.1 127.3(1) 10.0 - 84.7 (006,7(1) 7.5 0.3 1.0 8.9 0.5 8.4 60.6(n) 27.8 71.5 29.4 31.5(m) 82.9 55.9 84.8 31.4(k) 38.0(1) 12.4 30.0 39.9 63.7 55.4 44.4 101.4 20.4(1) 160.0 76.2 55.1 93.9 27.0 21.5 - 8.1 41.2 109.0 31.5 11.6(g) 26.8(h) 11.3 58.7 61.5 72.7 99.6 32.8 35.9 100.0 78.7 29.4 145.4 345.1(1) 3.8 10.9 33.7 35.0 166.3 416.6 449.7 7.9 0.0 4.4 4.1 1.0 0.9 0.8 0.3 0.1 0.7 0.1 2.1 0.6 18.5 36.6 2.1 31.9 0.6 4.0 4.0 7.0 9.1 33.4 7.0 31.6 1.3 0.2 8.0 19.3 27.3 - - 24.4 18.2(a) 8.0 Transfers from BritIsh Purchas wing Commission Bank of Canada for French Account Unek ended From Dec. 34, 1940 110. Dimilat 103 . - to 5.8 54.8 75.4 60.7 126.2 335.6 3.0 10.4 16.7 29.6 - 0.6 - 1.2 . 0.3 . - 50.1 - 0.1 0.1 0.1 - . 22.4 18.0 19.8 9.5(1) 0.1 0.5 + 5.4 - 6.1 . 44.0 +100.4 4.1 2.0 190.3 +259.0 1.3 7.3 0.5 0.6 0.2 + 4.3 15.3 900.1 1000.0 1.3 0.0 0.8 Other Credits Net Inor. (+) or Dear. (-) in Balance 35.0 28.1 5.0(f) 11.4 15.9 Sales 105.4 - 22.5 33.7 of Gold $1.0 86.8 . 3.6 Proboeds Gov't - 1939 Securities (incl. . Debits Total Credits . tures(a) Other Credits (+) or + PERIOD Expendi- Other Net Inor. Proceeds of Sales of FRANCE OF DEBITS CREDITS Gov't Total Debits BANK BANK OF KINGLAND (BRITISH ) DEBITE Confidential Week Rnded December 31, 1940. (Th Million or Dollars) - - - - - - 0.7 0.1 0.6 105 0.3 0.3 0.1 - 202 -0.2 0.1 +0.1 0.1 . (See footnotes in reverse side) 40E ARALYGIE OF CANADIAN AND AUTHALINE ACCOUNTS Week Knden Dec. 31, 1940. In Millions of Dillars) to Official Other British Debits Total Gredit# A/C 1939 Nov. 30 - Jan. 3 14.4 30.0 22.8 15.3 3.0 83.5 25.7 17.0 21.1 - 9.0 16.7 9.9 0.7 9.8 30.0 83.5 23.1 42.3 38.2 37.9 44.1 3 July 4-31 28.2 Aug. 1- 26 First year of war Aug. 29 Ost. Oct. 3 - 30 Oct. 31 - Nov. 27 2 Nov. 28 - Dec. 31 15.0 18.7 323.0 16.6 44.3 26.7 - 35.2 - 48.0 29.5 50.2 29.3 24.0 50.0 44.1 72.5 72.2 96.3 306.4 44.3 504.7 26.7 28.6 412.7 16.4 14.0 49.2 42.5 43.9 35.2 69.6 48.0 60.6 21.4 WEEK ENDED Dec. 4 10.8 10.8 11 5.4 5.4 18 11.0 11.0 24 7.1 1.1 31 13.7 - 42.9 117.6 73.6 18.7 - 16.1 42.3 23.2 37.9 28.2 - - May 30 July - - 1 May Apr. 2-29 4 - May 23.1 - 3 - Feb. 29 - Apr. 0,0 8.1 0.0 - Feb. 1- 28 10.1 7.0 18.8 9.6 1940 Jan. 4 31 A/C 13.7 14.4 10.4 12.4 2.0 - - - - 15.0 - 19.2 - 53.9 19.5 - 20.9 - - - 21.4 5.8 10.3 3.4 - - - . 1.6 leekly Average of Total Debite Since Outbreak of War (Canada alone) million 6.8 Through Dec. 31 Other Gredits 38.7 27.3 14.3 16.7 13.7 Net Inor. Total (+) or Deer. (---) Debit# in Balance A/C - - 1 Nov. # #9 81.0 Hale# For French - Dept.BU - Nov. 10.9 0.6 for Own Gold - 17.5 Aug. 31 Dept. 87 Proceeds Transfers from Official British A/C of - PERIOD C Transfers - Total Debits COMMONWALTH BATHS OF AUSTRALIA CANADA CREDI B - Transfers OF 0.9 4.8 9.5 9.1 1.1 4.5 Proceeds to Official British Other Debite 1,9 1.9 8.0 0.9 5.8 2.5 4.6 0.9 8.8 5.2 0.3 6.1 3.3 0.1 4.9 3.8 0.8 12.8 3.0 0.3 2.7 3.1 4.7 2.3 0.2 12.3 28.4 1.2 8.3 0.2 1.0 09.4 4.6 - 6.8 3.0 3.9 54.9 +181.7 0.2 0.4 0.3 1.9 31.2 0.7 10.1 34.4 3.1 +12.6 4.8 +10.6 0.8 9.0 0.8 4.5 0.1 4.1 8.9 0.1 + 5.3 0.2 0.2 -11.7 -0.6 0.1 1.4 - 1,9 3.0 0.3 0.2 0.9 1.6 0.6 0.0 1.8 0.2 1.7 0.9 7.3 5.9 4.4 1.5 -0.3 +1.4 +3.6 4.6 4.2 3.8 5.0 5.0 0.8 1.6 27.3 36.1 8.0 6.2 2.6 7.9 0.6 2.5 3.6 4.8 6.8 0.8 0.1 0.8 0.3 6.0 0.3 1.7 - 1.9 3.5 E.E 7.5 - - 3.3 2.5 1.7 - 8.4 2.2 2.0 2.6 2.3 - in Balance - . 7.8 3.7 4.4 Gold - 32.4 Net Inor. (+) or Credits Deor. (-) Other of Sales A/C 6.0 0.3 2.1 0.2 Total Credits - BANK DEBITS Dont Mential 0.1 1.4 0.1 3.4 30.0 6.7 6.5 2.1 4.8 4.7 0.1 6.1 1.3 1.4 1.5 0.4 -1,6 +4.9 -0.7 -2.2 +0.5 2.0 2.0 0.1 0.3 -0.5 1.3 -01 +.4.3 0.2 +0.2 0.1 103 407 FEDERAL RESERVE BANK OF NEW YORK January 9. 1941. CONFIDENTIAL Dear Mr. Secretary: Attention: Mr. H. Merle Cochran I am enclosing herewith our compilation for the week ended December 31, 1940, showing dollar disbursements out of the British Empire and French accounts at this bank and the means by which these expenditures were financed. Faithfully yours, /s/ L.W. Knoke, Vice President. Honorable Henry Morgenthan, Jr., Secretary of the Treasury, Washington, D. C. Enclosure ANALYSIS OF BIRTHING AUD FREE : ACCOUNTED Th Millions of Dollars) DEDITE Total Debito PERIOD Gov't Expendi- tures(a) Week Ended December 31, 1940. BARK BANK OF KNOLAND (BRITISH GOVERNMENT DEBITS CREDITS Other Net Inor. Proceeds of Sales of Other Debits Total Credits Credits (+) or Securities (incl. Dear. (-) Gold (Est.) (b) adj'ts) in Balance Proceeds Gov't Total Debits Expendi- tures(s) Debito Credits Nov. 2- 29 Nov. 30 - Jan. 3 1940 Jan. 4 51 Feb. 1 - 28 Feb. 29 - Apr. 3 Apr. 4 May May 2-29 Max 30 July 3 July 5- 31 1 Aug. 1 - 88 First year of AUTO a Oat Oct. -- Oct. the Nov. 27 Nov. Dec, 3.6 191.7 182.8 97.7 8.9 8.7 54.8 16.8 124.2 115.5 113.4 100.9 283.2 15.4 38.0 108.8 101.0 249.7 261.1 1903.1 5.8 14.5 26.1 23.6 89.0 87.3 77.3 145.3 156.7 157.9 180.2 608.6 00.9 93.0 25.0 14.2 20.6 56.7 60.9 46.8 17.8 17.9 33.7 21.5 13.4 11.6(g) 20.2(h) 93.2 7.1 43.4 108.3 94.0 86.4 126.2 319.3 225.0 294.0 10.8 356.1 211.0 6.0 6.0 198.5 160.0 39.9 259.5 198.0 210.0 47.8 42.4 5.4 10.4 14.4 1.3 4.0 3.5 4.7 71.2 27.5 60.2 3.6 74.5 England (through June 19) England (since June 19) 27.6 million 57.9 million 111.4 18.0 26.0 - 11.4 - 15.9 21.5 27.0 61.5 72.7 99.6 84.8 36.1 24.7 33.7 2.0 271.0 86.8 25.3 212.2 267.4 1.0 22.5 25.9 12.9 300.9 AYRISSE Linkly Expenditures Since Outbreak of War $19.6 million France (through June 19) 5.0(f) 5.1 10.6 50.1 10.4 301.3 32.1 36.1 50.1 46.5 78.6 57.8 50.6 72.5 88.9 27.8 - 85.9 3.2 42.3 242.0 23.0 142.0 105.8 75.2 33.6 52.6 234.6 196.7 19.4 88.6 185.4 244.3 167.8 101.1 206.8 318.0 86.2(e) +113.5 35.3 -11.2(d) 207.8 6.0 13.4 $1.8 105.4 28.1 58.7 109.2 31.5 32.8 35.9 29.4 30.0 39.9 63,7 55.4 44.4 29.4 1.0 8.4 55.9 71.5 105.0 78.7 145.4 26.4(1) 050.0 31.4(k) 38.0(1) 31.5(m) 60.6(n) 35.0 7.9 1.8 18.5 36.6 7.0 31.9 4.0 9.1 TO 33.4 31.6 0.2 8.0 19.3 27.3 48.3 8.0 1.4 2.0 18.2(a) 24.4 101.4 (166.7(1) 345.1(1) 335.6 ) Sept. 28 - Nov. 90.7 100.9 94.3 106.7 57.0 127.3(1) 7.5 6.3 8.9 0.5 44.5 416.6 449.7 0.8 0.5 0.8 Total of Gold Other 1939 Aug. 31 - Sept.27 Net Iner. (+) or 0.3 0.1 as 0.1 2.1 2.1 0.6 1.3 0.2 Transfers from British Purchasing Commission to Bank of Canada for French Account Yeek ended Doe. July31. 1940 MILLION Dimilation Decr. (-) Credits in Balance 11.3 11.3 - 8.1 76.2 35.0 41.2 - 12.4 55.1 27.8 93.9 15.3 . 22.4 50.1 5.8 - 5.6 54.8 16.7 75.4 29.6 60.7 18.0 126.2 19.2 82.9 3.2 10.9 1090.3 Sales 9.5(1) 3.0 0.2 10.4 0.5 198. 900.8 1.3 0.5 0.9 . 4.3 - . 1.2 5.4 61 44.0 +188.4 4.1 2,0 $00.0 7.8 0.5 - 0.6 0.9 0.1 0.6 205 0.6 0.3 0.3 103 0.1 0.1 0.1 0.1 0.2 - Other - as 0.1 a 0.3 ... =1st +0.1 (See distantes. a reverse side) (a) Includes payments for account of British Purchasing Commission, British Air Ministry, British Supply Board, Ministry of Supply Timber Control, and Ministry of Shipping. week ended (b) Through June 19, these figures represent total sales of American securities in Second District reported for account of the United Kingles. (Proceeds of these sales, however, may not have been credited to the Bank of England's account in all cases.) Beginning with the June 26, the figures represent transfers from the Bank of Montreal, New York Agency, which is custodian for requisitioned American securities held in this country. The transfers apparently reflect procedds of official security sales, including those handled through private deals. From June 17 to July 19, transactions in securities "payable in specified foreign currencies, including dollars, by United Kingdom residents (o) were prohibited. Includes payments for account of French Air Commission and French Purchasing Gommission. (e) About $85 million transferred from accounts of British authorized banks with New York banks. (d) Includes adjustment for (b) above. (f) About $11 million transferred from accounts if British authorized banks with New York banks. (5) About $6 million transferred from accounts of British authorized banks with New York banks. (h) About $10 million transferred from accounts of British authorized banks with-New-York banks. (1) Adjusted to eliminate the effect of $20 million paid-out on June 26 and returned. the following day (1) About $2 million transferred from accounts of British authorized banks with New York banks. (k) "About as million transferred from accounts of British authorized banks with New York banks. (1) About 04 million transferred from accounts of British authorized banks with New York banks. (a) About 86 million transferred from accounts of British Authorised banks with New York banks. (a) About $32 million transferred from accounts of British authorised banks with New York banks. (o) About $11.3 million transferred from accounts of British authorized banks with New York banks. ANALYSIS OF CANADIAN AND AUSTRALIAN ACCOUNTS In Millions of Lillars) BANK DEBITS OF Transfers to Total Debits PERIOD Official British Other Debits Total Credits - Sept. 27 -Jaw. Nov. 8-39 Nov. Jane 3 CANADA Gold For French A/C A/C - 0.6 16.9 21.8 15.1 0.8 9.6 9.9 30.0 0.3 9.3 9.2 16.7 7.3 2.1 14.4 30.0 22.8 13.3 13.3 23.5 23.1 25.7 17.0 21.1 16.1 42.3 29.5 23.2 37.9 44.1 28.2 42.9 29.3 24.8 0.7 - DEBITS For Own 17.5 Dont Mential COMMONWEALTH BANK OF AUNTRALIA CREDITS Proceeds Transfers frem Official of British A/C Sales A/C Strictly Week Ended Dec. 31, 1940. Other Credits Net Inor. (+) or Deor. (-) Official British Other Debits Total Credits of Gold 4.3 - 1.1 + 4.5 - 6.5 7.2 2.5 4.6 0.9 2.2 6.1 5.2 3.3 0.2 12.8 Net Iner. (+) or Credits Deer. (-) Other in Balance Sales A/C 5.9 7.3 3.0 Proceeds to Total Debits in Balance - CRKDITO Transfers - 7.1 - - - - - 1.9 1.9 2.5 5.8 5.8 4.9 3.2 3.3 2.4 2.2 3.0 2.2 0.2 1,6 0.6 1.8 1.7 0.2 - - - - 1940 Jan. 4-31 23.5 25.1 42.3 38.2 Feb 1-13 Feb. 29 Apr. Apr. 4-May May B-29 3 1 May July 37.9 3 July - - - - 15.0 44.1 MCT - First year of - 16.6 Ang. 89 - Oat. Ost. 5- 80 Ost. 81 - Nov. H Nov. - - Doc. al W.S 4.0 50.2 18.7 73.6 50.0 72.2 96.3 53.9 306.4 504.7 412.7 72.5 117.6 - - - - - - 15.0 - - - - 20.9 - 44.5 45.9 16.4 - - 26.7 28.6 14.0 - - 35.2 626 49.2 480 60.6 42.5 10.8 5.4 11.0 Tel 13.7 23.4 14.4 21.4 10.4 12.4 2.0 10.3 3.1 0.2 0.3 - - - 2.1 19.2 19.5 38.7 27.5 14.3 16.7 13.7 - - 18 24 T.1 11 - - 5.8 0.2 54.9 32.4 0.2 +181.7 0.4 0.3 1.9 3.7 . 34.4 4.4 +12.6 4.8 3.4 1.6 147 lookly Average of Total Debite Since Outbreak of War (Canada alone) million $ 6.8 Through Doc. 31 32 - - - . 45 1.2 2.3 4.6 6.8 31.2 8.7 10.1 3.1 - ENTED 10.8 5.4 11.0 4.7 12.3 28.4 89.4 3.0 2.3 4.1 0.1 0.3 0.1 0.3 0.2 1.0 2.3 4.6 2.0 3.8 5.0 4.4 4,2 3.4 30.0 3-0 3.8 5.0 2.2 21-1 0.3 0.9 1.5 0.8 1.6 6.8 36.1 8.0 7.5 2.6 7,9 6.5 1.4 0.6 2.5 3a 2.1 1.5 4a 6.8 0.8 0.8 0.1 +10.6 0.8 - +9.0 0.8 - 1.1 - 06 2,7 2.3 1.1 8.9 0.1 + 503 0.1 - - 0.1 - 0.2 0.2 -11.7 14 - 14 6.2 4 0.3 6.0 0.3 0.1 4.3 0.1 - - 6.1 1.5 2.0 +1,9 3.3 1.9 0.9 -0,8 0.3 +1.4 +3.6 +0.4 -1,8 +4.9 -0.7 -2,2 tas $ 2.0 0.1 0.3 .03 1.1 4.4.3 0.2 0.1 +02 =13 o 411 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE January 10, 1941 Secretary Morgenthau Mr. Cochran Mrs. Arthur Wood, Hobart 3014, telephoned me this morning. She said that her aunt. Miss Anne Morgan, was just back from Europe and would like very much to bring to Secretary Morgenthau's attention her first-hand information with respect to the situation in France, as well as certain recommendations toward a more liberal policy in the Treasury's control of funds for certain residents of France. I promised Mrs. Wood that I would learn whether the Secretary preferred that Mr. Fehle or a group from our Control Committee receive Miss Morgan and submit her obervations with such recommendations as we might see fit to make, or whether the Secretary might himself care to receive her. Miss Morgan is now endeavoring through Mr. Dunn to have an early appointment with Secretary of State Hull. Will the Secretary tell me what answer I should give Mrs. Wood? his? RMR 412 January 10, 1941 Last night I called up Herbert Feis, and asked him whether he wouldn't please try to halt or correct Cordell Hull's misinformation. Twice yesterday he said that the English have $18,000,000,000 worth of securities. Therefore, there was no reason why they couldn't put up two or three billion dollars' worth of collateral. Feis said he wanted me to know that there is an author of a book on English securities of about ten years ago, and he is the greatest living authority on English securities. It was he who had given Hull his information; in fact, he had given him quite contrary information. Feis said that he was opposed to having the English put up any collateral. He promised me that he would get in touch with Merle Cochran today to bring himself up to date, although he didn't use exactly that language, and then he would tell Mr. Hull how much securities the English really have. Feis is to call me back and tell me the results of his conference with Hull. 413 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE January 10. 1941 TO FROM Secretary Morgenthau Mr. Cochran STRICTLY CONFIDENTIAL At 11:45 Dr. Feis telephoned me. He mentioned Mis talk with you last night. asked me for information to help refute Secretary Hull's understanding that the British have $18,000,000,000 of assets which could be liquidated or pledged. I told him that the British had met with us this morning and that Sir Frederick Phillips was going to request an appointment with Secretary Full for this very purpose of explaining the true British situation. I added that he would probably enjestor to see two or three of the other Cabinet members. Feis was happy that Phillips was coming to the State Department and promised to do what he could to assist in reaching a correct understanding of the real position. I confirmed one = two figures that Feis had and corrected him on one other. En Feis was inclined to doubt the wisdom of this matter of international finances. which is shortly to come before Congress. being discussed by Phillips in departments other than Treasury and State. Feis was afraid of leaks. I told him that the Treasury felt it urgent that Phillips back up Secretary Morgenthan's arguments with some of his Cabinet colleagues if the Cabinet, and Congress in turn, are to be conrinced of the British need for assistance. Feis was still worried about the risks involved through Phillips visiting the other departments. BMR 414 BRITISH EMBASSY. WASHINGTON, D.C. 10th January 1941. Dear Cochran, You will recollect that at the meeting this morning the question was raised whether some financial relief could be secured through immediate payment for goods on the sterling area to be acquired by the U.S. Departments. The following instances occur to us:1) WOOL. Purchase by U.S. Government of 250,000,000 lbs. Australian wool to be stored in the United States under the Storage Agreement signed in London on December 9th 1940. Possible purchase by U.S. Government is provided for in this agreement. According to our information, the value of this wool would be between $130 to $150 millions. The loading of the wool for shipment to the United States has recently commenced in Australia. As you know, the British Government has purchased the entire Austral- ian wool clip until after the war. 2) RUBBER Rubber Reserve Company agreed to purchase 150,000 tons on June 29th, for shipment prior to December 31st, but we understand that shipment has not yet been completed. The Company agreed to purchase a further stock of 180,000 tons for shipment during 1941, none of which has presumably yet been shipped. The value of the first lot at the contract price was about $67 millions, and that of the second lot $81 millions. 3) TIN Metals Reserve Company agreed in July 1940 to purchase 75,000 tons of tin at 50e 1b. C.I.F. U.S. Ports, total value being about $84 millions. 415 BRITISH EMBASSY, WASHINGTON, D.C. -2I understand delivery was expected to be completed towards the end of 1941, so that some substantial part of this yet remains to be delivered. We are sure that these items include the best chances for an immediate application of the new idea in time to be of use in meeting the financial needs of the interim period. I have cabled to London to enquire whether there is a prospect of fixing up a contract for a further 50,000 tons of tin and generally whether any other articles occur to them. In particular we know that all the following articles are in oversupply in the sterling area and that we can meet any orders which U.S. Departments are likely to place for them. We do not, however, know how far they are regarded as strategic materials under the Act of June 25th 1940. Burlap Cocoa Copra Long staple Egyptian Cotton Jute Kapoc Animal, vegetable and fish oils, Shellac Skins Tea. I need not remind you that rubber and tin come only in part from British sources and that we can only count on receiving a corresponding part of the proceeds. It seems to me that wool offers the best immediate possibilities from every point of view. Yours sincerely, r. H. M. Cochran, United States Treasury, Washington. Hellips 416 January 11, IRC -- complete : Present: N.M.Jr: Mr. White yrs. Klots Mr. Gifford stames being to set to =, I don't know whether It. Frank told you the story. As a matter of fact, IF tilt If there of it. He nay have talf memory isn't clear. But I into that you always felt that THE sim_nt have worked with Vorress. in mit. = ended = times at Lothian's, Emil It SET SET tay to Butterworth and Buttermorti self = = = his own initiative, le SETS, DE END TE all take it for the 701 5.7% going to get your advice et = it Street, and then he said, it the other stille = the table, your Undersecretary, in wes sitting next to VErban, EDIT If sel: to Eigher, 'You know, Yr. Erter TE emert you to TO to J. P. Mooren for will said, After all, will DEI time If if here your financial of the Embassy in Longum SING Impersecretary voluntarily tell 1E = to Morris. How should TO - S Shat ist`' what the Administration retei" Elots: Somebody talE this stay refure. F.V.Jr: I think it is III the record, but I want to Elotz: make it again. I know it. - 417 === hime You don't know this story" No. This is the first I have heard of this story. It is curious he didn't defend himself THE you were criticizing him for that. Be unobaily didn't think it was the emporiate time. 30 be salt, If would have known that the stration didn't want IS to take the advice of I 3. Morgen, I would have brought helf a mebtle over here from England and set us = DEI office. Inte - But you tolf him right here. Tell, I don't know, but subsemently he must have got it from Lanes and Butterworth Anyway, be tool Benes' and Butterworth's were BE against nine. I remember that meeting here very well. Then I ested him what advice Kennedy had given its. it said when they got over here, also in December, they got a cable from Treasury in london not to do anything until Tennedy arrived. Gennecy WES stronely against their Testing any securities. He said, "The market couldn't take it. at the most, they should only Test 15 or 20. it not everybody in the British Treasury very it RES very nervous about the whole thing, and nervous. I the asked if he could let me have E report of his conversation, and he said It WES all covered in E cable that he sent back to England, and be sald he would hand me . copy the next time IN comes down. 418 -3Tlots: You told him the story about the school children's attitude toward J. P. Morgan the day he was here. E.M.Jr: I gave that. White: He is a very slippery chap, this Gifford, very shrewd, but still the rest of the story may be true and they gladly seized upon the excuse which they wanted to in the first place, but it rate him an additional - but it is emazing that Butterworth should have had the - should have said that. Flote: Butterworth was, I think, very close to Kennedy White: I mean with Eanes it was - he was high enough and he inex what Kennedy would want. to share his own policy, but Butterworth is action under instructions. It is of quite a different character. With Kennedy, of course, the Iord knows if everything that Kennedy said and did would come out, it would make a very interesting picture. Flotz: I believe so. E.V.Jr: Now, 816 you (White) want to see me or did I want to see you? White: You said you wanted to see me. E.M.Jr: Tell, I have had that pleasure. 419 January 10, 1941 Dear Jeremes Thank you for year courtesy in sending me a engy of year proposed letter to the President on the attitude of the investment bankers of New York in connee- tion with the sale of British securities. It is entirely agreeable to - to have you send the letter to the President. Youre sincerely, Henry Non. Jereme Freak, Chairman, Securities and Exchange Commission, Washington, D. c. By 420 January 10, 1941 Dear Jeromes Thank you for your courtery in to the President on the attitude of the sending me a copy of your proposed letter investment bankers of New York in connee- tion with the sale of British securities. It is entirely agreeable to - to have you send the letter to the President. Yours sincerely, Henry Non. Jereme Frenk, Chairman, Securities and Exchange Commission, Washington, D. c. 421 SECURITIES AND EXCHANGE COMMISSION WASHINGTON THE CHAIRMAN January 8, 1941 Confidential The Honorable Henry Morgenthau, Jr. The Secretary of the Treasury Dear Henry: I am enclosing a copy of a memorandum which I would like to send to the President if you have no objection. My purpose in sending it is to acquaint him with the attitudes of the investment bankers, and not to inform him about the British arrangements which, of course, are your province. Sincerely yours, Jerome N. Frank Chairman Enclosure O.K. Let the letter go 1pm/ 422 January 8, 1941 CONFIDENTIAL MEMORANDUM FOR THE PRESIDENT: I think you will be interested in the following in its bearing not only on our national problems but in its relation to the attitude of the investment bankers: Secretary Morgenthan, as a result of his conversations with the British, wanted to demonstrate to them that it is possible for them to sell their nonlisted securities, in wholly owned American corporations, in an orderly way with- out unnecessary sacrifice. To that end he conferred with Mr. Cyril Quinn, one of the principal officers of TriContinental, an investment trust affiliated with Seligman. He then invited us to a conference for the sole purpose of asking us to see to it that, if the investment trust industry were to offer to buy such securities, all the investment trusts would get their retable share, if they so desired. To agreed to perform that limited task. Mr. Schanker, head of our Investment Company Division, accordingly went to Bow York to confer with the heads of the various investment trusts. He learned that, with the exception of the three investment trusts controlled by investment 123 -2bankers, Lehman Corporation; U. S. and Foreign, & Dillon affiliate; and American General, a Lazard Freres affiliate all the investment companies which had been contacted by Yr. Quinn were ready to go along. Mr. Schenker conferred with Robert Lohman and John Hancock of Lehman Bros. and Arthur Bunker of Lehman Corp. They expressed an unwilling- ness to participate primarily on the alleged grounds, first, that they had information to the effect that the British did not want to sell such securities and that the plan would put pressure upon the British to sell (which they thought undesirable) and second, that the particular mechanism set up would stifle competition in bidding for those securities. (This second ground is amusing inasmuch as the same invest- ment bankers are vigorously protesting against a contemplated S RC rule to require competitive bidding for utilities.) As above noted, the three recalcitrant investment companies are those which are dominated by investment bankers. It seems fairly obvious that their true basic objection is their fear that there will develop through the investment trusts something highly desirable, namely, true underwriting, i.e., underwriting in which the underwriters, having sufficient capital, are able to buy, without the necessity of any immediate or even ultimate sale to the public. The fact 424 -3is that our investment bankers, when they act as so-called underwriters, do not do the job that is done frequently in England but merely act as salesmen who get more than a sales- man's commission on the theory that they are true underwriters when, in fact, they do not so function. They wish to maintain that position and in effect continue to get something for nothing; this vice of the existing underwriting arrangements was forcibly commented on by former Chairman Douglas several years ago to the great disgust of the investment bankers. What makes the matter even more amusing is this fact: The position taken is based on the alleged desire to maintain competition between investment bankers. Our own studies, and the evidence introduced before the T.N.E.C., show that today there is no such thing among the leading investment bankers, for when one investment banker gets a piece of business all others by tacit consent lay off and do not compete. The development of true underwriting by the investment trusts (something contemplated by the Investment Company Act of 1940) will create competition for the investment bankers; that is what they dislike and, in this instance, are resisting. In spite of that resistance, I think that within a very short period the investment trusts (either with or without 425 cooperation on the part of the recalsitrents) will be in a position to wake - offer for the British securities. Fres there - the job will be Benry Morganthan's. Chairman Securities and Exchange Commission 426 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION STRICTLY CONFIDENTIAL DATE January 10, 1941 Secretary Morgenthan TO Mr. Klaus FROM FBI reports: January 8. The Yokohana Specie Bank in Honolulu has been preparing to transfer to its parent in Japan the customers' collateral and other assets and to turn its required government bond reserve into cash; a legal opinion advising the Bank of its power to do this but of the possibility of a receivership by the Territorial Bank Examiner on the ground of this conduct amounting to 4 bad banking practice has been circulated to the Yokohama Specie brunches in the United States. The Territorial Bank Examiner has declined to accede to the request that he permit the conversion of the 2à million dollars of United States government bond reserve into = cash deposit with the Bishop National Bank and the Bank of Hawaii. nl 427 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE JAN 10 1941 Secretary Mr. Folay In accurate with the request contained in Mr. Thompson's - of December 26, 1939, there is attached a summary report of staties or projects carried on in the Office of the General Counsel for the month of December, 1940. ENTL Attachment 428 SUMMARY REPORT ON STUDIES OR PROJECTS IN THE OFFICE OF THE GENERAL COUNSEL - December, 1940 The following matters received attention in the Office of the Chief Counsel for the Bureau of Internal Revenue: 1. Bill (H.R. 10558) to Liberalize Tax Provisions of Merchant Marine Act of 1936. By virtue of existing provisions of the Merchant Marine Act of 1936, a shipowner qualifying as a "subsidized opera- tor" in foreign commerce is permitted to build up a reserve for use in the expension or replacement of its shipping facilities and to avoid income taxes with respect to the earnings from operations deposited in such reserve. Earnings so deposited and used are wholly exempt from tax. By virtue of a recent amendment to the Act, the reserve privilege has been expanded. All shipowners, subsidized and unsubsidised alike, are now permitted to include in a tax-exempt re- serve the proceeds of a sale or other disposition of existing vessels. In such case the amount of the unrecognised gain represented in the proceeds of sale is applied in reduction of the cost basis of the new vessel. There is now pending in Congress a new bill, H.R. 10558, by virtue of the enactment of which the privilege of building up the tax-exempt reserve out of operating profits, originally restricted to subsidized operators, would be extended to the unsubsidized opera- tor in foreign commerce. It should be noted that while the recently enacted amendment results merely in tax postponement because of the fact that basis is reduced by the unrecognised gain, the earlier provisions of the 1936 Act and the pending legislation result in 429 -2complete tax exemption because no provision is made for a reduction of basis by the amount of the untaxed earnings. 2. Tax Liens on Real Property in State of Michigan. In United States of America V. Thomas Maniaci and Wilmarth T. Shafer, decided November 8, 1940, the United States Circuit Court of Appeals for the Sixth Circuit in affirming the decision of the lower court held that where the notice of the Federal tax lien imposed by section 3186, Revised Statutes, as amended, failed to contain a description of the land upon which the lien was claimed, as required by the laws of the State of Michigan, the lien was invalid as against a bona fide purchaser of real estate situated in Michigan, who took title subsequent to the filing of the notice of the lien in the proper registry. A memorandum has been prepared proposing legislation to clarify the section of law here involved (section 3672, I.R.C.), to state more clearly that the author- ity granted to the states is merely to designate the office for the filing of notice of Federal tax liens and not to provide that there must be a full description of the land upon which the lien is claimed. The above matters were handled under the supervision of G. E. Adams, Head, Legislation and Regulations Division. The following work was done under the supervision of Assistant General Counsel Cairns: 3. Proposed Order of the Secretary, Authorizing the Chairman of the Processing Tax Board of Review to Designate an Acting Chairman. The 430 -3agintion - this question was prepared by Mr. Indects and - signed on December 18, 1940. The conclusion is that the - of appoint- ment are designation vested in the Secretary cannot be to the Chadinum It is pointed out that - Indiatant = the Secretary, under I.S.C. title 5, sec. 246e, could designate - alternate Chefixman. The faillowing WES the subject of special struige 4. Foreign Confiscation Decrees. This study - prepared by listurs. Kaufaun and Tarky. It considered the effect did American courts may be expected to give to decrees of foreign governmental confiscet- ing or regulationing property, real or personal, stated in this country amt owned by nationals or corporations of the foreign country. Only tentative predictions can be made - the insta of the jufficial authorities. (1) Confiscatory or requisitioning decrease of nised foreign governments will not be applied to affect property that has a legal sites in the Inited States, (2) such decrease of recognized foreign governmental - probitity not be given effect to the extent of impairing the rights of domentir dateanta, and parthaps simple creditors; (3) stare domestic claiments have been protected, it cannot with assurance be Survey netter or not the courts will give effect to such decrease - - to property in the United States; it may be relamnt another the decrease make provision for compensation; (4) there there is - international 431 -4agreement such as the Litvinoff Agreement, the courts will probably give some effect to the foreign decree; (5) in the event that the individual property otters themselves convey the property, personal to the decree, American courts my give effect to the treasfer in the United States. 5. Silver Fax Far Agreement. In order to insure the administrative fessibility thereof from the patalt of vier of the Customs Service, Nessrs-Date and Smith of the Customs legal staff cooperated with the various interested agencies in the drafting of a new supplementary trade agreement with Canada for the governance of imper- takions of silver or black foxes and furs and articles made from such furs. The agreement WES proclaimed by the President on December 18 and became provisionally effective am December 20, 1940. Also prepared was a Treasury Decision containing instructions for the administration of the quota previsions of the proclaimed agreement. 6. British Purchase Tax. Mr. Duen, Quiet Counsel, Customs, reviewed and approved a letter prepared in the Bursan of Customs for the sig- nature of the Secretary and reporting - ER 10705, a bill to amend section 402 of the Thriff Act of 1930 S that sales or purchase taxes of - exporting country should not be included in the foreign market value used by customs authorities in amounting and collecting customs daties about such taxes are not applicable to exported merchandise. 432 -5The following matters received attention in the Legislative Section under the direction of Assistant General Counsel Bernard: CONTINUATION OF PROJECTS 7. Bill to Believe the Hospitals from Double Taxation Under Harrison Narcotic Act (for description see original report, item 9). This bill, prepared by Miss McDuff, together with subsequent material sub- mitted in support of particular phases of the bill, is still receiving consideration by the Bureau of the Budget. 8. Fidelity Bond Bill (formerly identified as "Bond Survey") (for de- scription see original report, item 10). Due to the interest of about ten other agencies in this bill, the Bureau of the Budget has not yet been able to give it the usual clearance. 9. Compilation of Money Statutes (for description see original report, item 11). York on this project has been temporarily discontinued. 10. Codification of Jnti-counterfeiting and Related Laws (for description see original report, item 7). Work on this project has been discontinued for the time being. 11. Federal Depositary System (for description see original report, item 6). Mr. Reeves is continuing his work on this bill. It is anticipated that the bill will be transmitted to the Congress shortly after the beginning of its next session. 12. Acting Administrators Bill (for description see June report, item 33). Miss McDuff is continuing her study of the necessity and 433 -6feasibility of general legislation to provide for acting bureau or division chiefs in the absence of a chief. 13. Law Committee of Defense Communications Board (for descrip- tion see November report, item 23). Mr. Spingarn is continuing his work with the Law Committee, as the Treasury representative, on drafts of legislation to authorise complete control by the Government of radio and wire communication facilities in time of war or impending war. NEW STUDIES 14. Codification of Public Debt Laws. Mr. Koken is preparing a bill to codify the public debt laws authorizing the borrowing of money and the issuance of obligations therefor. Mr. Broughton prepared the first draft of such a bill. The following matter received attention under the supervision of Mr. O'Connell, Special Assistant to the General Counsel: 15. Bank Holding Companies. The have been assisting in studying the bank holding company problem and in preparing a draft of leg- islation dealing with the matter. Mr. Sherbondy has been con- ferring with lawyers in the office of the Comptroller of the Currency relative to changes in our draft of the proposed bill. The following matters were handled under the direction of Assistant General Counsel Bernstein: 16. Foreign Funds Control. A number of conferences have been held with the operating division of the Foreign Funds Control, together 434 -7with representatives of the Office of Monetary Research, at which conferences the proposed Order in case of the extension of freezing control has been discussed, and attention has been focused upon the problems that will arise in the administration of an extended freezing control and some of the possible EVER of approach to be pursued from the policy point of view. The object of such conferences has been to familiarize the various groups as to the types of problems and possible solutions thereof which will be presented under an extended control. Considerable work has been done on the revision of General Licenses 32 and 33 relating to the remittance of small sums for living expenses to nationals in the occupied area, including American citizens. The object of such revision will be to liberalize the sums which may be remitted, together with the formulation of a method by which the blocked funds of such nationals may be remitted to them without permitting the dollars involved to be released from the control. The entire staff worked on the foregoing matters. 17. Executive Order re Economic Defense. This office participated in the drafting of the proposed Executive Order consolidating the various economic defense measures under the Economic Defense Board with administration thereof vested in the Secretary of the Treasury. It also participated in the drafting of a memorandum and letter to the Secretary of State describing the proposal and cleared the mt ter with Justice. Messrs. Bernstain and Laxford worked on this. 435 -818. Denish Ships. This office participated in conferences relative to action to be taken in connection with the ships of the MaerakMoller Line located in this country. Mr. Bernstein and Mr. Friedum worked on this matter. 19. German Re-Inxigration Marks. This office studied the possible violation of the Johnson Act and the Neutrality Act involved in the sale of these marks in this country and discussed the matter with representatives of the Department of Justice. Messrs. Bernstain, Friedman and Laxford worked on this. 20. Foreign Exchange Provision in Trade Agreements. This office participated in departmental conferences relative to the foreign exchange clause to be used in trade agreements entered into by this government with foreign countries. 21. Argentine and Chinese Stabilisation Agreements. lie participated in the conferences leading to the Secretary's appearance before the joint congressional committee, worked on the statement read before the committee, drafted the Agreements, participated in the negotiations and conferences with the interested governmental agencies and foreign representatives, and prepared legal opinions on certain questions. Mr. Bernstein and Mr. Friedman worked on this matter. 22. Black Tom Cases. life discussed with Justice the brief filed in this case and attended the argument before the Supreme Court. Mr. Bernstein and Miss Hodel handled this case. 436 -9- 23. Spanish Silver Cases. The time to appeal to the Supreme Court from the decision of the Circuit Court which had been favorable to the Government has expired and the remaining law suits are being dismissed. Messrs. Bernstein and Friedman worked on this matter. 24. Norwegian and Swedish Accounts at the Federal Reserve Bank of New York. We have discussed with the foreign representatives and with the Federal Reserve Bank of New York and the State Department documents and letters to be furnished in connection with transferring control over the Norwegian Central Bank assets at New York to the Norwegian Government and giving the Swedish diplomatic officials in Wash- ington control over certain accounts of the Swedish Central Bank. Mr. Bernstein handled this matter. 25. Stamp Taxes. This office participated in the problem of the ap- plicability of stamp taxes to the sale or transfer of the securities requisitioned by the British Government and worked on the Treasury Decision issued in connection therewith. Mr. Bernstein handled this. 26. Proposed Bill to Authorize Establishment of New Coinage Mint. This office participated in the preparation of a Bill and letters of transmittal which would authorise the establishment of a new coinage mint at some point in the Middle West to be selected by the Secretary of the Treasury. Mr. Bernstein and Miss Hodel worked on this matter. 27. Contributions to the British. The New York Federal nas received numerous checks made payable to the order of the British Government 437 - 10 - by persons desiring to contribute to the British war effort. This office, after consulting with the British, State Department, and Mr. D. W. Bell, advised the New York Federal to return the checks to their senders with reference to the appropriate provision of the Neutrality Act. Mr. Bernstein and Mr. Groman worked on this matter. 438 January 10, 1941 Mr. Preston Delano Secretary Morgenthau I wish you would begin to prepare arguments why Senator Glass' bank holding company bill should go through. One of the suggestions I would like to make is for you to go back five years or ten years in each community where bank holding company banks operate, and find out just how many banks are in each community. My impression is that where the bank holding company banks operate there are less banks serving the community than there would be if there were not bank holding companies. I would like you to make this study just as soon as possible, and see whether the argument will or will not hold water. 439 January 10, 1941 Mr. White Secretary Morgenthan I think you better prepare a letter for me, letting the President know just what the exact financial situation of the English is today. I learned from my conversation with him yesterday that he doesn't seem to comprehend what the situation is. I think it important that I make a record of it by writing him a letter. 440 Ferdinand Kuhn January 10, 1941 Secretary Morgenthau You can tell Edgar Mowrer that I release him and he can write anything that he wants to on frozen funds. For your own background, the situation is now definitely blocked in the State Department, and I have grave doubts that I will be able to get it out of there. 441 JAN 10 1941 By dear Mr. Secretary: Thank you for your letter of December 16th. conserting the National Munitions Control Board regulations with respect to the exportation of timplate scrap. Is view of the information which you set forth and the recommendations of the Advisory Commission to the Council of National Defense, say I state that I concer with your views on this subject. Sincerely, (Signed) E Jr Secretary of the Treasury. The Renerable, The Secretary of State. Pripf you By - 3 10 442 OF STATE DEPARTMENT OF STATE WASHINGTON In reply refer to Co December 16. 1940 CONFIDENTIAL My dear Mr. Secretary: Reference is made to the minutes of the meeting of the National Munitions Control Board which was held on November 28, 1939. A copy of these minutes was enclosed with the letter which I addressed to you under date of November 30, 1939. The regulations which I prescribed on December 7, 1936, in virtue of the authority vested in me by Executive order No. 7297 of February 16, 1936, to govern the exportation of tin-plate scrap under the provisions of the act of Congress approved February 15, 1936, provide under para- graph (3) that the Secretary of State will issue export licenses to authorize the exportation of tin-plate scrap when, in the opinion of the National Munitions Control Board, the issuance of such licenses may be consistent with The Honorable Henry Morgenthau, Jr., Secretary of the Treasury. 443 -2- with the purposes of the act. The purposes of the act are embodied in the presamble thereof in which it is stated that, "in the interest of national defense, it is hereby declared to be the policy of Congress and the purpose and intent of this Act to protect, preserve, and develop domestic sources of tin, to restrain the depletion of domestic reserves of tin-bearing materials, and to lessen the present costly and dangerously dependent position of the United States with respect to resources of tin". It has been customary for the Board to meet each year for the purpose of giving consideration to the adoption of rules of procedure to govern the issuance of licenses for the exportation of tin-plate scrap for the ensuing ealendar year. It is my understanding that the Advisory Commission to the Council of National Defense is of the opinion that the interests of the national defense require that the exportation of tin-plate scrap should not be permitted. In view of this fact and in view of the stated purposes of the act, it is my feeling that no action should be taken at this time to make any provision for the issuance of 11censes during the calendar year 1941. It would seem per- tinent to mention at this point that, since the existing legislation has been in effect, all of the tin-plate scrap exported from this country has gone to Japan. The Department has never received a single application for license to export tin-plate scrap to any country other than Japan. You 444 -3- You will recall that the Board, at its meeting on November 28, 1939, authorized me to assign allotments for the exportation of tin-plate scrap during the calendar year 1940 to a total of not to exceed 15,000 long tons in accordance with the rules of procedure adopted at that meeting. Requests for allotments totalling 13,181 long tons have been received up to the present time. The allotments assigned thus far during the present calendar year total 8,363 long tons. Licenses have been issued since January 1, 1940, authorizing the exportation of a total of 4,269 long tons. Actual exports of tin-plate scrap between January 1 and October 31, 1940, inclusive, as shown by the Department of Commerce statistics, totalled 2,841 long tons, all to Japan. It appears, therefore, that, of the total quantity of 15,000 long tons which the Board authorized to be exported during 1940, a total of but 4,269 long tons has been licensed for export, and a total quantity of but 2,841 long tons has actually been exported. I may state, for your information in this connection, that under existing circumstances I have not availed myself of the authorization granted to me by the Board at its meeting of November 28, 1939, to assign ad- ditional allotments for the last six months of the present calendar year. In 445 -4- In view of the considerations mentioned above, I do not believe that it will be necessary for the Board to meet for the purpose of considering this subject. Accordingly, unless you or some other member of the Board disagrees, I do not propose to call a meeting of the Board at this time. On January 1, 1941, the situation would then be that no provision would have been made for the issuance of allotments or the granting of licenses for the exportation of tin-plate scrap to any country, and any person who should make inquiry in regard thereto would be so informed. The effect of this proposed action would be that the exportation of tin-plate scrap from this country would not be authorized until such time in the future as the Board may meet and take action to reinstate the licensing procedure heretofore in effect. I should appreciate it if you would communicate to me, as soon as practicable, your views on this subject. Similar letters have been addressed to the other menbers of the National Munitions Control Board. Sincerely yours, r Greener 446 BRITISH EMBASSY, WASHINGTON, D.C. 10th January, 1941. 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, have Bother The Honourable Henry Morgenthau, Jr., United States Treasury, Washington, D. C. 447 Telegram received from London dated January 8th, 1941 Naval Night of 6th/7th, bombers attacked Tripoli and one large merchant vessel was hit amidships. Explosion followed and smaller vessel probably hit. 2. Reported that Northern ports of Gulf of Bothnia closed thick ice but Southern ports being kept open by ice breakers. Danish fjords are frozen up, no longer navigable ice breakers out of coal. 3. 4. Assessment of damage done to enemy aircraft by ships' gunfire up to December 31st, 1940, from the beginning of the war 193 destroyed 91 probable 105 damaged, of these His Hajesty's ships and auxiliaries accounted for 151 destroyed 79 probable and 78 damaged. 5. Military The following Italian formations have been captured at Bardia:62nd Division, remainder of 63rd Division (this Division had already sustained heavy casualties previously) 1st (March 23rd) Blackshirt Division and 2nd (October 26th) Blackshirt Division less one Legion. 6. Royal Air Force Night of 7th/8th. Bad weather - operations cancelled. 7. Albania On January 6th 9 Blenheims successfully attacked Valona. 8. German Air Force January 7th. Single enemy aircraft were active during the day over Eastern Countries and 8 Royal Air/ 448 Air Force stations were attacked but wither damage nor casualties were serious. 9. Eight of 7th/8th. No enemy activity reported. 10. Aircraft casualties in agerations over and from British Isles: 2 aircraft damaged. - 449 DISTRICTION D.C. January 10th 1941. personal and secret. Dear ir. Secretary, I enclose herein for your personal and secret information = engy of the latest report received from London - the military situation Believe me, Dear Mr. Secretary, Thery sincerely yours, has sh The Renourable Benry Morgenthen, Jr., United States Treasury, Washington, I. c. 450 Telegram from London dated January 9th. 1. Naval. on the 8th one aircraft attacked without success aerchant vessel of 3,500 tons in Bjorne Fiord. 2. Night of 8th/9th strong force of heavy bombers attached Tirpits and ship building yards at Wilhelmahaven and docks at Enden preliminary report of results good. All returned safely - weather conditions perfect. 3. Night of 6th/7th. Aircraft bombed submarine base at Massave, bombs fell near moorings but searchlight glare prevented observation of damage. 4. Royal Air Force, Italy on night of 8th/9th January. Naples. Wellingtons were sent to attack targets at Naples. 5. 10 German Air Force. Night of 8th/9th January. Nothing to report. 6. Aircraft casualties in operations over and from the British Iales - none to report. 7. Secret. Home Security. On the afternoon of January 8th an enemy machine, while dropping boabe on Coventry, hit a balloon barrage cable and broke it, but managed to get away. 451 G-2/2657-220 No. 289 RESTRICTED SITUATION REPORT M.I.D., W.D. January 10, 1941. 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. Last night the German Air Force, operating in normal strength, varied its technique and made widespread attacks on at least fifteen cities, including Liverpool and Manchester, in the northwest industrial area. The R.A.F. last night attacked the Ruhr industrial area, concentrating on oil targets, and bombed docks along the French coast and oil targets at Rotterdam. II. Greek Theater of War. The Greeks claim the capture of Klisura, dominating the main interior road north to Berat, Elbasan, and Tirana. Minor air activity. III. Mediterranean and African Theaters of War. 1. Ground Operations. British mechanized forces are operating west of Tob- ruk and preparations for its capture are proceeding. In East Africa, an Italian outpost northeast of Kassala on the Sudan frontier, has been occupied by the British. In Ethiopia, rebellious natives have forced the Ital- ians to evacuate the post of Gubba. 2. Air Force Operations. The R.A.F. continues to support the British advance into Libya. The British attacked Messina, Sicily, using incendiaries. RESTRICTED 452 IV. Far East. Thai-Indo Chickene Instilities have is intensified, with the Thalese on the offensive. -2- CONFIDENTIAL Panghan of Code Indiagram 453 Insurance - the Mar Department at 13:36, January 10, 1941. London, filed Mass, January 10, 1961. 1. - Thursday, January 9, railway installations in Bealages were attended by planes of the British Coastal Commond. During the presenting sight planes from the Bember Commond fully attached Balan, Tirgits (1) and Wilhelmshaven and dropped propagenda Insflets. They also planted mines along the north coast of Germany. 2. During deplight hours of January 9 German aircraft engaged in only the videly seattered attacks. One was along the eastern coast of Britain and the other was over the Thomas Estuary. That night Common please assurely attached Marthapter, Liverpool, English and Ministram Fairly heavy accordary raids were earried out against Shaffield, Partmenth, Bristel Gas German be - faste a balloon eable but the cable brake and the plane got - The damage eased by these raids and the number of Secure please used in them is not I Eather is the - of - sircraft casualties I Also there is - information as to another or not British night fighters intercopted the sticulars. s. British airplanes centines to earry out stincies in Like - - in the Sales. The submitted base and the power plant at - - severely best during the night of January T.O. 4. a is - that a direct hit was - - - Italian buttleskip during the sight of January 8-9 in a severe attack - CONFIDENTIAL CONFIDENTIAL 454 Myples by British planos from Malta. Hits on other targets eased explesions and started fires. A ship and a dock were hit by British be at Paleme. 5. There is new the equivalent of two and one-half ammoned divisions under General Werell's command. The 24 Armored Division, whishwas sent to Sept, arrived there on December 24. The two divisions whose - to the Middle Eastern theater was mentioned in our emblegram of January 9 are Infantry divisions. 6. Captured Italian weapons are being shipped to Greece and up to new a total of 20,000 captured Italians have been sent to India. To The island of Malta is being prepared as a base for destroyers. The island is strongly hold and at present has supplies sufficient for a 6-math period. Under eever of flest raids and diversions supplementary supplies are arriving each month. 8. Two new parts - the northwest coast of Seotland are being rapidly built by the British. Since these parts will be able to care for three earge vessels each, the time consumed by turning around will be leased and the likelihood of damage to merchant vessels from air banking will be reduced. It is estimated that they will be completed in six months. 9. On January 6 - of the fireststarted by the Genesa raid - Bristel of January 2-3 were still moldering. This raid Insted 12 hours. During the first two and one-half hours the German used incentlary boube exclusively and started many fired. For the - four hours high explesive bombe were used principally but same CONFIDENTIAL CONFIDENTIAL 455 incendiaries were used. This was followed by a 30-minute I At regular intervals during the next five hours high explesive bumbe were used. Distributions Secretary of War State Department Secretary of Treasury Asst. Secretary of War Chief of Staff War Plans Division Office of Naval Intelligence AC -2 G-S, 1 CONFIDENTIAL CONFIDENTIAL Paraphrase of Code Indiagram Received at the War Department at 15.00, January 10, 1942 Busharest, filed January 10, 1941. Including - Passer division, the German - in Rumania now consist of six or seven divisions. The number 1 cluding air force and corps troops is about 140,000. Additional troops continue to arrive. The chief of operations of the German Azsed Parent, General Ven Greifenberg, is in Emania temporarily. This officer was at Leaveworth 1932-1998. RATAY Distributions Secretary of Yes State Department Secretary of Treasury Asst. Secretary of The Chief of Staff War Plans Division Office of Naval Intelligence CONFIDENTIAL 456 CONFIDENTIAL 457 Paraphrase of Code Telegram Received State Department 11:58, J 10, 1941 Caire, filed 16.00, January s, 1941. From Coloral 6. E. I A. C., Air - in East EXTRACT 1. I attessed both the ground and the air operations at Bankin. Majer Fellers is certificating this observation up to and including the cooperation of Tebrate 2. The British Wasters Desert Force, which is now called the 13th Carpe, is composed of the 7th Amount Division, the 16th Infantry Brignie, the oth Instrulium Division and corps troops. 3. The Italian foress at Bardia proved to be half again as large as was expected and instaled the 30th Prestier Guards, the 21st and 234 Carps the 1st and 2d Blackshirt Militia and the 624 and and Divisions. 4. Although Italian Infortary showed fooble resistance and gave up readily, the artillary hold - The artillary proved to be assurate and prolanged the second please of the attack apprexiantely 18 hours beyond what and been planned. s. It is - believed that the only Italian foress at Tobacco are Prestice Guards, earge - any troops, and the 61st Division. Medical position is not as strong as was that of Bardia. 6. As - as a system of supply can be organised - attempt to - in the direction of Bangasi will probably be made. Saless the resistance of the Italiana should collapse emplotely, the - will probably be halted at the mutuines area between - Bangasi for a worth or more. Descrose Italian airplanes have been within to CONFIDENTIAL CONFIDENTIAL 458 this area. in estimated - Italian planes in this theater are w licued to be service - operating, while 280 additional planes are marviceable at the present time. 7. Before the attack the British No. 203 (General Recommissiones) Signature beeked the Marber at Bantia heavily at night and the following night Toback was the object of the attack. Each day recommissence was earried out at high altitudes with one plane usually following the read along the coast line as far as Bangasi. 8. On January 3 the northern section of the Bardia area was beebed by two Blenhain beter agendress. These aquadrons, asking in conjustion with shalling from the floot, earried out the attack at 800, 1,800 - 1,000 feet. a J 3 and 4 single Blenhain bombers fly ing at high altitudes reided eight ecoupied airtrones with small bonbs. Those please kept the Italian fighter planes to the rear. However - January 4 - becker was last. Tobrak was bombed on January 5 by three Blenhain bember against which carried out operations from 20,000 feet in the face of heary antiairwaft fire. Right Italian airplanes, either - the great or just taking off, were destroyed by four fighter please attacking each of two aintress. Can- fighter patrels were matained each day west of the battle area. Single Buriem fighters were east forward every tea minutes to / fields, after which each would make a patrol at altituies between 12,000 and 20,000 feet. Each available plane mile - such flights daily. On January 4 a Barrieson fighter plane was lost. CONFIDENTIAL CONFIDENTIAL 459 9. Centinuous testical reemaisnance was carried out over the patrol area by the British No. 208 (Army Cooperation) Squadren, while Lyeander observation planes carried out intermittent artillary about tion. Barriesse planes of this squadren resconcitered to Tebrate The Tobrak and Bardia defeness were sapped by Harriesne planes - missions. Gladiator bi-plane fighters of the Australian No. 3 squadron, which is also under the control of the Army, carried out patrols at low altitudes over Italian troops west of the Bardia area. 10. The British had to and about half of the supplies for their whole force by water through the part of Solum. Solum was further for ward than most of the force, and despite its vulnerability to banking and shelling, it was not heavily attacked by the Italians until January 5. On that date - Italian attempts in the Salum and Bardia areas were repulsed with probable lesses of more than 20 Italian planes. 11. According to reports of Italian prisoners, the main stares of food in Bardia were destroyed shortly after Christmas by British booking. 12. The heavy fire from 15-inch navel guns was feared although may of them benead off the hard reak desert and did not exploin. Dumbe and wall shells merely camped annoyance in that they required the seeking of shalter. 13. It is my plan to go back to the Bardia area about January 14 in order to earry out observation of the operation of the recently on guaised fighter wing. Later in the month I plan to pressed to Sales. BROWER Distributions Secretary of Mar State Department Secretary of Treasury Asst. Secretary of War Oklah of staff Mar Plans Division Office of Naval Intelligence Air Carge - 2 as 3. & N.E. Aviation Section CONFIDENTIAL CONFIDENTIAL 460 of Cade Received at the - Department at 12.53, J n. INC London, filed 14:00, January 11, ISCL 1. a Friday, January 10, - fight planes planes of the December Comment - heavy attach all along the French annual coast - penstratat a distance of so siles inland. No British planes - last, inte other results are known. During the night before Number / planes continued to plant mines along the northern coast of Germany and bombed docks - island vatarages and railroads. The - Burber Command objectives that sight, 66 oil refinarias in Rotterdam and others in were summerfully attached by 136 heavy medium bombers. a the - night a annual - in a French part was - been by planes of the Constant Comment. a January 9, Coastal Comment planes made return - shipping in Barning and - two hite - a ending of the Hope - at Breath 2. a January 10, German planes - in stimer patrels - the Thomas Istuary - the Register Damail Single please made oscasional island Darting the night before 330 German places were platted - England Daving the might of January 10-21, 25 German please - - - Envergent and the Irish See, - 76 were platted in - Partneralls area. 3. It has - been determined - in the British read - Region - January S-9, - his - - - a bettleship of the Litterie class, - earge ships, / - - d During daylight hours of J 9 stir British fighter CONFIDENTIAL 461 CONFIDENTIAL planes interespted 12 Italian please attacking Malta and destroyed five of the Italian planes without lesing a single ship. The railread you and Member at Meesing, Sieily, were successfully attached during the night of January 9-10, by Malta-based been 4. Planes of the Reyal Air Force were very active on January 9 and 10 over all theaters in the Middle East. The harber and airfield at Bengasi and the airfield at Benina in Libya were bombed with great success. 5. The intention of the British to wage a more aggressive air - which - methoned in earlier reports, is believed to have began to take shape with the heavy daylight reid on January 10 reported in paragraph 1, above. 6. Importe totalling 636,000 tem, made up principally of mitious, makine teals and airplanes from the United States and Connie, arrived in Britain during the week of December 29 to January 4. LEE Distribution: Secretary of Bar State Department Secretary of Treasury heart. Secretary of for Chief of Staff Yes Please Division office of Reval Intelligence Air Carge -2 as CONFIDENTIAL -2- RESTRICTED Paraphrase of Code Radiogram Received at the War Department at 16:34, January 11, 1941 Rone, filed January 10, 1941. The Italians have called up their class of 1921 three months ahead of time. It is, however, entirely normal for them to call up the 1922 class at the present date. Normally, they would call this class into service in March of 1942, but any time after July, 1941, it will be available for call if wanted. FISKE Distribution: Secretary of War State Department Secretary of Treasury Asst. Secretary of War Chief of Staff War Plans Division Office of Naval Intelligence RESTRICTED 462 CONFIDENTIAL 463 Paraphrase of Code Radiogram Received at the War Department at 12:53 P.M., January 11, 1941 Athens, filed January 9, 1941. Your attention is invited, with regard to the situation in Athens, to eablegrams numbers four and six from the legation. The practical end of Greek advances seems to be caused by Greek failure to prevent re-enforcement; by Italian superiority in the air; by the complexity of the terrain and the weather conditions; by stubborn resistance in Italian prepared positions; and by equip- ment shortage, especially in trucks. This last has added to trouble in communications and supply. A general pessimistic note, recently developed among the military authorities in Athens, has been in- creased by stories that German intervention impends. Italian strength is now estimated at about 350,000 in Albania. The immediate objectives and the strength of the Greeks is not materially different from what it was. Troop morals is high as ever. The line now remars approximately Pogradets-Bratile-Tserovonte-Ilissoure (exclusive) Topeleni (exclusive) ending on the coast some three miles above Himara. BAKER Distribution: Secretary of War State Department Sedretary of Treasury Asst. Secretary of War Chief of Staff War Plans Division Office of Naval Intelligence CONFIDENTIAL 464 G-2/2657-220 No. 290 RESTRICTED SITUATION REPORT M.I.D., W.D. January 11, 1941. 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. There was little German offensive air activity during daylight of the 10th. Last night the Luftwaffe apparently operated normally, concentrating on Portsmouth. During daylight of the 10th the R.A.F. made raids, heavily escorted by pursuit, on German airdromes and ports in France. Success of this new procedure and losses incurred are not yet determined. Last night Brest and LeHavre were again raided. II. Greek Theater of War. Klisura. Greek headquarters officially announce the occupation of Limited air activity. III. Mediterranean and African Theaters of War. 1. The British are concentrating forces around Tobruk. The Italians report 100 British mechanized vehicles heading toward Akruna, which is about 20 miles southeast of Tobruk. It is reported that the British have retaken Buna in Northeast Kenya, and that E1 Tak near the Kenya-Italian Somaliland border has been abandoned by the Italians. 2. German air units are now operating from southern Italy and perhaps in Albania. Air attacks are claimed on British naval units in the straits of Sicily. Malta was bombed on the night of the 10th. The R.A.F. is continuing its attacks in Libya. Palermo, Sicily, was bombed on the night of the 10th. RESTRICTED 44A TREASURY DEPARTMENT INTER OFFICE COMMUNICATION the 1-11-41 date 0. DATE JAN 13 1941 TO meeting Secretary Morgenthau FROM Mr. Foley see also meet for the Diony of 11-13-41 There was a meeting in the Attorney General's office on January 11, 1941 attended by the following: Attorney General Jackson, Assistant Attorney General Arnold, Assistant Attorney General Shea, L. M. C. Smith of Justice, Mr. Berle of the State Department, Leon Henderson, Mr. Foley and Mr. Bernstein for the Treasury. Jackson stated that he had been designated by the President to head a committee to work out a program of economic defense. Jackson said he thought we ought first to try to do what we could under existing legislation and then consider new legislation. A discussion developed of the problems that needed handling. The point was particularly made that the Army and Navy and the Defense Commission group were seeking to get control of economic defense problems, that this was entirely undesirable from the point of view of progressive and liberal treatment of economic and non-military problems, and that in order to forestall this possibility it was necessary for other agencies of the Government to cooperate in a program to be presented to the President. A discussion arose as to the Executive Order which had been submitted by the Treasury. Mr. Henderson felt quite troubled at the proposed membership of the Economic Defense Board, particularly the presence of the Army and Navy and Office of Production Management thereon. He made some suggestions as to an organizational set-up for handling economic problems. Berle emphasized that the State Department was essentially only a policy making organization and would not wish to handle the administrative aspects of such an economic defense but urged that others should not seek to grab power for themselves. Jackson also stated he wished to keep Justice a law department and not burden it with administrative problems. Mr. Foley indicated that the Treasury was an organization set up to administer such problems and would be glad to serve in any such capacity as was desired. He also pointed out some of the aspects of the Executive Order and how the Department would function as an administrative body subject to the policies formulated by the Economic Defense Board. It was agreed to have a further meeting on Monday, January 13, 1941, at 2:30 p.m., at which time each person would come prepared to discuss what should be included or excluded from the Treasury's proposed Executive Order and what kind of organization should handle the policy and administrative problems. Copies of the Executive Order and memorandum from this Department to the President, explaining the Order, were distributed to the people attending the meeting. iN 7h. 465 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE January 11, 1941 TO Secretary Morgenthau CONFIDENTIAL FROM Mr. Cochran Registered sterling transactions of the reporting banks were as follows: Sold to commercial concerns Purchased from commercial concerns 19,000 16,000 The Federal Reserve Bank of New York purchased 11,800 in registered sterling from a non-reporting bank. Open market sterling was steady at 4.03-3/4. Transactions of the reporting banks were: Sold to commercial concerns Purchased from commercial concerns ( 12,000 -0- The Cuban peso, which improved to 7-11/16% discount during the first part of is week, weakened today to close at a discount of 8-1/16%. Closing quotations for the other currencies were: Canadian dollar Swiss franc Swedigh krona Reichamark Lira Argentine peso (free) Brazilian milreis (free) Mexican peso Chinese yuan 14% discount .2321 .2385 .4005 .0505 .2360 .0505 .2066 .05-5/8 There were no gold transactions consummated by us today. Under licenses previously issued, the Federal Reserve Bank of New York transfered from the account of the Central Bank of E1 Salvador gold valued at approximately $196,950 to account No. 6 of the B.I.S. This transfer raises the amount of gold in B.I.S. account No. 6 to approximately $647,750; gold in this account is owned by the Central Bank of E1 Salvador and is pledged to secure repayment of credits granted that Bank by the B.I.S. 466 The Federal Reserve Bank of New York reported that the Central Bank of 31 Salvador repaid $50,000 of the three-month loans previously made to it by the Federal. Upon repayment, the Federal transfered $54,290.50 worth of gold from the collateral account to the Salvadorean bank's own earmarked account. The amount of loans outstanding is now $772,000. secured by $864,545.02 in gold. The Federal Reserve Bank of New York reported that the Bank of Mexico shipped unknown at the present time. $404,000 in gold from Mexico to the Federal. The disposition of this shipment is Today's Bombay gold price was equivalent to $33.91, a decline of 5# from Fednesday's level. Silver was priced at the equivalent of 44.05 up 1/16 HMS CONFIDENTIAL 467 PARAPHRASE OF TELEGRAM RECEIVED FROM: DATE: NO.: American Legation, Stockholm, Sweden January 11, 1941, noon 26 RUSE According to the Riksbank Governor, there is much nervousness in Swedish financial circles because of a rumor which was circulated today that on Monday, January 13, the President of the United States would place a general embargo on assets in the United States belonging to Europeans. STERLING. EA:LNW 468 EH PLAIN Stockholm Dated January 11, 1941 Rec'd 11:20 p.m. Secretary of State, Washington. 25, Eleventh. Cost of living index December thirty-first 1940 POSE by SEVEN points to 204 which will automatically raise wages by four points under new master agreement. National debt rose during 1940 by 1854 to 4518 both million crowns. 200 new corporations registered during fourth quarter capitalized at 13,200,900 crowns. INFORM TREASURY, COMMERCE. STERLING NPL 1159 469 COPY TREASURY PLAIN EH Stockholm Dated January 11, 1941 Rec'd 11:42 p.m. Secretary of State, Washington. 26, Eleventh. 1941 ordinary session of Rikstag opened today. In speech from throne King made traditional statement that Sweden's relations with foreign powers were friendly and expressed hope that with support of united and determined people he would still be able to preserve peace and freedom. Purpose of country's economic policy was not only to satisfy needs of day but also safeguard sustenance of people in days to come by adjusting production and regulating consumption of raw material resources and other essentials. Measures had been planned to counteract unemployment. King forecast bills for provisional extention to full year of initial training period for conscripts pending plans for reorganization of entire defense system. Needs of national defense would continue to place heavy burdens on public in form of taxes and loans. National budget proposed by government for coming fiscal year lists current revenues at 2,082,000,000 crowns and current expenditures at 1,889,000,000 leaving nominal surplus of 193,000,000. This does not include extraordinary expenditures anticipated to combat unemployment which will be listed under two supplementary budgets to be laid before Rikstag later in session and which 470 -2will turn annual surplus fate I deficit Whister of Phone estisates that defense appropriations alme for caring fiscal year will to not less than 1,300,000,000 and - - Sha 1,800,000,000 - while ordinary operating buiget in this for 190-42 calls for 550,000,000 only. Actual deficit for cosing fiscal year estimated at between 500,000,000 and 1,000,000,000. Carresponding deficit for current fiscal 1 oniting June 30, 1941 estimated at 1,700,030,000. Total defense equilture for this year now estimated at 2,400,000,030. BEL 471 E GRAY Belgrade Dated January 11, 1941 Rec'd 2:38 P.M. Secretary of State, Washington. 17, January 11, 6 p.m. Department's telegram No. 2, January 6, 10 P.T. I took if the matter with the Prime Winister today who claimed to be ignorant regarding the CASE and suggested that I should SEE the Winister of Finance, who has promised to SEE THE tomorrow morning. Please telegraph the value of gold involved. LANE NE 472 EH GRAY Berlin Dated January 11, 1941 Rec'd 1:20 p.m. Secretary of State, Washington. 99, January 11, 10 a.m. (SECTION ONE). FOR TREASURY FROM HEATH. The issuance of the mint statement for the End of December 1940 makes possible an Estimate of the present circulation of cash money in Germany. The December Rentenbank statement is not yet available but since no new notes had been issued since June it can probably be assumed that none WERE issued in December. On this basis the net cash money circulation (gross coin and note circulation less Reichsbank holdings) was 16,694,000,000 marks on DECEMBER 31, 1940 compared with 15,541,000,000 marks on September 30, 1940 and 14,502,000,000 marks on DECEMBER 31, 1939. The individual items in million marks stood as follows: on DECEMBER 31, 1940 (compared with September 30, 1940 and DECEMBER 31, 1939): Reichsbank notes 14,033 (12,847; 11,798); Rentenbank notes 1,053 (1,056; 957); coins 1,726 gross 1,608 net (September 1,805 gross 473 EE -2- 99, January 11, 10 a.m. (SECTION ONE) from Berlin. gross 1,638 net; DECEMBER 1939 2,097 gross 1,747 net). It will be noted that there was a decrease of approximately 80,000,000 marks in gross coin circulation from September to DECEMBER 1940. This was due to the demonstization of nickel 50 pfennig pieces of which 107,000,000 marks WERE still in circulation on September 30. Nickel one mark pieces of which 419,000,000 marks had been in circulation on June 30, 1940 WERE withdrawn from circulation in the period between the June and September quarterly statements. It is not possible, however, to make a complete surVE of Germany's present monetary position without infornation as to the volume of demand deposits in German banks, the monthly report of which CEASED with the outbreak of war. However, sight deposits in the Reichsbank, a very important form of bank money, have shown a substantial increase during the year standing at 2,561,000,000 merks on December 31, 1940 compared with 2,018,000,000 marks a year Earlier. Adding this to the above figures total cash and bank money circulation (without commercial bank demand deposits) stood at 19,255,000,000 marks on December 31, 1940 compared with 16,520,000,000 marks on December 31, 1939. Undoubtedly, commercial bank deposits have also increased greatly during the war. Compared with a year ago there has also been a considerable increase in the velocity of the REichabank's sight deposits. MORRIS NPL 474 JR GRAY Berlin Undated Rec'd 12:30 p.m. January 11, 1941 Secretary of State, Washington. 99, (SECTION T30) Total clearings (in payments plus out-payments) of the Reichsbank giro system were 141 billion marks in September, 150 billion marks in October and 162 billion marks in November, 1940 (the latest figure available) compared with 116, 116 and 128 billion marks in the corresponding months of 1939. There had been SOME increase in sight deposits in the Rrichsbank but allowing for this total clearings WERE 88 times as great as the average of the sight deposits in the four weekly statements of the months in September, 1940, 90 times ES great in October 1940 and 95 in November 1940, as compared with 76, 83, and BE in the corresponding months of 1939. It should DE noted, hourver, that there had been a considerable decrease in velocity during the first months of the = since sight deposits had shown c greater relative increase than clearings. No information is available concerning the volume of clearings in the clearing systems of the commercial and savings banks 475 -2- #99, (SECTION THO) from Berlin. banks. Since the Reichsbank giro system is used chiefly for payments between banks, large firms, government agencies, Et ceters, the increase in its clearings probably reflects chiefly on increase in turnover in the financial SECTOR. It has frequently been pointed out in the press that the velocity of cash money has probably decreased since the beginning of the war. Although there has thus been a considerable currency Expansion in 1940 this can undoubtedly to C fairly considerable EXTENT be attributed to territorial expansion. The most important annexations occurred before 1940 but undoubtedly there have been substantial increases during 1940 in the currency circulation of Foland the Sudetenland, Danzig, Mamel, et ceters, as well CS in the territories ennexed in 1940 which would perticlly account for the considerable expension in currency circulation in the Reich. However, there has undoubtedly been = mild inflaticarry movement in prices CS well (SEE my air nnil memorcudum of January 7) since EVEN the official but doctored cost of living index rose by 3.5% from December 1939 to December 1940 and this takes no account of quality declines, ct CETERS. END MESSAGE. MORRIS INE 476 GRAY EE Berlin Dated January 11, 1941 Rec'd 4:28 p.m. Secretary of State, Washington. 120, January 11, 3 p.m. My 4941, December 7, 10 a.m. FOR TREASURY FROM HEATH. According to the statement of the Reich's short term debt at the End of October which has just been published the Rsich increased its short term borrowing during October by 1,960,000,000 marks to a total of 33,959,000,000 marks. Treasury bills and certificates issued increased by 1,758,000,000 marks to 27,913,000,000 marks, other short term loans (including the loan of the REichskreditkassen system to the Reich) increased by 202,000,000 marks to 1,715,000,000 marks, the Reich's operating credit from the Reichsbank increased by 4,000,000 to 630,000,000 marks and the amount of tax certificates outstanding decreased by 3,000,000 to 3,553,000,000 marks. The increase in short term debt in October was more than twice as great as in September when it was only 842,000,000 477 EH -2- 120, January 11, 3 D.M. from Berlin. 842,000,000 marks but less than that of the peak months of short term May, July and August. In September the increase in long term debt at 2,337,000,000 marks was very large but in all probability long term borrowing continued on a fairly large scale during October. In a speech recently made by Director of the Reichsbank Puhl,, be stated that close to 8,000,000,000 4% treasury bonds were issued during 1940 which means that almost 3,000,000,000 marks WERE issued during the last three months of the year months of THE year. The savings banks and insurance institutions in all probability also bought as usual a considerable amount of li-loans during October. The total increase in debt during October was therefore probably not under the monthly average of 3,200,000 marks borrowed during the preceding five months. MORRIS NK (COPY:FE:FRE) 478 CONFIDENTIAL PARAPERASE OF TELEGRAN DATED JANUARY 11, 4 P. X. FROM RANGOON. At Chungking next week B conference is to be held at which Chinese and British officials will attend. Burma will be represented by the Minister of Commerce and secretary, the Chief of Public Works in the Shan States, and the Counselor to the Governor. The Minister of Commerce is the only Burmese included. Also participating in the conference will be the British Ambassador to China. One of the important matters to be discussed will be the YunnanBurme railway, China pressing again for the construction of the Burns link. The Burne-Chinese boundary question will also come up for discussion, together with verious communication and trade questions, including traffic control on the Burma road and the construction of new highways and the improvement of others. As E consequence of damage done by the Japanese bombing of the old sussension bridge BCTOSS the Mekong river on the Burms road on January 2, 5 and 6 trans- shipment by reft is necessary. The new structure over the stream was also extensively damaged. CONFIDENTIAL. 15,534 tons of Government supplies were shipped by the Southwest Company from Lashio into China during the last two and one-half months of 1940. NE:CWL/GC 1/14/41 7450.93/7 479 BRITISH EMBASSY, WASHINGTON, D.C. PERSONAL AND SECRET. 11th January, 1941. 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, have Bother The Honourable Henry Morgenthau, Jr., United States Treasury, Washington, D. C. 480 Telegran from Leader dated 10th January, 1941. Naval. British destroyers on December 26th sank one, on December 29th captured another. and on December 31st. captured two more motor schoolers being employed by Italians running through to Bardia from Tobruk by night. 2. Enemy formation of bombags made several unsuccess- ful attacks on British units at Sallum at dusk and dawn during operations. One torpeds-bember believed shot down. 3. Position of our own troops procluded further bombardment of Bardia after 16.00 January 3rd. 4. Coastal Command attached Hipper Class cruiser in Breat evening of January 9th made two hits on her. and two on adjacent docks and the Tele. 5. During the week ending January 4th, 636,081 tons of imports arrived in convey is United Kingdom, including large quantities of aeroplanes, machine tools and aunitions from Canada and united states and nearly 8,000 tons of . 6. During the month of December 2,483 tons cargo destined for enemy were seised in prise. 7. Royal Air Force. sight of January a/ms. Attack on Saples was successful. A stick of bonite dropped across the store of Litterie class battleship was followed by dull red glow. Hits were registered on quays, in dry dock area / and 481 and amongst merchant vessels. Many bombs fell the railway station and a Easoneter was set - fire. 8. sighs of January 9th/10th. Two hundred business were sent out, of which 136 heavy and medium were to attack oil plants at Gelsenkirchen. Petroleum dayet at Rotterdam also attacked. 9. Libya. January Stib. 8 Elenheims and several attacked a transport convey near Giarabub and caused considerable damage. Amount car patrols are expected to have captured the remainder of the convey. Hurricanes also landing grounds where two Italian bembers were destroyed and eleven others damaged. was attached by Elembians. Details not yet smilable. 10. Gersea sir Fares. January 9th. Our fighter command carried sun exclusive offensive operations over the Straits, aquadrons posstrated the French Coast at Boulagne without encountering emany aircraft. Sight of January 9th/10th. Enewy activity was on a large scale. about 310 aircraft being platted all over the country and it is difficult to assess the saits objectives - numerous fires were started but they were all quickly under control and no serious military was reported. CONFIDENTIAL Paraphrase of Code Indiagram Received at the We Degartment at 16:15, January 12, 1981 482 Balgrade, filed 18:30, January 11, 1941. I have been informed that transit through Hungary to Euroxia for 1500 treep trains has been requested by Germany. This information obtained from Bulgarian military attache who received it from German military attache who returned from Borlin a short time age. The Tageslav 6-2 has raised his estimate to 189,000 of Service troops in Immaia. PORTIER Matrilutions Secretary of War Shake Department Secretary of Treasury lett. Secretary of (did of Staff Mar Plane Division office of Fiscal Intelligence CONFIDENTIAL CONFIDENTIAL Paraphrase of Code Radiogram Received at the War Department 483 at 12:56, January 12, 1941 London, filed 14:25, January 12, 1941. 1. On Friday, January 10, and during the following night planes of the British Coastal Command attached earge beats and neval write in part. Results are miknown. During the night of January 10-11 coopied parts along the northwest coast of France were basicod with wobserved results by planes of the Bember Can mand. As yet there is no official information concerning the damage done by the heavy British attack during daylight hours of January 10. 2. There was no reported damage from the minor German raids against Britain on January 11. In the early evening of January 11-12 London was severely attacked by 114 German bembers. There were same casualties and considerable damage from high - pleatve basis in the residential district in the West End of London. Several severe fires were started in the business district. Build ings where fire watchers were on duty ever the week-and were hit by incontiary bumbe but suffered no damage from fires. Those buildings which had been practically deserted for the week-end and in which no fire were on duty were the ones which were burned. This was equally true in connection with the German incendiary attack London during the night of December 29-30. The habit of leaving the central City deserted over the webbears is beeening a eastly Immey - the Government will probably take same action with - gard to it. 3. In the Middle Eastern theater British airplanes engaged CONFIDENTIAL 484 CONFIDENTIAL in usual operations. LINE a Matributions Secretary of Mar State Department Secretary of Transacy A Secretary of Yes Skief of Staff War Please Minister office of Real AS 2 G-S, 1 s CONFIDENTIAL