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DIARY
Book 384
March 20 - 31, 1941
P<<<
A
Book
Allieoz Regiseering Company
See Was Conditions: Airplanes (Ingines)
American Bankers' Association
See Financing, Government
Appointments and Resignations
O'Dunne, Bugene: Forrestal (Havy) wants O'Dunne
Page
transferred so that he may familiarize himself
with Havy contracts and procedure in connection
with Truman investigation of defense contracts 3/30/41
384
34
-BBelgium
See War Conditions: Foreign Funds Control
Bolivia
See Latin America
Brasil
See Latin America
-CCanada
See War Conditions
Colombia
See Latin America
Costs Rica
See Latin America
-DDefense National
Air Corps situation now improved: Lovett (Special
Assistant to Secretary of War) memorandum 3/24/41
243
Defense Savings Bonds, United States
See Financing, Government
Donovan, William J. (Colonel)
See War Conditions: Lend-Lease
--Financing, Government
Defense Savings Bonds, United States:
American Bankers' Association guarantees support
of nation's banks - 3/20/41
Edwards' presentation of program in Louisville to
be checked by Barth - 3/20/41
HMJr suggests to Graves that (1) on May 1st
postmasters sell every Governor or Mayor either
stamp or bond, and (2) Houghteling be associated
with program - 3/24/41
7,141,252
12
257
- F - (Continued)
Financing, Government (Continued)
Book Page
Tenders invited for $100 million 91-day Treasury
bills to be issued on discount basis rader
competitive bidding: to be dated March 26, 1941,
and to mature June 25, 1941 - 3/21/41
Tenders invited for $100 million 91-day Treasury
bills to be issued on discount basis under
competitive bidding; to be dated April 2, 1941,
and to mature July 2, 1941 - 3/28/41
384
139
301
France
See War Conditions
-GGold
See Latin America: Brasil
Grain
See War Conditions: Foreign Funds Control
Greece
See War Conditions: Airplanes
Guatemala
See Latin America
Gulick, Lather
See Revenue Revision
-HHonduras
See Latin America
-IItaly
See War Conditions: Shipping (sabotage)
-Japan
See War Conditions
Johnson, Enoch ("Wucky")
See Tax Evasion
-LLatin America
Bolivia:
Axis Influence: Kamarck memorandum - 3/25/41
Brazil:
Gold: United States selling Bank of Brazil $12
million of gold - proceeds of transfer from
Yugoslav account - 3/20/41
212
26
- L - (Continued)
Latin America (Continued)
Book Page
Colombia:
Axis Influence: Kamarck memorandum - 3/25/41..
384
213
Costa Rica:
Axis Influence: Kamarck memorandum - 3/27/41..
291
Axis Influence: Kamarck memorandum - 3/24/41..
186
Axis Influence: Kamarck memorandum - 3/26/41..
236
Axis Influence: Kamarck memorandum - 3/27/41..
293
Ecuacor:
Guatemala:
Honduras:
Mexico:
Negotiations reported by State Department to be
well along and Treasury asked whether
exploration of possibilities of some monetary
arrangements are now in order - 3/20/41
a) HMJr's letter to Welles agreeing to
discussions "with special reference to
stabilization and silver" - 3/20/41
22
75.76
Panama:
Axis Influence: Kamarck memorandum - 3/27/41
294
Peru:
Axis Influence: Kamarck memorandum - 3/25/41
-MMexico
See Latin America
-NNorway
See War Conditions: Foreign Funds Control
Nova Scotia
See War Conditions: Canada
-0O'Dunne, Eugene
See Appointments and Resignations
-PPanama
See Latin America
Peru
See Latin America
215
-RBook
Page
Revenue Revision
Doughton assured by HMJr repeated stories that
Treasury writes all tax bills do not originate
in Treasury itself - 3/20/41
384
37
a) Sullivan tells HMJr of Doughton's
disturbance.
29
Gulick, Luther: Financing of project again
discussed by HMJr, Sullivan, etc. - 3/20/41
27
-SShipping
See War Conditions
-TTax Evasion
Johnson, Enoch ("Nucky") - Atlantic City, New Jersey:
Case discussed by Biddle and HMJr - 3/20/41
Tax Research, Division of
Report of projecta during March 1941
41
385
Training in Industry Programs
Resume' of agencies sponsoring - Bell memorandum 10
3/20/41
-UUnited Kingdom
See War Conditions: Military Planning: Purchasing
Mission (imports)
-W-
War Conditions
Airplanes:
Air Corps situation now improved: Lovett (Special
Assistant to Secretary of War) memorandum 3/24/41
Engines: Allison Engineering Company shipments 3/31/41
Greece: FDR approved transfer of thirty Grumman
planes from British to Greece - 3/29/41
Shipments to United Kingdom, etc. - 3/24/41
243
404,405
333
282
Canada:
Halifax, Nova Scotia: Visit of certain officers
to - papers concerning - 3/20/41
54
- W - (Continued)
War Conditions (Continued)
Exchange market resume' - 3/20/41, etc
Book Page
384
77.159.185.203
217.258.289.304
324,401
Export Control:
Exporte of petroleum products, scrap iron, and
scrap steel from United States to Japan,
Russia, Spain, and Great Britain, weeks ending
March 22, 1941, and March 29, 1941
Foreign Funds Control:
Grain purchases for distribution and consumption
in Belgium for shipment to Norway, etc.,
205,403
discussed in Treasury letter to State
France:
Department - 3/21/41
162
Free French: British Government's agreements
providing for credits necessary for financing
war effort and financial relations and foreign
exchange questions between British Empire and
territories of French Empire which refused to
accept armistice - American Embassy, London,
Gold:
report - 3/20/41
4,297
United States selling Bank of Brazil $12 million
of gold - proceeds of transfer from Yugoslav
account - 3/20/41
26
Japan:
Deliberate intention to let assets in United
States decline: gold shipments to United States
being reduced - 3/21/41.
150
Lend-Lease:
Donovan (Colonel William J.) apparently taking
over; HMJr praises highly to Treasury group 24
3/20/41
Barth resume' of editorials - 3/21/41
Appropriation bill passed by Senate, 67-9 3/24/41
a) FDR's signature delayed by poor flying
weather - 3/26/41
b) Bill signed - 3/27/41
British needs for road building equipment,
agricultural implements, etc: War Department
suggests that Procurement Division handle 3/25/41
a) General Counsel's office decides this
is permissible - 3/28/41
b) Treasury's answer - 4/1/41:
142,341
207
238
281
210
313
See Book 385, page 37
c) Copy of War Department memorandum on
existing "deplorable situation" -
4/1/41: Book 385, page 49
Supply Division - operations of
a) Young memorandum to Burns - 3/29/41
.
.
b)
Currie - 3/29/41
329
328
- W - (Continued)
Book
Page
War Conditions (Continued)
Military Planning:
War Department bulletins:
"Account of operations between May 10 and
armistice at Compiegne" - 3/20/41
Mustard Gas: German intention to employ
384
increasingly indicated - 3/21/41
German Air Force: British estimate of present
strength and disposition in Middle Eastern
theatres - 3/28/41
79
136
320
"New Types of German Armored Divisions" 3/31/41
412
Report from London transmitted by Lothian 3/31/41
406
Ordnance:
Federal Loan Agency Administrator Jones agrees
that War Department be not limited to various
estimated costs ***** provided total cost of
articles to be manufactured does not exceed
total cost set forth in list provided
1/25/41 (3/19/41)
288
Purchasing Mission:
British Financial Position:
Cumberland Gap National Historical Park:
Peacock asks for further information as to
English syndicate owning land and promises
cooperation - 3/26/41
Federal Reserve Bank of New York statement
showing dollar disbursements, weeks ending
March 12, 1941, and March 19, 1941
Imports in convoy into United Kingdom exceeded
296
164,306
one million tons for the first time since the
beginning of August, 1940; goal is 3.58 million
tons per month - 3/22/41
Vesting order sales - 3/24/41
Insurance Companies: Valuation of fire, marine,
and casualty - 3/25/41
173,174
206
219
Shipping:
British Purchasing Commission reports on present
handling of trans-Atlantic cargoes
a) Coast Guard shown reports - 3/21/41
Sabotage on Italian ships discussed by HMJr
(in Arizona) and Gaston - 3/31/41
a) FDR approves "taking of ships as
recommended by Acting Secretary of
Treasury with concurrence of State
and Navy"
Wheat
See War Conditions: Foreign Funds Control
152
364
371
1
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE March 20, 1941
TO
FROM
Secretary Morgenthau
Mr. Cochran
STRICTLY CONFIDENTIAL
When Mr. Pinsent, Financial Counselor of the British Embassy, called at the
Treasury at 11 o'clock yesterday forenoon he showed me in confidence a cablegram
which he had just received from London. It was to the effect that the British were
planning to sell to us $125,000,000 of gold at a South African port. Part of this
gold was in Durban and part in Capetown, but the port of embarkation was indicated
as the same port at which an American cruiser called some weeks ago. (I asked
Mr. Pinsent to be sure that all of this gold was assembled there 80 that there would
be no need to call at more than one port.) Furthermore, the message indicated
$105,000,000 of the gold was "switched" and that $20,000,000 of it actually belonged
to the British. (Pinsent explained to me that the $105,000,000 was being switched
against Belgian gold borrowed in Canada.) The French will thus acquire earmarked
itle to gold which the British borrowed from the Belgians in Canada. We shall thus
be buying the total $125,000,000 of gold directly from the British.
Shortly after Mr. Pinsent's visit I talked, at 12:10 p.m. yesterday. with
Ammral Noyes. He had received from his man in London the same word to the effect
that the cargo would contain $125,000,000 of gold. His message from London also made
ertain inquiry in regard to the fuel which is desired at the South African port. He
replying directly on this latter subject. I repeated to him the message which
insent had given me, as above set forth, and told the Admiral that I had insisted
8
o Pinsent that all of the cargo be assembled at the one port.
B.M.P.
2
British Embassy,
Washington, D. C.
March 20th, 1941.
Dear Cochran,
With reference to my letter of March
3rd regarding the basis of composition of the lists
of securities believed to have fallen into enemy hands,
I enclose a copy of the circular to banks and bankers
of the 28th of June, 1940, to which I referred.
Yours sincerely,
(s) R. J. Stopford
Mr. Merle Cochran,
Room 279,
U.S. Treasury Department,
Washington, D. C.
Duplicate to Mr. Pehle 3/24/41
3
NOTICE TO BANKS AND BANKERS
The Treasury have given notice that it is proposed to
compile a list of numbers of bearer securities which there is
reason to believe may have fallen into enemy hands. The list
is being compiled by the Securities Control Office, Bank of
England, E.C. 2, and full particulars, including names and addresses of beneficial owners, place of deposit, definitive numbers and denominations of such securities, should be forwarded
to the Principal of that Office without delay:
(a) In the case of securities issued in the United Kingdom
through the medium of the Company's Secretary or
paying Agent in this country, and
(b) In the case of securities issued abroad through the
medium of a Bank in the United Kingdom.
Bankers in many cases may be aware of the numbers of the
bonds or warrants from which coupons have previously been sent
to them for collection by persons residing in territory now
occupied by the enemy. If they have no reason to suppose that
the relative securities were removed from that country before
the enemy occuried it, full details of the relative securities
should be advised.
Purely domestic securities of enemy occupied territory
or securities for which there is no market in the United Kingdom
should, however, not be advised; neither should securities held
on account of persons residing in enemy occupied territory which
are physically held in the United Kingdom.
Bank of England,
28th June, 1940.
Copy:b
4
PLAIN
GMW
London
Dated March 20, 1941
Rec'd 2:15 p.m.
Secretary of State,
Washington.
1099, Twentieth.
FOR TREASURY FROM BUTTERWORTH.
The following press release appeared in this morning's
London newspapers describing the British Government's
agreements just signed with the Council of DEfEnSE of the
French Empire:
"The British Government has signed with General DE
Gaulle and the Council of DEfEnSE of the French Empire two
important agreements, which are animated with the same
spirit of friendly collaboration as the financial agreement
concluded with the French Government at the beginning of
the war.
"The first agreement provides for the credits NECES-
sary for financing the war Effort of the Free French.
"The second deals with the financial relations and
foreign Exchange questions between the British Empire and
the territories of the French Empire which refused to
accept the Armistice.
"In particular,
5
-2- 1099, Twentieth from London
"In particular, it fixes the rate of Exchange between
the French Colonial franc and the pound sterling at
176.625 which was the parity of the franc against the pound
before the armistice.
"Each colony of the Free French Empire can freely
dispose of the foreign Exchange proceeds of its Exports
and gold production, under the control of the Council of
DEfEnSE of the French Empire, which if necessary may USE
the surplus Exchange resources of one colony in order to
meet the deficit of another for the needs of the Free
French forces as a whole and in the common cause of the
Allies.
"The arrangement is complementary to the Economic
agreements which have been signed recently or are about
to be signed and which SECURE for the produce of the Free
French colonies the market which it has lacked since the
loss of the French metropolitan market.
"It also gives these colonies ACCESS to the supply
facilities which are available to the British Empire, thus
enabling them to devote all their Efforts to participation
in the war, not only in a military but also in an Economic
sphere."
WINANT
HTM
6
TREASURY DEPARTMENT
Washington
Fress Service
FOR RELEASE, MORNING NEWSPAPERS,
No. 24-10
Thursday, March 20, 1941.
3/19/41
Secretary of the Treasury Morgenthau announced last night that
the subscription books for the receipt of cash subscriptions to the
current offering of $500,000,000, or thereabouts, of 2-1/2 percent
Treasury Bonds of 1952-54 closed at the close of business Wednesday,
March 19, except for the receipt of subscriptions for amounts up
to and including $5,000 where the subscribers specify that delivery
be made in registered bonds 90 days after the issue date. The sub-
scription books will be closed for the receipt of subscriptions of
that class at the close of business tonight, March 20.
The subscription books for the Treasury Bonds of 1952-54 and
for the Treasury Notes of Series D-1943 for the receipt of subscriptions in payment of which Treasury Notes of Series B-1941,
maturing June 15, 1941, are tendered, will close at the close of
business tonight, March 20.
Subscriptions of any class addressed to a Federal Reserve Bank
or Branch or to the Treasury Department and placed in the mail before
12 o'clock midnight of the respective closing days will be considered
as having been entered before the close of the subscription cocks.
Announcement of the amount of subscriptions and the basis of
allotment will probably be made on Monday, March 24.
-000-
MAR 20 1941
HOUSTON ON DEFENSE FINANCING
LOUISVILLE KY - A P - THE NATION-S 15 000
BANKS WILL SUPPORT FULLY THE GOVERNMENT-S PLANS
FOR NATIONAL DEFENSE FINANCING P D HOUSTON
PRESIDENT OF THE AMERICAN BANKERS ASSOCIATION
SAID TODAY IN AN ADDRESS BEFORE AN A B A
REGIONAL CONFERENCE
HOUSTON SAID THE BANKS WERE PLACING THEIR
SERVICES AT THE DISPOSAL OF THE TREASURY
DEPARTMENT BY OFFERING AID IN MOBILIZING THE
NATION-S FINANCIAL STRENGTH AND IN
DISTRIBUTING THE TREASURY-S NEW DEFENSE SAVING
SECURITIES
-IN FINANCING A STUPENDOUS PROGRAM LIKE
THIS -NATIONAL DEFENSE- THE GOVERNMENT MUST
DO MORE THAN FIND DOLLARS- HE CONTINUED -
-IT MUST FIND THEM IN SUCH A WAY AS TO
SAFEGUARD THIS COUNTRY AGAINST X X X INFLATION
- IT MUST DRAW UPON THE X X X ACCUMULATED
SAVINGS OF THE PEOPLE AND SPREAD THE FINANCING
X X X - IT MUST FIND THE DOLLARS IN SUCH A
WAY THAT MILLIONS OF AMERICAN CITIZENS WILL
HAVE A SENSE OF PARTICIPATING IN THE DEFENSE
OF OUR COUNTRY-
-0-
8
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE March 20, 1941
TO
Secretary Morgenthau
FROM W. H. Hadley
Movement of High Grade Corporate Bonds
The market for high grade issues in the immediate vicinity of
the new 2 1/2% taxable 11=13 year Treasury bond experienced a con-
siderable revision downward in price during the last two days to
bring yields more in line with this 2.50% coupon rate. Although
trading activity in such corporate issues was rather limited, as has
been true in the past, yields were variously increased from 0.12 to
0.25% above those existing on the day before the Treasury offering.
This change may be the forerunner of a general revision of high grade
corporate rates upward, although there is some feeling that the
scarcity value of many of these issues may tend to keep prices
relatively stable. Nevertheless, as of the close of business today
yields on highest grade corporate issues in the 1951- 1954 range
averaged about 2.42% as compared wi th 2.26% on March 18th. The yield
on the new Treasury 2 1/2% bond closed at 2.37% tonight.
The following table indicates changes in price and yield of
selected high grade corporates in the 1951 - 1954 area between
March 18 and March 20.
HIGH GRADE CORPORATES
1951 - 1954 Maturities
tal
March 19
March 18
Maturity
Bid
2.36
98 1/4
Coupon
Bid
2 1/4%
99 3/8
2.32
126 1/2
2.15
126 1/2
2.15
97 1/4
2.30
96 1/4
2.40
104 3/8
2.33
Issue
1951
Beneficial Ind. Loan
1951
Liggett & Myers
1952
Ches. & Ohio Serial
1953
Standard 011 of N. J.
2 3/4
105 1/8
2.26
1954
Shell Union Oil
2 1/2
96 5/8
2.81
5
2
Bid
99
March 20
Yield
Yield
Yield
96 1/4 2.85
Yield
Chg.
2.45
+0.13
123
2.40
+0.25
96
2.42
+0.12
2.41
+0.15
2.87
+0.06
103 1/2
96
9
10
THE UNDER SECRETARY OF THE TREASURY
WASHINGTON
March 20, 1941
TO THE SECRETARY:
your memo March 19th
The following agencies are spending money to train men and women
in industry. Some of the programs involve direct spending for training
by Federal agencies, such as the National Youth Administration and
certain projects sponsored by the Works Project Administration; other
programs are indirect, such as the Civilian Conservation Corps which
to some extent involves the training of workers; and other programs
are carried out by grants to States, for expenditures through State
Colleges, schools, etc.
Appropriations
for 1941
Estimates of
Appropriations
for 1942
Federal Security Agency
Civilian Conservation Corps
Expenditures for all purposes,
$279,994,900
$270,000,000
including salaries, food,
clothing, project supplies, etc.
National Youth Administration
Youth work and student
aid programs
Defense activities
Office of Education
Promotion of vocational education
Grants to States for annual program under Act of 2/23/17
Further development of
vocational education
Grants to States for annual program under Act of 6/8/36
95,984,000
22,500,000 1
30,535,375
95,984,000
100,000,000 2
7,000,000
7,000,000
13,150,000
13,500,000
1 Supplemental estimate submitted Feb. 18, 1941.
amountoftothe
thisBudget
figure.advises that supplemental 1942 estimates may
Bureau
2
11
-2Appropriations
for 1941
Estimates of
Appropriations
for 1942
Office of Education (Cont.)
Vocational Education, Defense
Workers
Grants to States
Educational and Training,
15,000,000
Defense Workers
Grants to States
26,000,000
Purchase of Equipment
Grants to States
Cost of short engineering course
of college grade
Grants to States
Cost of instruction for out-ofschool rural youth, etc.
Grants to States
Cost of instruction of National
8,000,000
9,000,000
employees
Social Security Board
Selecting, testing and placement
of defense workers
Federal Works Agency
100,000,000 3
10,000,000
Youth Administration project
Grants to States
-
7,500,000
-
2,000,000
Project
Limitation
Works Projects Administration
Direct projects:
Nation-wide project to train
persons for manual occupations
in industries engaged in production for national defense
27,603,020
29,000,000
4
Connecticut-to operate a pro-
duction and training project to
engage in the making of certain
crafts
201,218
Nation-wide project to furnish
trainees and train needy persons
in the manual occupation of aviation ground service men, etc.
1,429,690
$555,898,203
615,484,000
3 Bureau of the Budget advises that supplemental 1942 estimates may
amount to this figure.
This assumes a similar allotment out of 1942 funds when made available.
12
March 20, 1941
Fordinand Kuhn
Secretary Morgenthau
Please send Alan Barth down to Louisville right away
so he can see what kind of a reception Marion Edwards gets
when he presents our savings bond plan; also how good a
public speaker he is and how he conducts himself generally.
13
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
March 20, 1941.
Secretary Morgenthau
Mr. Kuhn
Mr. Barth is going to Louisville tonight
with Mr. Gale Johnston.
F.K.
14
March 20, 1941
2:30 p.m.
GROUP MEETING
Present:
Mr. Graves
Mr. Thompson
Mr. Sullivan
Mr. Young
Mr. Pehle
Mr. Gaston
Mr. Kuhn
Mr. Haas
Mr. Foley
Mr. Schwarz
Mrs. Klotz
Mr. Bell
Mr. Cochran
Mr. White
H.M.Jr:
This is good, once in awhile, to have a
2:30 meeting and see who is back from
lunch.
Thompson:
The Undersecretary and Harry White and
Cochran aren't back yet.
H.M.Jr:
You see them come in with their chins
covered with soup.
Norman, I didn't sign that order because
I didn't have a chance to read it. I
don't know what you are trying to put over
on me.
15
-2Thompson:
Just those two things.
H.M.Jr:
Well, will anything happen if I don't sign
them?
Thompson:
Oh no.
H.M.Jr:
I think we had better wait, but I want to
talk to you about that. What else?
Thompson:
That will be all right.
H.M.Jr:
What else?
Thompson:
I have three or four new allocations on
H.M.Jr:
How much extra does this give him?
Thompson:
That is a full grade reallocation, thirtytwo to thirty-eight.
All right on that. Where do I sign this?
H.M.Jr:
Thompson:
H.M.Jr:
this authorization thing.
Right here. That is all I have.
Harold, did that go over all right this
morning?
Graves:
Just fine.
(Mr. White entered the conference.)
H.M.Jr:
Very well indeed. (Laughter)
White:
Just missed the last spoonful.
H.M.Jr:
Or the last glassful. Perlmeter made a -(Laughter)
(Mr. Cochran entered the conference.)
16
-3H.M.Jr:
I didn't do this on purpose, pulling everybody out of the two hour lunch club. I am
sorry. Wait until - we will give Bell the
razzberry.
Thank Perlemeter for his suggestion, will
you?
Graves:
Yes.
H.M.Jr:
What else?
Graves:
I have nothing.
(Mr. Bell entered the conference.)
H.M.Jr:
Good afternoon, Mr. Bell.
Bell:
Good afternoon.
White:
He is chairman of the three hour lunch club.
Bell:
It was a good lunch, anyhow. (Laughter)
Sullivan:
The service is getting terrible in these
Bell:
No service at all.
H.M.Jr:
All right, Harold?
Graves:
Yes.
H.M.Jr:
The real purpose of this meeting was, I
restaurants.
wanted to know whether anybody in the 9:30
staff has a cellar that stays at fifty
degrees temperature where I could store
my wine. Has anybody got a piece of cellar
in their house?
Sullivan:
How big a cellar do you need?
17
-4White:
Do you keep an inventory?
H.M.Jr:
About the size of the washroom.
Sullivan:
I have got it.
H.M.Jr:
Have you really?
Sullivan:
Just about. I think. I have never measured
H.M.Jr:
it.
No stove? Do you know what the temperature
is?
Sullivan:
No, but it is in the southeastern corner
of the cellar. (Laughter) I should think
it would be cool down there. It is walled
off. I can lock it and give you the key,
and then they will never know who took
that bottle.
H.M.Jr:
Well, we will just see, you know. Have you
any idea what the temperature is?
Sullivan:
No. I will take it for you.
H.M.Jr:
Would you?
Sullivan:
Sure.
H.M.Jr:
This would be a good time to take it.
Sullivan:
What about the sun?
H.M.Jr:
Is it fairly deep in the ground? This is
important.
Sullivan:
It is about eleven and a half feet.
White:
Can't you build one in there?
-
18
-5H.M.Jr:
Take a look at it, will you, and if you
think it is a good place - what are the
walls, are they stone?
Sullivan:
White:
Stone, and then this part is cut off.
What is the matter with some of the vaults
downstairs if they don't have gold in them
any more?
H.M.Jr:
We have been all through those. We have
explored the Treasury.
Gaston:
They are heated, aren't they?
Bell:
I don't think so.
H.M.Jr:
Anybody else got any offers?
Sullivan:
You asked me if I think it would be 52
H.M.Jr:
Yes. Would it go up to 60?
I don't know.
Sullivan:
in the summer time?
White:
How are you going to take the temperature
in the summer time, John?
Bell:
Turn on the heat.
Sullivan:
The way you do that, Harry, is wait until
H.M.Jr:
Take a look at it, will you, and if it is
summer and then take it.
all right, would you tell Mrs. Klotz and I
will move my few wine cases up there. I had
it at a place where the man said it was air
conditioned, fifty degrees the year around,
and the boy went up there and looked at it
and it was hotter than my celler. My cellar
has no place where I can keep it.
19
-6Sullivan:
I will take a peek tonight.
H.M.Jr:
Thank you.
Thompson:
The sun shines in the windows in mine.
H.M.Jr:
All right. That is settled.
Bell?
Bell:
Mr. Eccles called up and he said he had
authority from his executive committee to
spend fifty million.
H.M.Jr:
Wonderful.
Bell:
He
could get another fifty million if you
needed it.
H.M.Jr:
Wonderful.
Bell:
I think I ought to mention that both the
Federal Reserve and the FDIC have somehow
or other gotten onto the fact that we are
going to circularize the banks and are
asking for information concerning the
holding of the securities. Eccles wants
the Federal Reserve Banks to do that job
in each district, and FDIC are not so sure
they would like to do it, but they would
like to help and either get the information
from us or have us get it from them. George
is inclined to go ahead on his program.
H.M.Jr:
Which way is George going?
Bell:
He is going to get it himself and process
it here in the Treasury, but I thought they
might mention it to you some time.
H.M.Jr:
How do you feel?
20
-7Bell:
Oh, I don't have much feeling on it. George,
I think, has got a good point. This is something new and he wants to experiment with
it in different ways, the size of the banks,
the size of the communities, and he probably
could do a better job by experimenting here
where he could look at it than having it
done in the districts by a similar organization.
H.M.Jr:
I am for George doing it. Let George do it.
Bell:
O.K.
H.M.Jr:
Got anything else?
Bell:
I would like to have a minute if I could,
some time.
H.M.Jr:
Sure. One other thing. This thing that I didn't read it. This thing that Jerome
Frank sent over, is that control of the
finances, private finances.
Bell:
Somewhat along that line, yes.
It is about the same thing as a capital
issues committee. I didn't read the executive
order.
H.M.Jr:
Is there an executive order?
Bell:
There is a draft of an executive order attached.
H.M.Jr:
What I was thinking was this. Don't you
think we had better get a letter off to
the President saying that before he signs
anything like this we would like to have
a talk with him?
Bell:
Oh, I didn't understand that it was sent to
the President. I think he wanted your comment
before it goes.
21
-8H.M.Jr:
Well, I just wonder if he hasn't sent it
Foley:
He made a speech at the War College, and
to the President.
he developed financing for defense and this
was about a year ago.
Now, I think they have asked him to go
further and make more concrete his suggestions
and that is his memorandum and the document.
Bell:
Doesn't he say in the last paragraph --
H.M.Jr:
Yes, memorandum for the President, control
Bell:
These are all drafts, I am sure.
H.M.Jr:
Well, the easiest thing is to find out.
I will make you a little bet of five to
one he sent it to the President.
White:
Well, he indicates in the letter that he
isn't going to do anything until he hears
of capital funds.
from you.
Foley:
That is right. He said this to the War
Bell:
Well, we will get in touch with him anyhow.
College.
I thought we might take a look at it while
you are away.
H.M.Jr:
He says, "proposed memorandum to the President."
I still make a little bet it is gone. But
gents, if it has gone to the President,
send a block signal to the President not to
do anything until he talks to us, will you,
please?
Bell:
Yes, sir.
22
-9H.M.Jr:
Harold, everything in order? You know,
we had a funny situation this morning,
Harry. Normally when the press boys ask
me twice a week what we are doing with
China, I always say to see the Undersecretary,
but he was sitting here this morning so I
couldn't say it, so I said, "See Harry White."
White:
Fine. I will fix it. (Laughter)
H.M.Jr:
Anything else?
White:
You got a letter from Welles last night
which indicates that the negotiations with
Mexico are much further along than we had
thought, and they are asking whether the
Treasury is prepared to explore the possibilities of some monetary arrangements,
et cetera. I have drafted a letter which
won't be -H.M.Jr:
I want to congratulate you and Mr. Foley
on the successful seeds that you sowed on
the beaches of Mexico and it comes back,
you see, like manna from the sea, and here
we are right on our way.
White:
It didn't take long. I think that we earned
our transportation.
H.M.Jr:
I think so. (Laughter)
White:
We have to collect from Mexico, though. We
weren't sure whether we were working for the
United States or Mexico.
H.M.Jr:
Well, you see now. You will keep Mr. Welles
in order while I am gone?
White:
Well, the draft of the letter would indicate
that you are prepared to explore it at the
appropriate time.
23
- 10 H.M.Jr:
That doesn't answer my question. Will you
White:
I will keep him just as much in order as
H.M.Jr:
Including Mussolini. George?
Haas:
I have nothing.
H.M.Jr:
Philip, what you want to say, can you say
keep Mr. Welles in order?
anybody else has ever kept him. (Laughter)
it semi-publicly or does it have to be
whispered in my ear?
Young:
Oh no, it can be quite public, I think.
Last night you said you were considering
the possibility of sending a letter to the
Secretary of State with respect to this
transfer of foreign purchasing. I wrote
up a draft. I don't know whether you
still want to send it or not.
H.M.Jr:
Well, as far as I am concerned, it is not
necessary. It is a question of how you
feel.
Young:
Well, certainly the State Department hasn't
had any official notification, so far as I
know, and all these fellows are going to
turn up over there.
H.M.Jr:
Well then, after this meeting, if you and
Foley and Cochran could get together,
whenever the letter is ready, let me know.
Now, in the room here, something has happ
which couldn't happen, I don't think, any-
where else but Washington. Maybe it could
happen somewhere else, I don't know. But
as of last night, certainly, in talking with
Young and Cox, Hopkins left his work amongst
24
- 11 -
five or six people. That is about right,
isn't it?
Young:
H.M.Jr:
Yes, that is right.
And that is the way Purvis said, who I saw
at lunch, he understood it, and Purvis was
just amazed when I told him that Colonel
Donovan was taking over. So I got back
to thinking, and so he said, "Well, all
you must have done was to hypnotize him,
because when I talked to him last night he
had certainly no idea of taking over." So
maybe I sold him instead of his selling me,
but Purvis said Donovan had no idea last
night he was to do all of this.
Young:
Well, I understood Donovan to say this
morning he was just taking over on this
Middle Eastern list which he had, not on
the broader problem.
H.M.Jr:
I think he is taking over on the whole thing
for Hopkins.
Young:
I didn't get that impression at all this
morning.
H.M.Jr:
Didn't you? No? Well, we will see, anyway.
Young:
No, I haven't heard anything.
H.M.Jr:
Neither have I.
Foley:
Well, Oscar said he left everything with
H.M.Jr:
Well, certainly when Donovan left here, I
gathered from him that the matter is entirely
in his hands, and I called my people in and
You haven't heard from him further?
Burns.
25
- 12 -
said to give him all the help they could.
He is the first man I have talked to that
I would be willing to really back. I saw
what he did last summer. But what I said
still holds true. Anything you can do to
help him, because he certainly is - he has
been for a week actually in the trenches
up in Albania. He was down in Libya when
they took that last town, whatever the last
town was. He was with Wavell for over a
week. He was with Eden in Cairo. He has
been twice in England. He has been in
Spain and he has been in Portugal. I think
he knows more about the situation than anybody I have talked to by about a thousand
per cent. And he is not discouraged.
White:
That is all good preparation for Washington.
(Laughter)
H.M.Jr:
What do you mean, Harry?
White:
I mean, he ought to be at home in all the
fighting that is going on.
H.M.Jr:
Well, he is a fighter, don't worry.
Klotz:
I don't know what I am laughing at.
H.M.Jr:
You are just laughing at Harry.
Anyway, any help that anybody can give him
in this group, I would appreciate it. But
you (Young) are going to draft a letter.
Young:
I have one already drafted.
H.M.Jr:
Well, let these two gentlemen take a look at
it, will you? Then when you are ready, I
will let you know, Bell. You and I will
look at it after they get it done.
26
- 13 Bell:
O.K.
H.M.Jr:
Anything else?
Young:
No.
Kuhn:
Do you want to see Allen Barth's surveys
with the clippings while you are away?
H.M.Jr:
Yes, please.
Kuhn:
Would you like them oftener than once a
week?
H.M.Jr:
The clippings? Surveys? No, once a week.
Kuhn:
Right.
H.M.Jr:
You got my message?
Kuhn:
He is leaving tonight.
H.M.Jr:
I thought it might be worthwhile.
Kuhn:
It is a good idea.
H.M.Jr:
Anything else?
Kuhn:
That is all.
Pehle:
I have nothing.
Cochran:
We are selling the bank of Brazil twelve
million dollars of gold. It is evidently
the proceeds of that transfer from the
Yugoslav account.
H.M.Jr:
And the gold will stay here?
Cochran:
The gold is staying here, earmarked with
the Federal.
27
- 14 H.M.Jr:
Anything else?
Cochran:
No, sir.
Sullivan:
Have you seen Dr. Gulick?
H.M.Jr:
Have I? No.
Sullivan:
He was due here Tuesday, and I telephoned
New York and they said he was in Washington.
He registered at the Hay Adams, but I haven't
been able to reach him. Is it your under-
standing that the Carnegie Corporation are
going to carry the charges here on everything
except Dr. Gulick?
H.M.Jr:
Sullivan:
No, you were here --
That is right, and I don't recall that that
was mentioned at all. The extent to which
we were going to finance them.
H.M.Jr:
I never - well, every discussion I had with
Sullivan:
That is right, and there was no - there has
H.M.Jr:
No.
Bell:
I thought the understanding was that we
would finance it so far as we could and
him, you were present.
been no understanding on that.
somebody would finance the excess, either
the - Gulick's organization or the Carnegie
would help Gulick's organization.
Sullivan:
That was all right up to the point where they
said they had three hundred twenty-five
thousand dollars. Then I began to think that
they were going to do it.
28
- 15 H.M.Jr:
Somebody asked me to - my understanding
was that we pay the $22.50, but where the
man got more than that, either Gulick's
organization or the Carnegie would make
up the difference. Is that right?
Bell:
That is right. And then Carnegie would help
Gulick's organization. They were not in the
picture at all, so far as we were concerned.
Sullivan:
That is all right. I just wanted it under-
H.M.Jr:
Well, if he doesn't show up, call up Randolph
stood.
Burgess.
Sullivan:
Bruere.
H.M.Jr:
Yes.
Sullivan:
He is the fellow who knows about it.
H.M.Jr:
And ask him.
Sullivan:
I will. Mr. Doughton called up yesterday
afternoon. He was very, very much agitated
and I went up and he was terribly disturbed
about all the newspaper stories reporting
a high Treasury official had said this,
that and the other thing. The Republican
members of the House are riding him on it, and
I haven't seen him so disturbed about anything
since the Pearson and Allen story last summer.
He was very anxious that you should make give a statement saying that the Treasury had
not discussed this with anybody.
H.M.Jr:
Discussed what?
Sullivan:
Taxes, new tax policies.
29
- 16 H.M.Jr:
Sullivan:
I said that. Henry Morgenthau, Jr. said
we have no plan until after the first of
April. There is no high Treasury official.
No. I understand that, sir, but there have
been a lot of stories for the last two weeks --
H.M.Jr:
Has there been anything since Monday?
Sullivan:
Yes, the Tuesday papers have it.
H.M.Jr:
Well, my Monday press conference quoted
me verbatim. There is no high Treasury look at my press conference Monday, what
I said.
Sullivan:
I understand that, but all of these fellows
are writing stories which they attribute
to the Treasury.
H.M.Jr:
I haven't seen any.
Sullivan:
There have been a lot of them.
H.M.Jr:
I haven't seen any. I would like to see
one. I would like to see one that says
high Treasury official that has been written
this week.
Schwarz:
There was one Tuesday.
Sullivan:
There was the Tuesday morning paper. There
was the Sunday - there were the Monday after-
noon papers. Mr. Doughton called in Mr.
Cooper, who doesn't get excited, and he
reached in his pocket and pulled out a long,
long story from the Sunday Star.
H.M.Jr:
No one has brought it to my attention.
Sullivan:
Well, that is why I am doing so now.
29
- 16 H.M.Jr:
Sullivan:
I said that. Henry Morgenthau, Jr. said
we have no plan until after the first of
April. There is no high Treasury official.
No. I understand that, sir, but there have
been a lot of stories for the last two weeks --
H.M.Jr:
Has there been anything since Monday?
Sullivan:
Yes, the Tuesday papers have it.
H.M.Jr:
Well, my Monday press conference quoted
me verbatim. There is no high Treasury look at my press conference Monday, what
I said.
Sullivan:
I understand that, but all of these fellows
are writing stories which they attribute
to the Treasury.
H.M.Jr:
I haven't seen any.
Sullivan:
There have been a lot of them.
H.M.Jr:
I haven't seen any. I would like to see
one. I would like to see one that says
high Treasury official that has been written
this week.
Schwarz:
There was one Tuesday.
Sullivan:
There was the Tuesday morning paper. There
was the Sunday - there were the Monday after-
noon papers. Mr. Doughton called in Mr.
Cooper, who doesn't get excited, and he
reached in his pocket and pulled out a long,
long story from the Sunday Star.
H.M.Jr:
No one has brought it to my attention.
Sullivan:
Well, that is why I am doing so now.
30
- 17 H.M.Jr:
Well, I am not going to do anything about
it, because I haven't - I talked on the
record and my press conference is there and
here I have got Schwarz and I have got Kuhn
and no one has told me anything about it.
I don't know what you are talking about.
Sullivan:
I am just trying to convey to you the very
great excitement of Mr. Doughton, who --
H.M.Jr:
But give me something to show me what he
is excited about. I made an on the record
statement after talking to him Monday morning
in which I said that we had nothing, and I
talked to Mr. Doughton. It is all there.
If you had gone up there - if you had talked
to me before you went up there, I could have
shown you my statement. He read me his
statement over the telephone.
Sulli
Yes, I knew about that.
H.M.Jr:
I don't know what you are - when you come
in, show me something about what high Treasury
officials said. What does he hang this thing
on?
Sullivan:
There isn't anything that a high Treasury
official has said, sir. It is these stories
the newspapers are writing which they attribute
to a high Treasury official.
H.M.Jr:
Show me the story. Show it to them. I can't
be bothered with it. I can't be bothered with
Doughton. Doughton has nothing to hang his
hat on as long as I haven't seen the story,
and here is my press section and if they are
not disturbed, I am not going to be disturbed.
Sullivan:
All right. I am just reporting to you that
he is very much so.
31
- 18 H.M.Jr:
Then let him call me up, John. I don't
know what it is all about.
Sullivan:
He called me because he thought you had
H.M.Jr:
Did you take up my press conference Monday
to show him that?
Sullivan:
No, I did not.
H.M.Jr:
Well, I would have taken it up. You had
Sullivan:
I have it.
H.M.Jr:
Then why don't you take it up and show him?
Sullivan:
Because that doesn't answer his problem,
sir.
H.M.Jr:
Let's skip it.
It is all right with me. He is the fellow
Sullivan:
left, and he asked me to tell you particularly
that that is why he had called me.
better get a copy of my press conference.
on whom we are relying. That is the reason
I brought it up.
H.M.Jr:
I don't know what you do up there, but when
I talked to him Monday morning he was sweet
as sugar, and if I was sent for and had this,
here It is, I would show him what I said.
That is what I am trying to get over to you.
Sullivan:
I am writing him a letter and I am setting
out what you said Monday, but that doesn't
answer his objections. His objection is
not what you said, his objection is that
we are allowing to go uncontroverted, a
lot of stories on a lot of tax things which
he says is making a fool out of him before
all the other members of Congress. That
32
- 19 -
is why all of his talk about being a rubber
stamp, that we are not consulting him. He
says story after story appears which is
attributed to the Treasury, and the Treasury
doesn't deny it.
H.M.Jr:
Well, Chick, would you please show me any
stories? Have you seen any stories?
Schwarz:
There were one or two.
H.M.Jr:
Since his statement, since Monday?
Schwarz:
Only one Monday, which the boys said they
wrote based on Monday's conference which
they thought was to clear up the atmosphere,
that there - that nothing was being discussed.
They said a high Treasury official said no
unorthodox methods, or something like that,
which was a conclusion they drew from Monday's
conference. I feel that it is --
H.M.Jr:
Have you talked with Schwarz about it?
Sullivan:
Yes. I talked to him the minute I got back
yesterday afternoon. I talked with Mr.
Schwarz and Mr. Kuhn and Mr. Tarleau and
Mr. Blough and Mr. Surrey. We prepared what
we thought might be done this morning.
Schwarz:
The boys told me that Mr. Doughton objected
to the rumors about post tax legislation and
in the next ten minutes he was dropping rumors
himself.
H.M.Jr:
Well, without seeing him, my own feeling is
Sullivan:
All right, sir.
H.M.Jr:
What do you think, Ferdie?
that I would forget it.
33
- 20 Kuhn:
I think there have been many stories,
many, many stories since your press conference of Monday, making it clear that
nothing was going to be done until after
April 1. I think that idea has gotten
across. I think that is more - should
be more important to Doughton than one
story on Tuesday morning in the other
direction. I think the papers have been
good on the tax thing this week.
H.M.Jr:
Do you think we ought to do anything more?
Kuhn:
Yes. I think if John agrees, it might be
Are you familiar with it?
worth sending the transcript of what you
said on Monday, and also the remark you
made this morning saying that we are going to
rest on our oars until we get an invitation
from Mr. Doughton to go up and discuss the
thing with him. You said that on the record
this morning.
H.M.Jr:
Sullivan:
Can't do any harm. Send it up. Is that all
you are going to do, is send it up?
That is all, I think, that can be done now.
I don't see anything else that can be done.
Bell:
Why can't John say in his letter --
Sullivan;
I am going to talk to him and try to explain
to him that we thought this was covered on
Monday. If it were anybody but Mr. Doughton,
I don't think we would be in this position.
He feels it very keenly and the Republican
members have been ribbing him unmercifully.
I don't think there are very many other men
up there who would have the same reaction
to it at all.
34
- 21 H.M.Jr:
Well, I don't want to - well, the only
thing I can think of is to send him
verbatim what I said at Monday's conference
and this press conference.
Sullivan:
I will do that. That is all I have, sir.
H.M.Jr:
I would keep away from him, John. That is
Sullivan:
Yes, but he called me. Oh, you mean from
all I can say.
now on?
H.M.Jr:
Well, I mean - I don't know why there is so
much trouble. I never had any trouble with
him. I don't - the trouble is - well,
let's - anyway.
Sullivan:
He called me. I didn't go up to him.
H.M.Jr:
O.K.
What is it, Ed?
Foley:
Here is the memorandum for the diary.
Jim Forrestal wants one of our lawyers
by the name of O'Dunne who has been
working on the Associated Gas and Electric
case. He thinks that in this investigation
of the defense contracts which Truman is
going to carry on, if Hugh Fulton, who is
the assistant United States Attorney who
handled the Hopson case up in New York was
appointed counsel for Truman, that it would
be well if he could have O'Dunne and have him
familiar with the Navy contracts and pro-
cedure and then have O'Dunne taken over to
Fulton so that he could carry it out. I am
willing to let him go.
H.M.Jr:
O.K. What else?
35
- 22 Foley:
Gaston:
That is all.
Shall we wait until we get the Solicitor
General?
H.M.Jr:
He called me. I tried him all morning and
now they say he is in and I am going to
call him.
Gaston:
You didn't want me to do anything about that
Iowa thing, did you, about the Vice-President?
I am inclined to just let it slide. George
Brennan wanted you to know that he was in a
receptive mood, and if there are any appoint-
ments to the Federal Reserve Board passed
around - George Brennan of the Farm Credit.
If it should come to your attention. He
wasn't asking you to do anything, but if it
came to your attention he wanted you to know
that he was in a receptive mood.
H.M.Jr:
Well, for those who I won't see again, I
will try not to call you up; and I hope you all
get a little vacation. I think the sun will
be out.
I say, you will be calling me instead of
my calling you. If you would confer with
Mr. Bell and Mrs. Klotz before you call, I
would appreciate it.
Gaston:
If I get permission from Mr. Bell, you don't
mind if I am out of town two or three days
at a time?
Bell:
That is the purpose of this statement.
H.M.Jr:
I encourage each and all of you to get a
little holiday. John, do you want to run
down to Florida?
36
- 23 Sullivan:
I don't think I can, thank you very much,
sir. She is coming home in two weeks from
Saturday.
H.M.Jr:
It is a good time if you want to run down.
Sullivan:
Thank you, but it takes too long to get
H.M.Jr:
You might settle your public relations
Schwarz:
On a Florida beach?
H.M.Jr:
All right.
there.
troubles.
37
March 20, 1941
3:06 p.m.
H.M.Jr:
Hello.
Operator:
Congressman Doughton.
Bob
Doughton:
All right.
H.M.Jr:
Bob?
D:
That you, Henry? I thought you were away
up in New York or New England or Canada or
away down in Mexico or Florida somewhere.
H.M.Jr:
Well, I can't be everywhere at the same
D:
Well, you can come as near as anybody I
H.M.Jr:
D:
H.M.Jr:
D:
time, 80 I'm still in Washington.
know of.
I'm leaving tonight.
Well, I hope you have a wonderful trip.
How are you feeling?
Oh, about the same, Henry. Nothing to
brag about and nothing to complain about.
H.M.Jr:
Got any worries?
D:
How's that?
H.M.Jr:
Are you worrying about anything?
D:
H.M.Jr:
D:
Well, no acute worries, no. I have plenty
of chronic ones all the time.
Good. Well, I just wanted to know before
I left whether you still were hitting on
all sixteen cylinders.
Well, I talked with your right-hand man,
John Sullivan, yesterday about these
repeated stories in the press about the way
you all are writing tax bills down there.
He told you about it, didn't he?
38
-2H.M.Jr:
D:
Yeah. Well, you know it doesn't come from
down here.
Well, I was sure of that. I've been sure
of that all the time but they keep telling
it does and it seems to me like - I don't
know, I can't speak for you all down there,
but if they kept quoting me and anybody on
my committee of making a statement, I'd just
call them down someway, pretty rough and
hard. It is quite embarrassing to our
folks, you know, although after I made my
statement why that's dropped as far as I'm
concerned.
H.M.Jr:
Well, there's nothing more you want us to
D:
How's that?
H.M.Jr:
D:
H.M.Jr:
do down here is there?
Is there anything you'd like me to do?
Well, didn't John tell you what I suggested?
Well, we're sending you up - I did say
something this morning at my press conference, that we were doing nothing.
D:
Well, that's the thing to do now. That's
what I suggested - something of that kind that these stories so far as the Treasury
was concerned were entirely unreliable
and without any ground.
H.M.Jr:
D:
Well, if you don't mind my saying it, I
wouldn't take them so seriously.
Well, I don't, but my committee, you know,
are both Democrats, of the majority and
minority members and they keep muttering
about it and seem to be embarrassed and
H.M.Jr:
D:
worried about it and feel like that
Well, with your fine reputation you're
above all of that.
How's that?
39
-3H.M.Jr:
D:
With your fine reputation you are above
all of that.
Well, I thank you, but it's all right.
Whatever of course you think about it.
It's very unjust to us all for them to
keep doing that but what's the best treatment, of course, that's a matter for you
to determine. Whatever you do about it will
entirely satisfactory to me.
H.M.Jr:
Well, John is sending you up a verbatim
copy of what I said Monday and today at
my press conference.
D:
H.M.Jr:
How's that?
John Sullivan is sending you up today a
verbatim copy of what I said at my press
conferences on Monday and today.
D:
Yes. Did John tell you about our little
short conference - not conference, but
conversation he and Jay and myself had
about tax procedure?
H.M.Jr:
Yeah, he mentioned it.
D:
Yeah. I think when the President gets
back - we had one conference you know - it
would be mighty fine for us all to get
together again and get us started out and
all as near headed in the same direction
with the same objectives and the same
thoughts as we can.
H.M.Jr:
Well, we'll do it under your leadership.
D:
How's that?
H.M.Jr:
We will do it under your leadership.
D:
Oh, no. Not my leadership. Leadership of
you and the President, but we'll all work
together. I'm not a leader; I don't lead
in my committee; I try to work along with
the boys, you know.
40
-4H.M.Jr:
D:
Well, I'11 take my leadership from you.
Oh, thank you, Henry. You're entirely too
gracious and entirely too kind, but I
appreciate the compliment just the same.
H.M.Jr:
All right, Bob.
D:
Well, a good time to you.
H.M.Jr:
Thank you.
D:
Good-bye.
41
March 20, 1941
3:29 p.m.
Francis
Biddle:
I'm leaving town tomorrow.
H.M.Jr:
Who is?
B:
Yeah.
H.M.Jr:
You are?
B:
Yeah.
H.M.Jr:
Well, who's going to be Attorney General?
B:
McGuire.
H.M.Jr:
Uh-oh.
B:
What have you got on your chest?
H.M.Jr:
B:
Well, I've got this. I don't know whether
you've ever heard of a man by the name of
"Nucky" Johnson of Atlantic City.
Why, "Bucky" Johnson is the famous graft
mayor down there.
H.M.Jr:
B:
H.M.Jr:
B:
No, Nucky. (Enoch).
Nucky , yes. I know all about him, yes.
Well, we're ready to go ahead and try to
get the man indicted.
Yeah. Fine.
H.M.Jr:
Now, what I'd like is before you go away,
very much, because what we need is a judge
from outside the state - we don't think any
of the New Jersey judges will do -
B:
I agree.
H.M.Jr:
And what we'd like is if you'd see Herbert
Gaston and Ed Foley and Elmer Irey and give
them fifteen minutes to tell the story,
because we want
42
-2B:
I know the story pretty well now. I was
at Atlantic City not long ago and went
over the story with our agent down there.
H.M.Jr:
Yeah.
B:
I'11 be very glad to see them and they can
come over this afternoon at 4:00 o' clock
if they can.
H.M.Jr:
They'11 be there.
B:
4:00 'clock.
H.M.Jr:
They'11 be there at 4:00 o'clock.
B:
Henry, is there any talk of difficulty
with getting our opinions down and all
that?
H.M.Jr:
How do you mean?
B:
For the defense? Harry said something
to me day before yesterday which made me
think
H.M.Jr:
B:
H.M.Jr:
Harry?
Harry Hopkins - that our opinions weren't
coming through with the type of zest that
they wanted, but you know all of those
fellows are awful kickers.
B:
I don't know that I follow you.
Legal opinions from our office with
respect to what you can do in the defense
situation.
H.M.Jr:
This is Harry Hopkins?
B:
Harry Hopkins mentioned something about
H.M.Jr:
I don't know what he's talking about.
B:
I didn't either; he didn't specify, but
it.
you haven't heard anything of that kind.
43
-3H.M.Jr:
No.
Birdilde
Right-o.
H.M.Jr:
But this thing I do. Now, one other
think while I can.
Beddle
Yeah.
H.M.Jr:
I'll ask Gaston to hand you this. I've
got a letter - I'm just going to give it
to you - from a man by the name of Ernest
Bohn who runs the Cleveland Housing
Administration, and he's interested in
this new Federal judgeship in Cleveland.
B:
Yes.
H.M.Jr:
And he sent me this editorial that I'd
like to hand you recommending Attorney
Marc J. Grossman, and I'd just like to
put it in your hands for whatever it is
worth.
B:
H.M.Jr:
B:
Delighted. Will you send it over?
I'll ask Gaston to give it to you.
Fine. All right, Henry.
H.M.Jr:
And they'11 be there at 4:00 o'clock.
B
4:00 o'clock. That's fine.
H.M.Jr:
Thank you 80 much.
B:
Good-bye.
44
Copy given to Mr. Bell 3/20/41
ack's is feed 3/29
see reply dated 3/20 + Hogin
further
metered is very lettersful
45
March 20, 1941
My dear Mr. Secretary:
In my letter to the President dated
March 12, 1941, copy of which I sent to you,
I recommended that all foreign countries
outside the lend-lease area desiring to pur-
chase military supplies in this country submit their needs to the Secretary of State.
I have instructed Mr. Philip Young, the
Treasury member of the President's Liaison
Committee, to accept no new business from such
countries beginning today. It is my under-
standing that Mr. Young has already discussed
this problem with Assistant Secretary of State
Acheson in order that the transition with
respect to both new and pending foreign purchasing operations may be consummated with as
little difficulty as possible.
I have been informed that purchasing operations by Poland, Iceland, Greenland, Netherlands,
Greece, China, British Empire, and Norway are
interpreted to be within the lend-lease area and
will be supervised by Mr. Harry Hopkins. The
members of my office experienced in foreign purchasing operations will be delighted to assist
representatives of your Department in connection
with the foregoing.
Sincerely,
In.
The Honorable,
The Secretary of State.
By Messenger 515
PY:bj Put 74
46
March 20, 1941.
Dear Nathan:
I received and read your letter of March 12th,
and was very glad to see Mr. Interik. After talking
with him, I turned him over to several of my
associates here in the Treasury who are now working
with him to ... what may be done. It was a pleasure
to do this.
We are both so gind that you are getting better,
and hope that the improvement steadily continues.
I am leaving this evening for Tucson, and Elinor
will join me there in a few days.
with best wishes from - both,
Sincerely,
(Signed) Henry
Mr. Nathan Straus,
Quarry Lake,
Valhalla, New York.
47
March 20, 1941.
Dear Nathans
I received and read your letter of March 12th,
and was very glad to see Mr. Istorik. After talking
with him, I turned him over to several of my
associates here in the Treasury who are now working
with him to see what may be done. It was a pleasure
to do this.
We are both so gind that you are getting better.
and hope that the improvement steadily continues.
I - leaving this evening for Tucson, and Elinor
will join me there in a few days.
with best wishes from us both,
Sincerely,
(Signed) Henry
Mr. Nathan Straus,
Quarry Lake,
Valhalla, New York.
ORF/Che
48
March 20, 1941.
Dear Nathans
I received and read your letter of March 12th,
and was very glad to see Mr. Istorik. After talking
with him, I turned him over to several of my
associates here in the Treasury who are now working
with his to see what may be done. It was a pleasure
to do this.
We are both so and that you are getting better,
and hope that the improvement steadily continues.
I - leaving this evening for Tucson, and Minor
will join me there in a few days.
With best wishes from us both,
Sincerely,
(Signed) Henry
Mr. Nathan Straus,
Quarry Lake,
Valhalla, New York.
ORF/Che
49
UARRY LAKE
VALHALLA
NEW YORK
March 12, 1941.
Dear Henry:
The enclosed letter reached me this morning from my
friend, Edward Norman. In case you do not know Mr. Norman,
I may say he has given of himself, his time, and his means
unstintingly for years in the interest of Palestine -- this
despite certain grave differences of policy between him and
the Zionist organization, from whom he holds completely
aloof.
I do not know Mr. Istorik, however, I have sufficient
confidence in Mr. Norman's judgment to believe that if you
can find time it might be well worth while to see
Mr. Istorik as Mr. Norman suggests.
I am working several hours a day up here at Quarry Lake
work within two or three weeks.
and hope to be able to return to Washington and full time
I cannot tell you how much I was pleased and touched by
Eli's several visits.
Fondly,
Nathan
per H.S.S.
Hon. Henry Morgenthau, Jr.,
2211 Thirtieth Street, N.W.,
Washington, D. C.
Enclosure.
50
EDWARD A.NORMAN
60 BEAVER STREET
NEW YORK,N.Y
March 11, 1941
Mr. Nathan Straus
Quarry Lake
Valhalla, New York
Dear Nathan:
For several months I have been in touch with Mr. Leo
Istorik, the London Director of the Anglo-Palestine Bank.
He is here in connection with arranging some financial
matters for the Bank that I consider to be soundly conceived and of great importance, not only to the Jewish
cause, but also to the British. Mr. Montague Norman,
Governor of the Bank of England, has cooperated with Mr.
Istorik in formulating these plans, and it was at the
suggestion of Mr. Norman that Mr. Istorik came here.
Mr. Istorik has been working here in cooperation with the
British Embassy, and I believe has made progress with his
plans.
Now Mr. Istorik tells me that he thinks the time has
come when he ought to have a talk with the Secretary of
the Treasury. He feels that it would be better if he were
introduced to Mr. Morgenthau privately rather than through
the Embassy, and for this reason he spoke to me, and that
is why I am writing to you.
I have known Mr. Istorik for a number of years, and
have the highest regard for him, and am sure that what he
is working at deserves encouragement. Incidentally, he is
a brother-in-law of Israel Sieff, of London, who is now
here, and whom perhaps you know.
I would be most appreciative of any help you might
give in arranging an appointment for Mr. Istorik with Mr.
Morgenthau.
Mr. Istorik is now at the Shoreham Hotel in Washington, and Mr. Morgenthau's office could reach him there, or
word could be sent to him through me.
With kindest regards and best wishes for your rapid
and complete recovery,
Cordially yours,
EAN FSW
51
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE March 20, 1941.
The Secretary
Mr. Foley
After the meeting in your office Bernstein spoke
to Istorik for about an hour. Istorik had the following to
say:
(1) The Anglo-Palestine Bank wanted to increase
its liquidity to the extent of about 11,000,000 because of
the possibility of the withdrawal of its deposits if the
British position in the Middle East was weakened. Istorik
asked Montague Norman for help and Norman suggested that
Istorik try borrowing money in the United States.
(2) The Anglo-Palestine Bank wanted to sell
increased shares in the Bank and also to sell certain of its
non-liquid investments in Palestine. Istorik felt that
there would be no market for such assets in the United States
unless he tied in the Anglo-Palestine Bank's borrowing with
borrowing by the Palestine Foundation Fund which had a
branch in the United States and which branch received annual-
ly donations in dollars and would use such dollars to repay
the loan. Istorik also felt that he would have a better
chance of raising the money in this country if the borrower
52
-2-
were to be an American institution. It is for these reasons
that the loan to the Anglo-Palestine Bank is tied in together
wi th the loan for the purposes of the Palestine Foundation
Fund.
(3) Istorik realizes that his proposition is not
a business proposition in the ordinary sense, that the RFC
or other United States Government agency would, in effect,
be lending dollars to finance activities in Palestine of
the Anglo-Palestine Bank and of the Palestine Foundation
Fund, that there might be important and sound criticism if
a United States Government agency were to engage in such a
transaction, and that the British Government might use such
a loan as a precedent to ask the United States Government
to lend dollars against the stock and other sterling assets
of other British banks.
(4) Istorik would, of course, like to have some
private American business or banking institution buy or
otherwise dispose of the shares of the Anglo-Palestine Bank,
but apparently he feels this is unlikely and he feels that
it would definitely hurt the position of the Bank if he
were to try to dispose of the Bank's shares and assets on a
philanthropic basis and be refused. He wished that he
53
-3had had better entree in American banking institutions and
with other Americans who could be of help to him in this
matter.
(5) Istorik did not seem at all surprised by the
Treasury's reaction to his proposal. Ben Cohen had indicated
to him that although the scheme was clever he didn't think
the Government would support it. Istorik felt that his inability to raise the money in this country would help him
with Montague Norman in that he could tell Norman of his
effort to raise the money here and his failure to do so.
Istorik felt that in view of the importance of the AngloPalestine Bank, the British Government and the Bank of
England would have to lend the Bank help in a pinch.
Istorik indicated that he might call on Bernstein
again in the near future to discuss the problem and hoped
that he might have some opportunity, when the Secretary re-
turned from his vacation, to discuss Palestine problems with
him. Istorik wanted the Secretary to know of Montague Norman's
friendly and helpful attitude with respect to the AngloPalestine Bank.
54
March 20, 3941.
Captain Martin K. Netcalf, USN,
Room 1704 Havy Department,
Washington, D.C.
Dear Captain Netwolfs
At the request of Captain D. J. Callaghan, Neval
Mide to the President, I an returning to you certain canfidential papers which Captain Callaghan gave to Secretary
Morgenthan to read.
Very truly yours,
(Signed) Herbert R. Gastes
Herbert B. Gaston
Assistant Secretary of the Treasury.
CC: Captain Callaghan,
The White House.
MemoFebruary
from Captain
Metealif to The Chief of Naval Operations, dated
19, 1941.
Carbon
memo from
P.R. Smith
1941,ofsubjects
Inspection
TriptotoGaptain
Halifax.Netcalf, February 17,
Observations by Chief of Naval Staff of Canada, Ottawa on situation regarding Naval control service in Ottawa area in the
event of U.S. participation in war.
Pages from The Star Weekly, Toronto, February 15, 1941, containing
article entitled "Mounties of the Sea Lanes.*
cc. Miss Channey
THE WHITE HOUSE
WASHINGTON
memo for feevitary
Hemputhen
these are the paper
about which 9 spoke
to youyou
mmwill
the when
phone
then to Cryx. Wantin
K. metery USN.
Room 1704, lavy Dyex.
it
when
you
are
thing
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with Id appreciate
Rissing
DY Calingha
14
Op-388-0-cw
CONFIDENTIAL
February 19, 1941
Captain , K. Metcalf, USN, (ret.)
From:
The Chief of Neval Operations
To:
Official Channels
4 Via:
1
Subject: Visit of certain officers to Halifax, Nova Scotia.
I have to report that the following officers visited
1.
Halifax, Nova Scotia, to study and observe the operations of
the Naval Control System, routing and despatching of convoys,
etc., from that point:-
Captain M. K. Metcalf, USN. Operations Officer,
Naval Supply and Transportation Service Section
of Ship Movements Division.
Commander W.E. Hall, USN., Assistant Operations
Officer, Naval Supply and Transportation Service
Section of Ship Movements Division.
Lt. Comdr. P. R. Smith, USNR., Assistant Operations
officer, Naval Supply and Transportation Service
Section of Ship Movements Division.
Captain M. Milne, USN. Port Director,
First N&val District.
Captain F. G. Reinicke, USN., Port Director,
Third Naval District.
Captain J. B. will, USN., Port Director,
Fifth Naval District.
Captain E. M. Williams, USN., Port Director,
Sixth Naval District.
The party remained in Halifax for two days and three
nights, arriving at Halifax 10 February 1941.
2.
3. Free rein was given all members of the party by the
Royal Naval and Canadian Naval authorities. All publications
pertaining to convoys were made available for study. The actual
forming of a large convoy, together with routing and convoy
Op-383-0-cw
CONDIDENTIAL
instructions, was witneesed by all officers. All officers
were present at a final convoy conference prior to convoy
sailing.
4.
The Naval Control System office at Halifax, under
command of Commodore G. C. Jones, R.C.N., forms all convoys
leaving Halifax, sets speed of convoy, inspects all ships
of the convoy before sailing, ascertains that all ships are
properly loaded, etc., and on instructions from Ottawa, sets
time of sailing and routes to be followed.
5. The sea and air defenses of the harbor, the escorting
vessels, the sortie protection, the channel sweeping, etc.,
are under direct charge of Rear Admiral Bonham-Carter, R.N.,
and hie staff.
5.
All convoys are under the direct chamand of a
Commander, R.N. Reserve, who is charged with the maneuvering
of the convoy, zig zage to be used, etc. The excort vessel
acts as protection only and 16 in charge of all vessels that
may be used for escort duty. An interesting phase of those
officers detailed as convoy commodores 16 the fact that all
Commodores are retired Royal Naval Officers of the rank of
Rear Admiral, or above, who voluntarily accept a commission
as Commodore, R.N. Reserve. This list includee a former
Commander-1n-Chief, Kediterranean Fleet, a former Commander-
in-Chief, Asiatic Station, & former Sea Lord of the Admiralty,
and others; their staff consists of two Royal Navy signalmen
only and they are usually quartered on the largest ship of the
convoy and mese with the ship's officers.
Appended hereto is a more detailed report submitted
by Lt. Comdr. P. R. Smith who W&S made historian for the trip.
The various Port Directors who were with the party have been
7.
requested to submit to me, any questions or recommendations
they may see fit to make and if from their reports any pertinent
recommendations seem necessary, they will be forwarded under
separate cover.
M. K. METCALF
-2-
February 17, 1941
-383-02-01
Confidential
Subject:
MEMORANDUM FOR CAPTAIN METCALF
Inspection Trip to Halifax
The party consisted of the following officers:
Captain Martin K. Metcalf, USN, Washington;
Captain F.G. Reinicke, USN, New York;
Captain M. Mibne, USN, Boston;
Captain J. B.Will, USN, Norfolk;
Captain E. M. Williams USN, Charleston, S.C.;
Commander W. E. Hall, USN, Washington, and
Lt. Comdr. P. R. Smith, USNR, Washington,
all of whom arrived in Halifax at about 9:30 pa. Monday February
10, 1941, where we were met by Captain O.M. Read, USN, United
States Naval Attache, Ottawa, Canada.
Captain Read escorted us to the Halifax Naval Station
he next morning, where we met Comdr. Richard H. Oland, R.C.N.,
the Naval Control Service Officer, and his assistant, Comdr.
Banyard. we were then introduced to Commodore G. C. Jones, R.C.N.,
enior Canadian naval officer, C.O. Atlantic Coast, and in charge
of all Canadian activities in Halifax.
9
Comdr. Oland then arranged to form our party into two
roups and turned us over to Lt. Lambkin who outlined hie duties
of instructing masters of merchant vessels engaged in confoy duty
etween Canadian and U.K. ports. H1B duties consisted mainly of
checking with each EASTER as to whether or not he had the required
papers, forms, etc. in his possession and whether he was familiar
1th instructions contained therein, each master signing a form
to the effect that necessary papers, documents, etc. were on board
is vessel and that he understood them; thence to Lt. Buntain who
further checked with each master as to physical characteristics
f each vessel. Another officer, Lt. Stewart, had charge of upeep and maintenance, and if a master reported trouble to vessel
r machinery, Lt. Stewart would pass the information along to the
ngineer officers who promptly went into the matter in order to
ave the vessel ready to make her scheduled eailing date.
4
The next officer, Lt. Mitchell, had charge of convoy
routing and gave the party a very interesting outline of the
general procedure followed. Briefly, a convoy of merchant vessels
would leave Halifax and proceed to a rendezvous well off shore,
(these vessels had been originally loaded at American ports as
far south as Savannah), where they would meet a convoy of merchant
vessels which had been made up at Bermuda (these vessels had been
loaded, in most part, at American gulf ports, Caribbean ports and/
or ports in Northern South America, including the West Indies).
The sonvoys would combine and proceed on specified routee under
escort to a rendezvous in European waters, where they would again
receive orders as to what porte they would proceed to. At this
point, the armed ocean escort vessels would pick up a westbound
group of cargo vessels, most of them in ballast, and proceed to
f
the American ports. Considerable exchange of messages and accurate
timing had apparently enabled east and westbound convoys to arrive
at rendezvous as per schedule.
We were then turned over to Lt. Day who had charge of
independent routing, that is, vessels that might become separated
from a convoy and/or otherwise proceeding on their own. He outlined the general procedure to be followed advising them of the
latest reports of locations of submarines or raiders.
The principle mentioned above are covered in the
Naval Control Pamphlet, a copy of which is in this office. However,
there are some additional papers copies of which, I understand,
Captain Read is going to send to you in due course. The general
talks given by the various Canadian naval officers to our party
were given to us as if we were masters and/or agents of merchant
vessels which were part of a convoy.
The next officer we net was Lt. F. B. Watt who has
charge of the boarding parties which examine every ship eutering
and leaving the port of Halifax. This officer has & very interesting
assignment and has a specially selected examining party of petty
officers and enlisted men who board each vessel inward bound
prior to their actually coming to anchor in their assigned berths.
This is considered of primary importance to prevent & veosel from
being brought into the port, which might be the cause of a serious
catastrophe.
The entire vessel, deck, engine and steward's departments, receives a most thorough physical examination. Such inspection as is possible 16 made of the cargo and cargo holde and
all papers pertaining to cargo are most theroughly examined.
The seaworthy condition of the hull and machinery is most carefully gone into to make certain that the vessel, as a whole, is
fitted for the trans-Atlantic passage and every precaution is taken
-2-
to prevent a possible breakdown of machinery, which would cause
a vessel to drop out of convoy and be alone; or possibly elow up
the whole convoy or damage another vessel, such as has occurred
with disabled steering gear, etc. Stores, bunkers, etc. are also
very carefully checked, 88 well 8.8 the manner in which the vessel
is stowed and whether or not everything is to the satisfaction of
the master.
There is another interesting procedure followed by the
boarding parties who, incidentally, are purposely made up of
persons who speak Norwegian, Swedish, Italian, Greek, and/or other
languages, depending upon the nationality of the vessel which they
are boarding - this 18 done in order that members of the boarding
party Lay carry on & friendly interrogation and more or less get
acquainted with crew members of the various vessels, and by BO doing
they determine in a friendly manner the general crew morale aboard.
Coadr. Oland and Lt. Watt have found that thia procedure
has been most beneficial, although in some cases it has been necessary to use strong-arm methods with both the officer personnel
and the unlicensed personnel. This, however, 18 not usual and has
not occurred very much lately and our party .informed that very
little trouble was found with the personnel on board the vessels.
Probably a great deal to do with this is the fact that both merchant
officers and men are receiving very large bonuses per trip for a
safe passage across.
The general attitude of the Canadian officers mentioned
above is most pleasant; they are & very cheery, efficient lot and
all enjoy their Jobs and work like & large happy family. The senior
officer, I understand, is Rear Admiral Bonham Carter, R.N., who is
the commander of armed R.N. forces, that is, the ocean escort.
He, I understand, has a small yacht assigned to him for office
quarters, etc. This vessel ties up at the Naval Station.
The day prior to the departure of a convoy, all masters
are required to report to the Naval Control Office to attend a
conference and receive their final instructions. This is after
they have reported to their respective civilian agents and their
vessels have been cleared in the usual manner through the oustome
and they are about to return to their vessels, having completed
all shore duties in connection with their actual sailing.
Our party was invited to attend this conference which was
held in a large room and attended by some forty merchant captains.
Comdr. Oland had charge of the conference and gave the instructions.
The conference was also attended by the commander of the senior
armed escort vessel, who is a retired British naval captain returned to active duty; the escort vessel, in this case, being of
-3-
the 18,000 ton class of the Cunard-White Star Line, heavily armed
with 6k guns and anti-aircraft guns, together with a full working
crew, but no cargo carried. In connection with this vessel we
were also informed that her cruising speed is between 16 and 18
knots and that a large part of her cargo space was filled with
empty steel drums to add to her floatation in case of torpedo and/
or gun fire. The captain of this vessel was introduced to the
conference and he very definitely stressed the fact of vessels
maintaining the correct speed and position (approximately 9 knots
for this class of convoy); also the seriousness of allowing any
lights to show, particularly Just prior to daybreak. He said that
he had a short time before been forced to run close along side a
tanker which, for some reason or other, W&B displaying a large
light aft that may have been seen several miles: in fact, to draw
the attention of the vessel's crew, he opened fire with a machine
gun. The gun, however, was not actually trained on the vessel and
he informed the conference that he hoped there would be no repetition of this action in the case of the present convoy He stated
that on several occasions he had been forced to run his vesbel
between the lanes of the convoy and therefore possibly cause damage
to himself or others by collision, in order to give instructions
to vessels that were not carrying out the orders.
Another officer who gave instructions to the masters
vas the Commodore of the convoy. Each convoy is in the charge of
& naval officer who has the rank of commodore and who is stationed
on the leading vessel of the convoy, which has good accommodations
for this officer. The commodore gave very definite instructions
to the masters as to how he desired the convoy to run, stating,
however, that he did not deviate in any way from the instructions
laid down in a book of instructions in the possession of each master.
Also attending the conference were two Canadian Air
Force officers. We were informed that each convoy had an air escort
for about the first forty-eight hours out of Halifax, 88 well as
an armed escort of smaller vessels, several of which were in the port.
The meeting dismissed and Comdr. Oland specifically
requested that all merchant captains return aboard their vessels
promptly and remain on board all night, together with their crews,
as the authorities could take no chances on any delay the next
morning in case of fog or otherwise since each vessel must up anch
and proceed at a designated time, each master having received
written instructions as to the time he was to proceed. In this
connection the first vessel of the present convoy was to fet under
way at 11:00 the following morning, the others followsvals of several minutes, proceeding toward the protected rate
the entrance to the harbor.
Our party WAS taken to the headland overlooking the
anchorage in the lower basin of the harbor, which contained
about seventy freighters of many nations, some large, some emaller,
as well RS several tankers. All vessels appeared to be loaded to
the marks and standing by to proceed the next morning. In the
inner harbor were several large passenger vessels, apparently
standing by for a troop movement; one battleship which, I understand, was the H.M.S. Rogal Sovereign, also a large armed fast
liner, both of which were camouflaged, black, gray, etc; the
other troop vessele had black hulle and tan upper works, All
cargo vessels of the convoy were mostly gray or black; all stack
marks painted out, He well RB the majority of names. The British
vessels had a gun aft and probably a machine gun or BO around the
bridge.
Part of the party made an inspection of the Corvette
Orillia, a vessel about 225 feet long, of large beam, drawing
about 15 feet. Commander Captain Briggs; 6 officers and 50 men
in the crew. The vessel's speed is 16 knots, had been built at
Ontario, Canada, and WHE of gunboat type, equipped with one 4"
gun forward, anti-aircraft guns and a pompom gun, depth charges,
two "Y" guns and two tracks for same over the stern; a large winch
aft and two davits for mine sweeping equipment. This vessel is
single screw, 4 cyl. triple expansion engine, 2600 IHP., reciptocating auxiliaries, 2 generators, and special equipment for degaussing; two 3-furnace eingle ended Scotch boilers (pressure
225), oil burners Howden system forced draft; separate fire rooms,
separated from the engine room by a watertight bulkhead; fuel oil
is carried in eide tanka in the way of the boiler room. The vessel's
fresh water sunnly 10 limited and an eveporator and distiller fitted
of about 25 ton capacity. The vessel has very rugged machinery
throughout and all steam operated. The steering gear is aft, being
the conventional two cyl. reciprocating engine operating a worm to
a geared quadrant of very reliable type. Thin 10 controlled by
a
hydraulic telemotor eyetem from the pilothouse.
The crew accommodations in a two deck forecastle forward
are very good - hermocks are used instead of bunks. The captain's
and officers' cabine are very good. An ofl burning galley is amidships, which requires that the food be carried to both officers and
enlisted men, which, of course, could be improved upon. However;
the general layout is quite good. A substantial windlass 18 fitted
on the raieed forecastle head, and the large raised gun platform
immediately abaft same.
The general construction of the vessel's machinery, fittings,
etc. appears to be very good. They are lightly built but should be
-5-
excellent sea boats and should stand up very well. I was informed that the full speed revolutions of the main engines are
about 175 and the engines turning inward make the engine room
not too liveable due to throwing oil. There is one magazine
forward and one aft.
This vessel is fitted with anti-submarine detectors
"ASDIC" which apparatus is over the pilothouse on the upper
bridge connected to a streamlined housing, containing sending
and receiving microphones, which is about three feet deep and
secured to the vessel's keel by two.heavy tapbolite, This device, they tell us, can be removed and hoisted on deck at sea,
or vice versa. It seems, however, that it would be particularly
subject to damage by ice. ae were given a demonstration of its
workings, the intent being to locate a submarine and to proceed
to her position on bearings taken, in order that depth charges
may be dropped. A well equipped school is maintained at the Naval
Control Station with a duplicate set of the entire gear aboard, ship
in order that armed escort vessels may have special ASDIC operators.
This equipment 1E claimed to have been quite efficient in the
locating of submarines.
Our party was given access to various publications,
copies of which I believe will be forwarded to this office for
future reference, and the Canadian officers were most courteous.
Ye Joined them at lunch one day at the Officers Club and our
party, in turn, invited them for dinner at the Nova Scotian Hotel
the last night we were there. These officers were most cooperative
in all respects and seemed very pleased that a delegation of
American naval officers had taken the trouble to come up to look
over their activities.
As a summary - the Halifax Naval Control Service officer
personnel has a rather broad Job but they do not have any responsi-
bility as to what kind of vessels are going to carry cargo, what
cargoes are carried, etc. There is only & small number of vessels
loaded in Halifax which work, of course, 1e done by the agenta
and the local stevedores. The primary job of the control service
is to receive the veenels which are fully loaded, stored, prepared,
manned, etc., and to see that everything ie in order for the proposed trip; any discrepancies they will endeavor to correct.
Ordinarily a vessel which has been loaded at a sourthern
port prior to arriving at the convoy port has been thoroughly taken
care of by her agents, classification surveyors, etc., and hao had
a sea trip of some hundreds of miles and normally upon arrival at
Halifax would be able to continue for the comparatively short traneAtlantic passage, BO that the Halifax people only have to generally
check up, and should a vessel for some reason have mechanical or
-6-
erow
troubles and be absolutely unable to sail, she would be
has) ed over to a lay-up anchorage, when worst comes to worst;
her crew could be relieved and her entire carge transferred to
some empty vessel for shipment to U.K. The repair facilities
at Halifax are very limited and the one shipyard there has one
drydock about 520 feet long, which is working around the clock.
As far as any suggestions of improving the routine carried out
by their office, it would appear that they have done a very fine
job and apparently overcome possible serious difficulties with
convoy vessels' personnel by not having strikes or serious Union
trouble. Usually a vessel would remain at anchor in the outer
basin, which, incidentally, is a perfectly protected harbor from
all sides, from four to seven days after arriving at Halifax, The
only way that the officers and crew can go ashore would be by
certified boats, which would be a long cold trip in the winter,
and after they did get ashore, there is very little offering, there
trouble
in
our
the town we saw no signs of any disorder, 80 it would appear that
open bars permitted in Halifax. However, they Beem to
being have practically no no this respect in going around
the officers and crew of the convoy vessels remain on board, which
is not always the easiest thing to arrange without some difficulty
with the crew of the average merchant vessel (about forty men per
ship of this type). It was noticed that the streets were well
populated by men in Canadian Army and Navy uniform.
The party left Halifax having spent two full days,
Captain Milne staying over the third day to make a trip to examine
the protective gate at the entrance to the harbor, as well 83 to
see the convoy sail.
I as attaching & copy of the article from the Toronto
Star Weekly, dated February 15, 1940, which mentions Condr. Richard
Oland, Naval Control Service Officer, and outlined activities at
Halifax, together with a detail of the activities carried. on by
Lt. F. Watt who LE in command of the boarding parties.
the
It
interestine
18
work
of the Naval Control Service comenced
over three years
situation.
P. R. SMITH
A
SECRET
OBSERVATIONS BY CHIEF OF NAVAL STAFF OF CANADA, OTTAWA
ON SITUATION REGARDING NAVAL CONTROL SERVICE IN OTTAWA
AREA IN THE EVENT OF U.S. PARTICIPATION IN WAR.
The Naval Control Service now controlled from
1.
Ottawa consists of:
(a) The Canadian and Newfoundland Naval Control Service
Officers (8 main ports and reporting areas).
(b) The Consular Shipping Advisers at 13 ports in the U.S.A.
and 5 sub-ports administered by Consuls under district
Consular Shipping Advisers.
2.
FUNCTIONS INVOLVED
Broadly, the control of the Naval Control Service
amounts to the following:
(a) The passing out of route instructions and orders, information
of minefields and safe channels, etc., which enables N.C.S.O. 's
and C.S.A. is to route and instruct individual ships or convoys
as required.
NOTE - N.C.S.O.'s and C.S.A.'s on the East Coast are kept
up to date with information which enables them to route ships
direct to Newcastle (north about) Thames via Channel (this
route is at present in abeyance), Iceland, Gibraltar, Sierra Leone,
Capetown. N.C.S.O.'s and C.S.A.'s on West Coast can route ships
to Japan, Hong Kong, Singapore direct and (via Torres Straits),
Sydney, Hobart and New Zealand.
(b) The passing of information regarding the movements of ships.
This is broadly:(1)
From individual ports to London and Ottava.
-2-
CRET
(II) From Ottava to adjacent Intelligence Areas.
(III)
The warnings given to N.C.S.O.'s and C.S.A.'s
of anticipated arrivals at their ports passed
by Ottawa and in certain cases, direct from one
port to another.
(c)
The Administration of N.C.S.O.'s and C.S.A.'s
In Canada, the N.C.S.O.'s are administered
through the Naval Officer in Charge of their port.
In the U.S.A., the C.S.A.'s are part of the
Consul's staff and are administered by Ottawa.
CONVOY ASSEMBLY
Convoys are-at present assembled at Halifax, Sydney
and Bermuda and practised staffs are stationed at these ports.
In addition, the C.S.A.'s at New York and Norfolk
have been given instruction in this work at Halifax and special Books
of General Instructions and Summaries of Special Signals Affecting
Convoy Assembly are kept up to date in Ottava, ready for issue to any
ports which may have to assemble convoye in future.
Certain U.S.N. officers have also been given convoy
instruction in Halifax and the U.S. Navy Department holds a copy of
the Book of General Instructions mentioned above.
INCEDIATE PROVISIONS.
At any moment the existing organization could take
control of U.S. merchant ships in the same manner in which Norwegian
and Netherlands ships were included in the organization. The only steps
necessary to do this would be:
(a) Inform N.C.S.O.'s and C.S.A.'s.
-3-
SECRET
(b)
Order U.S. Masters to call at British Consulates
and Control Service Offices for route instructions.
5. CONVOYS.
The order to take control of U.S. merchant ships having
been given, U.S. ships could be directed to convoy assembly ports
as desired.
6.
In the event of a U.S. port being allocated to convoy
assembly, it is probable that the need for assembly at Bernuda would
cease and the trained Bermuda staff would be available to assist in
establishing the routine at the U.S. port in question.
7.
PROBABLE SITUATION IN U.S.A.
It is obvious that in the U.S.A., the U.S. Havy would desire
to set up their own control service, but in the interests of smooth
working during the transition, it is suggested that U.S. officers
should first work through our existing offices and then as soon as
convenient, the British staffs would transfer to the newly established
U.S. Naval Control Office at the port to act as limison officers and
general assistants to the U.S. staffs for British ships.
It is assumed that the U.S.N. would desire to open up
more control ports in the U.S.A. than we have at present. In due
course ve should probably be able to apread out our existing staffs
in order to have a liaison officer in all U.S. Control ports.
ROUTE INFORMATION TO U.S.N. CONTROL PORTS.
Under these circumstances the question would arise as to
how the U.S.N. control ports were to be supplied with their routeing
information, etc.
-4-
SECRET
This could be done either!
(a) By the Admiralty through Ottawa, as at present, all
such information being, of course, repeated, to
Washington.
or
(b) / By the Admiralty through Ottawa, thence to Washington
for distribution.
or
(c) By the Admiralty through Washington, which would
virtually mean the splitting of the existing Ottawa
area into two parts, i.e. U.S.A. and Canada.
10.
It is suggested that method (a) should certainly be used
in the early stages of the system as it would make no real difference
in the existing arrangement and this should be carried on until the
U.S. ports were completely au fait with the work. Orders regarding
American waters, and waters controlled by U.S.N.. would, of course,
be passed out by Washington direct, being repeated to Ottawa (for
the information of Canadian ports) and to Admiralty for the infornation of adjacent stations.
11,
It is for consideration whether this method or method (b)
should not be standardised since Ottawa is well used to interpreting
Admiralty orders to U.S. ports.
12.
Method (c) has the disadvantage that at times, two different
interpretations might be placed on the same Admiralty order. In any
case it would involve a very close and constant liaison being maintained
between Ottava and Washington.
13. SHIPPING MOVEMENTS (The Vesca System)
The U.S. authorities would naturally want full information
regarding the movements of U.S. merchant ships.
This could be provided immediately and simply
RET
by a new and separate Vesca from all ports in the world con-
tainly daily information of U.S. merchant ships and sent direct
to Washington, thus providing a world-wide picture of U.S.
merchant ships. This would be supplemented by an additional
copy of the normal daily Vesca from U.S. ports being sent to
Washington. Information of anticipated arrivals at U.S. ports,
could, in the early stages, be supplied by Ottawa or by C.S.A.'
direct under the existing system.
It would probably be desirable later to set up a
Mercantile Movements Section in Washington and treat the U.S.
ports as a separate "Intelligence Area' for Vesca signals. But
if, or whilst, Ottawa were still the channel through which Route
Instructions were passed, it would still be most desirable for
a copy of U.S.A. ports' Vescas to be sent to Ottawa to enable
routes to be checked as they are at present.
ADMINISTRATION
The administration of British Naval Control Liaison
Officers in U.S. ports (ex C.S.A.'s) would either continue to
be carried out by C.N.S., Ottawa, or by the Senior British Liaison
Officer (if one were appointed) at Washington.
SUMMARY
It is convenient to summerize the suggested arrangements
under two headings:
(a) Early Stages - The situation to be assumed immediately the
U.S. desired their Merchant Savy to participate.
(b) Final Arrangements - To be gradually assumed as experience
was gained, staffs augmented, etc.
SECRET
These suggested arrangements are shown in the
appended tabular statement.
SECRET
EARLY STAGES
Routeing Ships and
Assembling Convoys
FINAL ARRANGEMENTS.
British Staffe under
U.S.N. Staffe with
U.S. auspices.
British Liaison Officers.
in U.S. Ports.
Passing out route
Admiralty
instructions, mine-
through
fields, etc., to
N.C.S. ports in
U.S.A.
Reporting Movements
of U.S. ships.
Ottava or
Admiralty
As in "Early Stages"
through
or
Ottawa to
Admiralty through
thence
Washington
ports
ports.
direct to
Washington and thence
thence to
to ports.
Additional Vesca from all
ports giving movements of
U.S. ships only and sent
to Washington.
Ports in U.S.A. to send )
(Ports in U.S.A. to send
Vesca to Washington
(ington and possibly
(additional copy to Ottawa
(for checking routeing.
additional copy of daily) - (copy of Vesca to Wash
)
Movements into U.S.
)
ports sent out to ports
)
Washington.
)
from Ottawa, repeated
-
)
(Movements into U.S. Area
(to be passed to Washing(ton by Area from which
(ships are coming. Washing-
(ton to inform ports
(concerned.
Administration of
British C.S.A. 's
in U.S.A.
C.N.S. Canada
C.N.S. Canada or Senior
Liaison Officer, Washington.
72
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
Mr. White
FROM
Mr. Kamarck
March 20, 1941
Subject: Weekly Report on Significant Military Developments
1. The British are now using 150 bombers a night consistently in
raids against Germany with sporadic peak raids of 300. The Germans are
using 250 bombers with sporadic peak raids of 400.
The British have about doubled the number of bombers they are using
against Germany compared to the number they used in September. The Germans,
on the other hand, have only slightly increased the number of bombers used
against England.
2. The British are still using only Gladiator fighters against the
Italians in Albania. The Gladiators are outmoded, four-gun, biplane fighters
with a top speed of 250 miles per hour. According to the results of the
aerial fighting, however, the Gladiators are still good enough to dispute
superiority of the air with the Italian air force.
The Gladiators were the only plane available to the English in Egypt
last summer. The victorious English Libyan army of the last few months,
however, won its triumphs by using Hurricanes to win unchallenged command
of the air. The fact that Gladiators are still the only planes mentioned
as taking part in the Albanian fighting would indicate that any English
supplies from Egypt recently transported to Greece are being held in
reserve for use against the Germans.
3. There is not more than one German division (mainly motorized)
in Tripoli. This would mean that not more than 5,000-20,000 Germans are
in Tripoli. The Italians probably have 70,000 men here. Some German
reinforcements were necessary to replace the vital motorized components
lost by Graziani in the Libyan campaign and also to stiffen the Italian
resistance. The dispatch to Tripoli of much more than the small number
of German troops necessary for these purposes is not likely. Too large
axis forces in Tripoli would overburden the tenuous line of communications from Italy and would merely increase the vulnerability to English
attack.
73
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy, (Paris) Vichy
DATE: March 20, 1941, 7 p.m. Rec'd 11:20 a.m., 21st.
NO.: 325
The following is from Matthews for the Treasury.
The Foreign Exchange Office has just issued an instruction
under which the maximum amount of foreign currency which banks
in the unoccupied territory may sell to a foreigner proceeding
abroad is reduced to the equivalent in value of 5000 francs;
it formerly was 25,000 francs. This new regulation 18 intended
primarily to conserve the foreign exchange holdings of the
banks, but it is also designed to end abuses.
On March 17 an arrete of the Finance Ministry became
effective reducing the interest rates on short term government
paper for the second time since the beginning of 1941. Hereafter
instead of a 3.25 percent yield for two-year Treasury bonds,
it will be 3 percent. There has been a reduction in the
rate for one-year Treasury bills from 2.75 percent to 2.50
percent, and in the rate for six-months Treasury bills from
2.25 percent to 2 percent. Instead of 2 percent on 75 to 105
day bills, the rate will be 1.75 percent.
The "easy money" conditions now prevailing in France
have made this action possible. Increasing amounts are being
invested by banks in short term issues of the government, fared
with steadily rising deposits as a result of the considerable
sums which the German army of occupation is paying cut, and
a relative scarcity of commercial paper.
74
-2Yesterday morning the ban was lifted on transactions
in variable revenue securities on the Paris bourse. However,
stocks in French-owned companies which operate abroad will
not be quoted for the time being. The stockholders' syndicate
several days ago sent back to Paris the French securities which
had been held in this area since June for the account of
customers residing in the occupied zone.
Several reliable banking sources-have told me that
a bargain recently struck between Bouthillier and the Germans
was responsible for the "reopening" of the Paris bourse.
This action was at first opposed by the Finance Minister but
favored by the Germans. It was in return for this action that
the German authorities agreed to withdraw their opposition
to the French proposal for registration of all stocks.
Reference - telegram of December 10, 11 a.m., no. 1 from
the Embassy.
END MESSAGE.
LEAHY.
EA:LWW
75
MAR 201941
My dear Mr. welless
Reference is made to your letter of March 16,
1941, calling attention to Mexican proposals of
February 17. 1942, requesting the cooperation of this
Government in connection with the sale of silver produeed in Mexico and in the stabilization of the
Mexican pese. It is noted that you wish to know
whether the Treasury Department will be willing to
discuss the possibilities of arrangements relating
to the purchase of silver and of a stabilization
operation.
When the state Department considers the time
appropriate during its negotiations with the Mexican
Government, the Treasury Department will be glad to
undertake discussions with representatives of the
Mexican Treasury for the purpose of exploring the
actual monetary problems of the two governments
with special reference to stabilisation and silver.
Sincerely,
(Signed) H. Morgenthan, 327
Secretary of the Treasury.
Menorable Summor Wellee,
Asting Secretary of State.
FASIesh
Burlette
3/20/41
File to Mr. Thompson
76
COPY
DEPARTMENT OF STATE
Washington
March 18, 1941.
In reply refer to
RA
My dear Mr. Secretary:
Reference is made to conversations between officers of the Treasury and
of this Department with respect to the informal discussions now in progress
with the Mexican Ambassador regarding a wide variety of problems. In the
course of these conversations a copy of the Mexican proposals of February 17.
1941 has been made available to Mr. Harry White.
Among other things, the Mexican proposals request the cooperation of this
Government in connection with the sale of silver produced in Mexico and in the
stabilization of the Mexican peso. These are subjects which, of course, fall
within the province of the Treasury and regarding which negotiations would
have to take place between your Department and financial representatives of
the Mexican Government.
It would be very helpful to the Department if in any further informal
discussions which it carries on with the Mexican Government at this time it
were in a position to state that you would be prepared, at the appropriate
time, to discuss with representatives of the Mexican Government the possibilities of arrangements relating to the purchase of silver and of a stabilization
operation. I would appreciate an indication of your views in the circumstances.
Sincerely yours,
(Signed) Summer Welles.
Acting Secretary.
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury.
77
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE March 20, 1941.
Miss
For
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
£100,000
£ 3,000
Most of the £100,000 purchased by commercial concerns is being used to pay for the
importation of jute and liquor.
Open market sterling remained at 4.03-1/2. Transactions of the reporting banks
were as follows:
Sold to commercial concerns
Purchased from commercial concerns
£ 1,000
£ 3,000
In New York, the closing rates for the foreign currencies listed below were as
ollows:
Canadian dollar
Swiss franc (commercial)
Swedish krona
Reichsmark
Lira
Argentine peso (free)
Brazilian milreis (free)
Cuban peso
Mexican peso
14-15/16% discount
.2322
.2384-1/2
.4005
.0505
.2315
.0505
5-1/16% discount
.2066
In Shanghai, the yuan was unchanged at 5-13/324, and sterling was also unchanged
at 3.91-1/2.
A few days ago, the Federal Reserve Bank of New York received an order from the
Central Bank of Turkey to sell 5,000,000 French francs at best. The Federal submitted
an application to the Treasury for a license under Executive Order No. 8389 as amended,
permitting the execution of this order. Pending the receipt of such a license, the
Federal has made inquiries in the New York market. and has found that the banks are
willing to purchase French france at rates ranging from .0218 to .0228.
We sold $499,000 in gold to the Bank of Portugal, which was added to its earmarked
account.
No new gold engagements were reported.
78
-2In London, both spot and forward silver were again fixed at 23-1/2d, equivalent
to 42.67
Handy and Harman's settlement price for foreign silver was unchanged at 34-3/4.
The Treasury's purchase price for foreign silver was also unchanged at 35t.
We made four purchases of silver totaling 301,000 ounces under the Silver Purchase
Of this amount, 251,000 ounces represented sales from inventory, and the remaining 50,000 ounces consisted of new production from foreign countries, for forward
Act.
delivery.
CONTIDENTIAL
GD. 79
CONFIDENTIAL
SPECIAL BULLETIN
No. 32
MILITARY INTELLIGENCE DIVISION
WAR DEPARTMENT
Washington, March 20, 1941
G-2/2657-231
NOTICE
The information contained in this series of bulletins
will be restricted to items from official sources which are
reasonably confirmed.
This document is being given an approved distribution,
and no additional copies are available in the Military Intelligence Division. For provisions governing its reproduction see Letter TAG 350.05 M.I.D. (9-19-40) M-B-M.
ACCOUNT OF OPERATIONS BETWEEN MAY 10
AND THE ARMISTICE AT COMPIEGNE
SOURCE
In November, 1940, the chief of the French Second Bureau,
who corresponds to the American G-2, rendered an account to the
Vichy government on operations between May 10 and the armistice
at Compiegne. This report, translated and considerably reworked,
is presented here with an introduction prepared in the Military
Intelligence Division.
CONTENTS
1. INTRODUCTION
2. REPORT OF THE FRENCH G-2
a. General Foreword
b. Opposing Forces
C. Allied Plans of Operations
d. Estimate of the Maneuvering Possibilities
of the Enemy
e. Allied Operations
(1) From the Meuse to Dunkirk
(2) The Somme and Champagne
(3) The Withdrawal Maneuver
f. The German Maneuver as Seen by the French
g. Summary and Conclusions
***
Two maps are attached.
CONFIDENTIAL
-1-
80
CONFIDENTIAL
ACCOUNT OF OPERATIONS BETWEEN MAY 10 AND THE
ARMISTICE AT COMPIEGNE
1. INTRODUCTION.
The French G-2's account of operations, presented herewith,
brings out these salient points:
The Germans obtained strategical surprise through the
factors of rapidity and power.
a.
b. French GHQ knew before May 10 that the Allies were greatly
inferior in combat strength to the Germans, but the full degree
of inferiority was not recognized.
C. Political as well as military factors were involved in the
French decision to advance into Belgium.
d. The Allied forces moved out from behind their prepared
defenses without any intention of seeking a military decision, but with
the sole purpose of extending their passive defense system over a part
of Belgium.
e. The general line which the Allies hoped to defend had not
been fully organized in advance.
f. French distribution of forces was extremely defective.
The account states that on May 10 the number of divisions available to the Allies on the Northeast Front was 104. There were 67
French infantry divisions, as well as 13 fortress divisions, three
armored divisions, three light mechanized divisions, five light
cavalry divisions, and three infantry divisions in GHQ reserve. In
addition, the British had ten divisions available. The report adds,
however, that initially only 46 divisions - two armored, three light
mechanized, four light cavalry, 27 infantry, and ten British - met the
enemy west of the Moselle. None of the totals includes the 22
Belgian and the nine Dutch divisions.
Examination of the map indicates that GHQ controlled some 21
divisions, although this fact is not clear from the report. In the
Maginot Line there were about 25 divisions in addition to fortress
troops whose strength was probably equal to that of about nine divisions.
From the distribution of troops, it appears that the French
High Command did not expect the Germans to make their main effort where
they did, but the French seem to have determined correctly the
direction of the German main effort by May 11. The initial distribution
of forces and the rapidity of the German movement were such that
CONFIDENTIAL
-2-
81
CONFIDENT IAL
little could be done in time.
In particular, French armored and light mechanized units were
widely dispersed over the front, and 75 per cent of the French
tanks were not in armored formations. These tanks - 34 battalions
appear to have been largely frittered away; no very strong tank mass
could be constituted for the decisive action, although French GHQ
-
seems to have recognized the need for such an armored mass.
There is no indication that GHQ sought to facilitate rapid
movement of its reserves to the decisive point. Orders for reinforcement of the hinge at Sedan stated that the four divisions of a first
echelon were to arrive over a period of six days, while the six divisions of a second echelon were to arrive over a period of eight days.
The extreme weakness of French aviation, particularly as regards bombers, is made clear in the report, but there is no indication that GHQ fully recognized what repercussions this weakness
would have upon the action of other arms or upon the operations as a
whole.
Complete details of French strength and frontage near Sedan
are not available, although the report shows that the Second Army
had five infantry divisions and some fortress troops to hold 70
kilometers while the Ninth Army had seven infantry divisions, including one fortress division, to hold a front which was 75 kilometers
in width but which would expand to 90 kilometers when the army's
left wing had pivoted to Namur. The German main effort struck the
left of the Second Army and the right of the Ninth, just short of the
pivot of the French-British advance into Belgium. Thus, the main
bodies of French troops had not left their prepared defenses in the
area where the effort was made.
It appears that Gamelin insisted on the Breda maneuver the movement into Holland - despite the objection of the commander
of the Seventh Army. There is also an intimation that General Georges,
Commander of the Northeast Front, opposed the movement, at least
passively. The result of this plan was that the Seventh Army, originally intended as a reserve behind the Allied left, was committed
initially. Incidents such as this lend weight to reports that com-
plicated command organization resulted in considerable friction.
As a result of the nature of French dispositions, the
Germans generally met the French in greatly superior force. They
were able to strike locally with a powerful armored force at weak
parts of the French position in terrain favorable for German tactics
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but unfavorable for the French. French GHQ lacked means for intervening rapidly and effectively although the direction of the main
effort was known.
2. REPORT OF THE FRENCH 0-2
a.
General Foreword.
On May 10, 1940, France had been on a war footing for more
than eight months. The sudden attack which had been feared at the
beginning of operations had not taken place because of the campaign
in Poland. Mobilization and concentration had been effected without
difficulty and without intervention by enemy bombing aviation.
During the winter of 1939-1940, training for reservists,
who constituted the major part of our effectives, was somewhat improved,
and the program for equipping our units with armored, antitank, and
antiaircraft materiel was in progress. Because of the fact that
construction of this type of materiel had just been started, the few
units which had any of it at all had only small amounts.
During the same period, the Germans made considerable
progress in training of effectives and in development of materiel.
They increased their number of large units from about 140, which
were probably set up upon mobilization to more than 190. They reconditioned armored and motorized materiel which had been damaged in
Poland, brought their large mechanized units up to strength, increased
from six to ten the number of their armored divisions by providing
tanks for the four light divisions already in existence.
The spring, therefore, found us making great improvements,
but it would be several months before we could come up to the mark.
The German Army was greatly superior in both men and materiel.
b.
Opposing Forces.
(1) The Allied Armies.
(a) The High Command.
From the beginning of the war until January, 1940, GHQ at
La Ferte-Sous-Jouarre ensured execution of the orders of General Gamelin,
Chief of Staff of National Defense and Conmander-in-Chief of the Land
Forces, and of General Georges, Assistant to the Commander-in-Chief
and Commander of the Northeast Theater of Operations. The Chief of
the General Staff was at La Ferte with General Georges.
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On January 18, this organization was changed, with the
following results:
General Gamelin, Commander-in-Chief of the Land Forces,
was stationed at Vincennes with his cabinet. He had GHQ at his disposal, but by order of the Chief of Staff, this headquarters was
located in the region of Montry, 30 kilometers west of La Ferte.
General Georges, redesignated Commander-in-Chief of the North-
east Front had a headquarters entirely distinct from GHQ, but the Fourth
Bureau, equivalent of the American G-4, remained common to both head-
quarters in order that supply and transport might be unified.
(b) Inter-Allied Cooperation.
In principle, the British Expeditionary Force was immediately
under the Commander-in-Chief of the Land Forces, but Gamelin tacitly
authorized Georges to settle directly with Lord Gort on means of
carrying out the Gamelin decisions. This double subordination did
not result in major inconvenience because of the fine spirit of cooperation shown by Lord Cort. He recognized the authority of General
Georges from the beginning of the war, and even passed into Belgium
under the orders of the general commanding the First Group of Armies.
No agreement could be reached with the Belgian High
Command, however, regarding organization of the command in case
Franco-British forces should penetrate into Belgium at the request
of the Belgian King.
General Gamelin intended to settle the important question of
organization of the Inter-Allied Command when the time came.
(c) Ground Forces.
Large Units. On May 10 the French Army had, in principle,
the following forces in the different theaters of operations:
67 infantry divisions plus staffs and corps
troops for 23 army corps;
13 fortress divisions plus staffs and corps
troops for 5 army corps;
Northeast Front
3 armored divisions;
1 cavalry corps composed of 3 light
mechanized divisions;
5 light cavalry divisions and 4 cavalry
brigades.
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Southeast Front
2 army corps composed of 7 divisions,
including 1 colonial division;
3 divisions stationed in rear of the
GHQ Reserve
Northeast Front, but destined eventually
to reinforce the Southeast Front;
North Africa,
3 army corps composed of 8 divisions;
Near East
1 army corps composed of 3 divisions;
Norway
3 light divisions.
The 67 infantry divisions on the Northeast Front comprised
31 active divisions, of which seven were motorized; 20 divisions
formed upon mobilization and constituting Series A, First Reserve;
16 divisions formed upon mobilization and constituting Series B,
Second Reserve.
A much greater reorganization than had been effected was
contemplated for fortress troops. The five army corps on the Northeast Front were not complete with respect to service troops; they
included no organic corps elements, such as general reserve or corps
artillery. Infantry fortress divisions, which had partially taken
the place of fortified sectors, were also incomplete with respect to
service troops. Thus, although there was a theoretical increase in
the number of our large units as a result of these beginnings of
reorganization, there was no increase in the actual power or value of
our formations.
The situation was serious for the colonial divisions.
Their number had just been increased from six to eight. In each of
six of these divisions, two regiments of seasoned white troops had
been replaced by two regiments of colored troops, some of whom had
only recently been levied. On May 10, three of the seven colonial
divisions on the Northeast Front had not even completed the amalgamation of their elements. Some of them, as one might have expected,
gave a very poor account of themselves.
Our armored divisions had been created very recently.
Each consisted of only two battalions of B tanks - 70 tanks - and
two battalions of light tanks - 90 tanks. Two of the divisions had
had but a few weeks of training, and the third was just being com-
pleted. At the beginning of the battle they suffered for lack of
cohesion and combat practice.
In addition to French troops, the Allied forces under the
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Commander-in-Chief of the Northeast Front were three British army
corps, consisting of ten infantry divisions, and a division from the
Polish Army.
The power of the British divisions, five of which were
regular and five territorial, was about equal to that of a similar number of French divisions. They were fully equipped with modern materiel,
but the training of troops and cadres, especially in the territorial
divisions, was far from good. A British armored division was to arrive
late in May at Pacy-sur-Eure, where it would complete its training.
Its materiel was neither very abundant nor more than lightly armored.
The Polish division was incomplete, and its training had
not been finished.
Belgium set up 20 infantry divisions, of which six were
active, and two cavalry divisions. Materiel was incomplete and not
sufficiently modern, while the training, morale, and value of large
units was not uniform.
Holland furnished eight infantry divisions and one light
division, but these were not capable of offering long resistance
to the German Army.
French General Reserve. In the French general reserve
there were 34 tank battalions in addition to the twelve which were
used in the armored divisions. Among the 34 battalions were six
employing Model F. T. tanks and one employing Model F. C. tanks. Both
of these types were obsolete.
Troops for Norway. There were three light divisions of a
special type available for use in the Norwegian theater of operations
on May 10. These had been rapidly organized while the reinforcement
of armament equipment - unfortunately too slow - was in progress,
and while the High Command was endeavoring to increase the number of
our large units. Formation of these units not only deprived us of
two normal divisions and four companies of tanks, but involved changes
within about ten divisions.
Antitank Armament. When the invasion of the Low Countries
began, each division was equipped with its battery of eight 47-mm.
guns, but the far greater requirements for 25-mm. guns had by no
means been met.
Antiaircraft Armament. In each of 22 divisions, specialized
antiaircraft armament included three sections of 20-mm. Oerlikon
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machine guns, each section having 12 guns; in each of 13 divisions
it included a battery of six 25-mm. antiaircraft guns. Other divi-
sions had no antiaircraft armament on May 10, although ten additional
batteries were emplaced on May 12.
In the army echelon, 39 general reserve batteries, each
having six 25-mm. antiaircraft guns, had been distributed among the
armies. There were also 33 groups, or 99 batteries, of 75-mm. guns.
of this number, 19 groups, or 57 batteries, were equipped with
World War motorized guns which possessed good ballistic qualities up
to 5,000 meters, but whose transport materiel was worn out and
sometimes incomplete.
Finally, 163 Territorial antiaircraft defense batteries
were emplaced in the zone of the armies on the Northeast Front. The
majority of the guns in these batteries had old ballistic qualities,
including a ceiling of 5,000 meters, and no transport materiel,
(d) Aviation.
On May 9, the forces available to air zones of operations,
corresponding to army groups deployed on the front, were as follows:
NORTHERN ZONE (1st Group of Armies)
Air Forces for
Cooperation
Reconnaissance
Observation
Pursuit
Reserve
Air Forces
4 Groups
1 Group
17 Groups
1 Group
4 Groups
7 Groups
2 Day Bombing Groups
2 Night Bombing Groups
2 Assault Bombing Groups
Bambing
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EASTERN ZONE (2nd Group of Armies)
Air Forces for
Reserve
Air Forces
Cooperation
Reconnaissance
Observation
Pursuit
3 Groups
1 Group
15 Groups
3 Groups
4 Groups
4 Night Bombing Groups
Bombing
SOUTHERN ZONE (3rd Group of Armies)
Air Forces for
Reserve
Air Forces
Cooperation
Reconnaissance
1 Group
Observation
4 Groups
Pursuit
1 Group
1 Group
Bombing
1 Group
1 Group
The numbers of French planes available at the front on
May 10 were as follows: 580 modern pursuit planes, 31 day bombing
planes, 64 obsolete night bombing planes, and 300 modern reconnaissance
planes.
British air forces based in France on the same day comprised
ten bombing squadrons of 160 planes, of which eight squadrons were
equipped with obsolete Battles and two squadrons were equipped
with modern Blenheims; ten pursuit squadrons of 130 planes,
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and the observation aviation of the B.E.F. The 130 planes of the
pursuit squadrons were reduced to 40 after May 20.
Stationed in Great Britain were the Bomber Command and
the Fighter Command, which served to reinforce units based in France
or to execute missions for the benefit of the land forces from bases
in England.
(e) Defensive Organizations.
The Maginot Line. In the principal line of resistance and
rear areas of the Maginot Line, the winter and spring program of
improving permanent fortifications called for installation of armor
plate and special armament. This work was considerably handicapped
by lengthy delays in manufacture. The program also contemplated the
construction of works such as defiladed entries and supplementary
premises, but these had not been started on May 10.
Positions were reinforced by construction of concrete field
works for the purpose of increasing the depth of the organizations
and the density of arms under light concrete. Detailed programs for
this work were made up by the armies upon a basis of technical recommendations made by the Inspector General of Engineers. There were plans
for concrete blockhouses of all types, as well as for antitank obstacles,
generally in the form of ditches. Troops in the intervals were to be
protected by trenches, communication trenches, shelters, and other
features of terrain organization, but since concrete work was given
priority, none of these works had been completed by May 9.
On the Saar Front the weakness of peacetime organization
was remedied by construction of important casemates and by reinforcement of inundation areas. Slow production of armor plate also hampered
this work.
Outposts were discontinuous organizations consisting of
wire entanglements in front of ground shelters along the line of contact and the line of resistance. Special efforts, including construction of concrete blocks and antitank obstacles, were made in connection
with outposts near Longwy and Steinseltz, region of Seltz, and along
the Rott Line.
The Meuse, the Ardennes, and the North Front. The program
of the First Group of Armies was to reinforce light peacetime works
by means of rather large blocks for protection against 210-mm. armament,
while
the program of the large units in line was to multiply the
small works.
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Although the winter program. was handicapped by bad weather, it was well
on its way to completion.
The works of the Givet Salient had not been improved, since
priority had been given to work on the main line of resistance. The
spring program contemplated reinforcement of this part of the front
by civilian labor, but very little progress had actually been made.
The Second Position. The second position was to include
a continuous reserve line along the entire front. Work on this
position, entrusted to the Fortified Zone Study Committee, had been
started by civilian contractors in the following areas: Region of the
Flanders Heights; La Capelle; the Signy-L'Abbaye-Omont-StenayMangiennes-Spincourt Line, Zone of the Forest of Remilly, and the
line running: Pond of Pischwald-Saar Union-Butten. On May 10 the
work yards were in full swing, but few actual results had been seen.
Belgian Works. Peacetime works included fortifications at
Liege, Namur, and Antwerp; organization for defense of the Albert
Canal; establishment of a zone of massive demolitions in the Belgian
Ardennes, and the starting of an antitank obstacle on the edge of
Gembloux. This obstacle was moved to the region of Perwez by the
Belgians shortly before May 10.
The Armies going into Belgium were to carry out a plan
of demolitions to protect their defense on water lines - the Dyle,
the Charleroi Canal, and the Heuse - and to hold up the enemy's
advance in the passive zones, such as Semoy.
The Dutch Lines of Defense. These lines, based upon
water lines and inundations, were as follows:
The covering line on the Yssel-Meuse cut, characterized
by demolitions.
The first line of resistance, including the Grebbe Position and the Peel Position, situated on both sides
of the rivers along the Eem-Amersfort-La Grebbe-GraveMill-Deurne-Weert Line. The defensive organizations
of the Peel, consisting of light works above ground,
were the subject of contradictory estimates. Their
right flank did not have liaison with the Belgian
defenses.
The "Holland" position, a redoubt encircled by the sea and
the line of inundations extending Amsterdam-UtrechtGorinchem.
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Some works and inundations in Zeeland to support the defense of the islands.
Intermittent works between Peel and Zeeland, south of the
rivers.
(2) The German Armies as Seen by the French High Command.
The total number of divisions set up by Germany upon mobilization was estimated at approximately 150, divided as follows:
56 active divisions, of which six were armored divisions,
one was a light division, and one an SS division;
40 reserve divisions;
34 Landwehr divisions;
19 divisions made up of replacement units.
After the outbreak of hostilities, there were three new
series of divisions, nine in September, 19 in the period from November
to January, and 15 in the spring of 1940. In addition, four light
divisons had been converted into armored divisions by addition of tank
units.
Thus on May 10, 1940, the Germans had available ten armored
divisions of approximately 300 tanks each, and about 180 infantry
divisions, of which five were motorized. Undoubtedly these divisions
differed somewhat as regards strength and equipment.
of the total German strength, about 56 active divisions were
shock units and about 50 other divisions seemed suitable for offensive
operations. In short, Cerman troops available for offensive battle
in the spring of 1940 exceeded, according to the estimates of the
French High Command, 100 divisions.
At the beginning of May, information collected by the French
Highas
Command
was
follows: indicated that the general distribution of German forces
110 to 127 divisions on the Western Front;
27 to 36 divisions in Poland, Bohemia, and Austria;
15 to 23 divisions in Scandinavia and on the northern
coast of Germany;
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12 to 22 divisions in the Reich.
On the active front from the Moselle to the Rhine, however,
only 13 second rate divisions were identified, and only five to six
divisions held the Rhine front itself.
All the German divisions suitable for offensive operations
seemed to be available.
The success of armored divisions in Poland had confirmed
the conviction of the German High Command that mechanized formations
would be called upon to bring about a lightning decision in the war.
For this reason the aims of the Germans, as far as armored forces
were concerned, seemed to be rapid reconditioning of materiel damaged
in Poland; use of the Czech plants, Skoda and C.K.D., for the production of improved medium tanks; perfection of the heavy materiel, armed
with 75-mm. or 105-mm. guns, which had been tested before the war;
energetic training of greatly increased personnel, and conversion
of light divisions into armored divisions.
On May 1, the German Army probably had available 7,500 tanks
of different models. These constituted ten armored divisions - about
40 battalions - and 25 to 30 general reserve battalions which could
be used as replacements for losses suffered by armored divisions.
German combat aviation was estimated on May 10 at 1,500 pursuit planes and 3,500 bombing planes.
According to information gathered during the second fortnight of May, the German High Command used for the offensive west of
the Moselle on May 10 an army of operations whose minimum strength
was as follows:
34 army corps organic elements;
10 armored divisions;
107 infantry divisions, of which 43 were active and 64 were
reserve; 45 of the latter had been initially in GHQ
reserve.
At the beginning of May, certain of these large units had
still been in training at camps in the interior of the country at
such places as Arys, Frankfort-on-Oder, Kustrin, Grafenwoehr, Bruck
Leitha, Neuhamter, and Ohrdruf.
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There were two German army groups, including 2 total of
six armies and two groupments of armored and motorized forces.
To this army of operations, the French High Command originally opposed the following French forces:
2 armored divisions;
3 light mechanized divisions;
4 light cavalry divisions, and
37 infantry divisions, including the 10 British divisions,
as well as:
20 Belgian infantry divisions;
2 Belgian cavalry divisions, and
The Dutch Army.
C.
Allied Plans of Operations.
(1) Intervention in Belgium and Holland.
(a) General.
Of all the hypotheses made by the French High Command with
regard to a German attack in the northeast theater of operations, the
one considered most likely, even in peacetime, was the hypothesis of
an aggression against Belgium and Holland.
The plan in force upon mobilization contemplated that our
left flank armies would defend the position of resistance organized
in French territory and marked by the bridgehead of Montmedy-MezieresRevin-Rocroi-Maubeuge-Bavai-Conde sur Iscaut-Lille-Les Monts-Dunkirk.
In case authority to penetrate into Belgium were given,
the First Army was to straighten its left around the pivot of Conde
and occupy the Middle Escaut in liaison with the Belgians defending
the bridgehead of Ghent and the strong point of Antwerp. The High
Command understood that this penetration into Belgium could be effected
only upon the request of the Belgian government, either as a preventive measure or after the frontier had been violated.
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(b) Defense of the Frontiers.
From the beginning of our operations in the Saar, the
Commander-in-Chief of the Land Forces foresaw the eventuality that
the main body of the German forces would turn upon us. On September
26, 1939, the Commander of the Northeast Theater of Operations gave
the following personal and secret instructions:
On October 1 the First Group of Armies, withdrawn
from the Southeast Front, would take over the front from
Rochonvillers to the North Sea.
On October 3 the British Expeditionary Force would
go into line in the Lille Sector.
The Seventh Army, a reserve unit on the left of the
formation, would be introduced if the threat became more
clearly defined.
The defense of the frontier position of resistance
was to be ensured in any case by the Second Army, the
Ardennes Army Detachment, and the First Army of the
B.E.F.
If authority to penetrate into Belgium were given,
the B.E.F. and the Seventh Army were to move to the Middle
Escaut and organize it defensively.
In case of particularly favorable circumstances, cooperation
of the French and Belgian Arnies was to be sought on the position of
the Albert Canal and on the Meuse from Liege to Namur. On September
29 and 30, the Commander-in-Chief of the Land Forces emphasized the
necessity of accepting combat only at fortified positions and the
prohibition on penetrating deeply into Belgium unless the Belgians requested our help. These orders are explained by the fact that the
Belgian Government wished to maintain strict neutrality. In fact, two
Belgian divisions were placed in the Ardennes and two others between the Sambre and Escaut as covering forces to oppose France.
(c) The Escaut Hypothesis.
On October 24, 1939, the Commanding General of the North-
east Theater of Operations defined conditions for intervention of
Franco-British forces in Belgium. Instructions called primarily for
occupation of the Middle Escaut and contemplated a thrust on the
Antwerp-Namur line. The latter could be effected only if it were
possible for us to arrive in time on a prepared position, or on one
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which we should have time to organize.
Assistance from the B.E.F. to the extent of two army
corps of two divisions each was assured for the purpose of estab-
lishing an organization in Belgium, for it was to the interest of
both France and Great Britain to protect Flanders. The number of
large units mobilized in the Belgian Army had been increased to 16
infantry divisions, and the army was clearly oriented to face north
and east.
The French military attache in Belgium reported that a
spirit of neutrality prevailed, but that close collaboration with
the Belgian Staff did not seem indispensable for carrying out the
maneuver successfully.
The alert of November 11, 1939, caused the entry into line
of the French Seventh Army on the left of our formation.
(d) The Holland Hypothesis.
On November 8, 1939, the French High Command became con-
cerned about the possibility of an invasion of Holland as a prelude
to a direct attack against Great Britain. In such an event the plan
was to move to the mouth of the Escaut, occupy the Island of Walcheren
and the Woensdrecht Salient, and, in Belgium, to reach the line
Antwerp-Louvain-Wavre-Namur for the purpose of ensuring greater
liberty of action for our rear and our left. Our action was to be
subordinated to the wishes of the Belgian government, and this maneu-
ver was to be carried out according to the plan contemplated in previous instructions.
(e) The Dyle Hypothesis.
The intention to penetrate into Belgium beyond the Escaut
took shape after the alert of November 11, which foreshadowed a
German attack in the near future. Meanwhile, the attitude of the
Belgians towards us had changed. We knew that the Belgian Army
included 18 divisions and that it had the intention of establishing
a continuous obstacle from Wavre to Namur and extending towards the
south the position Antwerp-Louvain-Wavre (Dyle). This would bar entry
at Gembloux,
On November 17 the Commander of the Northeast Theater of
Operations defined the methods by which we were to occupy the posi-
tion Antwerp-Namur. Pivoting around Revin, the left of the FrancoBritish formation would move toward the north. The Ninth Army,
which had formerly constituted the army detachment of the Ardennes,
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would hold the Meuse above Namur; the First Army would bar entry to
Gemblous; the B.E.F. would hold the line of the Dyle; the Belgian Army
would connect the Dyle from Louvain with the fortified position of
Antwerp, and the Seventh Army, placed in reserve, would be ready to
support the extreme left of the formation. In order to save time,
the movement would take place directly from our frontier position
without a stop on the Escaut.
(f) The Albert Canal Hypothesis.
On January 10, 1940, after studies ordered by the Commanderin-Chief of the Land forces had been completed and after recommendations had been made by the First Group of Armies, the Commander-in-
Chief of the Northeast Theater of Operations issued directives concerning eventual occupation of the Albert Canal. The idea was to reinforce
progressively, prudently, and according to circumstances the occupation
of the canal from the Dyle.
(g) The Breda Maneuver.
The Commander-in-Chief of the Land Forces insisted on
March 12 that the Cormander-in-Chief of the Northeast Front make a
new study and reconsider the mission of the Seventh Army. This army
was not only to occupy the Maritime Escaut, but it was also to debouch
north of Antwerp for the purpose of securing the lower Escaut and
ensuring liaison between the Belgians and the Dutch.
(h) The New Dyle Hypothesis.
In view of the Breda maneuver, a new draft of the Dyle
hypothesis was made on March 20. The Dyle maneuver was considered
most probable of realization, and the Breda maneuver would be carried
out only if orders to penetrate into Holland were given.
The general formation along the Meuse from Namur to Antwerp
was not modified. The Seventh Army, previously in reserve on our
left, was charged with debouching northeast of Antwerp in the direction
of Breda, at the same time making sure of the Maritime Escaut.
The cavalry, recently reorganized, was to protect the
movement of the main bodies as follows:
The 1st Light Mechanized Division would ensure
protection of the Seventh Army in the direction of
Tilburg;
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The cavalry corps consisting of the 2nd and 3rd
Mechanized Divisions would move in the general direction Bavai and St. Trond, north of the Sambre-Meuse
Ridge;
The 1st and 4th Light Cavalry Divisions would
move in the general direction of Dinant and Laroche,
south of the Sambre-Meuse Ridge;
The 2nd and 5th Light Cavalry Divisions, would move
in the general direction of Carignan and Bastogne. They
were in liaison, by way of Arlon, with the 3rd Light
Cavalry Division operating in the Grand Duchy.
In spite of the difficulties foreseen by the Commanding
General of the Seventh Army in the execution of the Breda maneuver,
the Commander-in-Chief persisted in his view that it was necessary
to give a helping hand to the Dutch. This maneuver, defined in an
instruction dated March 21, was to be used when the Germans attacked
on May 10.
(1) The New Escaut Hypothesis.
Reconsideration of the Dyle hypothesis resulted in a revision of the Escaut hypothesis. The purpose of this was to cover the
possibility that German forces would precede us in Belgium and that
we would not be able to move our formation in due time to the LouvainNamur position.
The problem involved new data. The B.E.F. had increased
its strength from four to nine infantry divisions, and a new light
mechanized division had been organized. A decision to occupy the
mouth of the Escaut had been made.
The general formation was not modified except that the B.E.F.
was to occupy the entire Middle Escaut from Maulde to the bridgehead
of Ghent and that the Seventh Army was to occupy the Maritime Escaut.
North of the Sambre-Meuse Ridge, the three light mechanized divisions
would be moved to a line from the Willebroek Canal to the canal from
Brussels to Charleroi. South of the Sambre-House Ridge, the 1st,
2nd, 4th and 5th Light Cavalry Divisions would be moved to the Sambre
below
Charleroi, to the Meuse, to a point above Namur, and to the line
of the Semoy.
(2) Intervention in Luxembourg.
Intervention in Luxembourg offered the advantage of ensuring
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better protection of the industrial region of Longwy, situated in
front of our fortified position.
In case the enemy should penetrate into the Grand Duchy,
the Third Army was to be entrusted with the following missions:
Its cavalry units - the 1st Light Cavalry, one brigade
of Spahis, and one groupment of reserve cavalry - were
to be pushed ahead as quickly as possible in the direction of Luxembourg for the purpose of gaining contact
with the enemy. They were to effect certain vital demolitions in liaison with the cavalry elements of the
Second Army.
Outposts close to the frontier were to be occupied for
the purpose of gaining contact as far forward as possible.
Resistance was to be offered in advance positions,
including Longwy, in order that possession of this region
might be retained as long as possible.
These missions immobilized permanently large cavalry units
and caused troops taken from three divisions to enter the line at
the advanced post of Longwy. The divisions occupied the position
of resistance, and troops taken from them had a total strength equal
to that of one division.
(3) The Maginot Line.
The purpose of the Maginot Line, as viewed before the war,
was to permit covering forces to hold their ground in case of a sud-
den attack. A short distance in front of the line of actual fortifications there were advance posts, more or less fortified, which
barred the approaches.
After our offensive of September, 1939, the fortified posi-
tion between the Rhine and Moselle afforded the advantage of a glacis
as much as ten kilometers deep in certain places. The High Command
decided to occupy the glacis, establish a system of outposts, and
form a covering position for the purpose of permitting execution of
works reinforcing the main position. These works were undertaken
at first in intervals or in rear of works constructed in time of peace,
but later the Commander-in-Chief of the Land Forces insisted upon
increasing to the front the depth of the position. At certain selec-
ted places, strong points were organized. These constituted the real
advance posts of the position of resistance.
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The defense of the Maginot Line between the Rhine and
Moselle devolved upon the Second Group of Armies, which included the
Third, Fourth and Fifth Armies. Aimed chiefly at the main lines of
approach, the maneuver of this group tended to block any attack on
the fortified position in national territory and to reestablish the
integrity of this position wherever it might have been penetrated.
tives:
The battle was conducted according to the following direc-
In advance of the fortified position - that is, in front
of its outer edge - outposts formed a covering position whose garrison
was organized in two echelons, one for contact and one for support.
The strength of these two echelons was not to exceed 1/3 of the infan-
try and 1/5 of the artillery of the divisions in line.
The contact echelon, made up of small posts along the
general line of the frontier and slightly in rear thereof, had a mission
of surveillance.
The support echelon, formed by centers of resistance,
occupied an intermediate line marked by strong points of the terrain.
Its normal role was to stop enemy incursions, and in case of attack,
it was to have a temporary resistance mission. A withdrawal order
could be given to it only by the army commander.
The fortified position included a main line of resistance
made up of fortifications, a checking line, and an antitank barrage
in rear of the position. The battle was to be fought on the line of
the fortifications.
The fortified position was covered at certain points by
outposts or strong points. When these could be closely connected with
the position of resistance and given the benefit of its fire, their
garrisons were assigned the mission of resisting without thought of
retreat.
After the period of movement of September, 1939, frontages
allotted to large units in the field corresponded to those that would
be used in a static defensive combat situation. Approximately 16
infantry divisions were in line between Longuyon and the Rhine. It
had been estimated that if there was to be defensive combat on the
fortified position, it would be necessary to reinforce fortified
sectors with an average of two infantry divisions each. There were
nine fortified sectors from Longwy to the Rhine.
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Combat frontages were not only maintained once the October
threat had disappeared; they were even increased progressively to
facilitate service in outposts and to speed up passage of our large
units into a "seasoning" sector. A plan of relief for our large
units contemplated a sojourn of about one month in a sector for each
of them.
Each frontage involved a strip of terrain more than ten
kilometers deep and gave the formation the following aspect:
Infantry divisions superposing fortress troops - that is,
about two divisions per fortified sector - each had their three regi-
ments abreast. In each regiment, the battalions were successive - one
in the outposts, one on the position of resistance, and one in reserve
or engaged in fortification work. This schematic formation was in
reality far more flexible than it would seem because of the use of
reconnaissance groups, groups of volunteers, battalions of machine
gunners, units of pioneers, and the like. First echelon battalions,
nevertheless, had large fronts to watch and hold, and they alone
bore the brunt of winter operations.
The High Command attached special importance to the main-
tenance of our outposts in the density existing at the end of Decem-
ber, 1939, and they maintained this density until April, 1940. At
that time the withdrawal of several large units from the Lorraine
front seemed advisable in view of the general situation.
The Commander-in-Chief on the Northeast Front informed the
Second Group of Armies that it was desirable to give a certain sta-
bility to our first line formation and that, at the cost of strict
economy, the armies supported by our fortified position would be deployed
to ensure the freedom of action indispensable to our large maneuvering
units.
Approving the first phase of the withdrawal plan submitted
by the Second Group of Armies, the Commander-in-Chief on the Northeast
Front prescribed the withdrawal of two divisions and contemplated
placing a third division in reserve as soon as a British division
had been engaged in the sector of the Third Army.
On April 15 the deployment of the large units in the zone
of
the
Second
Group of Armies, excluding fortress units, was as
follows:
In line:
22 infantry divisions, 20 of which were
between Longuyon and the Rhine
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In reserve:
Total:
6 infantry divisions
28 infantry divisions
On May 10 the withdrawals effected in execution of the orders of April 16, which corresponded to the first phase of the retreat
plan of the Second Group of Armies, had modified this distribution
as follows:
In line:
18 infantry divisions, 17 of which, including the British 51st Division,
were between Longuyon and the Rhine
In reserve:
Total:
7 infantry divisions
25 infantry divisions
At the end of this first phase, the front was short three
divisions, but the total number of large units available to the
Commander-in-Chief had been increased by that number. The 7th and
14th Infantry Divisions had been placed in GHQ Reserve, zone of the
Second Group of Armies, and the 36th Infantry Division had been
practically replaced by the 51st British Infantry Division, In the
same zone, the number of large units in GHQ Reserve ready to be
moved to another destination had been increased from three to five.
In a second phase, which had not started on May 10, three
new divisions were to be taken from the Second Group of Armies and
were also to be placed in CHQ Reserve.
d.
Estimate of the Maneuvering Possibilities of the Enemy.
The end of the campaign in Poland made available the
greater part of the German forces. The question with the French was
how and for what purpose they would be employed. The hypotheses to
be considered were air offensive on the Northeast Front west of the
Rhine; intervention in Southeastern Europe, or an attack through
Switzerland, possibly in liaison with Italy.
Of these eventualities, the last two were never confirmed
by what was known of the formation of the enemy forces, and the first
remained most probable. As a matter of fact, the German forces necessary for a Holland-Belgium-Luxembourg operation had been in assembly
west of the Rhine since mid-November.
During the winter, the main object of the French intelligence plan was to determine possible variations in the strength of
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these enemy forces, to keep an eye on their stations, and to watch
especially for any closing of the formation toward the frontier which
would increase the possibility of attack. Special attention was given
to the situation of the armored divisions, basic elements of any
offensive action.
From the very beginning of 1940, the German High Command
had available on the Western Front a mass of from 106 to 120 divisions.
All the large armored and motorized units seemed to be assembled
there. Further, a certain number of large units were either stationed
or training in the interior of the Reich. Operations in Norway did
not alter this situation to any great extent.
The form of the German operation on the Northeast Front
and the point where the main effort would be made had not been determined, but it was known that a direct attack on the Maginot Line
would demand the emplacement of materiel and personnel. No serious
indications of such emplacement were observed.
On the other hand, the following operations were always
possible:
(1) An attack on Belgium and Holland for the purpose of
outflanking the Maginot Line from the north and conquering bases from
which Great Britain could be attacked.
(2) An operation in Holland alone, which might possibly
furnish bases without Franco-British intervention.
Although definite information as to the enemy plan of
operations had not been obtained, an examination of the known formation of German forces on the Dutch-Belgian frontiers showed important concentrations between the Moselle and the Rhine at Wesel.
There were approximately 50 divisions in first echelon.
Serious alerts took place November 12 and January 15, but
information regarding a German offensive on the Western Front be-
came frequent and definite only after April 15. About May 3 the
immediate threat to Belgium and Holland became more and more apparent,
and on May 10 the German attack debouched from the North Sea to
Luxembourg.
e. Operations.
From the French point of view, the battle which started
May 10, when German forces invaded Holland, Belgium and Luxembourg
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and which ended with the Armistice of June 25, may be divided into
three distinct phases.
The first, which lasted until the end of May, started with
the forward movement of our formation on the Antwerp-Namur-Mezieres
Front. This front was soon compromised by an enemy break-through in
the direction of Mezieres and Calais which resulted in the separation
and envelopment of our left wing. While most of the remainder of our
forces in the north were, at the cost of their materiel, embarking
at Dunkirk, we were able to constitute from Montmedy to the Channel
a front resting on the cut of the Aisne prolonged by the Ailette and,
insofar as possible, by the Somme from St. Simon to the sea.
The second phase lasted from June 5 to June 11. It corre-
sponds to the Battle of the Somme and Champagne, and, because of lack
of means, our dispositions were overextended. There was no spirit of
retreat, in spite of the fragmentation certain to occur in our armies
should the front be disrupted.
The third phase lasted up to the armistice and included the
deep withdrawal maneuver imposed on our entire formation by German
forces exploiting their successes.
(1) From the Meuse to Dunkirk.
(a) May 10.
During the second part of the night of May 10, many bombing
attacks were launched against the north and northeast of France, as
well as against Holland. Extensive landings were effected at Dutch
airdromes, most of them preceded and accompanied by release of
parachutists and supported by activities of the Fifth Column.
At dawn a large number of German troops crossed the GermanLuxembourg frontier, and elements of apparently lesser strength penetrated into Belgium.
At 6:30 A. M. General Camelin telephoned to General Georges
that the Belgians had requested our help, and orders were given for
action on the Belgium-Holland-Dyle maneuver hypothesis. As a result
of the lessons of previous alerts, the First Group of Armies prescribed
the application of measures codified in instructions issued to every
echelon. Cavalry units penetrated immediately into Belgium to cover
installation of main bodies on the selected position - Dyle-Namur, the
Leuse at Dinant, and Mezieres.
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In principle, the main bodies were to effect their movements
by night in order to escape the activity of enemy aviation. Emplacement of their essential elements was not to be completed before May 13,
but it was hoped that the time necessary for completion of these
movements north of the Meuse would be ensured by resistance along the
Albert Canal. South of the Meuse, however, the necessity of checking
the German advance as far forward as possible in the direction of
the Meuse at Dinant, which the main bodies could occupy in force in
48 hours, was obvious from the first day. It was for this reason
that the Commanding General of the Northeast Front intervened to push
the cavalry of the Ninth Army forward beyond the Meuse.
(b) May 11-12
The unexpected collapse of resistance along the Albert
Canal in the region of the Maastricht Canal on May 11 resulted in the
High Command's prescribing that on May 12 the First Group of Armies
order the cavalry corps to engage vigorously the enemy armored elements
on the plateau of Tirlemont. With the same object in view the efforts
of bombing aviation were directed against the German columns debouching south of Maastricht.
It became obvious as early as May 11 that the enemy was
making a vigorous effort south of the Meuse. The cavalry of the Second
Army was violently attacked by important armored elements and thrown
back on the Semoy.
On the same day, after having sent to the rear of the First
Group of Armies the units which were to constitute its reserves, the
High Command decided to direct an armored division of the general
reserve and three infantry divisions towards the hinge of SedanMezieres and the second position of Thierache. These movements started
May 12, and the arrivals were to be echeloned from May 14 to May 17.
Larger forces - one armored division and five infantry divisions were to be moved in the same direction on May 13 and to be on the
ground May 21.
(c) May 13.
The Seventh Army, subjected to bombing and tank operations
in Holland organized the line connecting WUEST WEZEL and the Turnhout
Canal. The British Army had its three infantry divisions in first
echelon on the Dyle in Belgium.
The cavalry corps, attacked in force, was obliged to withdraw at the end of the day in rear of the Perwez obstacle. The units
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of the First Army, meanwhile, continued their movement into position.
Further south the lieuse was crossed rapidly at Dinant by the first
enemy elements on the morning of May 13.
The Commander of the Ninth Army gave his attention to his
left, where he was to attempt to reduce the bridgehead of Anhee -
first with all the infantry and tank units he could muster, then with
an armored division.
During the afternoon, an attempt at infiltration was made
in the region of Montherme. This was easily contained. The enemy,
however, crossed the Meuse in force at Sedan, debouched from Flize and
Nouzonville in the direction of Liart, and attacked in the rear all
organizations of the Ninth Army occupying the first position.
(d) May 14.
There were now two necessities - first, to hold firmly the
pivot of Sedan and keep the enemy from widening the breach and outflanking our fortified system between the Argonne and the Meuse;
second, to fill the breach between the Oise and the Bar Rivers by
occupying the second position.
The solidity of the pivot south of Sedan was maintained
in spite of the fact that the left divisions of the Second Army gave
way and the enemy continued his strenuous effort with varied intensity
until the beginning of June.
It had been hoped that the front on the second position
could be united between the organizations of Rocroi and the Heights
of Sedan, but it soon became apparent that the contemplated concentration as planned would be outdistanced by the enemy. It was necessary,
therefore, to gain time, to remain on the south flank of the enemy
advance, and to assemble the necessary means of bringing together
the two parts of our formation.
In the North the enemy gained contact on the entire front
between Antwerp and Namur, and it became urgent to relieve the First
Group of Armies of the mission of carrying out the maneuver on the
Meuse and Aisne, as well as to place a new Army in the breach. For
this purpose, the Second Army was placed under direct orders of the
Commander-in-Chief of the Northeast Front as early as May 13, and on
May 14 the army detachment commanded by General Touchon was given the
mission of reestablishing the unity of the front between the First
Group of Armies and the Second Army.
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(e) May 15-16.
To avoid the break-through which was looming, it was necessary
to check the advance of armored units engaged in the region between
the Hirson-Liart Railroad and the Aisne at Chateau-Porcien. This
operation could be entrusted only to units of the same type. Efforts
were made on the one hand to reassemble them on the left wing of the
Ninth Army, consisting of the 1st and 2nd Armored Divisions, and on
the other to form additional units of this type for the benefit of
the Touchon army detachment. This detachment was de Gaulle groupment, which was to later become the 4th Armored Division.
This operation, contemplated for May 17, was to include
a main operation in the direction of Marle and Signy 1'Abbaye, and two
secondary operations towards Nizy-le-Camte, Chaumont-Porcien, Vervins
and Liart. It was aimed particularly at gaining control of road
junctions of Hirson, Aubenton, Rumigny, Liart and Chateau-Porcien.
Meanwhile, reserves were to continue to be brought up on the flanks
of the breach.
The organic large units of the Seventh Army - brought back
from Holland - with the exception of the 60th and 68th Infantry
Divisions, were directed toward the right of the First Army Group,
which was located in the region of Cambrai and Roye. Reserves were
brought up by rail as far as possible, although some came by motor
transport. It was thus possible to prolong the partitioning on the
Aisne at Rethel, and at one time there was a plan to reach the right
of the Ninth Army by way of the Marshes of Pierrepont.
(f) May 17.
In Holland, the situation of the Seventh Army's forces in
the Islands of Beveland and Walcheren became critical as a result of
the vigorous advance of the Germans in Beveland. This island finally
had to be evacuated. Further, it was contemplated that Walcheren would
be abandoned when a landing of enemy elements was reported.
The Belgian Army, which had retired to the entrenched position
of Antwerp, was not attacked. During May 15 and 16 the First Army and
the B.E.F. were withdrawing to the rear of the Charleroi Canal, very
strongly pressed by the enemy. On several occasions the tanks of the
cavalry corps were able to reestablish local situations.
At the end of the night it appeared that offensive operations
contemplated between the Sambre and Aisne could not give the desired
results anticipated because the Ninth Army did not have the necessary
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armored equipment. In fact, the 1st Armored Division had suffered
considerably, and the 2nd Armored Division had the majority of its
units placed on the bridges of the Oise and the Sambre Canal. During
the day, while the Maubeuge Salient and the line of blocks still seemed
to hold, the line of resistance was overrun farther to the south,
and General Giraud was obliged to shift his defense to the Sambre and
the Oise Canal between Berlaimont and Lloy.
On the Aisne, on the other hand, the de Gaulle groupment
started from the region of Liesse and attacked at dawn. It advanced
satisfactorily; its tanks reached Montcornet at about 12 o'clock and
held without any great reaction on the part of the enemy.
(g) May 18.
In Holland, the Island of Walcheren was evacuated.
In Belgium, the situation of the Belgians, the British, and
the French First Army was fairly good, although the troops of the
First Army were exhausted. The cavalry corps had helped considerably
in breaking off the engagement and in the establishing of the First
Group of Armies on the general line Alost-Ath-Mons-Maubeuge, It was
to be regrouped on May 19 and moved to the right of the formation.
Farther south, the enemy endeavored throughout the day to
undermine the defense of Maubeuge and to cross the Sambre Canal. At
the end of the day he had penetrated into the forest of Raismes. In
the region of Le Cateau, his attempts towards Cambrai failed in front
of the 1st Light Mechanized Division.
On the Oise, taking advantage of the bridgehead secured
towards Ribemont the previous evening and forcing the passages at
Mont d'Origny, the enemy pushed forward in the direction of St.
Quentin and Peronne, which he reached at the end of the day. He
crossed the Somme at Peronne and at Pont-de-Brie, where passages
guarded only by regional elements.
The delays necessary for permitting arrival of large units
capable of uniting the Ninth Army with the line of the Somme - delays
which were increased by the action of enemy aviation on communications
- killed the hope that we could stop the onrush of the armored divisions along a united front. The idea now was to canalize, to slow
down this onrush, and to take measures to cope with the worst that is - the outflanking of the Somme and the advance on Paris.
Consequently the Sixth Army and the de Gualle groupment
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were ordered at 10 o'clock to act on armored elements north of the
Serre and to slow down their advance toward the Oise; the Seventh
Army brought back from Belgium was ordered to join the right of the
Ninth Army on the Oise from La Fere, and, if possible, from Ribemont;
and the Second Army was ordered in the evening to prolong the obstructions and barrages of the Somme,
(h) May 19.
In Belgium the withdrawal operations of Allied forces left
personnel exhausted. At the end of the day the Belgians were on the
Canal from Terneuzen to Ghent and on the Escaut from Ghent to Audenarde;
the B.E.F. was on the Escaut from Audenarde to Amulde; the French
First Army held on its left the strong point, Conde-Valenciennes, and
on its right, in the region of Maubeuge, it endeavored to force the
passage and reach the Escaut. The cavalry corps was being regrouped
in the region of Douai and Arras.
In the region of the Somme, the enemy reached Peronne and
the southeast approaches to Doullens.
The Seventh Army received the mission of organizing without
delay the defense of Paris through the gap of the Oise, It established
itself on both sides of the valley, its right on the Ailette, its
center on the Oise at Chauny and the Crozat Canal, and its left on
the Somme at Ham and Peronne.
Farther to the East, the 4th Armored Division, formerly
the de Gaulle groupment, attacked from Laon to the North in order to
act against the flank of enemy columns. Having advanced successfully
to the Serre, the division was stopped and subjected to heavy bombardment. By withdrawing on the heights of Laon, it was to protect the
assembly on the Aisne at Berry-au-Bac and on the Ailette of arriving
reinforcements.
A solution to the painful question of uniting the two ends
of our formation became more and more necessary. The First Group of
Armies was urged to group on its right wing a force built around
large armored units capable of opening a way toward the South. Before the forces necessary for effecting a joining maneuver could be
assembled, care had to be taken to avoid being outdistanced on the cut
of the Samme, from which a mechanized maneuvering mass destined to
envelop our formation could debouch.
Information indicated that the enemy had limited his action
to deployment on the Aisne and the Somme in a curtain of decreasing
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density from east to west. This was destined to protect the operations of his armored forces in the direction of northern ports. A
covering force on the Somme at Peronne, at Amiens and ultimately at
Abbeville could be expected to gain the time necessary for a later
debouching toward the North.
(i) May 20-22.
Efforts were made to assemble on the Somme all elements
which could be taken from the Second Group of Armies or from the
interior, and to constitute on the extreme left a covering groupment
based upon cavalry - either mechanized or horse elements - reinforced
by British units stationed in the West and the British division pre-
viously engaged in Lorraine.
At the same time, the Third Group of Armies, charged with
coordinating operations on the Somme and Aisne, received the special
mission of reducing bridgeheads which the enemy had conquered south
of the Somme from Peronne to Abbeville. Unfortunately the means pro-
vided for this purpose permitted neither successful execution of this
task nor capturing the necessary passages for an ultimate debouching
in the direction of Bapaume and Albert.
On the other hand, the efforts of the First Army Group
and the B.E.F. to conquer the necessary exits for their maneuver
toward the South were fruitless, and we had to abandon the hope of
unifying our formation before the arrival of the main bodies of German
divisions in second echelon on the Valenciennes-St. Quentin front.
The pressure of the enemy was increasing around the units of the
First Group of Armies. On May 22 the First Army held the Escaut while
the Canal of St. Omer, Bethune, and La Bassee were defended only by
miscellaneous elements, frequently weak ones.
Farther to the West, enemy armored vehicles were at Noeuxles-Mines, south of Bethune. They were approaching St. Omer by the
way of Montreuil and Lumbres and arriving south of Boulogne, where
the 21st Infantry Division, having recently landed, was engaged at
Neufchatel, Samer, and Desvres.
(j) May 23-June 4.
Up to May 25, the First Group of Armies still hoped that
the operation contemplated towards the South and prescribed by General
Weygand could be carried out. This operation was to be effected on
May 26 by three infantry divisions attacking between the North Canal
and Escaut in the direction of Marchiennes and Peronne and supported
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to the west by two infantry divisions in the direction of Bapaume.
The cavalry corps was to connect the attack with troops forming a barrage
at the Bassee Canal.
Late on the day of May 25, however, the serious situation
of the Belgian Army, which had been violently attacked in the region
of Courtrai, became apparent. Two of the divisions which were to
attack had to be recalled to the North. Under these conditions, the
Commander of the First Group of Armies decided that the attack would
not take place and that it was advisable to organize the withdrawal
of forces as a whole with a view to occupying a wide bridgehead covering Dunkirk by the Canal of the AA, the Lys, Ypres, Dixmude and
Nieuport.
On May 28 the Belgian Army capitulated.
Pressed on their left as a result of this defection and deprived on their right of the assistance of the B.E.F., which was with-
drawing and embarking at Dunkirk, our forces in the North remained
alone to face the enemy in heroic combats. Only part of them were
able to embark; the last moved out under fire during the night of
June 3-4.
(2) The Somme and Champagne.
It was obvious as early as May 26 that the situation was
critical. Fifteen French divisions, three light mechanized divisions,
and nine British divisions were about to disappear in the North. On
the Aisne and the Somme a line of about 20 divisions was stretched
from the Argonne to the sea. Facing us, a victorious enemy had employed
only part of his troops, and he would soon be able to turn his main
forces against us.
(a) May 26-27.
It was to be expected that after a short delay the German High
Command would direct its efforts to the south, but no definite information as to where the enemy would make his new attack was yet avail-
able. It might follow the shortest route to Paris - that is, through
the Oise Valley - accompanied by an outflanking movement and followed
by an exploitation south of the Somme, Amiens and Abbeville, as well
as by a powerful action on the Laon-Soissons axis. Such operations
however, would call for numerous preparations, and it did not seem
possible that these could be made in the immediate future.
An offensive seemed more probable between the Argonne and
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Chiers and on the Aisne at Attigny, where enemy pressure was relentless.
Finally, the forcing of the Aisne between Berry-au-Bac
and Attigny might occur shortly and open the way for deep exploitation
by armored detachments across the plains of Champagne.
Maintaining liaison with the fortified system of Montmedy
and Longuyon, and well protected on the Aisne at Rethel and Berry-auBac, the French High Command devoted its efforts to organization of
a strong defense of the Oise valley and endeavored to assemble its
maximum forces gradually from the extreme left to the sea. The
Commander-in-Chief of the theaters of operations as a whole notified
the armies that the battle on which the fate of the country depended
was to be fought on the occupied positions without any thought of
retreat.
It was obvious, however, that whatever respite might be
given the High Command, there could not be an assembly of troops in
sufficient numbers along the entire front. It was necessary therefore
to make dispositions that would enable prolongment of struggle.
With the idea of directing the efforts of all units towards the front,
the Command took upon itself the organization of necessary security in
rear areas.
For this purpose, natural strong points and defensive lines
dividing the future battlefield throughout its depth were to be
occupied and organized by the large units in reserve as they arrived.
In the intervals, or near zones which were unoccupied because of a
shortage of means, groupments were to be built around armored units
and given the mission of attacking the flank of the enemy exploitation
detachments.
The Forest of Compiegne was to be organized and prolonged
beyond the Oise by the obstacles of the marshes of Clermont and the
valley of the Therain in the region of Beauvais. At the extreme left,
groupments based upon light mechanized divisions or armored divisions
were to defend the cut of the Bethune River and both sides of
Formerie Ridge. In rear, the obstacle of the Seine was to be organized
from Meulan to the sea and prolonged by the valley of the Oise and the
defensive position of Paris, while in the center, the Mountain of
Rheims
was protected to the east by the canal from the Aisne to the
Marne.
The Argonne, to the right, was strongly held throughout
its depth, and from it a groupment including one armored division and
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units of a light mechanized division would be ready to debouch from
Grandpre towards the West. Between the Mountain of Rheims and the
Argonne, the cuts of the Marne at Chalons and Vitry, the Ornain from
Vitry to Revigny and the upper Aisne were to be organized to complete
closing of the plain of Champagne.
On May 27 the enemy attacked without tanks our position
between the Meuse and Chiers, particularly in the region of Inor.
He was contained, but in the evening a straightening of the line
enabled him to reach the northern edges of Inor and Olizy-sur-Chiers.
(b) May 28.
The staff of the Fourth Army was withdrawn from the Lorraine
front and placed in reserve in the region of Troyes, while the Third
Group of Armies was ordered to reduce enemy bridgeheads south of the
Somme.
(c) May 29.
Although the battle was to be fought on the occupied
positions and without thought of retreat, further instructions defined
the maneuvers which the armies would have to effect in case the enemy
should break through their formations. The purpose of the instructions
was to facilitate the best use of strong elements which were being
organized in the rear areas.
If the enemy directed his efforts toward Paris and extended
them more or less to the sea, the Third Group of Armies was to concentrate its resistance on these lines of approach: Amiens-Paris,
Laon-Paris, and Rethel-Chalons. It was to take advantage of natural
defensive lines in its rear areas and hold on the line Aisne at
Soissons-Oise at Compiegne-Creil-Clermont-Beauvais. This line could
be extended if necessary to the Epte and the obstacle of the lower
Seine.
If the enemy directed his efforts between Montmedy and the
Aisne at Rethel, the Second Group of Armies, holding the positions
of Montmedy-Longuyon on the one hand, and the heights north of the
Argonne on the other, was to use the compartment of the Aisne at
Vouziers and the heights of the Meuse at Dun to bar the direction
Sedan-Clermont-en-Argonne.
If a deep break-through prevented execution of these measures,
the Third Group of Armies, covering the capital, was to reestablish
itself on the Paris position prolonged to the West by the Lower Seine
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and to the East by the Marne. The maneuver of its right was to be
covered on the line of the Vesle and the Marne Canal to the Aisne.
The Second Group of Armies, tying its right and center to the forti-
fied position, was to fall back on its left to the line Longuyon-
Verdun-Ste. Menehould-Chalons, or, at the worst, on the Orne, Verdun,
Ste. Menehould and Chalons.
At the junction of the two army groups between the Argonne
and the Mountain of Rheims, a groupment of forces was to be emplaced
in such a manner as to form a barrage on the axis of the enemy's
eventual effort. Laborers were sent to the rear areas of the armies
with a view to preparing the maneuvering position which had been
planned.
(d) June 1-4.
This period was marked by the preparation for the battle
which was anticipated. Attempts were made to reduce the bridgeheads
of the Somme, but the enemy, fully aware of their importance, had
concentrated defense means and antitank weapons upon them, and our
successes were limited.
In addition to preparing new obstacles, we set up new divisions with training battalions, effectives who had recuperated from
the battle of May 10, and brigades which had been destined for
Norway and repatriated from England. Materiel - particularly antitank weapons - was not available in sufficient quantity to equip these
new units.
There was indication of an eventual threat on Paris by two
wing operations, one along the coast and the other on the plains of
Champagne against Rheims.
In order to avoid charging the same authority with defending in two directions, the Command was reorganized with a view to
clearer definition of missions. The Third Group of Armies, comprising
the Sixth, the Seventh, and the Tenth, was charged with defense of the
front from the Mountain of Rheims to the sea and with barring the
direction Amiens-Paris. The Fourth Group of Armies, entrusted to
General Huntziger and comprising the Fourth and Second Armies, was to
bar the direction Rethel, Chalons and Sedan, Bar-le-Duc. The Second
Group of Armies continued to defend the fortified regions,
(e) June 5.
The enemy offensive was launched on June 5 from the Aisne
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at Bourg et Comin to the sea against an organized but very much
extended formation, especially on the extreme left.
Stopped the first day at the debouches of Peronne, the
enemy made an effort south of Amiens, where he succeeded in advanc-
ing. On the extreme left, British contingents organized their
defense on the Bresle, abandoning the passages of the lower Some.
East of the Oise, our line on the Ailette, which was too
sparsely held, gave way and our defense had to be moved back on
the Aisne, which was soon crossed. Under enemy pressure, the Sixth
Army no longer could expect to reestablish the situation before reaching the line of the Marne at La Ferte.
(f) June 9-11.
The withdrawal in the direction of the Lower Seine was
effected through successive use of delaying positions at the Bresle
and Bethune Rivers, Clermont, and Beauvais, then through withdrawal
on the position of Paris.
Throughout this battle the Command endeavored to carry
out the maneuver as planned. It tried to occupy the rear barriers lower Seine, Marne, Ornain - with units recently reconstituted and
hastily brought up. Elements of these units came from the Alps Front
or from North Africa.
A large part of the Tenth Army, driven back to the sea
in the region of St. Valery-en-Caux, was lost insofar as any later
maneuvering was concerned.
(3) The Withdrawal Maneuver.
(a) June 11-12.
The enemy succeeded in crossing the lower Seine on June 11,
although the center of the Third Group of Armies - the Army of Paris
and the Seventh Army - held its own on the position of Paris. The
Tenth Army, which had lost the greater part of its forces in the rear
of the Bethune River, risked being separated from the remainder of
our forces. The center of the Sixth Army, on the Marne at Chateau
Thierry, was broken, while the enemy, penetrating deeply into Champagne,
broke up the Fourth Army and compromised the retreat of the right of
the Sixth Army.
It then became obvious that the problem was no longer one
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of a military character. In spite of all, however, the struggle had
to be continued. There were two alternatives - either to remain
united on our fortified position insofar as possible and have our formation fall back on the pivot Longuyon-Argonne, or to abandon the
fortified position and endeavor to retreat with our entire force,
covering the heart of the country as long as possible.
The first alternative afforded us the advantage of retaining a formation supported by fortifications. It abandoned to
the enemy, however, practically all our national territory and left
to the army only the prospect of capitulation in the East or partial
refuge in Swiss territory.
The second alternative, difficult to execute, could lead
only to the division of our formation, but it permitted covering
the heart of the country for a longer period. It gave hope of preventing capitulation of the main bodies of our remaining forces. This
solution was adopted, and necessary instructions were given to the
groups of armies on June 12. The Second Group of Armies had been
notified on June 11.
The withdrawal was to end on the left at the Orne River
and at the hills of Alencon and the Perche; in the center and to the
right on the shortest and most economical front constituted by the
Loire River from Tours to Briare, the Horvan Hills, the Cote d'Or
and the Jura in the region of Champagnole and of the Rousses. An
intermediary stage, however, was necessary. It consisted of a
regrouping of the center and right on the Orleans Canal, the Loing,
the Seine, the Aube, the Marne at Vitry, the Moselle at Toul,
Epinal, and Belfort.
During this maneuver - executed for the most part by troops
who were exhausted, who had suffered heavy losses in effectives and
in material, and who were under the pressure of aggressive motorized
units - it became imperative that we act quickly. That is why all
available motor transport was distributed among the armies. We must
also maintain the unity of the formation to avoid its being split and
encircled. While it appeared that the center - the Army of Paris,
the Seventh Army, and the left of the Sixth Army - well consolidated
could carry on without serious fissures, the same was not true of the
left and the right.
To the left, the divergent axis of withdrawal given to the
Tenth Army for extra-military reasons - consitution of the redoubt of
Brittany - did away with the hope of maintaining unity with our Loire
Front if the enemy should push forward in the direction of Saumur or
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Angers. The Command endeavored, however, to maintain in the interval between the Tenth Army and the Army of Paris units capable of
delaying such separation. These units were light mechanized divisions
and armored divisions.
To the right everything depended upon the rapidity with
which the Second Group of Armies could break off, shift to its left
the necessary forces for its protection, and thus parry the deep
exploitation started by the enemy in the direction of the southeast.
(b) June 13.
The High Command urged the Second Group of Armies to hasten
execution of its withdrawal - particularly that of its left in
the Argonne - and prescribed organization of antitank obstacles and of
a barrage position throughout the depth of the withdrawal zone,
especially between the Loire and Jura, where the situation was the
most threatening.
(c) June 14-15.
While the Tenth Army was withdrawing on the Orne and on
Alencon, a rapid penetration was being made by enemy armored forces
which had broken through our Champagne formation. Moving through
the partitioned section of the Ornain and Meldancon, which was weakly
held by elements of the Third Army, they reached Gray, Vesoul, and
the Doubs River and then moved towards the Belfort Gap and the
Vosges.
(d) June 18.
The Second Group of Armies was outdistanced while hastily
constituting covering forces on its extreme left. Strongly attacked
on the Sarre during its withdrawal and exposed to an attack debouching
from the Rhine in Upper Alsace, it formed a square, under the orders
of the Commanding General of the Third Army, in rear of the Moselle
at Toul, Frouard, the canal of the Marne to the Rhine between Nancy
and Sarrebourg, the crests of the Vosges, the Upper Moselle, and the
Meuse at Neufchateau, This ended June 22 in the triangle Portieux,
Donon, and Corcieux.
A fraction of the Eighth Army grouped around Belfort
endeavored to force a passage north of the Doubs in the region of
Baume-les-Dames. On June 18 it obtained permission to take refuge
in Switzerland if necessary.
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While the partition and encirclement of our right was
taking place, the Tenth Army on our left was submerged by the sudden
thrusts of armored forces on Cherbourg and on Brest. In the center,
in spite of strong enemy pressure to the East, the Third Group of
Armies withdrew in order on the Seine and the Loire,
It was soon obvious, however, that the retreat would have
to be continued toward the Massif Central - thanks to the assistance
of successive valleys of the Cher, the Indre, the Creuse, and the
Vienne - in order that a double threat might be escaped. This threat
was constituted as follows:
To the West, from the forcing of the Loire at Saumur and
Angers, in spite of the splendid conduct of elements hastily grouped
on the left bank of the river and of the delaying action of the
cavalry corps;
To the East, from the deep thrust towards the Morvan,
and shortly afterwards towards the Haute Loire and Allier; this
thrust was made by large motorized and armored units which had broken
through the formation of the Sixth Army south of the Marne at
Chateau Thierry and which had encountered only the remains of units and
regional elements hastily engaged to defend river crossings.
The Command was endeavoring to delay encirclement. To
the West it prepared and took advantage of cuts of the Charente
and the Dordogne Rivers. To the East it ordered the Commanding
General of the Fourth Group of Armies, who had under him the
Commanding General of the Fourth Army, to bar the approaches of the
Massif Central to enemy forces debouching west of the Allier River
in the general direction of the southwest. Meanwhile the Commanding
General of the Second Group of Armies, having the Second Army at his
disposal, covered the north flank of the Army of the Alps and
took over the defensive sector of the Rhone. He also barred the
Rhone routes which led through the high valleys of the Loire and
the Allier to the rear areas of the Massif Central and of the Army
of the Alps.
The Army of the Alps, attacked by Italy on its normal
front, was obliged to guard its flank on the Lower Isere and to
cover progressively its rear areas on the east bank of the Rhone.
The splendid resistance of our troops, whose outpost fortifications
held their ground, denied the enemy the crossing of the Isere at
Voreppe and enabled the Army of the Alps to come out of the struggle
intact.
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At the time hostilities were about to cease, the High
Command issued its last instructions. The withdrawal of the Third
Group of the Armies on the Dordogne, whose passages were held and whose
course was marked by demolitions below Bergerac, was to be covered on
the left - on both sides of the Garonne - by the strong points of
resistance of La Baise and the Lower Lot, and on the right by the
delaying action of the Second Group of Armies covering the approaches
of the Ridge of Naurouze between the last spurs of the Massif Central
and the sea.
Conclusion of the armistice on June 25 ended this hopeless
maneuver, carried out with remnants of units whose movements were
made painfully on roads congested by refugees.
f.
The German Maneuver as Seen by the French.
It was obvious from the outset of 1940 that the formation
of the German forces was definitely planned with a view to offensive
operations on the Western Front. Their total strength had been
increased to 150 divisions and later to 190 divisions, of which ten
were armored divisions.
The center of these forces was particularly oriented toward
Luxembourg, Belgium and Southern Holland. Practically all the large
units of the regular army - that is infantry divisions, armored divi-
sions, and motorized divisions - and a large number of the divisions
set up upon mobilization were assembled in the region situated north
of the Hoselle and on both sides of the Rhine above Mainz. Some were
perfecting their instruction and completing their training, while others
held the Siegfried Line north of the Moselle and improved their
defensive organizations. The contact front, facing our positions, was
held only by divisions constituted upon mobilization.
Germany was thus preparing for a powerful mass of attack
capable of speedy intervention in Luxembourg, Belgium, or Holland.
As early as April, many signs of preparation for a German attack
north of the Moselle were noted - particularly the following:
the Rhine.
(1) Construction of bridges or landings on the Moselle and
(2) Movement and assembly of armored forces in the region
between the Moselle and the Lower Rhine.
(3) Closing-in of the German formation west of the Rhine
toward its western frontiers.
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the troops.
(4) Distribution of maps of Luxembourg and Belgium to
(5) Increase in the number and size of the depots for
materiel and ammunition west of the Rhine.
(6) Improvement of roads leading to the western frontiers.
(7) Interruption or reduction of passenger and freight
traffic on the Reich's railways.
(8) Withdrawal of German funds in Holland.
(9) Reinforcement of antiaircraft measures in large German
towns.
These signs became more clearly defined and supplemented
in the beginning of May. Preparation of many crossings over the Oure,
the Sure, and the Moselle above Trier were particularly noted. News
from Luxembourg, Belgium, and Holland proved the state of anxiety prevailing in these countries as a result of the ever-increasing German
mass.
The German offensive was about to take place. It was
actually launched on the morning of May 10.
Information gathered on May 11 indicated that "wing elements
directed on Luxembourg and Holland were to constitute secondary masses
only," and, as a matter of fact, it was confirmed on May 12, 13 and
14 that the center of gravity of the German attack was south of the
Meuse in the direction of Bouillon. Sedan seemed to be most
seriously threatened.
The crossing of the Meuse by the Germans on May 15 brought
up a new problem. Was the German mass planning to move South to take
the Maginot Line in rear, or was it planning to advance straight to the
West in order to effect separation of the Group of Armies of the
North from the main forces of the French Armies?
On May 16, all reports indicated that a bold exploitation
was being made by the German armored forces in the direction Sedan
and Guise. A German document, found during the night May 16-17,
showed the march direction of the divisions of the Von Kleist Group the 1st, 2nd, 6th, 8th, and 10th armored divisions and the 2nd, 13th
and 29th motorized infantry divisions - and stated that all German
armored divisions were to advance straight to the west. Any remaining doubt as to the axis of the effort of the German masses which
had crossed the Meuse was thus dispelled.
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Laon, St. Quentin, Cambrai, Arras, Amiens, and Abbeville
were successively reached by the advancing German mass of the Von
Kleist group, while the protection of this movement was insured
from the south by motorized divisions, which were relieved by infantry
divisions as they advanced.
The German effort was oriented more and more toward the
northwest, and on May 20 definite information indicated that the
German armored mass, having effected the separation of the northern
forces from the main bodies of the French armies, was turning towards
the north in the general direction Boulogne and Calais, in order to
annihilate the Allied forces in the north.
The first phase of the German maneuver ended in front of
Dunkirk.
It was obvious on May 26 that the armored divisions had
been withdrawn from the north and reassembled in the region of
Montreuil and St. Omer and that motorized infantry divisions fighting
on the Somme had been relieved. Thus a new mass was being constituted
immediately after operations in Flanders.
On the other hand, definite signs of the preparation of
an offensive began to appear June 1 on the northern bank of the Aisne
from Pontavert to Vouziers; the contact was closing in on the Moselle
and Rhine front, and assembly of materiel and effectives was noted
in front of the Rhine. It was obvious that the enemy was preparing
to launch powerful offensives from the sea to Switzerland within a
short time.
Movements and assemblies of large armored units were located
north of the Sommo and east of Hirson. They indicated that the
enemy effort would be made, on the one hand, on the Somme and, on
the other, in Champagne.
A very violent offensive was launched June 5 from Abbeville
to the junction of the Ailette Canal with the Aisne. Two mechanized
masses, identified near Amiens and Peronne, shook the French front
south of these two regions. Along the front of attack, approximately
forty infantry divisions were either advancing in rear of the
mechanized masses or endeavoring to break through the French Front.
Information soon indicated that the armored mass which
had been debouching from the region of Amiens towards the south was
now turning towards the southwest, then towards the west in order to
encircle our troops retreating from the lower Somme toward the
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lower Seine. The mechanized mass operating south of Peronne seemed
to have the mission of reaching the region of Montdidier by way of
the right bank of the Oise, with the west of Paris as its objective.
East of the Oise enemy attacks, at first repulsed, later
succeeded in reaching the plateaus north of the Aisne, and then in
crossing the river itself. East of the confluence of the Aisne
and the Ailette Canal, the many signs of an early attack, which had
been reported June 1, became confirmed. On the morning of June 9,
the enemy attacked on a front extending to the Meuse.
General Guderian's armored mass, identified since June 2
in the region of Hirson, was engaged June 10 on the Champagne Front.
Its action, obviously oriented to the southeast, was designed to
bring about, by an outflanking movement to the east, the fall of the
Mountain of Rheims. Then it was to carry out to the south, by way
of Chalons and Chaumont, an outflanking movement of our Lorraine
and Alsace forces. At the same time many signs of preparation for
an attack were disclosed on the Lorraine and Alsace fronts, particularly in the regions of Huningue and Neuf-Brisach, An attempt
to cross the Rhine appeared to be imminent on June 13.
Estimates of German forces now available indicated that
the German High Command had about 20 divisions in the Black Forest.
Further, about 30 divisions were available for the battle or for
movement in a new direction. Thus approximately 50 new divisions
could be engaged against the French armies, which for some time had
put all available forces in line.
On the morning of June 14, the First German Army attacked
on the Lorraine front, and the following day the Seventh Army
crossed the Rhine above Neuf-Brisach.
Fronts were being disrupted on all sides; German advances
were increasing and tending to encircle our forces in the west and
in the east; the Atlantic Coast was quickly occupied, and in the
rear the three and a half divisions of our Army of the Alps engaged
29 Italian divisions.
The armistice was signed before a German Army whose forces
were impaired by exhaustion and losses but whose men were exalted by
victory and still capable of powerful and prolonged efforts.
g.
Summary and Conclusions.
This study is not intended as a historical document giving
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a complete and accurate picture of operations. Too little time has
elapsed since the armistice, and insufficient testimony has been
given. This work constitutes merely a guide for more exhaustive
studies; it may, however, warrant certain conclusions as to the
reasons for German victory.
On May 10 the Allied armies included 104 divisions on the
Northeast Front. Of this number, 29 were immobilised because they
were fortress divisions or because they were second line divisions
made up of old classes. Thus there remained 75 divisions capable
of participating in active operations. Ten of these were British.
Against these large units, the German Army could put into line 190
divisions, of which 140 were capable of participating in active
operations. Numerical inferiority was still greater insofar as
tanks and aviation were concerned.
After losses in personnel and materiel suffered in the
north, there remained on June 4, the eve of the second German offen-
sive, over 43 Infantry divisions, three armored divisions and three
cavalry divisions from Longuyon to the sea. The mechanized equipment
of these units was greatly reduced. On the same date, the German
Army had reconstituted its ten Panzer divisions, and the enemy could
choose its zones of attack. To support our fortified position and
to oppose a possible attack through Switzerland, there remained but
17 fortress divisions and divisions made up of old classes.
These figures show that the superiority of the Germans in
effectives, mechanized units, and aviation was unquestionable and
that it constituted one of the principal military causes of our
defeat.
However, each time the French could oppose equal means,
they held their own and proved their valor as well as the effectiveness of their materiel, unfortunately insufficient in numbers.
number of examples will give proof of this assertion.
A
First of all, in the open, when the Germans used neither
tanks nor aviation, they encountered great difficulties.
(1) In the Argonne - first between May 15 and 20 and
later about May 22 - three or four French divisions held their
ground successfully against approximately eight or ten German divisions. The losses of the enemy were very heavy and his gains were
limited during this period to a few kilometers of terrain.
(2) On the Chemin des Dames, two French divisions held
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for two days, beginning June 5, against five German divisions operating without tanks but supported by a strong aviation.
(3) Farther to the east, the Fourth Army, in spite of
its feeble means - six infantry divisions, two of which were light
divisions of two regiments each, 1 armored division, and one light
mechanized division, very much reduced and including but 150 tanks
- checked for 48 hours on June 9 - 10 an adversary who employed
exceptionally strong forces. His strength included 12 infantry
divisions, four Panzer divisions, and two motorized infantry divisions.
In addition, he had absolute mastery of the air.
Second, modern French materiel had good qualities which
were recognized even by the Germansthemselves,
(1) The reconnaissance regiment of the 3rd Light Mechanized
Division left the region of Cambrai May 10. At the end of the day
it had reached the Albert Canal after a journey of more than 200
kilometers. It went into action the same evening.
(2) The combat brigade of this same division - that is,
the tanks and artillery - left the region of Cambrai May 10 for the
position Wavre-Namur which constituted its first objective. This
stretch of 150 kilometers was covered without incident; the materiel
arrived in perfect condition and the different elements of the
brigade fought each of the following days against the German Panzer
divisions.
(3) It was ascertained that tonnage being equal, French
armored tanks always proved superior to German materiel; the enemy's
very heavy losses in light and medium tanks have confirmed this.
On June 6 a French second lieutenant of artillery saw one
of our B. tanks immobilized because the tank commander was wounded.
The officer entered the tank, found out how to operate the 75-mm.
gun, started the vehicle, and came back shortly afterwards, having
destroyed three German tanks.
In the region of Montcornet, Aspirant X, whose tank had
been stopped by a breakdown, remained at his post and succeeded in
putting out of commission eight German tanks and numerous cars before he was obliged to destroy his own tank and abandon it.
In the 1st Armored Division on the evening of May 14 8 P.M. a
battalion of heavy tanks went into position at approximately
The next day at 8 A.M. it was attacked by enemy tanks four times
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as numerous. The German tanks, however, were immediately blocked
by the first of our tanks and were obliged to turn back. At 11
o'clock a new enemy attack, supported by a violent aviation bombing
and by heavy artillery, was no more successful than the first. Finally
the tank battalion had to withdraw, but only when threatened with
encirclement.
(4) Means for increasing the mobility of the 47-mm, guns
were still being tested at the end of May, but when circumstances
made it necessary to use these guns as antitank weapons, they were
mounted on cross-country tractors and protected with light armor.
As a rule, batteries of these "tank chasseurs" could not
be organized in time to render the services expected of them, but
it is interesting to report the results obtained by one of them in
a few days of campaign. Formed on May 30 at Versailles, the battery
commanded by Second Lieutenant B. went into action on June 5 in the
region of Molliens-Vidame. The same evening it opened fire at
2,000 meters against enemy tanks. Two tanks were destroyed by the
first shells fired by two of the guns of the battery, and two other
tanks were put out of commission shortly afterwards.
The next day this battery went into action in the same
region - the region of the Abbeville Road - to check the attack of
about 50 tanks, several of which were as heavy as 30 tons, It
carried out its mission with complete success, destroyed ten enemy
tanks, and suffered no losses itself. On June 7 toward Campaux,
where Second Lieutenant B. is battery had been ordered to withdraw,
five German tanks were destroyed.
(5) Batteries of 75-mm. guns were used for direct fire
against tanks. In the region of Aumale, the 1st Battalion of the
72nd Artillery Regiment, firing at short range, put 30 German
tanks out of commission. One of the three batteries destroyed 19
tanks.
(6) Fortifications of the Maginot Line brilliantly
resisted the enemy. The Chappy Farm was subjected on June 21 to
a violent four-hour preparation of heavy artillery fire which did
not harm any of its weapons. The two-battalion infantry attack
which followed the bombardment failed completely, and the enemy
suffered such losses that in the afternoon he had to ask for a
suspension of arms in order to remove his dead and wounded.
The Maginot Line fulfilled its mission completely until
June 27, two days after the armistice, when it ceased firing upon
receipt of orders from the French High Command. All the works
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were intact when the fortifications were turned over to the
German military authorities.
The French Army suffered a defeat which it would be un-
gracious not to admit, but at Rethondes, at the time of the signing
of the armistice convention, Chancellor Hitler said "The French
Army fought valiantly." This was an unquestionable tribute paid by
the adversary himself.
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125
Rage
Willfrecht
Scale 1,500,000
IN MILES
CONDON
Masthoum
Beauvais
ATEMY
Chalon
PARIS
Melun
Chartfer
Trov
Chaumont-en
Bassigny,
Oriea
R
Tour
-
126
4 a 5 Div.
D
30 na 34 Div.
12 Dt
1DC
3DI
7° Armée
3 DI actives(2mot)
1 DI série
B.E.F.
2 DI serieB
1 DLC
(8 D.I.W.)
5 DI
24 à 26 D
1 DC
Armee
3 DI actives
1 DI serie A
2 DLM
9°Armer
(1mot.)
1DIW
12-Di serie B
forteresse
1er LOT BELGIOU
DIM
active
Bde Spahist
1Djvadrie
DCR
2D1
13 Div.
31Armee
2DLC
2*LOT
BELGIQUE
1DI
Caraler
Armee
DI actives
2
1D
actives
1
2 DI actives
1DI
LEGEND
DI
1DJ
IDI.P
LOT SUISSE
8° Armée
DT
Division
Division
3 DI actives
RESERVE
adrie B
G.Q.G.
POUR
ALPES
3 DI
DLM
000
01
GMO
Brigade
Groupment
Motorized
5 be Divisions
127
RESTRICTED
M.I.D., W.D.
0-2/2657-220
March 20, 1941
12:00 M.
No. 344
SITUATION REPORT
I. Western Theater of War.
Air: German. Last night the German Air Force attacked
the dock area and the East End of London with a force estimated
at 400-500 bombers. It was the most severe raid on England of
1941. Severe damage is indicated, much of it from numerous fires.
British. Last night the R.A.F. operated normally
against Germany, the main effort being directed against Cologne.
II. Balkan Theater of War.
Ground: Albania. The Greeks report the repulse of
Italian attacks in the central and northern sectors.
Bulgaria. No change.
Air: No reports of activity.
III. Mediterranean and African Theaters of War.
Ground: Eritrea. The British report the capture of
important positions south of Cheren and the repulse with serious
losses of Italian counterattacks.
Air. The R.A.F. supported the attack on Cheren in considerable force and also raided widely in Ethiopia and Libya.
Note: 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
Restricted.
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128
of Colle Budiogram
Received as - Mear Department
as 0:27, March so,
Socion, filed 13:30, March no, 1942.
1. British air activities over the Continues.
a. my of March 19. Holds were carried out against Comman
a shipping. the results of those wide - not reported.
. Eight of March 18-19. R.A.F. operations were as follows
(1) - - Batch sistielda, inciniting I were
attached w I Brittah please)
(a) Potrolem stange facilities as Botterian was
attached w so mettom bembers)
(5) - attached w 43 medium business
(b) Kial was attached w 100 heavy busbers.
e. Hight of March 17-28. I - attached w a force of
please.
2. - air activities - Regional
a. Eight of March 19-80. Institu was subjected to a severe
said of fear have duration. Brand five or I minutes a formation of
appresiancely six - please was - the city. in the southeastern
and southern sections of Senior there - - - w private property.
. Day of Murch 19. A wall when of - please prostanted
the - Lines of Herfeit, Seven, Near - Buffall. only alight resulted from those attachs. Other wall - of - please -
- in - - Brittah waters and in getrole over the
Done Struite.
CONFIDENTIAL
CONFIDENTIAL
129
a Might of mank 10-19. in aggregate of 390 / please
- over Regional
Against I set Bristel . to
Against atefields in Berfolk, Baffalls end the Midianta . use
a Bonsborough and Bill . 100
the weld on Hall resulted in a - - of commities
and serious damage to private proportion. Regal Air Force night fighters
were in the ate but - mobile to interespe the - attachers.
5. Aircraft lesses.
a. Brittah
my of March " . .
.-
Might of March 18-19 - & busber
High of mode 19-89 - 1 w - 1 probable w
British sight fighters.
Bay of March 29 . 2 - 1 damaged.
High of March 17-18 . 5 night fighters w British Dembers.
4. Activities of the Reyal AS Yours is middle thentons
- as follows - Aste sange boats as Duresso, Athenta, - targeteed
w British abroad - " to probable that - others - also has with
tergetous, - Italian evalour as This, Albenta, - has w a British a
terpote, - the sight of Much Stree - started as
Mago, during . British booking attack - that part.
5. During the receive Italian offensive is Albenia Italian
momities - to at least 95,000 and - than 3,000 Italian soldiers
- taken price
-2-
CONFIDENTIAL
CONFIDENTIAL
130
6. A - long - but approving about sine
miles west of Blackood Day - the mast - of Indicate attention -
British truviers. - was - - the other - Distributions
Secretary of Year
State Department
Becrobany of Treasury
Aest. Secretary of War
IN
Ohiof
of Staff
Wes
Plans
Division
Office of Reval Intelligence
Air Garge
6-3
CONFIDENTIAL
CONFIDENTIAL
131
Paraphanse of Colo Indiagram
Received as the Was Department
at 10:03, March 21, 1961.
Lossian, filed 14:20, March a, 1942.
1. - the Combinent.
a. Daylight of March 20. - marchant shipping along the coast
of Holland was the target of British bombing wide and the city Zerient was
also attached. These suide were apparently not successful.
b. Eight of March 19-20. A total of 38 British heavy bombers were
over the Continent. Two attached oil installations in Retterios and 36
attached Cologne. The British maintain that the attacks were successful.
2. - Air Activity over Britain.
a. Hight of March 20-21. the of German please over England
was much less than during recent nights. Scattered raids were earried out in
all parts of southern Regiend but the principal actions were against
and Plymouth. the extent of the damages - has not yet book determined.
b. Daylight of March so. Only a for - please were active and
most of them were on - and patrol missions.
e. Right of March 19-20. As aggregate of 380 Common please were
pletted over Regists Same of those please were active over South Miles and
but the large unjurity of them, ago please, carried out severe
attacks - Losion's Thest Had - the inter-trust areas. Major fires were
started at 16 potate and 1600 fise page - in operation throughout the
entire night. Several manfacturing plants and other types of talestrial
properties and six - installations were severely damaged. Approximately
700 civilings had to be amounted permently from the areas affected. Nowover the casualties that resulted from those attacks were relatively for when
CONFIDENTIAL
CONFIDENTIAL
132
considered in the light of the severity of the suide.
3. Atmorth I No 100000 was reported for either olde.
4. Activities of the Royal Air Force is middle Enstern Montana
were as follows: in Albenia, the city of Sopoteat was bonbed w British
planos; in Libya, British bembers attached the city of Sixte, the airfield
at Thust (Street Nasson) and the merber of is other middle Eastern
sectors please of the Royal Air Force were used in support of lead foresa.
5. The British Mar Office believes that the negotiations between
Yegoelavia and Gemmay will reach a crists on March 25 or a According to
information is the perseasion of the War Office Yogoclavia was informed by
Turkey on March 19 that Turbay would be willing to consider - attack on
Greese by Germany as a cause for was provided that Togoclavia was willing
to do the 6. Fifteen 105mm g and fifteen 75mm - are being placed
aboard a ship in a part in Spata which has already been Leaded with a large
quantity of military equipment. Those military supplies are destined for
the Genery Initials.
T+ As a point in the about 100 miles off the Edhysa
coast at Triyeli two troop transporte with full leads were and w British
torgedoos.
8. East foress in Bulgeria are receiving large quantities of
equipment designed for use is tropient countries.
9. There is - increasing I - the part of the British
laboring classes and other civilians who have born Dember w the Genesas
and whose homes in Losion - other British cities have been destroyed that
the Reyel Air Force and the Bribish government retaliate with more frequent
and more severe attacks on Borlin and other metropolitan centers in Commany.
-2-
CONFIDENTIAL
133
CONFIDENTIAL
II
-
an the morning of March a oberise - is the Board I
-the
which
my be the Instituting or a - - start as
- results.
If of -
Distributions
State
of
of the
Amer.
III
Chief of Shaff
Ver Please Division
office
of
Ats
Garge
e-3
Maral Intelligence
-3.
CONFIDENTIAL
SECRET
By authority A. C. of S., G-2
Paraphrase of Code Indiagram
Received at the War Department
at 10108, March 21, 1941.
Date MAR 22 1941 BDH
Initials
134
Lonion, filed 14:20, March 21, 1941.
It was reported in our daily confidential emblogram of March
21 that there is a groving donand on the part of the British laboring
classes for more severe and frequent vaids OR Genesa metropolitan
centers in retaliation for the heavy Germa raids on British civilian
populations. Newever the Royal Air Force is unable to carry out raids
on Gorman cities equal in intensity to those - in w the Common
on British centers of poyulation because of the fast there is as average
of only about 350 trained British crows that can be used in such bombing
and the member of British Dembardment please available with units is in
the whighborhood of from 450 to 500.
SCANLON
Distribution:
Secretary of Year
State Department
Secretary of Treasury
Chief of Staff
Mar Plans Division
Office of Naval Intelligence
Air Garge
SECRET
135
CONFIDENTIAL
Peoplemen of Code Bullegree
Received at the War Department
as 21:41, March n, 1942.
Berlin, filed 17:16, March 22, 1942.
1. IS is believed that - to giving first priority to
the attack on England. Bevertholess, as is is the attached onlor
of battle, there has boon - increase in the - - is the each.
the reason for this increase is not I
2. The distribution - March 20th is believed to be as follows
West
North
South
Hollows, Delgium, I
16
Senalisavia
12
Italy
Tybia
Total
That
-
18
Follow
Southeast
Reserve
Remain
Balgeria
18
as
so
be
Total
250
PHYSICIAN
Distributions
Secretary of War
State Department
of Treasury
Ame. Searetary of Yes
Milet of Staff
Mar Please Division
office of Reval Intelligence
CONFIDENTIAL
CONFIDENTIAL
136
Jamphress of Date
Received as the Was at 21.166, March 22, yes.
Visity, filed 01:10, March n, 1941.
Comman intention to employ motors - is - institutes.
In the Calais and Boulegue districts, according to official sources, there
are important stores of - shells and a number of commities were I
w this - when a quantity of shells stared - Doulless was exploint
w R.A.F. bumb.
ZMANY
Distributions
Secretary of War
State Department
Secretary of Treasury
Asst. Secretary of Mar
Chief of Staff
Var Please Division
office of Naval Intelligence
CONFIDENTIAL
137
RESTRICTED
M.I.D., W.D.
G-2/2657-220
No. 345
March 21, 1941
12:00
M.
SITUATION REPORT
I.
Western Theater of War.
Air: German. Minor daylight activity on the 20th. Last
night the Luftwaffe was over England apparently in less force than
the preceding night and attacks were somewhat dispersed. However a
heavy attack was made on Plymouth.
British. No operations over Germany last night. The
German submarine base at Lorient was bombed.
II.
Balkan Theater of War.
Ground: Bulgaria. No change.
Albania. Only artillery activity reported.
Air: No reports of operations.
III.
Mediterranean and African Theaters of War.
Ground: Eritrea. The British announce they are steadily
making headway toward Cheren in spite of heavy Italian counter-attacks.
Abyssinia (Ethiopia). The Italians are making a
stand at Marda Pass in the vicinity of Giggiga which is the gateway
to Harrar and the Addis Ababa-Jibuti railroad.
British Somaliland. British troops are reported
to have occupied Hargeisa, about 95 miles southwest of Berbera,
March 20.
Air: The British report strong support of the Cheren
attack,
Note: 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
Restricted.
138
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE March 21, 1941
TO
FROM
Secretary Morgenthau
Mr. Cochran
STRICTLY CONFIDENTIAL
At 11:00 this forenoon Mr. Playfair of the British Treasury Mis sion called on
me by appointment. He let me know that Sir Frederick Phillips had gone to Ottawa
for a few days. He will also spend some time at Montreal on a League of Nations
Committee meeting. Playfair had received a cable from London to the effect that
much of the gold which it is contemplating to sell to us is at Durban, and that it
vas a six days' haul from there to the port where our cargo carrier is to arrive.
Yould it be possible, therefore, for the vessel to proceed on to Durban as a second
port of call? Playfair was also instructed to inquire as to whether we could confirm
the date of arrival.
I told Playfair that I had very definitely let Pinsent know, in accordance with
our understanding with our Navy, that all of the cargo should be assembled at the
one port of embarkation which we have discussed. In Playfair's presence, I telephoned
Admiral Noyes who confirmed this understanding and strongly insisted that the Navy
would not desire to send the vessel up the east coast to Durban. I asked Playfair,
therefore, to let his people definitely and finally know that there must be only the
one port of calland that the Navy's information is that the vessel may be expected to
arrive there on March 29.
139
TREASURY DEPARTMENT
FOR RELEASE, MORNING PAPERS
Friday, March 21, 1941.
The Secretary of the Treesury, by this public notice,
invites tenders for $100,000,000, or thereabouts, of 91-day
Treasury bills, to be issued on a discount basis under competi-
tive bidding. The bills of this series will be dated March 26,
1941, and will meture June 25, 1941, when the face amount will
be payable without interest. They will be issued in besrer form
only, end in denominations of $1,000, $5,000, $10,000, $100,000,
$500,000, and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and
Branches up to the closing hour, two o'clock p. m., Eastern
Standard time, Monday, March 24, 1941. Tenders will not be
received at the Treasury Department, Washington. Each tender
must be for an even multiple of $1,000, and the price offered
must be expressed on the basis of 100, with not more than three
decimals, e. 8., 99.925. Frections may not be used. It is urged
that tenders be made on the printed forms and forwarded in the
special envelopes which will be supplied by Federal Reserve Banks
or Brenches on application therefor.
Tenders will be received without deposit from incorporated
banks and trust compenies and from responsible and recognized
deelers in investment securities. Tenders from others must be
accompenied by payment of 10 percent of the face amount of
Treasury bills applied for, unless the tenders are accompanied
by an express guaranty of payment by an incorporated bank or
trust company.
24-12
140
-Immediately after the closing hour, tenders will be
opened at the Federal Reserve Banks and Brenches, following which
public ennouncement will be made by the Secretary of the Treasury
of the amount and price range of accepted bids. Those submitting
tenders will be advised of the acceptance or rejection thereof.
The Secretary of the Treasury expressly reserves the right to
accept or reject any or all tenders, in whole or in part, and
his setion in any such respect shall be final. Payment of accepted
tenders at the prices offered must be mode or completed at the
Federal Reserve Bank in cash or other immediately available funds
on March 26, 1941.
The income derived from Treasury bills, whether interest
or gain from the sale or other disposition of the bills, shall
not have any exemption, as such, and loss from the sale or other
disposition of Treasury bills shall not have any special treatment, as such, under Federal tax Acts now or herecfter enacted.
The bills shall be subject to estate, inheritence, gift, or other
excise taxes, whether Federal or State, but shell be exempt from
all texation now or hererfter imposed on the principal or interest
thereof by any State, or any of the possessions of the United State:
or by any local texing authority. For purposes of taxation the
amount of discount at which Treasury bills are original ly sold by
the United States shell be considered to be interest.
Tressury Department Circular No. 418, as amended, and
this notice, prescribe the terms of the Treasury bills and govern
the conditions of their issue. Copies of the circuler may be
obtained from any Federal Reserve Bank or Brench.
BANKERS AID DEFENSE BOND MARKETING
DR W RANDOLPH BURGESS PRESIDENT OF NEW
YORK STATE BANKERS ASSOCIATION ADVISED
SECRETARY OF TREASURY MORGENTHAU TODAY THAT
MEMBERS OF THE ASSOCIATION STAND READY TO GIVE
-ALL OUT- AID IN THE MARKET ING OF NATIONAL
DEFENSE BONDS
MAR
142
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE March 21, 1941.
Secretary Morgenthau
Alan Barth
FROM
LEND-LEASE AFTERMATH: FIRST REACTIONS
OPTIMISM
Enactment of the Lend-Lease law has been generally appraised
in editorials as a momentous national decision. Regardless of
misgivings as to the consequences, the very making of the decision
has evoked a patent sense of relief and a noteworthy resurgence of
self-confidence. Defeatism, perhaps the offspring of doubt, has
been spontaneously displaced by an enlivening sense of national
purpose and direction.
The President gave impetus to this sense of direction by
putting the law into operation instantly and by his prompt request
for an appropriation of seven billion dollars. His radio speech
of Saturday evening gave it dramatic expression. The ensuing editorial comment was overwhelming in applause -- much of it with a
"Damn-the-torpedoes" tone which bespoke the general eagerness for
action. Direction, for the moment at least, seemed more important
to the commentators than destination.
143
-2The President boldly articulated popular hopes which for
weeks had been submerged in apathy, uncertainty and even despair.
He proclaimed that Democracy will win. And in the sudden ebullience which he engendered, the editorial writers have busily bolstered yearning with reason.
They found cause for cheer in the foreign reactions to the
President's address. The disparagement of the President's promises
by Axis spokesmen was interpreted as a kind of whistling in the
dark, betokening essential weakness. The enthusiasm of the British
reception was assumed to be the basis for heightened morale.
Even viewing the battlefronts, the editorial writers have at
last been able to find causes for rejoicing. They hail the more
ferocious British air raids over Germany. They take heart from
the landing of British troops in Greece and predict that Turkey
and Yugoslavia will stiffen their resistance to Axis pressure.
Quite suddenly the aura of invincibility which it has been fashionable to spread about Hitler has been dissipated.
So, also, has the curious inferiority complex that Democracy
cannot match Dictatorship in productive efficiency. The President's
words, in a sense, flexed the industrial muscles of America and
caused the editorial writers to rub their eyes in wonderment. They
believe at last, not only that this nation possesses mighty
144
-3resources, but that under forceful leadership it will mobilize
them and make them effective. What was labeled wishful thinking
has become conviction. The United States has been transformed by
the events of the past fortnight from an immovable object into an
irresistable force.
NATIONAL UNITY
The bulk of the opposition to the Lend-Lease bill has, for
the moment, accepted the decision on the issue and is prepared to
move along, at least temporarily, with the majority with more or
less good cheer. Notable among the last-minute converts are the
Scripps-Howard papers and even, in some measure, the Paul Block,
Hearst and Patterson chains. Only a handful of intemperate bitterenders follow the lead of The Chicago Tribune in an insistence
that the Lend-Lease law will produce the downfall of Democracy.
A strong semblance of national unity has been achieved in
the sense that there now exists a higher degree of united public
opinion than at any time since the inception of the war. But a
militant minority is still working in opposition to the national
purpose. It is not likely to be overscrupulous in its efforts to
undermine popular confidence in the President's leadership.
LEND-LEASE COSTS
There was neither amazement nor dismay in editorial reaction
to the seven billion dollar appropriation request. Many
145
-4commentators, indeed, assumed that this initial sum would consti-
tute but a small portion of the total reckoning. Yet few of them
conjured up the bugbears of inflation and financial collapse with
which they were wont to greet past proposals of deficit financing
for peacetime purposes.
BRITISH ASSETS
The confusion of editorial thinking has seldom been better
revealed than in the reaction to the British sale of the American
Viscose Corporation. Newspapers which had been clamoring for the
liquidation of British holdings in this country were suddenly
sobered by a concrete instance of what they demanded.
The disposal of this direct investment was widely applauded
as evidence of Britain's willingness to go all-out in her own defense. It provided an answer to the querulous critics who have
insisted that America was being swindled into paying for Britain's
war. At the same time, however, it aroused fears for the financial
future of the British and strengthened the sentiment for dealing
with them generously. A number of editorials advance the thought
that a wholly impoverished Britain is not likely to be a substantial
customer for American goods when the war is over and may, indeed,
become, through the necessity to barter, a dangerous competitor.
146
-5Paradoxically, the Treasury Department, but a short while
ago accused of pampering the British and conniving to ease their
financial problems, is now cast in the role of tight-fisted banker.
The press and public are learning to be gentle.
147
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE March 21, 1941.
Secretary Morgenthau
Herbert Merillat
TAXING FOR DEFENSE: PRESS OPINION
Recent editorial comment on taxes has emphasized that the
burdens of income taxpayers are relatively light now and will become much heavier in the near future. The newspapers, through
news articles and editorials, have impressed upon their readers
that taxes will increase greatly in the next year. Widely publicized comparisons of British, Canadian and American taxes have
helped to show American taxpayers that they are relatively lightly
hit at present. Stories of voluntary contributions for defense
purposes by persons not liable for income tax have been given wide
publicity and have been generally interpreted as showing that the
public is willing to accept greater tax burdens in the cause of
defense.
There has not yet been much expression of opinion as to what
form additional taxation ought to take, but there has been plenty
of speculation as to what form it will take. Many papers have
featured reports based on "advance information" to the effect that
responsible Congressional and Administration leaders favor raising
148
-2the additional revenue by increases in present taxes rather than
by imposing untried taxes. Increases in the individual normal
income tax rate and corporation income tax rates, further reduction
of personal exemptions, and the widening of individual surtaxes
have been reported as Treasury proposals. It is a bit early to
tell whether newspaper speculation based on "inside information"
will be cut down by Chairman Doughton's statement deploring the
airing of tax suggestions in the press before they have been submitted to the Ways and Means Committee, or by your statement that
the Treasury has not yet discussed tax recommendations with the
Committee.
The proposal that two-thirds of the cost of the defense program should be paid by current taxation has been approved by news-
papers commenting on it. It is generally agreed that it is desirable to place the defense program on a pay-as-you-go basis as far
as possible.
There has been a scattering of comment from anti-Administration
papers calling for drastic reduction of "non-defense" expenditures.
At present comment on the President's public works proposal has not
been canvassed. That proposal will likely focus attention on the
question of government spending for other than direct military
purposes.
149
-3 GALLUP POLL
The Gallup Poll announced on March 16th indicates that the
general public is badly misinformed as to the amount of income tax
paid by persons in various brackets. Apparently the incidence of
the surtax is not at all grasped. According to the Poll, a typical
cross-section of people think that persons with an income of
$100,000 now pay combined Federal and New York income taxes of
about $5,000 and that they ought to pay about $10,000. Actually,
the present Federal tax alone, on an income of $100,000, amounts
to about $40,000. These figures will likely be cited by opponents
to increased income taxation of large incomes.
PORT OF NEW YORK AUTHORITY BONDS
The editorial columns have been surprisingly silent on the
recent assessment of deficiencies against holders of Port Authority
bonds. The Wall Street Journal confirms that municipal bond
traders and holders of tax-exempt bonds are taking the Treasury
move calmly, attributing it to Treasury assurances that no attempt
will be made to tax interest on outstanding obligations. The
expected squawk from the mayors has not yet come.
150
Treasury Department
Division of Monetary Research
0
To:
Date April 3, 19 41
Secretary Morgenthau
Apparently Japan is
deliberately letting her
assets in the United States
decline, and as part of the
policy she is reducing her
gold shipments to the
United States.
MR. WHITE
Branch 2058 - Room 210
151
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE March 21, 1941
Mr. White
TO
FROM
Mr. Taylor
Subject: Japanese Gold Movements and Dollar Balances in the United
States, January to March 1941.
1. Japanese gold shipments to the United States have fallen markedly so
far this year in comparison to former years, as the following figures
show:
Millions of Dollars
1940
1939
Jan.
Feb.
Mar.
Total
37.8
5.4
11.4
37.7
54.6
48.4
4.9
5.8
1941
6.1
nil
nil (to date)
6.1
Silver shipments to March 12th totaled only $1.2 million, less than
half that for the same period in 1940 but about the same as in 1939.
2. At the same time Japanese dollar balances in the United States have
been allowed to fall. No figures are available for 1939, but those for
1940 and 1941 show:
Millions of Dollars
Jan. (1st week)
Feb. (1st week)
Mar. (1st week)
1940
1941
165
110
153
109
161
103
Whereas in 1940 Japan deemed it desirable to keep the balance up to about low
$160 million, in 1941 she was content to allow the balance to fall as
as $103 million.
3. It is quite likely that the explanation of these circumstances is
Japan's reluctance to ship gold to the United States in order to States augment
her dollar balances as long as the threat exists that the United
may freeze Japanese funds. If this is the reason we may expect that Japan's
dollar balances will be allowed to fall even more noticeably in the future.
152
U. S. COAST GUARD
21 March 1941.
COMMANDANT'S OFFICE
-
Memorandum for
Assistant Secretary Gaston
CONFIDENTIAL
The attached correspondence is herewith returned
as requested; its contents having been noted with
interest.
annually
R. R. WAESCHE
Rear Admiral, U.S. Coast Guard,
Commandant.
miss Bhaunch
153
March 20, 1941.
CONFIDENTIAL
U. c. COAST QUARD
REC'D COMOT'S OFFICE
MEMORANDUM
MAR 20 1941
Admiral Waesche
FROM: Mr. Gaston
TO:
Please return the attached papers for the Secretary's
files when you have read them.
Mr.
Enclosures:
(1) Letter from Arthur B. Purvis to Secretary
Morgenthau, dated March 18, 1941.
(2) Memorandum on handling of transatlantic cargoes.
THE BRITISH SUPPLY COUNCIL IN NORTH AMERICA
154
Box 680
BENJAMIN FRANKLIN STATION
TELEPHONE REPUBLIC 7860
WASHINGTON D. C.
March 18, 1941.
Dear Mr. Secretary:
You asked me on Saturday to let you have an
interim statement prior to Sir Arthur Salter's arrival
to take care of the Merchant shipping situation on the
possibilities of (a) more scientific loading of our merchant
ships, and
(b) arranging for individual ships to load
at one instead of several ports.
You also mentioned the possibility of assembling convoys
outside American ports.
I inclose a memorandum on the first two points
as our shipping people in New York see it at this time.
Items 7-c and 7-d contain the answers to the specific points
raised. It may interest you to know that the actual average loading days for different types of cargoes 2 days for sulphur or phosphate
5 " 11 grain
10/12
" " liners, including both discharging
and loading
"
8/9
14
"
11
steel or steel and scrap
scrap
Yours sincerely,
The Honourable
Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
155
Handling of Transatlantic Cargoes
1. The British Ministry of Shipping has in the U.S. a
Representative with a staff of practical shipping men having
under constant review all Allied tonnage dispatched from
U.S. ports.
2. U.S. shipping lines and agents are employed to load
and dispatch ships and the Ministry keeps in touch with the
line or agent to see that all means such as overtime work
are employed to enable each ship to connect with the first
possible convoy.
3. Loading time has varied from two days for sulphur
and phosphate to fourteen for scrap. The overall average, including normal repairs but excluding major repairs and crew
troubles, is about twelve days.
4. Delays due to crew troubles have not affected British
shipping. Difficulties with Norwegian and Dutch vessels have
disappeared. There are still some troubles with Belgian and
Greek crews which would be helped either by amendments to existing laws or strict enforcement of others.
5. Major repairs are being carried out to an increasing
extent on this side of the Atlantic to relieve congestion and
eliminate danger on the other side.
6. Constant pressure is maintained for the purpose of
bringing into war service more Norwegian tonnage and Dutch
tonnage not essential to trade with Netherlands overseas
possessions.
7. Steps as follows are being taken to conserve tonnage:
(a) Transfer of ships from the Pacific to the
Atlantic and bringing Pacific coast cargoes across
by rail.
of American and other tonnage to
from Chartering
distant points
toofthe
availbring
(b)
cargoes
nearest
this,
able trans-shipment port. In furtherance
Austalian wheat is brought to Baltimore and oil from
the Carribean to Baltimore, Philadelphia and New York.
It is hoped that a modification of the Neutrality
Act may permit the use of Halifax as another point of
trans-shipment.
(c) Every effort is made to use the full capacity
of ships. The only unscientific loading of which we are
aware has resulted from our urgent demand for steel
which has necessitated the loading of many ships
156
2.
with full cargoes of steel with resulting wastage in
cubic capacity. This could be overcome with an increase
in available ships.
(d) The majority of our ships load at only one
port. of those that load at more than one some are
steel and scrap ships and other liners bringing cargoes
inwards to more than one port.
Assistance in assembling convoys in U.S. waters
would be very helpful and if escorts are available much time
would be saved if we could have, as in the last war, fast and
slow convoys from the U.S. Convoy arrangements for vessels
loading at eastern Canadian points would still have to be
provided either separately or by making contact at sea with
convoys from the U.S. The whole question of convoys is
handled by the British Admiralty as distinct from the Ministry
of Shipping and we would appreciate an opportunity of arranging discussions with a view to improving the situation.
March 18, 1941
157
Handling of Transatlantic Cargoes
1. The British Ministry of Shipping has in the U.S. a
Representative with a staff of practical shipping men having
under constant review all Allied tonnage dispatched from
U.S. ports.
2. U.S. shipping lines and agents are employed to load
and dispatch ships and the Ministry keeps in touch with the
line or agent to see that all means such as overtime work
are employed to enable each ship to connect with the first
possible convey.
3. Loading time has varied from two days for sulphur
and phosphate to fourteen for scrap. The overall average, including normal repairs but excluding major repairs and crew
troubles, is about twelve days.
4. Delays due to crew troubles have not affected British
shipping. Difficulties with Norwegian and Dutch vessels have
disappeared. There are still some troubles with Belgian and
Greek crews which would be helped either by amendments to existing laws or strict enforcement of others.
5. Major repair are being carried out to an increasing
extent on this side of the Atlantic to relieve congestion and
eliminate danger on the other side.
6. Constant pressure is maintained for the purpose of
bringing into war service more Norwegian tonnage and Dutch
tonnage not essential to trade with Netherlands overseas
possessions.
7. Steps as follows are being taken to conserve tonnage:
(a) Transfer of ships from the Pacific to the
Atlantic and bringing Pacific coast cargoes across
by rail.
(b) Chartering of American and other tonnage to
bring cargoes from distant points to the nearest available trans-shipment port. In furtherance of this,
Austalian wheat is brought to Baltimore and oil from
the Carribean to Baltimore, Philadelphia and New York.
It is hoped that a modification of the Neutrality
Act may permit the use of Halifax as another point of
trans-shipment.
(c) Every effort is made to use the full capacity
of ships. The only unscientific loading of which we are
aware has resulted from our urgent demand for steel
which has necessitated the loading of many ships
158
2.
with full cargoes of steel with resulting wastage in
cubic capacity. This could be overcome with an increase
in available ships.
(d) The majority of our ships load at only one
port. Of those that load at more than one some are
steel and scrap ships and other liners bringing cargoes
inwards to more than one port.
Assistance in assembling convoys in U.S. waters
would be very helpful and if escorts are available much time
would be saved if we could have, as in the last war, fast and
slow convoys from the U.S. Convoy arrangements for vessels
loading at eastern Canadian points would still have to be
provided either separately or by making contact at sea with
convoys from the U.S. The whole question of convoys is
handled by the British Admiralty as distinct from the Ministry
of Shipping and we would appreciate an opportunity of arranging discussions with a view to improving the situation.
March 18, 1941
159
TREASURY DEPARTMENT
For High
INTER OFFICE COMMUNICATION
DATE March 21, 1941
Secretary Morgenthau
FROM Mr. Cochran
CONFIDENTIAL
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
£157,000
Purchased from commercial concerns & 63,000
of the £157,000 sold to commercial concerns, £99,000 is being used to pay for the
importation of chicle.
The Federal Reserve Bank of New York sold £15,000 in registered sterling to
the American Express Co.
In the open market, sterling was first quoted at 4.03-3/4, or 1/4 higher
than yesterday's close. It remained at that rate throughout the day. Transactions
of the reporting banks were as follows:
-0-00
Sold to commercial concerns
Purchased from commercial concerns £3,000
The Cuban peso, which improved from a discount of 6-1/2% to 4-15/16% in the
week ended March 19.has since displayed an easier tendency. It was quoted at 5-1/8%
today.
In New York, the closing rates for the foreign currencies listed below were as
follows:
Canadian dollar
Swiss franc (commercial)
Swedish krona
Reichemark
Lira
Argentine peso (free)
Brazilian milreis (free)
Mexican peso
15% discount
.2322
.2384-1/2
.4005
.0505
.2315
.0505
.2066
In Shanghai, the yuan was again quoted at 5-13/324 and sterling remained at
3.91-1/2.
We sold $11,970,000 in gold to the Bank of Brazil, which was added to its ear-
marked account.
No new gold engagements were reported today.
160
In London, both spot and forward silver were fixed at 23-7/16d, representing
decline of 1/16d in each case. The U. 8. equivalent of this price is 43.56
Handy and Harman's settlement price for foreign silver was unchanged at 34-3/44.
the Treasury's purchase price for foreign silver was also unchanged at 35
Ve made one purchase of silver amounting to 75,000 ounces under the Silver
Purchase Act. This consisted of new production from foreign countries, for forward
delivery.
The Bureau of Foreign and Domestic Commerce reported on March 20 a shipment
of $430,000 worth of foreign silver coin, sent by the Guaranty Trust Co., New York,
to the Netherlands Indies Government, Batavia, Java. Including this shipment, a
total of $695,000 worth of silver coin has been shipped to the Javanese Government
under its order to purchase $2,100,000 in silver for conversion into coin.
B.M.P.
CONFIDENTIAL
161
ROYAL GREEK LEGATION
WASHINGTON
March 21, 1941.
My dear Mr. Secretary:
March nineteenth.
I thank you for your letter of
I also wish to express my warmest
appreciation for the kind interest you took in matters
concerning my Government in these crucial days and
to thank you for your valuable cooperation and good
will.
Sincerely yours,
C. Diamantopoulos,
Minister of Greece.
Mr. Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D.C.
162For
Miss
Chauncey
MAR 21 1941
by dear Mr. Secretary:
On December 31, 1940 you transwitted to this Department
& copy of Hr. Herbert Hoover's letter to you dated December 20,
1940, with reference to a proposal involving the purchase of
supplies of wheat in the Baltie States wt th fromos Bolgian funds,
for distribution and consumption within Belgium. Also transmitted
with such letter was a amorandum prepared in the State Department
commenting upon such proposal. No further word was received by
this Department from Mr. Hoover with reapont to the proposal.
However, a socumbat aimilar matter has now boen raised
with this Department. There is enclosed herewith a copy of a
letter dated March 14, 1941, from Norwegian Relief, Inc. requesting
the transfer of $500,000 to the Stookhola Enskilda Bank, Stockholm,
Sweden, such funds to be used for the purchase of grain from Russia
for shipment to Norway. This Department has not been advised
whether such grain would consist of supplies to be obtained free
the Faltie States as was the ease is the progosal advanced w
Mr. Hoover. The previous license to which Norwegian Relief, Inc.
refers in its letter was issued by this Department following the
receipt of Under Secretary Welles' letter of December 4, 1940.
There is also pending before this Department another
application, No. NY 103767, covering a payment of 850,000 out of
frosen Franch Government funds in the United States to the American
Friends Service Committee. Originally we were advised that such
funds were to be used for the purchase of milk in Switchriand to be
distributed to French children. This Department has new been advised
by the American Friends Service Consittee that If such funds are made
available to it, part of such funds will be used to purchase is
Portugal for shipment to France sugar, other foodstaffe, blankets
and clothing.
163
These transactions are being referred to yes in view of
the important foreign policy considerations which are involved
therein. This Department is not prepared to approve such transactions unless and until requested to do 80 by you.
Very truly yours,
(Signed)
Acting Secretary of the Treasury.
The Monorable,
The Secretary of State.
of
181
THIN
M
OF
SS
Inclevere
This
198
BLY ougb 3/18/42
164
For Miss Chauncey
March 21, 1941
CONFIDENTIAL
Dear Mr. Smoke:
Permit me to acknowledge, in behalf of the
Secretary, the receipt of your letter of March 20, 1941.
with which you tranomitted your compilation for the week
ended March 12, 1941. showing dollar disbursements out
of the British Repire and French accounts at the Federal
Reserve Bank of New York and the - by which such
expenditures were financed.
Faithfully yours,
B. Herle Goohrea
Technical Assistant to the Socretary
L.V. Kaoke, Require,
Fice President,
Federal Reserve Bask of New York,
New York, New York.
HMO:dm:3.21.41
165
For Miss Chauncey
FEDERAL RESERVE BANK
OF NEW YORK
March 20, 1941.
CONFIDENTIAL
Dear Mr. Secretary: Attention: Mr. H. Merle Cochran
I
am enclosing herewith our compilation for the
week ended March 12, 1941, showing dollar disbursements
out of the British Empire and French accounts at this bank
and the means by which these expenditures were financed.
What
Faithfully yours,
L. W. Knoke,
Vice President.
Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. C.
Enclosure
SI
WI
12
Strictly
ANALYSIS OF BRITISH AND FRENCH ACCOUNTS
(In Millions of Dollars)
DEBITS
Total
Debits
PERIOD
Cov't
Expendi-
tures(a)
BANK OF ENGLAND (BRITISH GOVERNMENT)
BANK
CREDITS
Proceeds of
Sales of
Other
Debits
Total
Credits
Securities, Other
Gold
Official)(b) Credita(s)
Confidential
Week Ended March 12, 1941.
Net Inor.
(+) or
Dear. (-)
in Balance
Total
Debits
FRANCE
OF
DEBITS
CREDITS
Gov't
Expendi-
Proceeds
tures (d)
Other
Debits
6.0
13.4
Total
Credits
of Gold
Sales
Credits
Net Inor.
(+) or
Deer. (-)
in Balance
11.3
- 8.1
Other
1939
191.7
8.9
97.7
185.4
182.8
207.8
142.0
105.8
8.7
89.0
75.2
50.6
54.8
124.2
115.5
16.8
38.0
15.4
108.8
101.0
113.4
100.9
283.2
249.7
26.1
23.6
145.3
156.7
180.2
605.6
43.4
108.3
94.0
86.4
126.2
319.3
225.0
294.8
1,828.2
308.9
-
3.2
-
57.8
-
22.4
138.8
+113.5
35.3
48.0
85.9
19.4
88.6
78.6
24.6
22.5
Feb. 1 28
Apr. May
May 2 29
Lay 30.- July
July 5 31
3
1
Feb. 29 Apr.
3
Aug. 1 28
261.1
First year of war
Aug. 29 Oct.
Oct. 3 4 30
1,793.2
2
Oct. 31 - Nov. 27
Nov. 28 - Dec. 31
316.8
196.7
241.0
234.6
War period through Dce.
14.5
244.3
167.8
201.1
206.8
1,425.6
Jan.
Jan.
Feb. Feb.
Apr.
164.6
137.8
87.3
77.3
137.9
93.0
80.9
187.6
72.5
28.9
39.9
27.8
1356.7
34.7
26.8
198.5
259.5
198.0
2,793.1
259.9
101.4
20.6
56.7
60.9
-
-
22.8
11.4
14.0
51.6
19.1
19.6
105.4
82.9
27.8
+ 4.3
86.8
28.1
58.7
109.2
93.9
15.3
22.4
61.5
31.5
30.0
15.9
72.7
39.9
21.5
27.0
25.3
99.6
84.8
35.9
63.7
55.9
71.5
105.0
50.1
32.8
57.0
55.4
44.4
60.7
- 1.2
+ 5.4
- 6.1
101.4
78.7
145.4
126.2
5.8
16.7
29.6
18.0
19.2
29.4
345.10
335.6
20.0
12.0
3.0
21.0
15.0
+ 36.1
212.2
24.7
267.4
2.0
1.0
1,356.1
52.0
29.4
156.7(e)
8.9
10.4
0.5
2.0
866.3
416.6
449.7
1095.3
900.2
195.1
+229.0
18.0
26.0
2,109.5
108.0
575.6
31.7
+ 62.5
+ 10.8
878.3
26.0
48.8
- 63.2
0.2
52.0
9.5(e)
0.2
44.0
+188.4
0.5
7.3
6.3
+ 33.7
35.0
8.6
4.4
4.2
1.3
+ 1.8
0.3
0.2
0.7
0.5
+ 18.5
0.5
0.8
36.6
2.1
- 7.9
75.4
5.6
3.2
10.9
271.5
160.5
210.0
111.4
176.2
26.6
127.3(e)
54.8
1.0
8.4
10.8
26.4
420.1
31.4
32.0
31.5
60.6
6.0
12.4
61.8
46.8
93.2
301.3
6.0
41.2
35.0
55.1
1940
Jen. 4 - 31
11.3
76.2
2.1
0.7
0.6
456.9
1098.4
0.2
0.2
0.1
0.1
0.1
421.4
14
0.5
3.0
-
-
3
90.7
100.9
-
Nov. 30 Jan.
3.6
5.8
-
Nov. 2 29
94.3
106.7
)
1
)
Aug. 31 - Sept. 27
Sept.28 - Nov.
-
900.2
-
4.1
1.3
7.3
0.5
0.7
0.6
- 0.1
- 1.5
196.2
+220.1
0.5
-
1.2
0.2
-
ENDED:
Feb.
19
26
March 5.
40.7
40.0
56.7
44.6(f)
38.2
27.0
49.0
2.5
13.0
7.7
19.6
44.5
50.1
92.0(f)
Average Weekly Expenditures Since Outbreak of War
(through June 19)
$19.6 million
12
England (through June 19)
England Lainoe June 19)
41.6
3.0
27.6 million
54.9 million
26.6
24.8
76.8(f)
6.0
4.0
19.0
12.0
13.6
139
6.3
6.6(g)
21.1
+ 45
0.1
6.6
50.8
-
-
-
-
-
-
-
-
-
0.3
-
Transfers
from British Purchasing Commission to
Bank of Canada for French Account
Week ended March 12
-
Cumulation from July 6
a 10.1
144.9
0.1
-
-
-
-
million
million
-
0.3
-
+0.2
(See footnotes on reverse side)
Strictly
ANALYSIS OF CANADIAN AND AUSTRALIAN ACCOUNTS
(In Millions of Dollars)
Total
Credits
A/C
of
Gold
For Own
Sales
A/C
For French
(+) or
Credits Deen (-)
in Balance
A/C
1939
16.9
21.8
15.1
0.8
9.6
9.9
0.3
9.3
9.2
16.7
7.3
2.1
14.4
13.3
30.0
22.8
13.3
23.5
23.1
42.3
23.2
37.9
25.7
17.0
29.5
21.1
16.1
29.3
42.9
24.8
50.2
72.5
50.0
0.7
-
-
3.0
-
30.0
3
-
Nov. 2 29
Nov. 30 Jan.
0.6
-
1
17.5
-
Aug. 31 Sept. 27
Sept.28 Nov.
69.6
60.6
49.2
42.5
707.4
534.8
33.7
33.9
16.9
31.1
24.3
14.3
4.5
3.7
13.6
3.0
7.7
2.6
4.3
8.5
14.4
2.6
20.9
-
-
-
35.2
48.0
460.6
-
16.6
43.9
28.6
-
-
7.3
1.1
6.5
4.6
0.9
Cold
in Balance
Sales
-
-
-
4.5
1.9
1.9
2.5
5.8
5.8
3.3
2.4
2.2
0.3
0.2
2.5
+ 2.2
5.2
0.3
4.9
6.1
0.1
3.2
2.7
0.2
12.8
3.1
+ 4.7
2.3
+ 12.3
1.2
0.2
+ 28.4
+ 89.4
2.3
-
4.6
-
-
-
-
0.3
3.0
-
-
2.2
1.6
0.6
2.3
2.0
1.8
1.0
2.3
2.6
1.7
0.2
0.9
5.9
4.6
5.0
4.4
4.2
1.5
1.9
+3.3
1.9
0.9
-0.8
-0.3
+1.4
3.6
+0.4
3.0
3.8
5.0
3.4
3.9
27.3
6.1
-1.8
4.9
2.5
6.2
36.1
8.0
30.0
0.4
6.8
31.2
8.7
6.7
+ 1.9
10.1
7.5
2.6
7.9
6.5
1.3
1.4
-2.2
34.4
41.0
+230.2
2.0
0.2
3.1
4.8
57.9
4.8
0.6
13.7
110.7
15.0
3.7
4.4
6.8
3.2
6.8
50
0.2
0.6
0.4
8.4
4.9
0.2
1.2
1.1
1.7
5.9
1.8
5.9
2.0
19.2
19.5
0.2
54.9
38.7
32.4
+181.7
27.3
14.3
16.7
0.2
0.3
12.6
14.5
1.7
0.7
+0.5
2.5
3.6
6.8
2.1
4.8
1.5
4.8
43.4
4.8
62.4
50.1
12.3
6.8
5.1
1.7
2.0
3.3
3.2
2.6
-1.8
0.2
1.2
0.3
0.6
2.0
+2.0
+4.5
2
-
-
7.9
-
2.3
-
-
8.5
12.9
-
10.1
+
12.9
7.9
13.6
-
5
12
Credits
A/C
3.3
3.0
0.2
0.3
2.1
Debits
Net Inor.
(+) or
Credits Dear. (-)
Other
0.8
1.6
-
26
Mar.
British
- 7.2
WEEK ENDED:
Feb. 19
Official Other
of
-
-
0.8
1.0
2.0
-
0.2
-
Feb. 27 Apr.
-
-
504.7
44.3
26.7
20.9
-
Jan. 30 Feb. 26
-
306.4
412.7
16.4
14.0
-
Jan. 2 29
48.0
477.2
33.7
31.1
-
53.9
-
Warperiod through Dec.
-
Nov. 28 Dec. 31
16.6
96.3
73.6
-
-
-
1
Oct. 31 Nov. 27
323.0
44.3
26.7
35.2
117.6
18.7
-
2
-
-
44.1
28.2
-
3
First year of war
Aug. 29 Oct.
Oct. 3 - 30
-
Aug. 1-28
72.2
15.0
-
3
-
July 4 - : 31
44.1
28.2
18.7
May 30 July
15.0
-
37.9
-
May 2 - 29
-
Apr. 4 May
-
-
42.3
38.2
-
Feb. 29 Apr.
-
-
23.5
23.1
+ 4.3
+ 7.1
5.9
1940
Jan. 31
Feb. 28
Debits
-
Debits
Proceeds
Total
-
Other
AUSTRALIA
OF
CREDITS
to
Total
-
PERIOD
Official
British
Other
-
Debits
Transfers
Net Inor.
-
Total
Transfers from Official
British A/C
-
Proceeds
to
BANK
DEBITS
-
Transfers
COMMONWEALTH
CANADA
CREDITS
-
DEBITS
OF
-
BANK
Confidential
Week Ended March 12, 1941.
6.6
6.4
0.6
0.2
Weekly Average of Total Debits Since Outbreak of War
million
7.1
Through March 12, 1941
(a)
Includes
payments
for and
account
of British
Purchasing Commission, British Air Ministry, British Supply Board, Ministry of
Supply
Timber
Control,
Ministry
of Shipping.
(b)
proceeds Estimated of figures Official based on transfers from the New York Agency of the Bank of Montreal, which apparently represent the
to the official British sales or American securities, including three effected through- direct negotiation. In
early months of the selling, war, substantial liquidation of securities for private British account occurred, particularly during addition the
to data supplied by the British although the receipt of the proceeds at this Bank cannot be identified with any accuracy. According
of our securities through December Treasury 1940 amounted and released to $334 by million. Secretary Morgenthau, total official and private British liquidation
(e)
Other
Includes reflecting about the requisitioning $85 million received of private during dollar October
balances.
from the
accounts of Britinh authorized banks with New York banks, presumably
transfers
large
apparently represent the acquisition of proceeds of exports from the sterling area from and other such accounts currently during accruing moré dollar recent receipts. months
(a) Includes payments for account of French Air Commission and French Purchasing Commission.
(e) Adjusted to eliminate the effect of $20 million paid out on June 26 and returned the following day.
(f) Includes adjustment of $3.4 million to allow for "overnight" item (to be deducted next work).
(g) Includes about $2. million received from account o of British authorized banks with New York banks
03
0.2
0.2
0.4
+0.1
-10
+48
-1.4
168
CABLE FOR THE PRESIDENT
VIA NAVAL
CLEAR
March 22, 8941
BY DIRECTION or THE SECURIARY I AM GIVING YOU THE RESULTS OF
OUR RECENT FINANCING. CASH OVER+SEBSCRIBED APPROXIMATELY
TVELVE TIMES AND EXCHANGES APPROXIMATELY NINETY-FIVE PERCENT
OF TOTAL OUTSPANDING TURNED IN FOR THE NEW SECURITIES. THIS
IS AN EXCELLENT SHOWING.
BELL
(Signed) D.W. BELL
169
Sunday morning. 3- 23-41
Dear Mr. Secretary,
The April issue of Fortune, just arrived, contains
a tribute to you which is so good that I thought you'd
like to read it, even on vacation. It appears in An
article on "The State of Defense" which discusses,
among other things, the new four-man Cabinet committee
on Lease-Lend policy. After saying that Mr. Hull is
old and worrisome, and unlikely to last, the article
comes to you, as follows:
There is also the Secretary of the
"
Treasury, of whose fiscal follies many unkind things
have been said. But during the educational ere of
the old Defense Commission, Mr. Morgenthau had the
unadvertised job of handling all orders placed here by
It was a job about
the British Purchasing Commission.
which he knew nothing, in the same sense that Lord
Beaverbrook knew nothing about airplanes: and he was
a quiet but decided success. More than any individual,
he can take bows for forcing early expansion on the
machine-tool and aircraft engine fronts. One day he
called the machine-tool people in and asked them how
things were going. Their reassurances seemed to please
him; but since he had another appointment, he asked
them to step into the next room. His other appointment
was with the engine people, who admitted that they were
way behind on their deliveries. 'Why?' he asked.
'Because we can't get deliveries on machine tools we
ordered months ago,' they replied. 'But the machine-tool
170
people have assured me that their deliveries are right
on schedule, came back the Secretary. 'They are not
and we can prove it, . shouted the engine people, pulling
out formidable lists of machinery serial numbers and
dates. By this time Mr. Morgenthau was ready to talk
to the machine-tool men some more, which he did in front
of their customers.
"Mr. Morgenthau, without setting up as an aircraft
expert, has repeatedly reminded our aircraft and
engine makers of the British point of view. By this
February the British combat experience had led to a
marked lack of British interest in the best American
airecooled engines. The British also admitted that
Packard's new Rolls-Royce plant, which will not be in
production for about six months, is of interest to them
chiefly because of the ease with which it can be retooled
for a later model. As tactfully as beggars can, the
British are praising our plants but trying to get us
to use their designs for the product.
"Therein lies the importance of Mr Morgenthau's
place on the new policy board. He provides continuity.
Up to now he has been able to get customer courtesy for
the British in Hartford, Paterson and points west.
Undertthe lend-lease bill, their only claim to consideration will be combat experience. The Cabinet policy
committee will have to sit in judgment over the
representations of the British and the claims and
prejudices of our aircraft industry, whose planes have
171
not yet been subjected so thoroughly to the acid test
of War.
On that bench Mr. Morgenthau is best sui ted
to represent the British cause
Greetings to you aa
7.K.
172
THE ECONOMIST
March 22, 1941
Dollars, American and Canadian
The fact that the passage of the Aid for Democracy Act (ne Lease and
Lend) has not absolved the British Treasury from the necessity of increasing
its supply of dollars by every possible means has been emphatically underlined by the news that the holding of shares in the American Viscose Corporation, owned by Courtaulds, Ltd., has been sold on behalf of the Treasury to
an American syndicate who are to make a public issue of the shares. American
Viscose is one of the earliest and most successful examples of direct British
enterprise in American industry and, however good the monetary bargain,
there will be a great deal of sympathy with Courtaulds over the loss of
their child. It is, indeed, a sad event, though not one that is to be regretted,
since it comes at a most appropriate hour to demonstrate that Great Britain
is still ready for sacrifices of any kind to provide the sinews of war.
There are already signs that the Lease and Lend programme is to be interpreted
broadly - large transfers of cotton and tobacco are apparently on the agendabut the shortage of dollars is as acute as ever. The appearance in the
estimates of British dollar needs which have been published recently in the
United States of substantial sums paid to Canada has naturally given rise to
some discussion in this country. As was remarked in The Economist last week,
"it is somewhat anomalous that a neutral should be providing munitions free
of cash payment while gold or American dollars are still being paid to a
belligerent." But it would be wrong to read into this anomaly, as is being
done in some quarters, a suggestion that there is any hoarding of gold by
Canada or any lack of financial co-operation at Ottawa. The gold or American
dollars paid to Canada by the United Kingdom are needed to settle Canada's
own adverse balance with the United States, a balance swollen by imports of
raw materials and machinery for the rapidly growing Canadian armament
programme. If Canada could obtain these commodities on lease-and-lend terms,
the necessity would, of course, disappear. But the difficulties that have to
be surmounted do not include any lack of cooperation on Canada's part, and
it is a pity that the publication of partial statistics should have given
rise to a false impression.
173
The goal is 3.58 million
tone per month.
174
TELEGRAM FROM LONDON MARCH 22nd, 1941.
Naval. Last week the first occasion since the
1.
beginning of August 1940 on which imports in convoy into
the United Kingdom exceeded one million tons.
During the week ending March 19th 822 shirs con-
2.
voyed and ten lost in convoy.
Two enemy battle cruisers and a destroyer reported
3.
by aircraft 130 miles West South West from Brest p.m. March
21st steering East. The weather has impeded further search.
Royal Air Force. March 21st. Nine medium
4.
bombers attacked enemy shipping off the Dutch and Belgian
coasts; a direct hit reported on the stern of 5,000 ton tanker.
Night of March 21st-22nd. Eighty aircraft sent
out - 66 to Lorient, 6 to Ostend - seven on mine-laying and
one to drop leaflets over Brittany. Two not yet reported back.
5.
6.
German Air Force. Little activity.
7.
Night of March 21st-22nd. About 170 employed
chiefly against Plymouth.
Home Security. Plymouth. Night of March 20th-21st.
8.
Casualties estimated at 95 killed and 300 wounded. Night of
March 21st-22nd. Many thousands of incendiary bombs dropped
in addition to H.E's. Fires more serious than on the previous
night, and direct water supply failed. Owing to dislocation
of telephone service during previous night and to the movement
of the report centre, details so far are incomplete but only
slight damage to dockyard and Naval establishments reported.
The municipal buildings, the G.P.O. and an area around the
Guildhall reported burned.
175
PLAIN
LS
LONDON
Dated March 22, 1941
Rec'd 8:50 a.m.
Secretary of State,
Washington,
1128, Twenty-second.
FOR TREASURY FROM BUTTERWORTH.
Since I leave from Bristol by plane on March 25
I have ns during previous temporary absences turned
over the financial work to Ferris who is ably assisted
by Mrs. Egerton,
WINANT
ALC
176
GRAY
(Paris)
Vichy
Dated March 22, 1941
REC'd 10:25 p. m.
Secretary of State,
Washington
333
March 22, 5 p. m.
FOR THE TREASURY FROM MATTHEWS
Today's Journal Official publishes the text of a furthe
convention bEtwEEN the Bank of France and the Finance
Ministry increasing the provisional advances to be made
to the Government to defray the "main costs of the German
army of occupation" from 85 billion francs to 100 billion.
LEAHY
KLP
177
PARAPHRASE OF TELEGRAM
To:
Secretary of State, Washington, D. C.
From: Embassy at Berlin.
Dated: March 23, 1939. 11 a.m.
Rec'd: March 23. 1939. 8:45 a.m.
No. : 193.
Reference Department's telegram no. 59. 7 p.m. of March 21.
Under foreign exchange law, the second executory decree of
March 16, 1939 embodies the regulations under reference. The de-
cree stipulates that residents of Germany shall offer their foreign
securities for sale to the Reichsbank not later than April 15. 1939,
which securities shall be sold and transferred to the Reichebank on
request. There already existed this obligation. This decree involves
a new census of foreign securities held by residents on March 18
(effective date) -- Consulate General's report of October 13, 1937.
No. 906. Americans having permits for the free disposition of foreign
holdings have been told by German authorities in answer to inquiry
that their permits are not affected by this decree.
Copy:bj:5-13-41
178SECRETARY
DEPARTMENT OF STATE
WASHINGTON
In reply refer to
EA 811.24 Raw Materials/1551
March 22, 1941
The Secretary of State presents his compliments to
the Honorable the Secretary of the Treasury and transmits
the following, with reference to purchase of Indochinese
rubber by the United States and funds of the Bank of
Indochina arising from the sale of rubber:
1. Telegram no. 425, March 18, from the
American Embassy, Tokyo.
2. Paraphrase of telegram no. 42, March 16,
from the American Consul, Hanoi.
3. Paraphrase of telegram no. 39, March 18,
from the American Consul, Saigon.
Enclosures:
See above list.
10
BVI
THE
W
a
21
RECEIVED
of
179
TELEGRAM
COPY
Tokyo via Shanghai & N.R.
March 18, 1941
(Rec'd 7:05 a.m., 19th)
Secretary of State,
Washington.
425, March 18, 7 p.m.
Special despatch Vichy today's ASAHI attacks Britain,
United States for obstructionist tactics designed create
rift between France, Japan following Indochina mediation
settlement. American shipment foodstuffs to France said
to be motivated not by humanitarian considerations but by
prospects procuring from Indochina large supplies raw
materials particularly rubber, to be paid French credits
frozen United States. This called indirect pressure
Japan revealing American desire secure Indochina rubber
and cooperation Britain block new order. Concluded
French-Japanese relations cannot escape being affected
by American-French relations.
Sent Department via Shanghai.
GREW
E***
RECEIVED
180
PARAPHRASE OF TELEGRAN RECEIVED
FROM: American Consul, Hanci.
DATE: March 10, 1941, 11 a.m.
NO.1 42.
Reference is sade to your 6 of March 13, soon.
First. I an informed by the Acting Director of the
Economic Section that data concerning the amounts of tin,
rubber, antimony and tungsten that can be exported have
been communicated to the French Government and, in addi-
tion, the French Government is being kept advised by the
French delegation at Tokyo of the amounts of such products
that are being requested by the Japanese Government.
The Acting Director of the Economic Section understood that
the difference between Japanese needs and the total amounts
available for export would be available for purchase by
our Government. But he added that present indications are
that all of the tungsten and antimony production of Indo-
china, half of Indochina's tin production, and 25,000 out
of about 66,000 tons of rubber are being taken by the Japanese.
Second, The objection of the assistant Assing Director
to the former method of payment for purchases of rubber 10
the period of time which elapose between shipment and pay->
ment; he said that the 90 percent payment after the documents are as received is usually a matter of weeks and
that a matter of months is involved in the 10 percent payand
ment after atrival/inspestion of the rubber. The same
objection
181
objection was Faised by the Inspector General of the Bank
of Indoshine, who added that the amount left in the *special
accounts is se distrished that he cannot wait for such a
long period for credits that can be expended freely. with
reference to this matter and to Consul's telegram of the
12th, inst., I an inclined to think that any objections to
the method of payment hitherto used would be effect by the
release of a part of the proceeds from earlier rubber contracts to take care of the pressing needs of the Bank of
Indochina.
Third. The possible effect of the alleged Japanese
proposal and the French acceptance that the French Govern-
sent will not make with regard to Indochine any agreement
OF alliance with a third country that would contemplate
cooperation of a political, economic OF military nature which
the Japanese Government is opposed to, was discussed by me
with both the Asting Director of the Economic Section and
the Inspector General of the Bank of Indochine, both of
whom admitted there was a possibility that Japan sight consider commercial transactions such as the sale of rubber
10 THE as failing within the meaning of the above French accept-
TECHNICY
OFFICE and although they stated that such commercial transactions
Bil
NVB
2T
st m should
not be so considered. Please refer to paragraph two
of Consul's no. 11 of February 2. 8 P.M.
RECEIAED
telegram has been sent to Cavito to be repeated
to Chungking, Hong Kong, Peiping and the Department.
EASNSG
EAIFL
REED
182
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Consulate, Saigon.
DATE: March 18, 1941, 4 p.m.
NO.:
39.
A source reputed to be reliable has informed me
confidentially that the Japanese merchant ship La Plata
Maru which is at present at Saigon is taking on a cargo
of four thousand tons of rubber which this source be-
lieves is to be shipped via Dairen to Europe. According
to this source, the rubber has already been paid for in
U.S. dollars. Union Commerciale Indochinoise et Africa,
Inc., 18 the local exporter.
FLOOD
EA:MSG
182
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Consulate, Saigon.
DATE: March 18, 1941, 4 p.m.
NO.: 39.
A source reputed to be reliable has informed me
confidentially that the Japanese merchant ship La Plata
Maru which is at present at Saigon 1s taking on a oargo
of four thousand tons of rubber which this source be-
lieves is to be shipped via Dairen to Europe. According
to this source, the rubber has already been paid for in
U.S. dollars. Union Commerciale Indochinoise et Africa,
Inc., is the local exporter.
FLOOD
EA:MSG
183
Delivered to Treasury by Mr. Nicholson
SHANGHAI
March 22 1941
Information received from Hongkong on good authority that
Japanese will attack Yunnan and Kweichow provinces in big
drive upon Matsuokas return to Japan Stop Japanese have just
landed three hundred bombers Tonkin Province of Indo China
with intention of making strong attack on Burna Road within
two weeks Stop Bombers will be accompanied by about the same
number of pursuit and auxiliary planes
10 THE SECHEINBA
OLLICE
bill IS se
chicopy
RECEIVED
Radiogram from Shanghai, March 22, 1941.
Cyril Rogers now in Lisbon awaiting plane for the United States
10 THE
DERICS OF THE
St bill IS 25
ehicopy
DECEIVED
185
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
ML.D
For
DATE March 22, 1941
Secretary Morgenthau
CONFIDENTIAL
Mr. Cochran
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
Purchased from commercial concerns
£16,000
-0-
Open market sterling remained at 4.03-3/4. Transactions of the reporting
banks were as follows:
Sold to commercial concerns
Purchased from commercial concerns
-022,000
In New York, the closing rates for the foreign currencies listed below were
follows:
Canadian dollar
15% discount
Swiss franc (commercial)
.2322
Swedish krona
Reichemark
Lira
.2384-1/2
Argentine peso (free)
Mexican peso
.2315
.0505
.2066
Cuban peso
5% discount
Brazilian milreis (free)
.4005
.0505
In Shanghai, the yuan declined 3/32 in terms of our currency to 5-5/16
Sterling was 1/2 higher at 3.92.
There were no gold transactions consummated by us today.
No new gold engagements were reported.
BMR.
186
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE March 24, 1941
TO
Mr. White
FROM
Mr. Kamarck
Subject: Axis influence in Ecuador
(Based on information supplied by the Office of the Coordinator
of Commercial and Cultural Relations Between the American Republics)
Summary
Axis influence in Ecuador while important is not overly dangerous
at present. A persistent campaign of propaganda is, however, steadily
being carried on.
1. There are 3,500 Germans in Ecuador, the majority located in or
near Quito, the capital. Over half of these have arrived in Ecuador in
the last two years. The Nasis are well organized and maintain a close
check on the other Germans through pressure on relatives in Germany.
The German refugees in the country are thoroughly intimidated and are
forced to contribute to Nasi funds. The two most active Nazi leaders
in the country were said to be Walter Giese who was employed in the
German Legation and L. E. Bruckmann who is German consul in Guayaquil
and is the representative of the Vick Chemical Company of the United
States and of the Bayer Company (presumably of Germany). Giese was
expelled from Ecuador in December, 1940, for Gestapo activities. (N.Y.
Times) There is a German school which is used for purposes of Nasi
indoctrination.
Transocean, the German news service, gives free news to any paper
that will use it. Transocean also sends daily bulletins to all important
officials and important business men.
The local German air line, Sedta, gives free passage to important
officials, business men and school children.
2. The Italians in Ecuador number less than a thousand. Most of
them have been in the country for years and are mostly small shopkeepers.
There is little Fascist Party activity. The leader of the Italian
Fascists is a Colonel Slaviero who remained in Equador after the Italian
military mission of several years ago returned to Italy.
187
2
Division of Monetary
Research
3. There are only a few Japanese in Ecuador. Most of then are
connected with a Japanese oil company which has a concession in the
country.
4. The Equadoreans, on the whole, are not pro-Nazi. There are,
however, a number of important natives who are in favor of the axis
powers.
The largest newspaper in the country, E1 Universo (20,000 daily
circulation) is pro-axis but not violently so. E1 Debate, a small
paper (600 daily circulation is strongly pro-Franco and pro-Nasi.
This latter paper is the organ of the Conservative Party (Catholic
Church party) which is in a minority in the government. All papers
in Ecuador will publish any article if paid for it though sometimes
the source will be given.
In general, the Ecuadoreans are not worried about the danger from
fifth column activities and have not taken any effective steps to
cope with such a danger.
188
RESTRICTED
0-2/2657-220
M.I.D., W.D.
No. 346
March 22, 1941
12:00 M.
SITUATION REPORT
I.
Western Theater of War.
Air: German. The attack on Plymouth was renewed last
night in considerable force. The cumulative effect of this attack
has evidently been great. The Germans claim to have sunk 31,000
tons of shipping on the 21st.
British. The only offensive activity known was
another attack on the Lorient on the night of the 21st-22d. Popu-
lar demand is rising in England for reprisal bombings on German
cities.
II.
Balkan Theater of War.
Ground: Bulgaria, No change.
activities.
Albania. Restricted artillery and patrol
Air: Normal support operations.
III. Mediterranean and African Theaters of War.
Ground: Libya. The British have captured Jarabub, an
oasis in eastern Libya, which was garrisoned by about 800 Italian
troops.
Eritrea. At Cheren the British report unsuccessful counterattacks by the Italians.
Air: Considerable British air activity in southern
Ethiopia.
Note:: 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.
RESTRICTED
CONFIDENTIAL
189
of Sale Bollogram
Received as the Was
as 8:99, March se, M
Losion, filed 15:40, March 22, 1942.
1. Air Activity - the Continues
a. Daylight of March 21. Comma - shipping, a
fleet boat, a destroyer and an oil teaker were for severe burbing
and anchine - attachs w Constal Common please. Hits were seeend w
busing on the teater and the others - mehics b. Hight of March 20-01. Sentenced wide wave sate w I
please on the part of Breat, and staffelds in and to Bought
with heavier attacks reported w be mining please on center office in
cocapies territory. the U-beat base as Excitent - again attented w as
heavy bembers.
a.
a. Right of March as-ss. Figurette was boubed again while
continued please attached Bertahise, - Benest. the
- of damage has as yet not bone reported.
D. Saylight March a. - welds were limited to continued
flighte along the coast and as - with alser action against Name, Commons,
Berfelt and Massin. No serious destruction resulted.
e. Sight of March A total of n streets have been
reported over Pigmouth, 45 please over Louise, 15 - sine laying missions,
- isolated please to the - of w veriously over the would of Registered
Pipments we again subjected to booking but details of - military
destruction - lacking.
CONFIDENTIAL
5. I
CONFIDENTIAL
190
the M Statetay reports that - Britten plano failed to
return on the sight of March se-st.
4. AMERICAN of Prince Ate Feese is made Stratez
Year - and as Account in Bottom the British sure
especially active on March a. Smoking attache we also emonted against
Divolous is Ethiggte. Bloodbero in the theater patrels were active.
5. date.Atz Autivity in middle Sectora Return.
Deagnet we the target of Gomma booking attack without
- during daylight of March a.
6. to two - states Battlechips (86,000 base) - and
- were dissured w British ship-based please at 18:30 March so,
proceeding in a a direction as so Inste as hour 600 attes - of
Gage Finishesse. Failure of provented further action or chears.
tion.
7. It was seported that the Sass - e during the
night of March 19-80.
Distributions
Secretary of Mar
State Department
Secretary of
Amer. Secretary of Mar
other of Staff
the Please Division
Office of Break Intelligence
Air Googe
0-3
CONFIDENTIAL
CONFIDENTIAL
191
Paraghance of Gote
Receivedatthe Wt Department
as March 23, 1942.
Belgrate, filed March 25, 1941.
The Fagoelav Government has reached as inveresable decision
to sign the past. It is time that feeling against the government is
numing high but there is not mash about of dangerous outbreaks,
state the young mm of the nation have been mobilized. Several
General Staff officers have make these statements to m.
FOREIGN
Distributions
Bosrotary of You
State Department
Secretary of Security
Aest. Secretary of M
Mar Please Division
office of Noval Intelligence
CONFIDENTIAL
CONFIDENTIAL
192
of Gale
Received at the Mar Department
at Ties, March as, with
Losion, filed 18:35, March us, was.
1. Driver Ats Activity - the Centinent
a. Daylight of March 22. - Asts account ohly was set on five
as a result of a his seared w British please that enried out attories -
- shipping - constal ettics in Harry the Botherinsin, Shouse,
and Belgian.
b. Might of March m British programate pooghlete trapped over the worth of Trease - over Britalay and leas British please
carried out vaids on berber facilities as Brest, eat Antwory. In
addition a U-beat bees as the haster of Loriest was the tanget of a a
British seld.
2. Service Atz Activity - Britain.
a. Highs of March se-es. - please error eat sentered
attachs on tongote in the Deatos, Commell, and Massinshire nugless. the
extent of the damages done has not yet been reported.
b. DayLight of March 22. only a small number of Garasa please
were pletted over English and the few other German please that - active
carried out suide - medical shipping along the east costs. As yes these
have been me reports of serious - to Bristen installations.
e. Right of March 21-22. A total of 170 Comma please were -
in the said ea As the present time there is as official institution
of the nobber of committee or the extent of the damages but is is believed
that a nubber of individuals ware Billed.
CONFIDENTIAL
CONFIDENTIAL
193
3.
a. Brittah - - no reports of British - Season.
b. - Highs of March ms. - w fise -
- - after striking a Ballow I able.
4. British ets activity is the made Mestare - as
followes in the theater British please cooperated with Inst Storess,
enried out - and patrus missions - - is atteste on a
number of targete - Discloses in the Silger theater a commentration of
- meter I vehicles - attached w British business in the
vistality of State, in the Britzons theater British please abbented
positions - I
5. - ats activity is the middle Sestem theater was as
follows Great But - White was attected w a formation of a -
-
busture without I to British installations, British foress in the
vietality of Aghetia in lybia were for four Anto waids.
Distributions
Secretary of Mar
State Department
of Treasury
Acct. Becombay of -
Other of Staff
M Please Division
office of Nevel Intelligence
Air Gays
6-3
CONFIDENTIAL
CONFIDENTIAL
194
Paraphrese of date Ballegram
Received as the the
as seem, March 25, 1001.
Befia, filed March 25, 1941.
For the last three vesits there has been a steely street of
tracks, materials, and material issues through Softa. That I gesterlay, I should estimate asi " howiteers of different califores,
15 large colline - artillery 100 a cases
15 fast light tanks, probably bank absence, and with - of about
75 - and having trusties free 10 whoole make of hard rubber, 500
motersycles with side esse which eas easy Shree soldiers spless;
a.a. mehine - to each tea trucks.
JANUX
Distributions
Secretary of Mar
State Department
Secretary of Treasury
Asst. Secretary of Mar
Ohiof of Staff
Year Plane Division
Office of Neval Intelligence
CONFIDENTIAL
CONFIDENTIAL
195
Persphrase of Code Ballogram
Received as the Mar Department
at 9:85, March as, 1941.
London, filed March 24, 1941.
1. British Air Activity on the Continent.
a. Daylight March 23. Near the islands off the Fristen coast
and off the coast of occupied France, Axis shipping was the target of
British Air Force with - well ship claimed his.
b. No air activities were reported night of March 22-25.
2. German Air Activity over Great Britain.
a. Right of March 25-24. Scattered German planes reided airfields
is East Anglis and Yeskshire.
b. Daylight March 23. Common reiding was limited to patrels
along the cosate and scattered flights of few please over Bangshire, Sections,
Valee, Susses, Kent, Yorkshire, Deven and Bases. British claim 2 destroyed
and 2 damaged without less to their own please.
e. The less of life in London in the bombing of March 19 was
461 killed, and at Pigmouth on the nights of March 20 and 21 more than 150
with 230 badly wounded. In the letter place 5000 are without shelter. A
pier was badly damaged and the town hall and the post office destroyed.
The Royal Deek Yeris were not seriously injured.
3. British Air Activity is the Middle Bagters Theater.
a. Daylight March 25. R.A.F. bombing in Eritree and Ethiegia
centered about Karea, Gender and Assare. Near Disedana . railway train
was attacked and destroyed. The British claimed the destruction of five
Italian please.
4. Asia Air Activity is the Middle Masters Theater.
CONFIDENTIAT
CONFIDENTIAL
196
a. Daylight March 23. in the Great Member of
mits was barted wise w low Styles please, the first assesses w as
Junkers accepanied w the stas number of fighters, and again w
30 Junhare with so essarte. In the first attack British sinteed the
destruction of - eat damage to 2 w and is the - 9
destroyed w fighters and , w artillary fine. Details of / to part
are looking.
. Deglight March m. the attacks were sade w Italian please on
a British sinfield at Peronythia, Greese, first with 18 - again with is
planse. Italian lessee were reported as one destroyed and one d
There - no British please seeb. the same day the British sinfield at
Grobe, was from Italian please.
e. Daylight March m. The Genesa long sange busbers accorpented
w an excert of 15 fighters - observed over the - e the
night of March 82-95, so long reage bonboro were observed.
5. In the Common action egatest Miles March m, as please were
employed. or 8 British fighters which counterstincies, five were shot to one Comma lost.
6. the strength of the Bulgeries Anny - the freatiers is as
follows.
Smith Frentier
1 motorised, 10 safentry divisions
Greek Freakter
2 informay divisions
Treatter 1 actorisos, 4 informay divisions
T. Souty in the morning of March se, - Anto amiliary
Sentensively Identified as the MASSER (9600 bene), we deserved 800 siles -
of Freetom. the buttleships - and - (86,000 base) have
e
CONFIDENTIAL
CONFIDENTIAL
197
not I observed.
a. Is the rook Designing March se the British - /
vessels
of which
- - suck. - imported - w
-8than
- million
Distributions
If of -of Aest.
State Department
IIII
other
Secretary
of 1
- Pione Division
Office
of
Air
Garge
Naval Intelligence
as
.3.
CONFIDENTIAL
CONFIDENTIAL
198
Paraphrase of Code Indiogram
Received at the War Department
at 18:09, March 24, 1941.
Rome, filed March 24, 1941.
The Germans are still moving troops to Naples by rail. It a
is now said that there are five German divisions in North Africa, less
some losses on the way. The Germans intend operations to start in
fifteen days or thereabouts, and think the force they now have in
Africa is sufficient.
FISKS
Distribution:
Secretary of War
State Department
Secretary of Treasury
Asst. Secretary of War
Chief of Staff
War Plans Division
Office of Naval Intelligence
CONFIDENTIAL
CONFIDENTIAL
Perephenee of Code
199
Received as the Was Department
as 18:09, March 24, 2001
Remo, filed March 24, 1941.
A trustworkly source asserts that Generally has con-
sented to wait until the Italians have tried - more Albanism
offensive, to be attempted within the more few days. Traveling
secretly, Mussolini reached Rose yesterlay. Arrangements have
been made for him to so beek to Albania during the present week,
it is stated. To my mind there is no chance at all of success
in - Italian offensive now. The mirale of the troops, especially
the morals of those in Albenia, is too low.
FISKE
Distributions
Secretary of War
State Department
Secretary of Treasury
Asst. Secretary of War
Oklef of Staff
War Plans Division
Office of Naval Intelligence
CONFIDENTIAL
CONFIDENTIAL
200
Permphones of Code
Received as the Year Department
as 22:43, March an, 2041.
Animars, filed March as, 1941.
1. Following George movements are being safe by the
Assigns
I Garya to Grankels and viciality.
IIVGouge
to a place not definitely located along Sea of Manuara.
Couge to Sures from Manga.
VI Gorge to Ismit from Maysers.
a. The estimates of mobilisation given in my reports as submitted
in writing, have been high. the total man on active service after enrollment
of the present elacesa is completed, will be - near 800,000. This
is the largest member that Turbay - equip. - and a half million is
the estimate of total Turbich - made w the Retish General Staff.
5. From trustwerthy informate there are reports of the arrival
is Greese of two Brittah divisions, part of a third division, - amount
brights. These are accorpented w 199
4. Please note Coblegram No. 74 and 78 from the
(8-2 Notes Rebeary Gablee Non. 74 and 78 have not yet bom received)
Distributions
Secretary of Mar
State Department
Secretary of Treasury
Aest. Secretary of Mar
Other of stoff
the Plane Division
office of Have Intelligence
CONFIDENTIAL
201
RESTRICTED
0-2/2657-220
M.I.D., W.D.
No. 347
March 24, 1941.
12:00 M.
SITUATION REPORT
I. Western Theater of War.
Air: German. Harassing activity over England. Numerous
attacks on shipping.
British. Minor offensive activity until last night
when normal attacks were made over western Germany. Berlin, Hanover,
and Kiel, in particular, were raided.
II. Balkan Theater of War.
Ground: Bulgaria. No change.
Albania. Local actions.
III. Mediterranean and African Theaters of War.
Ground: ibbssinia (Ethiopia). Neghelli, an important town
and road center in the south, has been captured by the British. Marda
Pass, west of Jigjiga, is reported captured by the British.
Eritrea. Heavy fighting in the Cheren area.
Libya: According to an Italian communique German
mechanized forces have gone into action on the eastern edges of the
Sirte Desert in Libya. There is a slight trend toward an increase
in the intensity of Axis operations in this area. (Note: The town
of Sirte is about 340 miles by road from Bengasi)
Air: Axis. Malta was heavily bombed.
British: Relatively strong support is being given
the attack on Cheren, with Italian air reaction almost non-existent.
Diredawa, railhead for Harrar is being systematically bombed.
Note: 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
RESTRICTED
202
24 March, 1941.
From:
To:
Spagent, Hongkong, China.
Mr. Nicholson.
Message from Mr. Campbell.
The Chase Bank on behalf of the Central Bank in September,
1938, placed in the SS. COOLIDGE seven and a half million ounces
silver amounting at that time to two million one half U. S.
dollars, which silver was to be sold to the United States
Treasury. The Japanese objected to this exportation and the
silver was removed from the ship and placed in the vaults of the
Chase Bank, where it still is. In view of the serious situation
in Shanghai, the Central Bank fears the silver will fall into the
hands of the Japanese and desire to know if the Treasury will buy
this silver. Further, even though the Treasury buys the silver,
the Central Bank believes the Japanese would still not permit its
exportation. Under the latter condition, could the Treasury appoint
the Chase Bank as custodian in Shanghai? Hsi submits this for con-
sideration before taking it up with H. H. Kung. Please reply to
Hei who is now in Hongkong.
to THE SEQUAL
LECHNICY
OLLICE
W a 58
BECEIAED
203
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
High
March 24, 1941
DATE
for
Secretary Morgenthau
TO
FROM
CONFIDENTIAL
Mr. Cochran
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
238,000
233,000
Purchased from commercial concerns
Open market sterling remained at 4.03-3/4. Transactions of the reporting
banks were as follows:
Sold to commercial concerns
£ 2,000
& 2,000
Purchased from commercial concerns
In New York, the closing rates for the foreign currencies listed below were
as follows:
Canadian dollar
Swiss franc (commercial)
Swedish krona
Reichemark
Lira
Argentine peso (free)
Brazilian milreis (free)
Cuban peso
Mexican peso
15% discount
.2322
.2385
.4005
.0505
.2320
.0505
5% discount
.2066
In Shanghai, the yuan in terms of our currency declined another 3/32# to
5-7/32#, the lowest quotation in over five months.
We understand that the Foreign Funds Control has authorized the Federal
Reserve Bank of New York to issue a license to the Chase National Bank permitting
the latter to sell 2,000,000 French francs on behalf of the Central Bank of Turkey.
There were no gold transactions consummated by us today.
The Federal Reserve Bank of New York reported that the Bank of Canada shipped
$3,573,000 in gold from Canada to the Federal for account of the Government of
Canada, for sale to the New York Assay Office.
The State Department forwarded a cable to us stating that the Chase Bank,
Hongkong, shipped $628,000 in gold from Hongkong to the Chase National Bank, San
Francisco, for sale to the U. S. Nint.
204
-2-
According to cable advice from Boxbay, gold was quoted at the equivalent of
$35.16 at the end of last week, representing a decline of 28 from the previous week's
closing level. Silver in Bombay was priced at the equivalent of 44.76 off 5/16/
In London, both spot and forward silver were fixed at 23-1/2d, representing
& gain of 1/16d in each case. The dollar equivalent of this price is 42.67d
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 35g.
We made two purchases of silver totaling 100,000 ounces under the Silver Purchase
Act, both of which consisted of new production from foreign countries, for forward
delivery.
pm
CONFIDENTIAL
205
EXPORTS OF PETROLEUM PRODUCTS, SCRAP IRON AND SCRAP STEEL
FROM THE UNITED STATES TO JAPAN, RUSSIA, SPAIN, AND GREAT BRITAIN
AS SHOWN BY DEPARTURE PERMITS GRANTED
Week ended March 22, 1941
RUSSIA
SPAIN
:
:
JAPAN
GREAT BRITAIN
:
PHROLXUM PRODUCTS
Fuel and Gas 011 (including
Diesel 011)
--
80,000 Bbls.
-
51,799 Bbls.
Crude -
Blended or California
High Octane Crude*
All Other Crude
146,000 Bble.
63.759 Bbls.
---
---
----
--
---
Gasoline -
Gasoline A**
Gasoline B*
All Other Gasoline
--
37,050 Bbls.
--
-
--
109,426 Bbls.
90,000 Bbls.
-
abricating 011 ---
--
--
--
--
--
--
--
--
Number 1 Heavy Melting Scrap
--
--
--
800 Tons
All Other Scrap
--
--
--
1,210 Tons
Aviation Lubricating 011***
All Other Lubricating 011
Tetraethyl Lead**
--
29,589 Bbls.
"Boosters", such as IsoOctane, Iso-Hexane, or
Iso-Pentane
-
3.483 Bbls.
314 Bbls.
SCRAP IRON AND SCRAP STEEL
Office of the Secretary of the Treasury, Division of Research and Statistics.
March 24, 1941.
Source: Office of Merchant Ship Control, Treasury Department.
Any material from which by commercial distillation there can be separated
more than 3 percent of aviation motor fuel, hydrocarbon or hydrocarbon
mixture - President's regulations of July 26, 1940.
Aviation Gasoline.
As defined in the President's regulations of July 26. 1940.
206
Miss Chauncey
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE
March 24, 1941
Secretary Morgenthau
TO
FROM
Mr. Cochran
STRICTLY CONFIDENTIAL
Official sales of British-owned dollar securities under the vesting order
effective February 19. 1940:
No. of Shares $ Proceeds of Nominal Value
Sold
March 17
18
19
20
21
22
150,079
30,146
51.997
53,625
35,508
1,176
322,531
Shares Sold
3,822,740
1,132,842
1,847,841
3,133,325
1,196,122
of Bonds Sold
15,000
911,625
172,700
189,400
2,701,000
$ Proceeds of
Bonds Sold
13,506
935.664
167,502
135,278
11,180,477
Nil
3,989,725
2,928,386
Nil
4,180,336
6.289.309-1/2
200,137,177
21,982,925
21,096,064
6,611,840-1/2
211,317,654
25,972,650
25,276,400
47,607
Sales from
2/22/40 to
15/41
TOTAL 2/22/40
TO 3/22/41
Miss Kelly reported sales of non-vested securities for the week ending March 15
totaled $1,000,000.
THE SENATE TODAY IN RECORD TIME COMPLETED CONGRESSIONAL ACTION ON
THE $7,000,000,000 WAR-AID APPROPRIATION TO PROVIDE GREAT BRITAIN
AND PERNAPS OTHER AXIS FOES WITH LARGE QUANTITIES OF WARPLANES, SHIPS,
TANKS, GUNS AND FOOD
3/24--2214P
ADD LEND LEASE BILL PASSED, SENATE
THE VOTE WAS 67 TO 9.
INEXBIKEXIE
NO AMENDMENTS WERE OFFERED.
THE BRITISH AID BILL WAS DISPATCHED TO MIAMI ON A REGULAR EASTERN
AIRLINES PLANE ARRIVING THERE AT 10:45 P.M. POSTAL INSPECTOR LOUIS
WHITE WAS IN PERSONAL CHARGE OF THE MEASURE. HE WILL TURN IT OVER TO
A NAVAL OR COAST GUARD PLANE AT MIAMI WHICH WILL DELIVER IT TO THE
PRESIDENT ABOARD THE YACHT POTOMAC OFF THE FLORIDA COAST.
3/25--V0419P