Full text of Diaries of Henry Morgenthau, Jr. : Volume 410 : Part 2

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Book No. - - 410

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Page 123

123
7White:

Because I think there is something in
what he says, and I can appreciate why
Hopkins and you both feel that he is push-

ing. There is no question about that.

Viner:

He is pushing. He came here five weeks
ago. I was here ten days ago and I see

no advance. It is just where it was then,

and I see nobody with his back behind it
to put it through and it happens to be the
only important business before the Treasury

that I have heard about, and I think it is

being muffed on this side; and if what he

says is true, the are in terrible straits

and for five weeks they have seen no light.

If he says that the British Bank of England

has fifty million dollars in gold, that is
a terrible situation for them to be in
while they are fighting a desperate war

at its critical stage, and I think there

may have been lots of muffing on their side,
but that in five weeks they couldn't have
made more progress than that is an ad-

ministrative scandal, if that hasn't been

straightened out, and I don't see anybody
who has got his back behind it and is trying

to get it either yes or no or telling them

to go home.
White:

Bell:
White:

I don't think that is fair either.
I don't either.
I disassociate myself with that. I think
that they are pushing. I don't think that
they are quite in the straits that he makes
it out that they are. There are difficulties,
but I think he is trying his best - I don't
think that it is fair to say that nobody here
has been pushing and pushing hard to straighten

that thing out.

124
8Bell:

And they have gotten relief to the extent
of about four hundred million dollars that
they didn't expect on March 11. The only

thing that I want to see is that letter --

H.M.Jr:

Cox said this morning that to date they have
gotten over four hundred million dollars
worth of relief. Now, maybe that is scandalous that they haven't got more than that.

Viner:

Do they know that?

H.M.Jr:

If they don't they are dumber than I think
they are.

Bell:

Yes, they have known that.

Cochran:

Yes, they have known it and I --

H.M.Jr:

I don't have to defend it. Mr. Bell has

been handling this thing for the last month
and if you want to answer Viner's criticism
that it is scandalous administration, I

mean you and White and Foley and Cochran

have been handling it. You can answer

Viner if you want to. I gave you the task.
Bell:

Well, I don't think it is scandalous. I

think some of them have been a little slow,
but after all we haven't had the information

we needed.
Viner:

There is no right to be slow at this sort

of a task. If I understand his letter
right, they are at the edge financially.

Their morale must be something terrible.
H.M.Jr:

They have said it four times. Four times
they have said they were on the edge and
four times they have been wrong. Four

different times Sir Frederick Phillips has
said they were going to run out of dollars.

125

-9White:

Moreover, this relief isn't to fix the

immediate situation, Jake. I think you
may be right in saying that they are low.
I don't think they could sustain the position
that they are to that depth that you seem
to indicate in your remarks. If they were
in that depth, they have a very easy out.
They have a very easy way of getting more

money immediately.

It is their position in the future, the

next four months, six months, next year,
with which they are concerned. I do think

it is being handled here. I think there
may be room for just criticism that it could
be handled more expeditiously and that he
has been given what appears to be a little
bit of a run around. He has moved from one

to another, but not to the extent that I
think you indicated at all.

Viner:

I was startled by that fifty million dollar

figure.
White:

Oh well --

H.M.Jr:

Just a minute.
(The Secretary had a telephone conversation

with Mr. Purvis.)
White:

For some reason Mr. Keynes started here on

the wrong foot. Whether it was his wrong
foot or somebody else's, I don't know; and
he just never has been able to get back in
sufficiently good graces to be given what

I would regard as a fair attitude in hearing.
That is the way I feel, Mr. Secretary, about

it.

H.M.Jr:

Well, it is perfectly obvious. They send a

126

- 10 man over here under the misunderstanding

as to what we are doing. Time and time
again through no fault of ours the Chancellor
of the Exchequer just doesn't know what is
going on. And then they send a man over
here, completely discredit Phillips who
has done a beautiful job, and independently

make me first and now Hopkins feel as though
we weren't doing anything.

Now, it is a question of psychology and
they have done the thing and they don't

do these things right. If they think they

are going to put me in a frame of mind that
I am not doing enough or Jake Viner thinks
he can scare me by saying these things, that

I am not doing enough, it is just perfectly
ludicrous and wholly unfair and I won't let

anybody say it, that I am giving them the
run around, because if they say it they don't
know what they are talking about.
I mean, nobody has done more, second to the

President, than I have since November '38,
to keep these people going, and I can't

help it if they go off on a tangent and

send somebody like this over here. And when
a man like Arthur Purvis, who is head of the

North American Purchasing Council doesn't
know who the man is who is in charge of

their dollar exchange or where he is located
or who represents him in this country, I

say it is a pretty bad situation.

White:

Well, I don't think you can allocate that
against Keynes.

H.M.Jr:

I am not allocating it against Keynes.

White:

Oh.

H.M.Jr:

I am not allocating it against Keynes. I am

127

- 11 blaming the Chancellor of the Exchequer
for having one man over here and then
sending another free lance over here to
try to do something where everybody is

working and trying to put me in the position
as though I wasn't trying to do everything
humanly possible.

It has been difficult enough to keep this
honeymoon going. After all, I don't bring
up the question, "What has happened to the

World War debt, either, but anyway, I know
that this thing that we have got now - and
as I say, Cox told me this morning they
have already received over four hundred
million dollars worth of dollar exchange

relief.

White:

Well, stating it that way, I presume this
is not the place to discuss it, but stating
it quite that way doesn't do justice to

Keynes' position; but I take It it is too
long a discussion here.

I think, Mr. Secretary, he is being done a

little less than justice in this whole matter

and I don't think there was any intent at
any time on his part either in what he said
in the letter, in what he has said anywhere

else, which is in the slightest bit any
British. On the contrary, I think that he
criticism of your cooperation with the

has gone out of his way many times to say

that you are the best friend that England
has here. He has told me that twice.

Viner:

I think you ought to be proud of that letter

and not regard it at all as a criticism.

He praised and thanked as intensely as he
knows how to do.

128

- 12 H.M.Jr:

Well anyway, everybody is entitled to his
opinion and that is your opinion and that
is Harry White's opinion, and that is the
purpose of the meeting. Thank heavens we

can do it this way and it is over.

What you say and I say, it is our personal

opinions and it finishes it. I hope the
next meeting you come in you will be just
as frank, and if you can't, it is of no use

to me, but don't mind if I disagree with you.
I hope you don't mind if I disagree with you?

Viner:

Well, I always hope we can come to an agreement before we get through, by my giving in
if necessary.

H.M.Jr:

Or by my giving in if necessary. (Laughter)

Sullivan:

He doesn't know about that compromise
technique.

Foley:

H.M.Jr:

Jake, I can give in, too.

I think he does. He indicated the only

manner of settlement.

Ever since - I don't want the last word and
somebody can rebut me, but ever since this

man has come in, he has tried his best to
give me a defeatist attitude as though,

well, I hadn't done what I should. I am

in the wrong. I am doing something to hurt
them and so forth and so on and it took me
an hour and a half, an hour and three quarters
to explain to Benjamin Cohen our attitude.

I went all through it. By the time I was all
through he understood it. But I haven't got

many hours and three quarters.

Now, I would like until we get this thing
started this afternoon, until I make up my
mind who will sit at these meetings, you

129
- 13 -

see, for the first one I would like Bell

and White and Cochran and Foley. Then

afterward I will delegate one person in
whose office they will take place.
Foley:

Three-thirty?

H.M.Jr:

You are here today, Jake?

Viner:

Yes.

H.M.Jr:

Would you come too, please?

Viner:

Yes.

H.M.Jr:

Three-thirty. Well, is Bernstein in with

you, too? Who follows this thing for me?

Foley:

Well, Bernie and I have been working on it.
We haven't been doing anything on it this

week because we have been tied up with other
things.

H.M.Jr:

Well, somebody has got to come in.

Cochran:

No, it has been going on just the same.

Foley:

They don't pay any attention to us, Mr. Secretary.
They go right ahead.

H.M.Jr:

Well anyway, we will go ahead. This is the
right road.
Now, Harold, are you going to have something

for me for my ten-thirty meeting on - to say

about the bonds?
Kuhn:

I have that information. About the salary
allotment plans, the companies that have
adopted them.

H.M.Jr:

Yes.

130

- 14 Kuhn:

I have that list and I will give it to

Chick at ten-fifteen.
H.M.Jr:

Well, I need a little rehearsal on it myself.
Harold, could you come in at ten-fifteen?
And I tell you - because I am going to put

a little pressure on you. If you want to step
out at ten-fifteen, I would like to have here
Powel, Houghteling --

Graves:

Houghteling is not in town.

H.M.Jr:

All right. Well, Powel and who is the fellow
from the Metropolitan Life?

Graves:

Johnston.

H.M.Jr:

Johnston and Sloan.

Now, what I am going to do is, I am going
to lay it down on the line and give you from
now until Monday at three o'clock when I
have my next press conference so you will
know what is coming. I am going to start
this list from Social Security, how many

factories in each country --

Graves:

I had your note about that. You asked for

my comment tomorrow. I can give it now

if you like.

H.M.Jr:

Yes.

Graves:

We have, of course, in the offices of the
collectors of internal revenue, the social

security lists of taxpayers under title

eight. It was an Addressograph list and the

plates show the approximate number of employees

and, of course, the location of the plants.

131

- 15 -

It is not necessary, in my judgment, to

do precisely what you suggested to get at

the objective you have in mind. A better
way, in my judgment, is to take these lists
and begin with those by extracting the companies that have a substantial number of

people. That is, instead of beginning at

the counties and determining how many people

there are in each county, we begin with a

list and determine what companies have employees over and above a certain number.
H.M.Jr:

Well, I would like to - I don't care whether
you do it by county or by state, but I want
to do it by states.

Graves:

That is entirely feasible. When I was in
Michigan, for instance, we did that very
thing.

H.M.Jr:

Well, I would like, you see, to be able to

announce Monday, that we are going to start,
say with Michigan and Texas or North Carolina.

I want these people on notice. We are going

to take this list. I don't care whether -

I don't know - what is the minimum, six
Social Security employees?
Graves:

There is no minimum on title eight.

H.M.Jr:

All right. Well, I want to take the whole
list for a whole state and I want to solicit
that whole list of employees, starting with
the union, and get just as near all of them

as possible.
Graves:

Of course --

H.M.Jr:

Now, I am not --

Graves:

I think there was a much more important

thing to do than that.
H.M.Jr:

Yes.

132
- 16 Graves:

It is the thing you and I were talking about
on the street the other day. You pointed
out yourself the chart showing that the bulk
of our employees fall in five states, and we
have an organization in just one of those states.

H.M.Jr:

Which one?

Graves:

Michigan. We have no organization in New York,

H.M.Jr:
Graves:

H.M.Jr:
Graves:

H.M.Jr:
Graves:

Pennsylvania, Ohio, or Illinois.
Let's start in Michigan.

Well, we have already started in Michigan.
But you haven't got my Social Security list.
Yes we have in Michigan. They have it out

there. Our State Administrator is the collector
of internal revenue. As I say, we compiled
that list one day while I was in Detroit.

Can I say so at my press conference this
morning, that we are doing that?
You can, but as I say, we can do nothing, in
my judgment, effective along the line of what

you are talking about until we get an organization in these four big states.

H.M.Jr:

Well now, what I am going to do with my eyes
open, I want to announce it and put the pressure

on so that the thing will come.

Graves:

Well, I think it is unwise to do that until

we get our vehicle in motion, which we haven't
done in the important industrial states and
what I would like to do, as you and I agreed day
before yesterday, to concentrate on getting
an organization in these big industrial states
and until we do that, in my opinion, we are
just ineffectual and not accomplishing anything.
You mentioned Texas. Texas is not an industrial
state. The number of concerns down there that
would be of importance in this picture is not
great. There is nothing, in my judgment, to be
gained by doing that in Texas while we leave
New York and Pennsylvania and Ohio and Illinois
uncovered.

133

- 17 H.M.Jr:
Graves:

Well, I am notBecause we have no machinery to do what you

are suggesting in those big states.
H.M.Jr:

Well, how am I going to get it if I don't

go
out publicly and put you on the end of a
limb?

Graves:

You don't have to go out publicly to put me
on the end of a limb. I am already on the
end of a limb. (Laughter) You and I agreed
day before yesterday that that was what we
would concentrate on in those four states.

I want to talk to you about it as soon as

I might.
H.M.Jr:

Don't get these fellows but have you got
that stuff between now and ten thirty? Stay
behind, and what I am going to say, you see,
you haven't won me over yet. I am tough.

Graves:

No, you and I are thinking about the same

thing, but it is just a question of the order

in which we do it. I am convinced that we

are not going to get anywhere on this problem
until we get an organization.
H.M.Jr:

You and Ferdie stay behind. I am going to
say something this morning.

Graves:

All right.

H.M.Jr:

And I had a bad night. I couldn't sleep,
and I got this idea about the dollar business,
and then I got this thing and these two things,
I am going to go to town on.

Farley will give me an answer between now and

noon tomorrow. I don't think he is going to
do it, so you had better be thinking of a
third one.

134

- 18 Graves:

Well, we have the third one, you remember.

H.M.Jr:

I don't think Farley is going to do it.

Graves:

I think if we concentrate on this thing we

can within a week get an administrator appointed in each of those four states and then

we can begin to do something.

(Mr. Sullivan and Mr. Blough left the

conference.)
H.M.Jr:

If I announce it publicly, it might be more
embarrassing.

Graves:

No, I would rather you wouldn't do that,
because sometimes we have slips and I would
rather not.

H.M.Jr:

Well, you stay behind and I will give you
another chance.

Graves:

Fine.

H.M.Jr:

Who has got something pleasant?

Gaston:

I have a couple of matters. Here is a letter

in which you wanted to reply to the Secretary
of the Navy letter asking us to make a great
expansion in our training program of Coast
Guard personnel to help the Navy out.

H.M.Jr:

What do you say?

Gaston:

Sure, yes, we have already expanded and would

like to expand some more and would like their

help in getting the money. There is another

letter that ties in to it. It is addressed

to the Chairman of the Appropriations Commit-

tee of the House asking them to include in
a deficiency bill money for the expansion

135

- 19 of the Coast Guard training program.
H.M.Jr:

You got it. Third try.

Gaston:

Very good. I would like to talk to you about
what to say to Pat Jackson sometime. I am
kind of stumped.

H.M.Jr:

All right. Tell Stephens.

Gaston:

Right.

The amount on that Kaplan thing was one

million three hundred seventy-five thousand

dollars. I will give you a little fuller

memorandum when - the papers were out of the

office temporarily.

H.M.Jr:

Foley?

Foley:

There is a hearing this morning at ten thirty
before the Senate Banking and Currency Committee on the Stabilization bill and the
witnesses are Professor Edwin W. Kemmerer,

of Princeton; Dr. Benjamin H. Beckhart, of

Columbia; and Mr. Harry Scherman, president

of the Book of the Month Club. They are the
only three witnesses that are scheduled.
You will have Larry Bernard up there. I

don't know whether Harry ought to have someone up there or not because these fellows

H.M.Jr:

will probably talk on the economic side.
I think that - I don't know how busy Harry

is. I think he ought to go up there, and

if they get some questions, he might slip
some questions to these fellows to ask.

White:

Unfortunately I have a large group coming

down to the office in fifteen minutes, and
we are going over something that is pretty
important for the exchange fund, but my idea

136
- 20 -

was a little bit different. We will have a

man up there to listen, but one of these
men is very competent, at least, and the
other is very impressive. Both can be very
damaging to, I think, the Treasury status
and position if they are not answered. My
thought was that if the men report back to us
that they are being so, that I think we
ought to put in a request for them to call
me up there, give me a chance to answer some

of their questions at the level at which

they are discussing them and not any offi-

cial, but rather keep it on the technical
level, if they do what they might well do.

Foley:

I think, Mr. Secretary, we ought to have people
there this morning who are competent to appraise the effectiveness of this testimony.

White:

That is right.

Foley:

I think when the whole thing is over we had
better have a talk with our friends on the
Committee and find out whether it is necessary.

H.M.Jr:

Will you - I will pin the responsibility on
you.

Foley:

All right.

H.M.Jr:

Merle?

Foley:

I have a couple of other things.

H.M.Jr:

Excuse me.

Foley:

I called Lowell Mellett, and I told him that--

H.M.Jr:

The longer you talk the less chance Harold

Graves has for rebuttal, you see. (Laughter)

137
- 21 Foley:

I will shut up any time, Harold. I don't

want to take up your time.

I called Lowell Mellett and I told him we
had taken up with Acheson and Shea the ques-

tion of making a list of registered aliens
available to the bankers in Louisville,
Kentucky, and said that it was the unanimous
opinion of the group that we not do that
because it would add confusion. The list
of registered aliens is made up from all
over the world, and it doesn't necessarily
mean that if a man's name is on there, he
happens to be a national of a country that

is covered by the freezing order. I also
told him that by General License No. 42 any
alien in the United States from one of the

countries covered by the order is taken out
of the operations of the order if he was
here prior to June 17, 1940.

I then called up the manager of the Louisville

branch of the Federal Reserve Bank, and I

told him what I had told Lowell and I asked

him if he wouldn't get in touch with the

Clearing House Association there in the town
and communicate that information to them and
if there were any other doubts or any other
questions or criticisms that the bankers had

there, to get in touch with us.

On Jay Crane's proposal to sell the Hungarian

oil properties, Dean is going to talk to Hull

and Hull will take up with the Presi-

dent of whether
or
is to be given

tial perhaps the treatment question to invaded not certain preferen- areas. con-

cerns having properties in the
We are not going to do anything about it until
Dean reports back. We indicated to Dean that
we thought that that was primarily a matter
for the State Department. Merle, I believe,
has called Crane and asked him not to come

138
- 22 down until after Dean has had an opportunity

to talk with the people there.

H.M.Jr:

Anything else? I am in no hurry.

Foley:

J. A. Wertheim came in yesterday and said that
he wanted to come down and work in this freeze

H.M.Jr:

control. I sent him over to see John Pehle.
I believe he is a brother of Maurice Wertheim.
How old a fellow is he?

Foley:

He is about forty-five. He has a seat on the
stock exchange. He wants to give up his business and come down and do something in this
field.

H.M.Jr:

If he is the fellow I think he is, he is about

as stupid as they come.
Foley:

Well, I thought I had better find out from
you.

H.M.Jr:

He is just as stupid as Maurice is smart.

If that is his younger brother, he is just a

dumb cluck.
White:

Which reminds me, Mr. Elisha Friedman, whom

probably Jake knows, who has written in from the
field and has been a banker who came down and

wants to act either as a dollar-a-year man
or on any other basis that you would see fit
to help in this foreign exchange control, and
he asked if I wouldn't speak to you about it.
I think he said you knew him or somebody.
Foley:

A fellow by the name of Oppenheimer came in
this morning who was the European resident
partner for Bear, Stearns and Company. He

seems like a pretty smart fellow. He knows

all the ins and outs, and I sent him over to

139

- 23 Pehle also.
H.M.Jr:

Well, on a dollar-a-year basis, I would say

that this - if this is the younger brother,

he would be worth about ten cents.
Foley:

That is what I wanted to find out. (Laughter)

White:

We ought to send him to the OPM.

H.M.Jr:

I see that Senator Mead proposes the showing
of Axis movie propaganda movies be prohibited

in the United States.

Foley:

I saw that.

H.M.Jr:

And
it. personally I would just as lief get behind

Foley:

All right. They showed the movie downstairs
yesterday and Huntington looked at it.

H.M.Jr:

Which one?

Foley:

The Bismarck. I don't think we will have any
trouble at all with finding a reason to keep

it out.

H.M.Jr:

We voted eleven to five against it, or eleven
to six.

Foley:

We finally didn't get any arguments to support

the vote, but the majority ruled.

Cochran:

You wanted good news. Nishiyama was in to see
me yesterday, and he said we would have happy
news from Japan within three weeks. What

that is I don't know. Then he brought up a
little unhappiness. He said that our federal
income tax people have been after Japanese

corporations in New York too severely in the

past two or three months and wanted to know

140

- 24 what "Well--" the significance of it was, and I said,
White:

Tell him we are waiting for the happy news.

Foley:

Yes, that may have a bearing on it. (Laughter)
And if I could see you for five minutes before that meeting this afternoon. I had a

Cochran:

talk with Playfair just before he left, and I

would like to report to you.
H.M.Jr:

Sure. Will you tell Stephens?

Cochran:

That is all I have.

Haas:

I have nothing.

H.M.Jr:

Peter? You had better stay behind when I

discuss it with Harold. I don't know which
side you are on. You can be umpire, you and
Kuhn.

Odegarde:

Do you need an umpire or a referee?

H.M.Jr:

You have got me there.

Graves:

Let's make it score keeper.

H.M.Jr:

The winner will invest in Savings Bonds.
Harry?

White:

Nothing, sir.

H.M.Jr:

Incidentally, I didn't see anything in the

newspapers that the winner last night invested
in Savings Bonds.

Kuhn:

He went on the radio right after the fight,
I believe, and said he was going to.

141

- 25 Schwarz:

He promised to.

There will be a number of questions about
freezing and what is happening.
H.M.Jr:

Oh, yes. I am glad you mentioned that. So
Foley, be here at ten thirty, will you please?
And Bell, I would like you to be here at ten
thirty on that. What are you doing at ten
thirty?

Bell:

I have got all those Federal Reserve people

H.M.Jr:

Then I will have to learn my lesson before
then on the financing.

Bell:

That is what I want to talk to you about.
I wanted to talk to you this morning.

H.M.Jr:

Well, as soon as I am through with Graves,

coming in at ten thirty.

I will phone you. I don't know how long it
is going to take, but I will see you before

my meeting.
Bell:

Well, I can tell you when it comes around to

my turn. There is just one wrinkle in it
you will have to look at.

H.M.Jr:

Jake?

Viner:

Nothing.

H.M.Jr:

Harold?

Graves:

Mr. Bell gave me a report on this Bank of
America and the report seems to indicate that

while some branches of the Bank of America have

not qualified as selling agencies for bonds,
the bank as a whole is cooperating satis-

factorily.

H.M.Jr:

Well, if I could have a memo, Mr. A. P. Giannini

142

- 26 called up and I gave him an appointment for
tomorrow morning.

Graves:

You mean a memo on this subject?

H.M.Jr:

Yes.

Viner:

Are you on speaking terms?

H.M.Jr:

He called up and asked for an appointment,

and I said I would give him one.

Gaston:

A. P.?

Foley:

Mario.

H.M.Jr:

A. P.

Bell:

Mario is in town, I understand, still.

Klotz:

He may have it wrong.

H.M.Jr:

He said he asked and it was A. P.

White:

Was it before the freezing arrangement or afterward.

Foley:

It was after when they contacted me. They
came in on Sunday, Harry--

H.M.Jr:

And you find out what time, Ed, because I
would like you to be with me; whenever Giannini
comes in, I want you here. (Laughter)

Bell:

Well, he saw Cy Upham last week.

H.M.Jr:

Well, let me have a report, Graves, so if he
says "What can I do to help - if there is something I can do.

Graves:

Well, the purport of this telegram is that Bond they

are satisfactorily supporting the Savings

143

- 27 program, that they have sold out of - as I
understand this, Dan, out of a total of
thirty-two million sold - the period is not

stated - but out of a total of thirty-two

million sold in the Twelfth Federal Reserve

District, four million have been sold by
this bank. That is one-eighth of the total.

White:

But how much of a banking system does that

bank have?

Foley:

Yes.

Bell:

They have a problem, Mr. Secretary, with all
those branches and every other bank has the

same problem, of putting up collateral. That
is one thing that sometime along the line I
ought to talk to you about.

H.M.Jr:

We will do that soon.

Bell:

Because they don't want to put up collateral
to qualify as an agent and most of them are
relying on the Federal Deposit Insurance of
sixty-five hundred dollars and it isn't enough
to keep them in a supply of bonds. Edward
wants to do away with the collateral provisions

entirely, and I think we ought to discuss it
sometime.

H.M.Jr:

O.K.

Bell:

And that is hindering this bank from qualifying
as an agent because each branch will have to

put up more then sixty-five hundred.

Viner:

The whole collateral business gets to be
pretty funny when you have a Government insured banking system and you ask for collateral

in order to make a deposit with them or get
them to hold bonds for you. That collateral

thing is an old antiquated thing now. It

144

- 28 -

just boes back - it is an insult to the

banking system, really.
Bell:

We don't ask them to put up collateral except
for a deposit in excess of five thousand
dollars.

Viner:

I know, but that is nothing.

Bell:

It may be old fashioned, but I will stick to

it. I am like the gold problem. I will

stick to it until you find something better.
We haven't lost a dollar yet.
Viner:

Why shouldn't you take a little risk that
everybody else has to take in the banking
system in the ordinary course of business?

Bell:

Because we represent all the public, and we
have public funds under our control, and I
think we have got to be very careful with

public deposits. It was, at one time, you
know, a political football and will become
one again if you take away the collateral
provisions.

H.M.Jr:

Are you through, Jake?
Are you through, Harold?

Graves:

I am through.

H.M.Jr:

Dan?

Bell:

On the financing, I find that the Commodity
Credit Corporation's authority expires on
June 30.

H.M.Jr:

Bell:

Ohoh!

And they have a bill up there which I understand is going to be considered today in the

145
- 29- -

House to extend that authority for two
years and to increase their borrowing power

from a billion and a half to two billion

six, and I asked them if - what they could
do to rush it, and they said they were do-

ing everything to rush it, but I don't bedate it before June 30. It would look

lieve you could issue a security now and
funny.

H.M.Jr:

Well, how about RFC?

Bell:

RFC is all right. We can go ahead with that.

H.M.Jr:

Tell me how much now, and you won't have to

bother me nor I you. What is the story?
We will tell them.
Bell:

About three hundred million dollars.

H.M.Jr:

What is coming due, Dan?

Bell:

Two hundred eleven million on July 20.

H.M.Jr:

Two hundred eleven million, RFC, July 20, and

we are going to refund that-Bell:

Refund that and have a new cash of three
hundred million.

H.M.Jr:

All right. That is the whole story, isn't
it?

Bell:

That is the story.

H.M.Jr:

All right.

Bell:

Now, you are going to do that next week.

H.M.Jr:

Right. What else?

Bell:

You have an appointment with me for eleven

146

- 30 on this financing, and also Haas. We are
supposed to attend this Federal Reserve

meeting
and it will take most of the morning.
H.M.Jr:

Haas too?

Bell:

Yes. Can you put it off say until twelve-

thirty or twelve fifteen? I think it will
take the better part of the morning.

H.M.Jr:

No, no.

Bell:

Two thirty?

H.M.Jr:

Does George have to sit in there with you?

Bell:

I would like for him to.

H.M.Jr:

Two o'clock, Bell.

Bell:

All right.

H.M.Jr:

Two o'clock.

Bell:

Two o'clock.

H.M.Jr:

What else?

Bell:

There has been a run on one of the Italian
banks out in Chicago. It looked as though

it was going to be of sizeable proportions.
It was caused by the officials being rather

strict on the interpretation of the order.

Everybody that came in and wanted to withdraw their money, they insisted on having

an affidavit or something that they were a
citizen of the United States and that caused

alarm and it is quite a long - there was
quite a long line yesterday. The bank

examiner thinks it will work out and so does

147

- 31 Leo Crowley and it is a very liquid bank so
they are not so worried about it. The
examiner suggested that in view of the

attitude of the officials of the bank that we

might consider in the next day or two withdrawing the bank examiner and that might

ease the situation, but Delano is watching

it and will let you know.
H.M.Jr:

Bell:

All right. Anything else?
That is all I have.
Oh, I wondered if you didn't want some time,

say early next week, to call Tobin and tell
him that we don't feel that we can give him
special consideration on an investment of
his funds.

H.M.Jr:

Will you give me a little memo on it?

Bell:

Yes.

H.M.Jr:

Give me a little memo?

Bell:

Yes. That is all I have.

Thompson:

I thought perhaps you might like to look at
this book. I found four pages that had

reference to you and Mrs. Morgenthau.
H.M.Jr:

Thank you.

Thompson:

That is all.

H.M.Jr:

All right.

148

June 19, 1941
9:45 a.m.

HMJr:

Hello.

Operator:

Mr. Purvis.

Arthur
Purvie:

Hello.

HMJr:

Arthur?

P:

Yes, Henry.

HMJr:

I had a long talk with Hopkins
and he's simply delighted with
the suggestion.

P:

Good, well now, I'11 go right
ahead.

HMJr:

P:

HMJr:

And he says that he's going to
send Cox with authority to act.

Oh, that will be splendid.
And we'll have the first
meeting at 3:30 today.

P:

HMJr:

P:

3:30 today?

And if you'll tell Mr. Keyne and
Phillips that if they're free,
I'd like them to come.
All right, good. Thank you
very much.

HMJr:

At 3:30 today.

P:

All right, I'11 get hold of them
immediately.

HMJr:

And you'll come too, wont you?

P:

I will. All right, fine. Thank you.

HMJr:

Thank you.

149

(COPY)

June 19, 1941.

Dear Mr. Secretary:

I am in receipt of your letter of June 18, 1941,
relative to the necessity of providing thousands of
specially trained Coast Guard enlisted men to meet the
growing requirements of the Navy during the next
several years.

The Coast Guard will promptly further augment

its present training program to the limit of facili-

ties and funds now available in compliance with your
request.

Additional facilities and funds will undoubtedly
be required for carrying out the further expansion of
the Coast Guard's training program and I shall appreciate any support you may be able to give us toward
obtaining them.

Sincerely yours,
(Signed) H. Morgenthau, Jr.

Secretary of the Treasury.

The Honorable

The Secretary of the Navy,
Washington, D. C.

150
(COPY)

DEPARTMENT OF THE NAVY

OFFICE OF THE SECRETARY
WASHINGTON

June 18, 1941.
Sir:

The duties assigned the Coast Guard in the Navy plans
for national defense require the immediate employment on naval

duty of large units of fully trained enlisted mon of the Coast

Guard. As the national defense plans develop and expand over the

next several years, it will be necessary that the production of
trained non in the Coast Guard keep step with the growing requirements.

Particularly, the Coast Guard must be in a position to
furnish thousands of enlisted men fully trained in specialités
peouliar to the Coast Guard. These specialties include the operation and handling of small boats, including the operation, repair,
and maintenance of Diesel engine propelling plants, radio-men,
redio and telephone maintenance men, machinists mates, and wa-

listed men in many other technical ratings.

It is realized that the demands which will be made on the
Coast Guard, while operating as a part of the Navy, will cause a
serious drain on the available trained enlisted personnel of that
Service, and will make necessary the establishment and maintenance

of an adequate training system in order to supply trained ratings
for the expanding navel operations.

In order that there be no failure or delay in meeting the
requirements, it is requested that the Coast Guard undertake the
necessary measures of organization and training to provide the en-

listed men required for Navy duty. Since the supply of trained
men in specialist ratings is far abort of the needs of the armed

services and oivilian requirements, the Coast Guard should be prepared to give to its own enlisted non extensive periods of
specialized training in order to produce the necessary qualified

men for an indefinite period.

In case additional facilities and funds are required for
the training program outlined above, it 18 suggested that the
necessary action be taken to obtain the required appropriations
as soon as practicable. The Navy Department considers this training program of paramount importance, and that 11 should be undertaken at the earliest possible date.
Respectfully,
The Honorable,

The Secretary of the Treasury.

(Signed) Frank Knox

00-F-0161 (6-13-41)

June 19, 1941. 151

Chairman, Committee on Appropriations,
House of Representatives,
Washington, D. C.
My dear Mr. Chairmans

The Budget-approved item in the sun of $3,000,000 for the construs-

tion of a training station for enlisted mon at Avery Point, Connectiout,
was eliminated from the appropriations for the Coast Guard carried in
the Treasury-Post Office Appropriation Act for the fiscal year 1942
through action of the conferees on that act, presumably because of the
insistence of the House conferees that, as stated in the report of the
Committee on Appropriations of the House dated February 10, 1941, "The

committee feels that while the project may be desirable it does not
possess sufficient of the characteristics of urgent necessity as to
warrant its inclusion."

In the past for weeks the need for this training station for

enlisted men of the Coast Guard has become much more urgent than at
the time of its submission to Congress, owing to demands made upon the

Coast Guard by the national defense program in connection with the
manning of naval transports and the training of merchant marine
personnel.

The Coast Guard is now engaged in the process of manning four

naval transports with approximately 1,700 enlisted non, and furnishing
to approximately 26 naval transports about 1,400 enlisted men who are
specialists in the operation and handling of small boats, including
the operation, repair and maintenance of the Diesel engine propelling
plants. In accordance with its assigned duty in the naval plans for
national defense the Coast Guard has assumed the responsibility for
furnishing enlisted men trained in the operation of small boats used
by naval transports and other vessels in disenbarking troops and other
personnel and in maintaining communication between ship and shore.
The immediate denand made upon the Coast Guard to supply such personnel

will practically strip Coast Guard stations of trained personnel, and
this continuing duty of the Coast Guard will call for intensive and
extended training over the period of the next several years.

CG-F-0161

152

The need for increased facilities for training rediomen is equally
urgent. The Coast Guard has not been able to train net for the openation and maintenance of radio apparatus in sufficient member to supply
the current need. The manning of transports has resulted in reducing
the number of available rediomen well below the emargent needs of the
service with no prospect of obtaining replasements through present

training facilities. It is almost certain that several of the redio

direction finder stations maintained for the safe navigation of marchant
vessels will have to be closed by reason of insufficient redio personnal.
This shortage of trained non in this specialty will increase throughout
the period of the national emergency, which, in accordance with legislation and appropriations passed by the Congress, is expected to last
for several years or more. The supply of trained rediomen in the
country today is for short of the needs of the armed forces and civilian
requirements.

In addition, I am in receipt of a request from the Secretary of
the Navy that the training facilities for personnel of the merchant

marine be greatly expanded to provide the necessary trained licensed
and unlicensed personnel required for the contemplated merchant ship
program. This expansion of the merchant marine personnal training pro-

gran will not only call for additional facilities, but also for addi-

tional trained Coast Guard enlisted mm to man and operate training stations and training vessels. The supplying of required trained personnel
in connection with the expanded marchant marine training program will
further deplate and practically exhaust available trained enlisted non
of the Coast Guard, particularly in the higher petty officer grades,
and require additional training of newly inducted men as replacements.
As you know, the whole national defence program is predicated on
preparedness measures extending over a period of at least three or four
years and a survey of the part which the Coast Guard will be called upon

to play in this program, in addition to carrying out its greatly in-

creased national defense duties in the immediate emergency which con-

fronts the United States, shows conclusively that the need for trained
Coast Guard enlisted non, far beyond the capacity of present training
arrangements to supply, will continue for many years.
To carry out these continuing functions of the Coast Guard in the
schese of national defense it is isperative that an adequate training
station to sugment the present makeshift training facilities for the
Coast Guard be provided at the earliest practicable date. The construc-

tion of this training station has the additional a of being required
for the normal peacetine functions of the Coast Guard as well as being
imperative in time of national emergency. Plans for the construction

--

153
CG-F-0161 (6-13-41)

of the training station at Avery Point have been completed and its
construction can be begun as sosa as funds are made available. In
view of the immediate and centiming need for trained sangoing personal

over a long period of years, the fast that it will take approximately
a year to construct this station is not dearned a factor which militates
against the project, but on the centrary is one, in - opinion, which
desands that its construction be undertaken immediately.

It was my intention to resubmit this item in the estimates for the
annual appropriation for the Coast Guard for the fiscal year 1943, but

I an convinced that the delay incident to this procedure is very desirable and that construction of this station should be started at

the earliest possible date. It is, therefore, requested that your -

mittee reconsider its decision that the construction of the training
station for enlisted personnal of the Coast Guard at Avery Point is not
urgent, and that the item of 63,000,000 for its construction be included
in the second deficiency bill now pending before your committee.

Very truly yours,

Secretary
of the Treasury.ja
(Sgd) Henry
Morganthan

-3-

154
TREASURY DEPARTMENT
WASHINGTON

June 19, 1941.

MEMORANDUM FOR THE SECRETARY:

Re: Bank of America

As I reported to you at 9:30 meeting
to-day, our information is that the cooper-

ation of the above-named bank on the Defense

Bond program is satisfactory.
This comes from the Federal Reserve
Bank at San Francisco.

Although some of its branches, due to
technical requirements, have apparently

not qualified as sales agencies for the
bonds, the institution as a whole has been
responsible for sales aggregating $4,000,000
out of total sales of $32,000,000 for the
12th Federal Reserve District.

GRAVES.

155

June 19, 1941
11:07 a.m.

HMJr:

Hello,

Sam

Rayburn:

Henry?

HMJr:

That's my name. How
are you, Sam?

Well, up to now, I'm

R:

all right, but it's not
quite 12 o'clock yet.

HMdr:
R:

Yes.

Henry, twice I've asked
you to do something for
an old fellow and you've
graciously done it.

HMJr:

Yes.

R:

Old man Sam Cottrell, who
year
at comes Arms' up here office to every Sergeant

the fellows

a out all grand old
and income makes-tax

fellow - he is quite above
the age

HMJr:
R:

Yeah, way above.

Way above. I don't know
whether you can do anything

about it or not, but all the -

me to to

been
here they've to get pilling ask on you me
I

or not, done

do can it, again don't whether you've you

it twice, I think.

HMJr:

You think we ought to, Sam?

156

-2Well, the fellows want it

R:

done,

HMJr:

They do.

R:

I think it'd be a nice

HMJr:

R:

gesture, if you can do it.
Well, if they want it done,

we'll do it.
All right. Well, they do
and I'd like to see it done
myself. He's a grand old
fellow.

HMJr:

Well, that's enough.

R:

All right, Henry.

HMJr:

Thank you.

R:

Thank you.

156

-2R:

Well, the fellows want it

HMJr:

They do.

R:

I think it'd be a nice

done.

HMJr:

R:

gesture, if you can do it.
Well, if they want it done,

we'll do it.
All right. Well, they do
and I'd like to see it done
myself. He's a grand old
fellow.

HMJr:

Well, that's enough.

R:

All right, Henry.

HMJr:

Thank you.

R:

Thank you.

157

June 19, 1941
11:24 a.m.

HMJr:

Henry

Hello, Henry, how are you?

Wallace:

Fine.

HMJr:

Good. Henry, I'd like to ask

your advice. We've been groping
here to get somebody in addition
to what we have to help us on
the morale end of our defense
bonds and there were two names

that we have been thinking about
and organizations; one was the
Henry Luce organization, the
other was the Cowls of Dee Moines.

Hello?
W:

Yeah.

HMJr:

Neither of them as far as I

W:

Yeah.

HMJr:

Now, what - I don't know -

W:

know are helping, you see?

what would you think of Cowle?

Well, I think they are both

wholeheartedly with you. Both

groups.
HMJr:

You coming from the same town
88 Cowls - I mean, how would
you feel about having him come

in if he was willing to.

W:

Oh, I think it would be a good
thing.

HMJr:

You think so. You're not
enthusiastic?

158
2-

Well, they are with us whole
on this

W:

as know,

heartealy fund. of course, particular you

they are Republicane, they was

John in putting Cowls Wilkie quite over active at the

Republican Convention.

HMJr:

Yeah. Well.

W:

of course, Luce was backing

HMJr:
W:

Wilkie too for that matter.
That's right.

Tnet's all right. I don't know
whether that has anything to

do with the current situation.

HMJr:

Well, what I wanted was their
technique.

W:

Well, I think they both have

good tecnnique. They are both
very capable people.

HMJr:

W:

HMJr:

Well, you see that magazine,
Look, don't you?
oh, yes.

well, my impression is that
it's been fairly new dealish.

W:

Yes, I think that's - I think
it's been fairly so.

HMJr:

Well, how about their newspaper?

W:

Well, they have always given us

On of
the

a program. break on other agricultural phases, the

course, Jay Darling,
cartoonist, has been very mean
to the President.

HMJr:

That's right.

159

-3But that doesn't have a thing
to do with the Cowls themselves they often times disagree

W:

personally between themselves,

that is Jay Darling

HMJr:

and the

Cowls as far as that goes.
Have you any feeling as to which
one of these two organizations
would do us the best job?

No, I would be inclined to say

W:

that either one would do a good
job.

HMJr:

Either one. And you wouldn't
have any feeling if it was
public that either one of them
was helping us.

No, I - Oh, I think it would be
all right to go either way
and I can't for the life of me

W:

tell which way you'd get the
best returns.

HMJr:

W:

HMJr:

Well, the main thing I wanted
was to

I think the Cowls boys would
understand the mid-west country
better.

Yeah. Well, that's where we

are the weakest. I say that's

where we're weakest.
W:

Yes.

HMJr:

I was leaning a little bit

towards them, although they
have no experience in the

movie field, which the other
people have.

W:

Yeah.

160

-4 HMJr:

Does - this March of Time

W:

recently did a grand job.
Oh, they do. Yes, they

HMJr:

Well

W:

Incidentally, Henry Luce

are awfully good.

or

and I've either forgotten John which, Mike,are

very good friends. I think

they were at school together.

HMJr:
W:

I see.

There's considerable friendship between the two organizations,

I think.

HMJr:

W:

HMJr:
W:

So I mean if we add both of, them,
that wouldn't be impossible.
That might be okay.

I see. Well, thank you, Henry.
They cover to some extent

different fields, you know,
different experience.

HMJr:

That's right. Luce hasn't got

a newspaper. Well, thank you
very much.

W:

All right, sir.

HMJr:

Goodbye.

W:

Goodbye.

161

June 19, 1941
11:52 a.m.

HMJr:

Hello.

Operator:

Mr. Purvis is in a meeting,
he'll be out in about an

hour.
HMJr:

Operator:

oh, what - is he in a meeting
in his own office?
She didn't say, and she didn't

offer to get him out. Should
I ask her to get him out?

HMJr:

Yes, if he's in his own office,

Operator:

All right.

HMJr:

Arthur?

Arthur
Purvis:

Yes, Henry.

HMJr:

I would like you to invite a

P:

All right, I'11 do that.

HMJr:

Hello.

P:

HMJr:

get him out.

financial representative from
Canada, if there 8 one in town
to join us.

Yes, I'11 do that, Henry.
We here, think it would be
helpful.

HMJr:

All right, I'11 do that.
All right, Arthur.

P:

Thank you.

HMJr:

Thank you.

P:

162

June 19, 1941
2:00 p.m.
RE FINANCING

Present:

Mr. Bell
Mr. Haas
Mr. Murphy

Mr. Hadley
H.M.Jr:

Well, gentlemen? Did I hear you (Hadley)
are engaged? Congratulations. When are
you going to get married?

Hadley:

Some time in August.

H.M.Jr:

If she ever comes to call, I would like to

meet her.

Hadley:

You met her at the party.

H.M.Jr:

Did I? But there were a lot of people.

Bell:

Bring her in again.
I remember now. I had a notion to ask you
at the time, but it hadn't been announced
yet.

You (Secretary) announced the financing of

five hundred next week, is that right?

H.M.Jr:

That is what you told me to do.

Bell:

Yes. As I told you --

H.M.Jr:

I always do what you tell me, don't I?

163

-2Bell:

Jesse wants two issues, one half of it into
two years and one half of it into three
years. He said that ought to get him an
average rate of about one percent, is what

he is thinking about. It is a little diffi-

cult to split the issue unless you had cash
in one issue and the refunding in the other.
Or you could say a hundred and fifty million
in cash and then increases into two issues

each. One hundred fifty million dollars
cash for each issue and then increase it

by whatever amount the exchanges came in

for each issue. That isn't a very big issue
either. We feel that one issue of five

hundred million would be better.
H.M.Jr:

I think we have got to do things in a
bigger way now.

Bell:

A two year issue would fall into July.

H.M.Jr:

Want to sit over here, Dan?

Bell:

He already has three hundred twenty-four

million dollars. This sheet shows you the
blocks.

Now, there is forty-three and there is
July, you see. You have already got three
hundred twenty-four in there.

H.M.Jr:

Is this just Jones?

Bell:

That is all of the things in this area and

that is Federal Land Bank issue. You don't
pay much attention to that. But June, you

see, is heavy. If you put it in October --

H.M.Jr:

What do you do, just put the rates in there?

Bell:

I put the agency, the rates, the date of the

month, which is June 15, and the amount.

164
3H.M.Jr:

That is a new sheet, isn't it?

Bell:

Iticular
just worked
area. this one up for this par-

H.M.Jr:

You know, you (Haas) are coming through with
a sheet one of these days.

Haas:

Yes, sir, we have it a little different.

I didn't know Dan had one.

H.M.Jr:

I am only here three and three quarters years
more, you had better hurry up. (Laughter)

Bell:

This is something that I have always worked

from and I just thought to bring it over in

this area would give you an idea as to where

it would be put.

Now, October would be an area for Jones, but
you see we have no three and a quarters, one

billion four callable, but they will probably

be taken care of in September. November is
vacant. But January '44, which would be

two and a half years, there is nothing there

but that little thing in May of fifty-five

million. That would be January 15, '44, and
that would be a rate of about one percent.
The minimum premium on that, according to

these fellows, would be about a half, sixteen thirty-seconds. Piser and New York

figure that it would be a little better
than that. Piser figures how high?

Murphy:

About twenty-eight.

Bell:

Twenty-eight thirty-seconds, but we have got
the week-end to thrash that out. Five hundred

million in January, on the fifteenth, '44,
would be a nice spot.

165

-4 H.M.Jr:

About three and a half years?

Haas:

A little over two and a half.

Bell:

And you see July is filled up for '44.

H.M.Jr:

That is a good spot.

Haas:

That gives him his one, if that is all he
is interested in.

H.M.Jr:

You could put it up to February.

Bell:

That is right, you could put it up there.

H.M.Jr:

What?

Bell:

That is right.
You wouldn't want to do it - if you don't
want to do it there --

H.M.Jr:

Bell:

You have got a billion and a half callable
bonds. Chances are it will be there.

H.M.Jr:

What is the matter with doing it in February?

Bell:

February is all right if we find that their

January figures are sweet.
H.M.Jr:

Why don't we say either January or February?

Bell:

It is all right.

H.M.Jr:

Tell him we are thinking of that.

Bell:

I will be glad to tell him.

H.M.Jr:

Looks as though it will fall in there.

Bell:

I hate to split a three hundred million dollar

cash issue.

166

-5H.M.Jr:

This is very easy. Let's see how Professor
Haas has got it. Why is it red?

Haas:

The red is just the totals.

H.M.Jr:

What does that "Direct" mean?

Bell:

That is the Treasury issues.

Haas:

Not guaranteed.

H.M.Jr:

You know, the only thing about this, George,

this doesn't say whether it is first callable

or not, does it?
Bell:

Yes, you have the callable, you see, and --

H.M.Jr:

For the first time. It doesn't show where

Bell:

What is that? Yes, it runs beyond. You

it would run.

see, now that would be down in here again.

It runs beyond this period.

H.M.Jr:

Well now, let's just see here. You have
got a '42. This shows eight seventy-five
and you go over to '44 and it goes over on
this side.

Bell:

You take this billion five --

H.M.Jr:

Well, why wouldn't the first callable come
in this column, George, on this side and
then the final over there? Why couldn't

the first callable be in this column and
the final maturities in that?

Bell:

We can just switch it around.

Haas:

I think that is an improvement.

H.M.Jr:

I think so, too. I would change it. First

callables here --

167

-Haas:

Because you would look at that first.

H.M.Jr:

Sure. First come, first look, first served.
Can you change that around?

Haas:

Oh, easily.

Murphy:

Sure.

H.M.Jr:

Now let me just think a minute. There would
be no way of getting more on one sheet?

Haas:

Well, if you do it is hard for you to read.

H.M.Jr:

That is right. This is good. It is all

right. You know, we have got this thing
in such beautiful shape, the whole debt

picture, and I don't think the President

has any idea what a beautiful shape we have

got it in.

The rest of the year we haven't got anything.

I think I would do the thing - it is in

beautiful shape.

168
June 19, 1941
2:21 p.m.

HMJr:

Go ahead.

Operator:

All right. Go ahead.

HMJr:

Hello. Hello.

Dean

Landis:

Hello.

HMJr:

Henry talking.

L:

Yes. You got my telegram

HMJr:

No.

L:

Oh, I'm sorry.

HMJr:

No.

L:

a little while ago, did you?

I telegraphed you this morning
and sorry that I felt that I
had to come to the conclusion

not to accept your awfully kind
offer.

HMJr:

I see.

L:

I'm terribly sorry and I would
not have delayed to this time -

to knowing
of thethe
which

exigencyare
this point
unless time under
I
you
working
there
hadn't been a reasonable chance

of my coming to the other con-

clusion. I couldn't see the

persone I had to see up here

HMJr:

until yesterday.
Well, wouldn't the college give

L:

Yes, he would give me a leave

you permission.

of absence, but I had to see

people like - I don't know

169
-

whether you know Granville

Clark - I wanted to see him

particularly with reference
to the future of the law
school and it's problems

and it's a frankly tough thing

to decide but I have my obligations

to this institution and I think
the situation is such that I just

shouldn't in the light of every
at this particular time.
I see. Well, I was under the

one of the considerations pull out
HMJr:

impression from what you sai d

it will

that you wanted to get into the
thing.

L:

I do. I do very much. I - in
fact I am sort of getting into
mebecause
a
give anyway
chance to La be Guardia here

and do a little work with him
on this civilian defense thing.
HMJr:

I see.

L:

But that does enable me to carry

on and I feel that with reference
to the whole staff and everything

it's terribly important to carry
on and that it isn't myself, but
it - I just happen to be the head
of the institution here and if I

had to pull out right now, it would
be pretty bad.

HMJr:

L:

Well, it's pretty bad down here. (Laughs)
And this situation is so critical
that I thought that from the way you
talked that you - Conant being willing
that you would have taken it.

Well, I - it's just a touch and go
thing.

HMJr:

Yeah, it's a not a comfortable

thing to move from there down here.

L:

No, I know and I was afraid that
I was allowing my own personal

170
- 3- -

desires to perhaps govern

me there, and I don t think

I am. 1 try to be as honest

about that as I can with myself
and
it isn't that
HMJr:

Well, I'm disappointed, very
could

are
very
few people that I want down

have disappointed. done it If there you

here.
L:

Yes.

HMJr:

Very few. And thinge are 80

L:

Yeah.

HMJr:

That's the way I feel, but

L:

Well, you feel - I mean you

dark ahead that - well if you
don't mind my saying, I think
the people that have the training
and the ability should do it.

really feel that - it's a if you say I've got to do it,

well, there's only one answer.
HMJr:

aI

Well, I can' t say that. I have
no right to say that, but after
all we're 80 close to the verge
that - and these things that we
have here are 80 terrific - and

- I went my

don't want people who

I dollar just year experience all through have and

business ties and going to go
back to law firms in Wall Street

or financial houses - I want

somebody from a college who can

go back to a college and who

isn't seeking financial advantage
through being connected with the

Treasury. Now, how many people

are there like that in the country?
L:

Yeah.

171

HMJr:

And, I mean - and - they just
don't exist. Now when I said
to the President when I asked

him, I said, "Is there anybody
that you know that is any better",
and he said, "There's nobody that
I know, who is as good" and I can
get plenty bankers, I can get all
the bankers in the world and I
can all the Wall Street lawyers
out on all or these decisions
whether it's plant expansion
or borrowing money or dealing with
the English and they have all the
people they sent over from the
bank of England or from the, City all connections with J. P. Morgan
crowd

and it takes to go somebody up against who that is red
a

blooded American and that's why
I asked you.

L:

1 appreciate that tremendously.

HMJr:

But this thing is - let me ask

you this; supposing we were at
war?

L:

HMJr:

well, I - and you asked me I

couldn't say no, that's
we're 80 damn close to it that
I want to be ready when we do

get in.
L:

HMJr:

Yeah.

I'm really terribly disappointed.
I aean the Harvard Law School
will govwith a - but we here, I
don't know.

L:

HMJr:

Yeah, that's true.
I mean if you said to me, there's

Tom, Dick, you can get any one of

a half a dozen, I'd say okay, Jim,
I can get them, but I haven't got
another person in sight. Not another
person.

172

-Well, really - isn't there is it you feel that badly -

L:

I mean not - that way about it,
that there just isn't anybody
else.

HMJr:

Yes, I do. I don't know - I

haven't got another single
person in sight. I did mention
another name to the President
and he said no, he doesn't feel

right on the English - on this

question of this whole English

German situation and there was

only one other person, the

President put thumbs down. So,

frankly, I haven't got another

person that I'd consider and
I don't - have you got anybody

you can suggest?
L:

No, I have been going over it in my
mind and well I don't know that
I know the group too well and

one of the things that really

on mythat
mind isI
own

my grate feeling about 1 think it
with

respect admiration

very can work deep you. and I have about a

for you and I've thought

that and I felt that there was
something that was reciprocal
in respect and I think that kind
of a relationship is an important
one.

HMJr:

L:

HMJr:

L:

HMJr:

Iddidn't get - you have doubts

about that?

No, I have no doubts.

Well, that'e terribly important.
Well, that's the way I felt.
Yeah.

And the one or two people that
I mentioned in the Treasury, they

are just gitting on the anxious
seat waiting to hear from you.

173
6L:

Yeah.

HMJr:

Jim, I just can't over exaggerate
the critical situation now, and
you look around Washington and

you tell me anybody that has any
financial sense in Washington,
who is down here now that I can

get in. I've gone over the whole

list
- that I'd be willing to go
away for a week or two weeks and
leave the Treasury in their
charge. I mean just to give you
an example over the week end,
when we went into these banks -

the last minute there was a great
drive - why should the examiners

of the Treasury go into State

banks - we must take State examiners -

at the last minute they tried to
block me - FDIC.

L:

HMJr:

Yeah:

I said no, this is a Treasury

matter and we are going to have
Treasury people. Well, we put
them in and the thing went off

beautifully. I don't know State
examiners - I don't know what

their sympathies are. 1 don't

know whether they are pro Germa.

or pro Italian or pro Nazi or

what. And you don't know - you
just don't know who is with the
Government and who isn't, and
there are dark days ahead and

I see very dark days ahead. I
mean,it's going to be terribly
hard for the President because I

mean - I'm very gloomy about the
summer and I think that those -

I mean, I think this summer is
going to be the most difficult
period he's going to have. I
think it's going to be worse than
anything he's faced, or this
country has faced.

174

-7Yeah.

L:

HMJr:

And it's something to get over to get by this summer and fall.
Yeah.

L:

HMJr:

I hope I'm wrong, but I think
the summer and fall is going
to be the low point in the whole
world, as far as this country

and the few remaining democracies

are concerned and that's the
time that I need somebody like

you at my side.
L:

Uh huh. Would it conceivably
do any good if I went down now
without any commitment one way
or the other and worked for you?

I doubt that, wouldn't it?

HMJr:6

You mean any commitment - how
do you mean?

L:

On your part or - I suppose
I would need the authority that
would come from

HMJr:

I think you do.

L:

A position. I - it's no answer -

HMJr:

No. I mean I'm willing to

that's not possible.

commit myself, you don't have

to commit yours, but I think
that a certain amount the authority

has to go with it.
L:

HMJr:

It has to go, that's true, it's

not possible.

But, you know I don't want to put
if the President himself talking
to you would help any - but 1 don't and
like to put you under pressure

you to undue pressure but I mean

175

I don't like to have to sort of
go and see teacher.

Yeah.

L:

HMJr:

But, if - we are at the threshold
of one of the tradegies of the
world.
Yeah.

L:

HMJr:

And it's going to be settled
for the next 100 years - this
coming - the rest of this year
will settle what kind of world

it will be for the next 100.

And home defense isn't going to

do it and you are not going to
be satisfied in your heart
organizing bucket brigades and

fire patrol and putting women
into uniform and that kind of
stuff.

L:

But it seemed something I could

HMJr:

I mean, that's what LaGuardia

L:

Yes, I know.

HMJr:

Because I've been all over it
with Mrs. Roosevelt. I mean

do with this other thing.
is talking about.

that isn't going to satisfy your

emotional desires.
L:

HMJr:

Well, I - you are a good salesman.

No, I'm not, I'm not a good
salesman but the world is crying
out Jim, for people like you and
they're so damn rare. I mean

it's the world that is crying out

and for the moment while things
look good, we got people like

Wilkie, etc. that will go out,

but where will the Wilkies be

176

-9- if England goes under?
Yeah.

L:

HMJr:

L:

And - will they still stand
up? I don't believe it.
I don't believe it.
Well this, some of them I

certainly wouldn't trust to

do that.
HMJr:

and -

Well, there's a great many.

some the

now
We've Administration got right right in

very if close the to thing the goes President bad

I'm just worried at heart over
it.

L:

Yeah.

HMJr:

And I mean that these people's
"American First" committees

back
for
to - if

on
:the
takes
some people very very deep

sitting something happen just waiting
under like to
go

England jump should President. with It

convictions and lots of character
of that.

and backbone and you've got all
L:

Well, it's awfully hard to -

let me take another day, will
you?

HMJr:

I wish you would and

L:

I - I mean I'maround
not just asking

that to- that's
play with
thedo
idea
sillybut
you

worry me.
HMJr:

Well, I - don't worry about me,
you worry about the U. S. A.

L:

Yeah.

177

- 10 -

HMJr:

And you got something that
this government needs right
now

can enormously.
over will be great. It's going
spot, and you coming help down in this

And the satisfaction when it'

to be uncomfortable, it's going
to be damn hard work and with
the dark days ahead - but Imy bet is on you - that you've
got what it takes and I just I don't see how you can turn the
job down.

L:

Well, I - it does look a lot

HMJr:

Pardon me?

L:

It does look about that way.

HMJr:

This is a question - you know

that way.

the forces that are against not only Roosevelt but all

and must hear

and they run so deeply-

day people

around I'm every shocked day you every that it

that I meet in my own organization well, why can't we sit down and
do business with Hitler? The world
is a big place, I mean, why do we
have to go on fighting, you know?

L:

Yeah.

HMJr:

You've heard that argument.

L:

Yes, I hear that..

HMJr:

And why shouldn't we make peace?

And there's plenty of room for
Germanic Europa and the United

States, there's plenty of room

and that
kind
runs 80 deep

which
it's of and thing
unlessgive
to
President
18 willing

all - I mean got
well,
he Roosevelt hasn't his
the- Mr.
hasn't
he can't - he'11 have difficulty

counting on both hands the number

178
- 11 of people he can count on when

the thing gets oad.

Uh huh.

L:

HMJr:

And I'm trying to do the
impossiole here, more or less
by myself.

L:

Well, I sort of wish you could

HMJr:

what's that?

L:

I wish you could draft me and

draft me and

I wouldn't have to think.

HMJr:

Well, I'm trying awful hard to
draft you, but still have you
to come. Well, I mean if you
said to me, "I can't get along
with you, Henry, you and I'll

have trouble, that would be one
thing, but

L:

HMJr:

No, that - my feeling is 80
very distinctly the other way.
Well, I'm confident that we can
get along, and all the paper

work will be kept away from you -

it will be purely on policy,

and I mean the things, for instance,
that went on this week end, I mean
that they have answered

-

now; we're not letting - we're solely
responsible for not letting these
Germans out of the country. Well,
we're breaking every law to do it.
L:

HMJr:

L:

Yeah.

We're not letting these oil tankers
sail because - until Ickes gets the
authority, and I've got no reason,
but we're doing it and Ickes is
going to get away with it.
Uh huh.

179

- 12 HMJr:

I mean this Japanese oil tanker
- up in

it
those decisions have to be made
and you got to talk to somebody
about it and the things like that I mean, which just go around the

because up in Japan I'm holding Philadelphia up but

world and in their importance -

it isn't
justissue.
a question of getting
out
a bond

L:

HMJr:

Yeah.

over the week end - I mean, first
we freeze the funds, then they

close the German Consuls, then `they

tell us, don't let them get out.
I'11 hold them till hell freezes
until they can get a bill through

We're just holding them here and
Congress, until they can dispose
of these fellows and send them

where they want to. We're right
in the center - there's something

doing but it takes just plain,

the Anglo-Saxon word, guts and I

need help. My guts are tired.
And as I say, once we're in it

it's the getting into it and getting

ready for it and all that, is when
I need the help. I need the help
now. Well, you think it over, will
you old man?
L:

HMJr:

Yes, I shall.
And you just turn the search light
on your old soul and I think that
you're going to say yes.

L:

I - it's a tough thing to do.

HMJr:

What?

L:

It's a tough thing not to immediately
say yes..

180
- 13 HMdr:

Well, I much rather have
you think it over and then
say yes.

L:

HMJr:

Yeah. Well, I'll do that.
It isn't - there's nothing
personal like your health
or anything is it that is
bothering you?

No, there is absolutely nothing
personal on the thing.

L:

HMJr:
L:

I see.

of course, there is the personal
element that I talked to you
about, I'm happy here and if
I had to consult purely personal
inclinations, why the answer
would be clear, but I've tried
to keep those things out as
much as I can.

HMJr:

Well, you've got no right to
be happy now.

L:

HMJr:

Yeah, I know it.

I
to
at
2 you could

(Laughs) And until this show

is over - well, you think it
over tomorrow, and go suppose Cabinet

let me know before that?

L:

Yes, I shall.

HMJr:

And I'm on standard time.

L:

Yeah. All right, I'll do that.

HMJr:
L:

I'11 say a little prayer tonight.
Yeah. I'll have to say a half
dozen.

HMJr:

Goodbye.

L:

Goodbye.

181

Treasury Department
TELEGRAPH OFFICE

21 PO FO DH FRANK
at

01

1941 JUN 19 PM 5 29

CQ CAMBRIDGE MASS JUNE 19 1941 256p

HON HENRY M MORGENTHAU
WASHNDC

SORRY FOR DELAY BUT COMMENCEMENT DUTIES MADE IT DIFFICULT TO SEE
NECESSARY PEOPLE STOP AFTER FULL AND THOROUGH EXPLORATION AND WITH

MUCH PERSONAL REGRET I HAVE DECIDED THAT FOR THE PRESENT I OUGHT TO

STAY WITH THIS JOB STOP IT HAS ITS OBLIGATIONS TOO TOUGH I SHOULD
HAVE BEEN DELIGHTED TO SERVE YOU AS CHIEF AND THROUGH YOU THE
COUNTRY

JAMES M LANDIS

182

TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION

DATE June 19. 1941
TO

FROM

Secretary Morgenthan
Mr. Cochran

STRICTLY CONFIDENTIAL

At 3 p.m. this afternoon Sir Edward Peacock called on the Secretary
to say good-bye. Mr. Cochran was present. Sir Edward will be in town again on
Saturday, but did not plan to return to the Treasury that day, and will go by
plane directly from United States to England next week.
Sir Edward brought the Secretary to date with respect to his negotiations
with Mr. Jesse Jones since the occasion of the last meeting between Sir Edward and
the Secretary. Sir Edward said that he had seen Mr. Jones several times, including
a visit this morning, and is to have his final meeting with him on Saturday. He
said real progress had been made and he is hopeful that Mr. Jones will arrange for
a loan of $425,000,000 against British collateral. The original amount suggested
was $400,000,000. It was then decided to add to this the amount which Mr. Jones was
agreeable to lend on the Clark-Coates concern. When Mr. Jones put this figure at
$22,000,000, Sir Edward suggested that it be rounded off to $25,000,000. Consequently,
the total now being negotiated for is $425,000,000.
Sir Edward explained that the collateral would be put in the hands of a
trustee. The only act which will be considered as constituting default is failure
to pay interest, The rate of interest has not yet been agreed upon finally. The
plan is for the loan to be paid out over a period of approximately 17 years through
the earnings of the concerns whose securities are pledged. Sir Edward has reserved
the British position in that Mr. Jones has not said that $425,000,000 shall be
the maximus loan against which the collateral which has now been pledged may be

given. That is, if circumstances make it necessary for and warrant the British in

approaching Mr. Jones further, they may request his consideration of additional
lending against the collateral which is now being posted.

In answer to the Secretary's inquiry as to whether marketable securities
were also being pledged, Sir Edward answered in the affirmative. He said that it
was necessary to throw in about $200,000,000 worth of marketable securities to reach

the total collateral required for the loan under reference. This is in addition to

the direct investments. Sir Edward said that of these he had thrown in practically
everything on which money could be realised. This included American subsidiaries
of British insurance companies. It does not include branches of British insurance to
companies, although the foreign exchange available from their earnings had will go

the British. Sir Edward gave to the Secretary information which he previously of

given to some of the Secretary's assistants with respect to the impossibility British sub- the
British acquiring dollars against real estate held in this country Astor by property, the

jects, most importantly the Astor family. In the case of the securities in

Astor family had indicated their willingness to receive sterling war

183
-

return for the dollar proceeds of the sale of their real estate in the United States.
It was found that this property was held in trust, and that the approval of the
trustees to this transaction must be obtained. Upon advice of counsel, the trustees
refused to approve the deal. This same situation obtains with respect to certain
other property. On the other hand, the big English-owned cotton plantation which

Mr. Oscar Johnson manages is included among the pledged assets. It has not been

found possible to sell the two British-owned Matador cattle ranches in Texas, one
in the Dust Bowl and the other just outside. These are managed successfully and are
paying taxes as well as interest on investment. They are not, however, marketable
and the tie-up with British owners is such that they are not acceptable among pledged
assets.

Sir Edward spoke also of Oceanic Investment Corporation, which is a
trust established in 1929, but subject to a complex arrangement involving three other

trusts and in addition, a Canadian trust. On this he finds it impossible to realize
anything. Sir Edward mentioned this concern particularly since the report had circulated that the British Royal Family had an interest therein. Sir Edward definitely
denied this. He said that the British Royal Family has no investments in the United
States. He said he was definitely in position to know this. He did condition this
statement by saying that the Duke of Windsor or the Duchess might have some property

in this country, but since they are no longer residents of Great Britain, it is not
possible to tell from the records.
Sir Edward thanked the Secretary most cordially for the assistance which

the latter has given Sir Edward during his stay here. He felt that he had really

accomplished everything that he could, and that what he had been able to do had

resulted importantly from the cooperation from the Secretary of the Treasury. He
said there had been some unhappy affairs to go through, such as the Viscose, but
he was positive that the sale of the Viscose had been a wise step. The Secretary
said that they both realized that some of the decisions which had been taken had been
difficult. On the other hand, he felt that when a matter of a $7,000,000,000
appropriation was involved, one should not consider too seriously a possible had loss

of $5,000,000. He reminded Sir Edward of the difficult position in which he had his
to go to Congress asking for the Lend Lease Act, and further the impossibility of Sir

appearing before the Appropriation Committee because of circumstances of which
Edward was aware, including the lack of progress in British sales of direct contracts investments,

and the authority which the Secretary had assumed in approving British fully
entered into while the Lease Lend Act was before Congress. Sir Edward was

cognizant of this situation. He said that he was going back to England to report of the
orally what he had already said in his letters, namely, that in the States. Secretary Sir Edward

Treasury the British Government had its best friend in the United which Mr.
said that he knew the British Government appreciated the assistance in

Morgenthau had given in the past, but that he would be able to had explain contributed person all

the peculiar circumstances which had obtained here, and which had rendered.
the more to the great value of the aid which Secretary Morgenthau

Sir Edward explained that Mr. Gifford would take over the work of
handling direct investments after his departure.

pm/g.

184

June 19, 1941
3:30 p.m.

RE AID TO BRITAIN
Present:

Mr. Purvis

Mr. Phillips

Mr. Cox
Mr. Keynes

Mr. Viner

Mr. Bell

Mr. White
Mr. Cochran

Mr. Haas
Mr. Graham

Mr. Childs

Mr. MacDonnell
H.M.Jr:

The reason that I asked you gentlemen to come

was this, that I have been giving a good deal
of thought to the future dollar needs of the
British Empire and Canada and it seems to me

that, wanting to be very helpful, if you will

let us, that if we follow a little different

procedure than we have in the past, it may
be that we can be more helpful. Now, I have
discussed this whole thing with Mr. Hopkins,

and he is delighted at the idea. I suggested -

he has got Mr. Cox here with authority not

only to speak for him but to act for him, to
make decisions. I discussed the thing informally with Mr. Purvis this morning, and
he seemed to like the idea. What I have in
mind is this. I have read the various memc-

randa of the British Treasury and the Canadians

that are filed with us, and I realize the

185

2

difficulty that you are having in raising

the necessary dollars with which to meet your
commitments. It seemed to me that if we

follow a little bit the same procedure that
we did during the time around the first of
January until around the fifteenth of March
when the orders were sent over here every

day for clearance, but with this in mind.
We don't know just what the dollar position
of the British Treasury is each week. We

don't know who the person is who is the
Comptroller of the Exchange. We don't have
all the information of what you spend your

dollars for in this country. We don't know

until reports come in from Mr. Murray's
organization through Mr. Haas - considerable
time passes and then we find out that you
have bought and spent this, and talking it
over with Mr. Cox we find that there are
a number of purchases that you are making

for dollars today outside of the Lend-Lease

which, if we knew in advance, a good many

of them, Mr. Cox feels - and he has talked it
over with Mr. Hopkins - could be put under
the Lend-Lease.

For example, he mentions fifteen million
dollars for a change-over in airplanes which
you are paying cash for which, if it was

brought to us in the first instance, could

be put under Lend-Lease.

Now, fifteen million dollars is a lot of
money, and there would be a lot of other
cases like that. The thought that I had,
knowing something about the British Treasury
position and the Canadian - we know more
Canadian - if you

this formula and you

wanted
be
to
a
meeting
once a day, if necessary with a representaabout to follow the us to helpful, if people have really wanted

tive from Mr. Hopkins' organization and from

186

-3the Treasury and the Purchasing Commission
and the British Treasury and Canadian and

not only today's orders would be placed on
the table, but you would work as far as pos-

sible in the future, so that we could look

one week, two weeks, or thirty days ahead and

get a chance to study these things. Mr. Cox
could say, "Well, now, wait a minute, if you
want this steel - " you (Cox) mentioned steel
as a particular item - "I can take care of

that. You don't have to pay dollars for that."
And also if you could button in, Sir Frederick,
whoever your man is, wherever he sits, your
dollar exchange comptroller. I don't know
who that mystery man is, but whoever he is

if he could have a counter-part in this
country so that he really could control the

dollar situation, and if at least once a

week we could have a net position of the
British Treasury so we knew just where you
stand.

Phillips:

Well, there is no trouble about that last
point, sir. I can give you the figures now.

We do in fact get them over once a week ourselves, but as regards the exchange comptroller,

I am afraid you will have to talk with me,

because I suppose I know more about it than

anyone else in this country. I used to run
it when I was on the other side.

H.M.Jr:

You and I have put up with each other for
about three years, and as far as I am con-

cerned I like it. (Laughter) But this is
something - I mean, if you people, as I say,

feel that the day is not too far off when you
are going to have trouble with the dollars,
I personally feel that this is a constructive
suggestion, if you are willing to do that sort
of thing.
Now, after all, it is up to you people to say

187

-4-

yes or no. I mean, it isn't - we are will-

ing to try it if you are.

Purvis:

Quite. Sir Frederick, have you any questions

you want to ask?

Phillips:

No, sir. I think myself the largest field for

improving our position lies in almost exactly

the point you have mentioned, namely, the
day-to-day orders which come along, some of
which are, for special reasons, tending to be

dealt with outside Lease-Lend. That is the

first point.

The second, and bigger, point is of course the
position of the dominions under the LendLease, which raises very difficult questions
from time to time. It would be an immense
help to have a discussion with your representative.
H.M.Jr:

Well--

Phillips:

The idea is extremely attractive to us.

H.M.Jr:

And then, as I say, if once a week we could
be given your net position.

Phillips:

Yes. There is nothing difficult about that.

H.M.Jr:

I don't think we get that now.

Phillips:

You get it monthly.

H.M.Jr:

Well--

Phillips:

You have had it every month, any how.

H.M.Jr:

Yes, but--

Phillips:

There is no trouble about giving it to you

week to week.

188

-5H.M.Jr:

Am I not correct that there are still expenditures made with dollars that are outside the

Purchasing Commission?

Phillips:

Oh, yes, sir, but we have given you estimates
of the size of those payments, and they fell

within about a hundred million dollars. We
could give you a little more detail as to
how that was made up, but a hundred million

dollars a year is not a very important sum.

It is about nine million dollars a month.

H.M.Jr:

Well, you don't mind if I differ with you.

Phillips:

It doesn't affect our balance very much.

H.M.Jr:

Well, I think it is important only in that

what you don't know you feel might be very
important.

Phillips:
H.M.Jr:

Yes.

After all, supposing half of it could be con-

verted to Lend-Lease. That would be fifty
million dollars. I mean, we are going along there can't be any reason why you wouldn't

want us to know it.
Phillips:

No.

H.M.Jr:

And the fact that we don't know and it is a

loose end, it is just - we can't say if and

when - we know down to the last sou what the

British Treasury position is. It is the
little things that come, I think, outside

the Purchasing Commission which are often as

irritating as anything, isn't that right,

Oscar?
Cox:

That is right.

H.M.Jr:

And often more so.

189

-6Cox:

H.M.Jr:

That is right.
I mean, you bump into them and it is the
surprise and the fact that you don't know

about it, isn't that right.

Cox:

That is right.

H.M.Jr:

What do you think, Mr. Keynes?

Keynes:

Mr. Morgenthau, I think this would be very
hopeful and helpful. We could give you break up all our dollar expenditures outside
Lend-Lease, item by - and then you could
consider any of these you could help on.

1

think you will find that there are a good
many which are very difficult but, on the

other hand, I am sure we will find something

substantial where it is possible. As Sir

Frederick said, "Much the biggest item will
be - " we don't feel we have got at present
full control over the expenditure in the
sterling area outside Great Britain. We
have got it estimated pretty accurately.
In the case of dominions, we can't do it so
accurately, and I think you could help us
a great deal in various ways to get it bet-

ter, but I think it would be well worth
while going through the British items for

what they are worth, I mean putting them
before you so you can see exactly what they
are.

H.M.Jr:

Well, our people here are willing to meet

every day at three thirty if necessary, if
there is something to discuss, to get
started.

Purvis:
H.M.Jr:

Yes.

And Mr. Cox is willing to come every day, if

necessary, isn't that right.

190

-7Cox:

H.M.Jr:

That is right.
And the thought that I had would be that this
committee composed of the British Purchasing
Commission, British Treasury, Canadian Treasury,
and
the U. S. Treasury would pass on all dollar orders.

Purvis:

As the requisitions were put in, you mean,

this body would clear the requisitions, is

that it in effect?

Cox:

Bell:

No, before the requisitions are put in.
After the--

Cox:

And most of the ones you would be particularly
interested in would be the ones that were not
proposed to be handled by requisitions but
might possibly be handled that way.

Purvis:

Yes, I see.

H.M.Jr:

Before?

Cox:

That is right.

Keynes:

You see there, there are all sorts of places we in Great Britain control the imports into
Great Britain, but we don't control the im-

ports in India. That is done in India.

H.M.Jr:

Well, those things would come up, and what
could we do to help and what can you do to
help yourself?

Purvis:

That situation, by the way, is developing.
I see a message today saying that India has
appointed a new head of its Mission here,
and it has just come in - the advice just
came in, with a head of the purchasing end,
which would, I think, tend to bring that more

191
8-

into focus than we have so far. That has been
done just today.
H.M.Jr:

But I mean, under the priorities, I mean if
some - if India or somebody wouldn't come
in and we wanted to be disagreeable, we

could very easily tell our people until

they do come in, don't let them have any

priorities.
Keynes:

Yes.

Purvis:

Would that be priorities or export licenses?

Cox:

Both.

Purvis:

Or both?

H.M.Jr:

Both.

White:

Both.

H.M.Jr:

And--

Purvis:

That is the most - that probably is a very
important field.

Keynes:

I think there is a very substantial sum to

H.M.Jr:

Well, the whole thing - I feel - then I would

be considered.

know on a weekly basis the net position as far

as the British Empire and Canada are concerned

as to your dollars, and I wouldn't be fooling

myself, and you people wouldn't and Mr.
Purvis would know, well, how far in advance
can he look, you see.

Now, monthly, I don't think is enough, and

if there is something - if, for instance,
Mr. Jones is a little slow on this four

hundred million, we will say, that Sir Edward

192

-9Peacock has put up and we find you really

need it very badly, I could call him up and
say, "You know, Jesse, this is really a matter of days. Would you mind?" And the
chances are nine out of ten he would say,

"Of course I wouldn't. I didn't know there
was
any hurry about it." And so we really
would know.
Purvis:

It would also give a forum for discussion of

the situations which are difficult. I

imagine you (Cox) - from Mr. Hopkins' view
there must be a number of those.
H.M.Jr:

As I understand it, Hopkins is tickled to death

to get this off his shoulders, is that right?

Cox:

Purvis:

That is right.
I must say the fact that you are sitting

there with the power to decide, I think would
be very helpful.

H.M.Jr:

He has given Mr. Cox the power to decide.

The things would be decided in the room. I
won't even let them bother to come back to
me. I mean, my people can decide on the spot.
So I mean, the decisions can be made right
there and then.
Purvis:

Right.

H.M.Jr:

Wouldn't it help you?

Purvis:

Oh, I think it would be very helpful because

at present a lot of these things are liable
to go around and 'round and 'round. The
questions are never - can never be asked

the people in the right - altogether. It
does tend to kill a lot of that.

H.M.Jr:

After all, I mean everybody here would like

193

- 10 to make it easy for both the English and
Canadian Treasuries as it is within our

power to do. If this would - at least they

would know on a weekly basis where they
stand as well as we do.
Purvis:

There is a point that Mr. Keynes put to me

and that is as to whether we could - to bring
the dominions along into this picture, expressing their demands on the United States,

on the dollar area, more clearly and quickly,

instead of sending them through any number
of channels. They have to have some assump-

tion that the thing is going to work if they

do it. You have already given us certain,

you might say, clubs that could be used to

bring them along, but I take it the very
fact that we are exploring it for the purpose

of handling the dollar problem shows that
they are going to be looked at sympathetically.
H.M.Jr:

Let's call it moral persuasion.

Keynes:

I think they are beginning to realize under
the priorities system if they don't centralize

they will fall by the wayside. I think that
is reaching them.

There is a series of letters in today which

shows that they are beginning to centralize
certain important commodities, particularly

steel, oil, and motor vehicles, and they
want to centralize fertilizers and chemicals
and machine tools.

Purvis:

I would like to feel that we could tell them
that that would be definitely to their interest
in handling this. I would like to pass that
cable out to London.

H.M.Jr:

Well, in doing this thing originally, we tried

194

- 11 every way possible - I remember a South

Africa delegation came in here. I don't know
how long ago that was.

Purvis:

Some months ago.

H.M.Jr:

And they thought they could do better going
around by themselves, and I told them I thought
they were wrong, but to go ahead and have a try
at
it.

Purvis:

Right. And as priorities have become more
and more important, the fact, there is no

doubt about it, it will be easier to do now
than it was then.

H.M.Jr:

Now, this doesn't mean - this happens to be
the nineteenth. That seems to be always the
day that we make important decisions. This
doesn't mean that we are not doing everything

that we can to clean up the things, Sir
Frederick, prior to this, you understand;

and you (Cox) feel that we are making some
headway, don't you?
Cox:

Yes.

H.M.Jr:

Dan?

Bell:

Yes.

H.M.Jr:

You and Mr. Childs--

Cox:

Yes, Childs has got all the figures up now,
and they are on the way over.

H.M.Jr:

Is Childs holding this up? Is that the man
now? (Laughter)

Childs:

I am carrying it alone.

H.M.Jr:

Well, I talked with Mr. Cox this morning, and

195
- 12 he thought on these questions that had been
hanging fire about our March 19

that tomorrow
Monday
or we
might discussion
have something.

Cox:

Ican
think
so, as soon as we get the list, we
start.

H.M.Jr:

I just want to let you know, Sir Frederick,

we are pushing just as hard as we can, but
there are an awful lot of people who have got

their finger in this pie, and the will is

there, but personally I don't think that you
have lost anything, I think that you have
gained a lot of dollars during the last during that time, but I just want to let you
know that everybody in the Administration is
pushing just as hard as they can, and that
with that cleaned up and this new set-up,
at least you would know pretty well where
you stand, don't you think so?

Phillips:

I think so, yes, sir. I have been following

H.M.Jr:

And you feel, Dan, that way, too?

Bell:

Yes. I haven't talked to Oscar only a minute,
but I think they are making progress on it.

H.M.Jr:

Well, do I understand that you gentlemen would

the discussions Mr. Cox has had with Mr.
Childs. They certainly seem very promising.

like to try this now?

Purvis:

Yes, definitely.

H.M.Jr:

Do you want to start Monday? Is there some-

thing to do tomorrow? Would you like to
start Monday?

Purvis:

Tomorrow is Friday. Is there anything that

we could start on?

196
- 13 Childs:

Why not start tomorrow?

Purvis:

I think we might just as well visualize our

problem tomorrow If we don't get any further.
Keynes:

We could even start today, couldn't we? I
think we could run through a good many of
the headings.

Purvis:

Yes.

H.M.Jr:

Have you got the time?

Cox:

Yes, sir.

H.M.Jr:

Well, what are you doing, Dan?

Bell:

I am down at that meeting, but somebody else

is running it, and they can go on if you
would like to have me go on with this.
H.M.Jr:

Well, I don't want you to do it permanently,
but I mean I would like to get the thing
started, and then I thought after that Harry
could carry it for you and me.

Bell:

It is all right.

H.M.Jr:

But if they could adjourn to your room, and
then afterward I think if Harry could carry
it and keep you and me informed as necessary.

Bell:

It is all right with me.

H.M.Jr:

So if you would like to go now, I would say
to adjourn--

Purvis:

Might as well start.

H.M.Jr:

And Merle, you keep - I mean, whenever they

meet, I would like you to sit in with them
too, Merle.

197

- 14 Cochran:

All right, sir.

H.M.Jr:

We have got to have a lawyer. We would never

Purvis:
H.M.Jr:

get along without a lawyer.
We will have several.

I would like to give you this. I haven't got

a copy for the Canadians. I am sorry. Have
you got an extra copy? (See attachment)
White:

Oh, yes.

H.M.Jr:

Those are the things we think we would like
to have.

White:

Those will be subject to considerable discussion in the meetings, those particular

points.
H.M.Jr:

Yes, fine.

Well - so I think if you want to - could you
(Bell) handle them now?

Bell:

Yes.

H.M.Jr:

All right.

From Harry White 198

Jame 19,194,

Memorandum on Information to be Supplied by the British

Because of the conferences at the Treasury
about probleme relating to the British financial position,
more detailed and systematic information with respect to
the dollar and gold incone and outgo 10 essential. To

would like actual figures by months for the period January
1 through May 32, 1941, with monthly estimates for the

remaining months of the year, and the actual figures for
these months at monthly intervals. This detailed statesent should contain the following:
1. Outer.
(a) A detailed breakdown of the 6763 million
set forth as the payments to be made by
them ea B.P.M. contracts during the 7-month
period, June 1 through December 31, 1941.
This breakdown should show the name of the

contractor-payee, the date of contract, the

subject matter of the contract (aircraft,
steel, machine tools, oil, change orders is
aircraft, etc.), the advance payments made
and when they were made, the payments still
due and when they are due, and the teres

upon which the contract is terminable.

199

(the British estimates here eited are all taken from

the submitted by Phillips to Bell on
June 26, 1941.)

(b) is stemised account of other payments so be
made by U.E. to U.S. - (estimated at 6100

million per a by the Brittsh.)

-

(e) Aa itemised account of British Empire imports
from U.S., excluding U.E. and Ganada (estimated by the British as $400 million DOP

(a) As Itemised account of British Empire (exclussag Ganada) dollar payments to third countries,

by countries and commodities - (British
estimate, $160 million per year).
(o) Any other expenditures, stomised.

200
.

2. Ressipts.

(a) An itemised account of S.K. reseipte from the
U.S. - (estimated by the British at 6280
million per assume).

(b) As itemised account of storling area exports
to U.S. -- (estimated by the British at 8500
million per assum).
(e) Itemised U.E. and sterling area exports to
third countries paid for is U.S. dollars OF gold.
(d) Empire, excluding Canada, gold production and
exports with breakdova by countries of destine-

tiea and of preximate source or origin.

(o) Dellar relief to U.K. for (1) plant facilities
transferred; (2) supply contracts taken over;
(3) changes in existing contracts.
In each ease we would like to have the
actual received and when, roller from expends-

turee by months, and reduction in total consitments outstanding.

(8) Reseipte from sale of U.S. securities and
direct investments. (This is not to supersode
the weekly tabulations now being received.)

(5) Receipts from R.F.C. and other lease on investments in U.S., by date of receipt of each.

(b) Any other dollar OF gold receipts, itemised.

201
4-

3. A daily report of items being cleared through the
British official account with the N.Y. P.R.D., with
Indication of the purpose for which the large ebosts
were cleared and principal source of the eredite mas
to the account.
Cash Position

1. A weekly statement showing daily gold and

dollar position.
2. British private dollar balances held as of
the beginning of each month, breken down by

classifications similar to these set up is
the skeleten tables submitted to Mr. Allen
on April 16, 1941.
3. Such information as the British Exchange Gen-

trel requires on debite and credite to such
private dollar accounts.
4. Gold heldings of Empire countries by countries
as of the beginning of each month.

5. A weekly statement of all gold transactions.

202
OFFICE FOR EMERGENCY MANAGEMENT

DIVISION OF DEFENSE AID REPORTS
WASHINGTON, D. c.

June 19, 1941.

TO:

Secretary Morgenthau

FROM:

Oscar Cox

SUBJECT:

Dollar Relief for the British.
1. Since your testimony on the Lend-Lease Bill and since

March 19, 1941, the British have received material relief from dollar
payments they thought they would have to make themselves.

2. In March, 1941, no one knew definitely that such things
as iron and steel, food, agricultural equipment, copper and brass,
shipping services, etc. would be purchased by the British through
Lend-Lease. No one could know this definitely before the Appropriation
Act was passed on March 27, 1941.

3. Even as late as the latter part of May, the British, as
I understand it, did not expect that Lend-Lease funds would be used

to purchase oil, shipping services, etc.
4. Out of the $1,350,000,000 appropriated on March 27, 1941

for agricultural, industrial, and other commodities and articles,
$280,314,695.50 was allocated up to June 1, 1941. Since then, additional

203
-2-

amounts have been and are being allocated. These allocations are

to be spent as fast as possible. They are doubtless for items which
in March the British thought they would have to use their own dollars
for.

5. In June, 1941, approximately $80,000,000 was allocated

for shipping services for June, July and August, 1941. More will

doubtless be allocated later. Here again the British could not have
known in April that these shipping services would have been handled
by Lend-Lease.

6. Conservatively estimated, at least $500,000,000 worth
of items will be handled under Lend-Lease which the British did or
should reasonably have contemplated in March and April they would
have to handle themselves.

OJC

From Oscar

Cope June 19. 1941204

DOLLAR CONDITION OF BRITISH
FOR THE 7 MONTHS FROM JUNE
THROUGH DECEMBER 1941

(Based On Their Own Statements)

1

Expenditures

$763,000,000

$763,000,000

Receipts and Liquid Assets

a) Gold and U. S. Dollars

138,000,000

b) Receipts From Marketable
and Direct Investments

175,000,000

2

c) Favorable Balance From

Exports of the Sterling

Area and Newly Mined Gold

d) Receipts From Sale to

RFC of Capital Facilities

Estimated Deficit

294,000,000
100,000,000
707,000,000

707,000,000
$56,000,000

1 This amount will be reduced to the extent that: a) Contracts
placed by the British after March 11, 1941 are taken over by
Lend-Lease; b) Supply contracts are taken over by the War
Department; e) Obligations incurred before March 11, 1941 which
are not firm commitments, such as spot purchase items, or cancellable items are picked up by Land-Lease; d) Changes in existing orders are handled under Lend-Lease; e) Contracts such as the
Vultee and Oarliken ones are picked up by Land-Lease.

In all probability this figure will be reduced$40,000,000
at least as

follows: a) Contracts Placed after March 11
b) Supply contracts taken over by Army
c) Changes in Existing Contracts
d) Contracts such as Vultee & Oerliken

43,000,000
35,000,000
50,000,000
$168,000,000

These reductions will also increase the receipts to the
extent that the British receive refunds.
2 This is a minimum amount calculated at the rate of 25 million
dollars per month. If the RFC makes any substantial loans against
British assets this will be appreciably increased.
3 U.S. imports from the British Empire, excluding Canada, on the
basis of the first four months of 1941 average 71.2 million per
month or are running at the rate of 954.4 millions per year. The
British statements estimate imports into the United States from
the Sterling area at 500 million dollars per annum.

205

June 19, 1941
4:23 p.m.

HMJr:

Clifton

Mack?

Mack:

Yes, sir.

HMJr:

What I read in tonight's paper
by Tom Stokes, it looks as

though
you fellows did all right
on
the Hill.
Well, I think so. We thought
that in view of all that pressure

M:

that was going on down there in
Florida that we better handle
those contracts up here.

HMJr:

Yeah.

M:

To avoid any possible difficulties.

HMJr:

M:

HMJr:9
M:

Right. Tell me, this man, Harkness,
he is now state director for WPA?
Yes, sir. Now, Harkness - Harkness
personally is supposed to be very
close to Senator Pepper.

I get it, I see.
But evidently in this case, he
didn't show any partiality one
way or the other.

HMJr:

Well, have we got a good man
down there now representing the
Treasury?

M:

HMJr:

Yes, sir, we have. As a matter
of fact I'm going down there
tomorrow night. I want to know
him better and I want to know
the office better.
Good.

206
2-

So I'11 be down there Saturday
morning and the man who is now

M:

acting State Procurement Officer
is the man who was Chief of the
Purchase Division for several
years down there.

HMJr:

I see.

M:

So I think he's all right.

HMJr:

Is he a Pepper man?

M:

I don't know, but I'm going

HMJr:

to know more about him after
I get down there.

Good. Well, were they friendly
or unfriendly to you on the Hill?

M:

They were friendly.

HMJr:

Good.

M:

They were very friendly and as
a matter of fact, we gave them
a good deal of help because they
came into this case, you know,
without a great deal of information
and we gave them exactly what the
record had to show.

HMJr:

One thing - is it true that you

have a special room for Congressman

with these contractors?

M:

Why that - I didn't see that that's a comment that Mr. Dyke

made when something was asked
about Congressman coming in and

he said that over in the Comptroller
General's office where he usedto
work that they had a special room
over there where they talked to

contractors and the Congressman who
came in with them.

HMJr:

But that is not in your office?

297

3

-

#

--

/ Tame m we don't base a

2000 2062 here for

R I mount I read 10 I

- that pain had 20 case

B merial can for contractors
and Dongressure

THE Imme New I - is that the
WEEK in reada in the papert

These . the - as CAME over the

- last right.

1 Come.
The (the Dreamstime Department are

e room for Congressman
and the contractors

the Team, well the

- title

400. Stones country - Stoken

- - read 1$ their way
hurt Sant insight on the United
- thinken.
New. - the centumony HERE that
Hand like etased that 10 the

General Accounting office they card

- over there whene they tailed
- contractors who game
protest mattern
SMIT, thanks all right. There's
somebody else's responsibilities

Team.

ALL right, CELC.

Ten, st.
Thank you.

AII right.

207

-3oh, Lord no, we don't have a

M:

Conference room over here for

any purpose.
HMJr:

Well, I mean I read it - I

was amazed that you had to have

a special room for contractors
and Congressman.
M:

Oh, Lord. No, I - is that the

HMJr:

way it reads in the paper?
That's the way it came over the

M:

Oh, Lord.

HMJr:

ticker last night.

That the Treasury Department has
a special room for Congressman

and the contractors.

M:

HMJr:

M:

Oh, Lord. Yeah, well the testimony
was this

Well, Stokes didn't - Stokes'
story didn't read it that way
but last night on the United
Press ticker
Yes, well, the teetimony was that
Harry Dyke stated that in the
General Accounting Office they had
a room over there where they talked
to contractors who came in to
protest matters

HMJr:

Well, that's all right. That's

M:

Yeah.

HMJr:

All right, Clif.

M:

Yes, sir.

HMJr:

Thank you.

M:

All right.

HMJr:

Goodbye.

somebody' else's responsibility.

208
June 19, 1941.

MEMORANDUM FOR THE SECRETARY'S FILES:

A meeting relative to the administration of Executive
Order 8389, as amended, was held in Mr. Foley's office at
4:45 p.m., June 19, 1941, attended from time to time by
the following:

Messrs. Foley, Gaston, Cochran, Viner, Bernstein, White,
Pehle, Coe, and Aikin for the Treasury, Messrs. Acheson, Hiss,
and Luthringer for State, Messrs. McNamara and Kreeger for
Justice.

There were no objections to the general license procedure
outlined by Mr. Pehle for Sweden. Briefly, he explained that
assurances would be given in respect to the Swedish Government

and Central Bank transactions; other transactions will first

be reviewed by the Central Swedish Exchange Control and, if

approved, cable advice to this effect will be sent to the

Swedish Legation here. Then the Swedish representative will
confirm to the Treasury that the transaction has received
prior approval in Sweden. Although complicated to a certain
extent, it was agreed that this was a workable arrangement.
Mr. Acheson mentioned that he had talked with the Portuguese
Minister, who is cabling Lisbon regarding the assurances to be
given.

Mr. Bernstein asked whether the State Department wished
to allow the seventeen Russians now waiting on the west coast

to leave the country. Originally, the Russian Ambassador was
to give assurances for them, but now it appears unlikely that
these will be forthcoming. Nevertheless, it was decided to
let the Russians go. Mr. Pehle stated that the Russians

wanted $10,000 for the Consulate General in New York, and
Mr. Acheson said that the State Department would interpose no
objections.

209
2-

Discussion then centered on the whole problem of
nationals who wanted to leave the country. Mr. Bernstein
explained that fundamentally this was a concern of the State
and Justice Departments. Treasury would administer the
freezing control so as to support the views of Justice.
Blocking is a fiscal problem whereas who should or should
not leave the country is for the State and Justice Departments
to decide. Mr. Bernstein, in answer to Mr. Hiss' question as
to why the Russians were being held up when it was his impression that the Order was directed to Germans wishing to
depart, said that the Russians themselves had raised the
question. Mr. Bernstein then explained that the Treasury
Department could instruct Customs officials to require a
report from those wishing to depart. This would provide
a formula for detention pending decision by the State and
Justice Departments as to what action was to be taken. The
discussion ended with Messrs. Acheson and Luthringer agreeing
that some arrangements would have to be set up by the State
Department for handling these cases.

Dr. White raised a question concerning reports. At a
meeting earlier in the day, Mr. Klaus had suggested that not
only should there be a report by aliens on the dates already
provided for under the Executive Order, but also by those
aliens who have settled here during the past five years.
According to Dr. White, Mr. Klaus had thought such reports
could be limited to property of a value in excess of $50,000.
Mr. Pehle questioned whether the banks on whom the Treasury

must rely would be in a position to furnish this information.
Mr. Bernstein felt that a five-year census should be independent of the one now provided for under the freezing Order.
Dr. White then agreed that the five-year census problem was

one to be canvassed later after further consideration had
been given to it by interested Departments, particularly
Justice.

Dr. White mentioned the desirability of taking a census
showing foreign property owned by Americans. Available data

is poor and, in view of possible future retaliatory actions,
setoffs, and the like, this information would be of inesti-

mable value. Both Messrs. Foley and Acheson were in agreement on this point and it was decided to explore the problem,

210
3-

restricting the census to continental European property of
Americans.

Mr. Gaston wanted to know what action was going to be

taken in respect to Italians wishing to leave this country, in

view of today's Italian order closing all American consulates.
Mr. Foley said that appropriate instructions were ready to be
sent immediately to all Customs officers.
Mr. Acheson stated that he had talked to Mr. Welles regarding the proposed sale by the Standard Vacuum and the
Socony Vacuum of their Hungarian and Rumanian properties.

Mr. Welles took the position that such sales might work injustices on other American claims to Hungarian and Rumanian

blocked funds. In other words, at some future time there
might have to be a pro-rating of these funds and the State

Department was opposed to any preferential treatment with
respect to them.

Mr. Kreiger referred to the meeting held earlier in the

day regarding reports. He said the Department of Justice
would like to see included in the census with respect to

corporations, names of officers and members of the board of

directors who were foreign nationals. He indicated that
this would be useful information for his Department. Mr.
Bernstein indicated certain objections to such questions.
Messrs. Foley and Acheson felt that it was worth considering
the question further. Mr. Foley asked Mr. Coe to consider
including a request for such information in the report forms
now being drafted.

211
MEMORANDUM

June 19, 1941
TO:

The Secretary

FROM:

Mr. Blough
This morning the Ways and Means Committee adopted

an income tax schedule (the so-called Schedule X) with
rates much below the Treasury rates up to $12,000 and
somewhat higher than the Treasury rates between $16,000

and $70,000. The vote was 22 to 2. The Treasury
proposal was not voted on.

The Treasury proposal for a special 10 percent

excess profits tax on that portion of profits in
excess of the average earnings, but not in excess of

the invested capital credit was approved 18 to 6.
The Stan plan for excess profits taxation involving
the reversal of tax deduction, increase in rates by
10 percentage points, and a reduction from 8 to 7 per-

cent in the invested capital credit for capital above
$5,000,000 was approved 18 to 7.

Mr. Duncan spoke in favor of lower total revenue

from the tax bill. Mr. Sullivan replied and pointed
out that in addition to other considerations, the full
$3,500,000,000 was desirable to help prevent inflation.

212

-2Mr. Sullivan left on the 12:45 plane. Both
Mr. Doughton and Mr. Treadway insisted that he should

go and Mr. Tarleau and I felt that there was no reason
in connection with the legislation why he should stay.
The Committee has adjourned until Monday morning to
permit conferences between the Treasury and Mr. Stam's

staff on proposed excise taxes. The Committee will

take up this subject next week.

RB

REFER TO FILE No

213

TREASURY DEPARTMENT
WASHINGTON, D.C
OFFICE OF THE CHIEF
U.

SECRET

June 19, 1941.

SERVICE

Memorandum for Assistant Secretary Gaeton
From Chief Wilson

This memorandum relates to the recent activities of the Secret
Service Division in relation to the protection of the President.

During the month of May the flow of letters referred to this Service by the Executive Office reached the highest level to date, and was
almost three times as large as the month of April. Considerable of
this increase was the result of letters arriving shortly after speeches
made at meetings conducted by the America First Committee.

There is set forth below a schedule showing the number of various

types of letters received by months during the first five months of
this year:

Threatening,
Abusive and

Suicide

Paranoid
Personal-

Total

347

582

ities

Obscene
Jan.

225

10

Feb.

158

15

468

641

March

223

13

433

669

April

249

17

570

836

May

816

12

2302

3130

The unprecedented increase of letters in April and May, together
with additional precautions being taken in connection with X-ray examination of packages addressed to the White House and deliveries of
household supplies to the White House, required that additional employees be assigned. Through the cooperation of the Budget Officer of the
Treasury Department and the Bureau of the Budget, an allotment of $5,850
was secured from National Defense Funds covering the period May 15 to
June 30, and a supplemental appropriation of $51,000 has been requested

for the next fiscal year.

An agent of this service has been on duty since May 16, 1941, at
Warm Springs and Washington, D. c., extending protection to the wife

and children of the President of Paraguay. This detail will extend
until about August 1st.

214
-

The Crown Princess of Norway and family will leave Washington

about June 26 for Hyde Park, and about July 1 will proceed to

Massachusetts for the summer months. Two agents and four uniformed

guards who have been extending protection to the family while in
Washington will be assigned to their protection during the period
they
are at their summer home, which is about eight miles from New
Bedford.

The pistol team of the White House Police won first place in
a competition at Trenton, New Jersey, in which 70 state and city police
teams representing outstanding police departments of the country participated.

you

215

June 19, 1941

My dear Mr. President:

I am taking the liberty of writing

to you in behalf of Francis Biddle for

Attorney General.

I have worked very closely with
Francis since he has been in Washington.
I hold him in highest esteem, and I am
confident that if you should make him
Attorney General, he will do a wonderful

job for you at this time. I believe that

Francis thinks right on all of the ques-

tions which come up daily for decision,
and I sincerely hope that you will decide
to give him this appointment.
Yours sincerely,

Henry.
The President,
The White House.

Sent to White House
by Secret Samin man
3:40 P.M.

216
THE WHITE HOUSE
WASHINGTON

June 19, 1941.
MEMORANDUM FOR THE

SECRETARY OF THE TREASURY:

FOR YOUR INFORMATION.

F.D.R.

/

217
Copy

June 18, 1941.

Dear Harold:

I have seen your letter of June 11th to the
Secretary of State, and your letter of June 11th to
Brigadier General Maxwell in regard to exports of oil
from the United States.
Lest there be any confusion whatsoever, please
do not issue any directions, as Petroleum Coordinator,
forbidding any export or import of oil from or to the
United States.

This can be qualified only if you obtain my
approval or that of the Secretary of State.

The reason for this is that exports of oil at

this time are so much a part of our current foreign policy
that this policy must not be affected in any shape, manner
or form by anyone except the Secretary of State or the
President.

I am sending a copy of this letter to the

Secretary of State and to Brigadier General Maxwell.
Always sincerely,
FRANKLIN D. ROOSEVELT

The Honorable

The Secretary of the Interior,
Washington, D. C.

218
BRITISH EMBASSY,
WASHINGTON, D.C.

June 19th, 1941.
PERSONAL

Persmal
Dear Mr. Secretary,

I was unfortunately out of Washington on official business
and could not accept the invitation to meet you on Monday morning.
I should have liked very much to thank you personally for
the great help that you have given to us in securing the freezing
of enemy assets and also for the very friendly and effective
collaboration that has continued for so long between my officers
your own officials. I am sure that you know that anything
further we can do to help will be done to the limit of our resources
and with the greatest possible pleasure.
I have had no personal message from Mr. Dalton on this or any
other matter but I know how very pleased he will be, and I am

passing on to you his thanks, in anticipation of his wishes.
believe me,

dear Mr. Secretary,

yours very sincerely,

Mael ittall
The Honourable Mr. Henry Morgenthau, Jr.,

Secretary of the Treasury,
Washington, D. C.

219

June 19, 1941

Dear Bob:

Thanks for your letter of June 16th.

After reading it, I tried to get you on

the telephone, and learned that you were

up at New Haven.

I thoroughly enjoyed reading your
radio speech, and certainly everybody who
heard it must have been impressed.
I would love to see you and Madeline
and have a good chat. When are you coming to Washington?

Very sincerely yours,
(Signed) Henry

Mr. Robert Sherwood,
630 Fifth Avenue,
New York, New York.

220

The Playwrights
Company
S. N. BEHRMAN

Circle 5 , 7930

June 16 1941

ELMER

AXWELL ANDERSON . . RICE ROBERT E. SHERWOOD JOHN F. WHARTON . Directors
630 FIFTH AVENUE NEW YORK
VICTOR SAMROCK . Basiness Manager
WILLIAM FIELDS

Press Representative

Dear Henry,
Thank you very much for having a copy

of your Amherer quick sent To me. In a my
fine statement - decent, understanding and at
the same time impiring I've been observing a grat
many of Those self proclamed "moral amorbas, and
The strange thing is that when They 80 into The army,

however litterly, They seem to become much better

soldiers
n
1917.

Than we ignorant young enthusiants me

I with I could see you soon and talk about
Things. just at present, l in waiting on The ansions

ear for materialization of The job I want most to do.

I'm afraid I was a his penulant with my old

mind, Hanford Powell, The other day. But I was
and and distracted Handand patiently explained
me That This is a grave origination and That it
mid be diffined for me to appreciate The granty
scause, being a writer, I live in an ivory Town at

proint
I bust
out intemperately.
Madeline
sends
love. Please her us for together

ron

Yours, Bus Shunned

221
COPY

June 16th, 1941
Dear Henry,

Thank you very much for having a copy of

your Amherst speech sent to me. It's a very
fine statement-decent, understanding and at
the same time inspiring. I've been observing
a great many of those self-proclaimed "moral
amoebas", and the strange thing is that when

they go into the army, however bitterly, they
seem to become much better soldiers than we

ignorant young enthusiasts were in 1917.

I wish I could see you soon and talk about

things. Just at present, I'm waiting on the
anxious seat for materialization of the job I
want most to do.

I'm afraid I was a bit petulant with my old
friend, Harford Powell, the other day. But I was
tired and distracted. Harford patiently explained
to me that this is a grave situation and that it
would be difficult for me to appreciate the gravity
because, being a writer, I live "in an ivory tower".
At that point I bust out intemperately.
Madeline sends love. Please let us get together
soon.

Yours,

/s/ Bob Sherwood

practicallyRadio
This
is one
no toE. my
listened efforts. apparently
222
Speech
by Robert
Sherwood
C. B. 8. 7:15 P. M.
Sunday, June 8th, 1941

In this war against Hitler and Hitlerism, we must have more and better
weapons than our enemies. More ships, planes, tanks and guns. The production of

these weapons is going forward rapidly - but not rapidly enough. However, it is
encouraging and heartening for every American to see how rapidly we are developing

the most powerful of all weapons - our national spirit - our American morale.
In our democracy, morale is a weapon which can not be bought. It can
not be manufactured by all of our vast industry.
Morale can not be enforced by law.
Morale can be produced only by the people.

It is the expression of our moral strength - our confidence and our
courage - our love for our country - our devotion to the ideals of freedom and
tolerance that our country represents in our hearts and in our minds.
In the present war, we have seen remarkable demonstrations of the power
of morale.

In the spring of 1940, German morale was high, British and French morale

was low. The Germans were inspired with the conviction that they could easily
conquer the world.

And there was a certain basis of fact for this conviction. Through the
years preceding the outbreak of war, the Germans had gained one bloodless victory
after another.

And each of these bloodless victories had been a spiritual defeat for the
British and French people.

Through these years, from 1936 to 1939, the British and French politicians

had been telling the people - "It's no concern of ours which side wins the Civil
War in Spain - or whether Mussolini occupies Ethiopia or Albania - or whether Hitler
moves into the Rhineland, or Austria, or Czecho-slovakia."
Thus, the British and French spirit had been weakened by a series of
compromises - which were, in fact, surrenders to Hitler.

223
After the conquest of Poland, the British and French people could only
say, "Well, there's another country gone. We can do nothing but sit behind our
'impregnable' defenses - the Maginot Line, and the British Navy - and see what
happens next in this phony war."

The Germans had the great advantage of the initiative. They knew they
were going places. They were not worried by the fear that this was a phony war.
They swept through France like a tornado. The French people had no time

to summon their national spirit. They did not wake up, until it was too late;
they did not realize the terrible truth - that they must fight for their own homes,
their OWD freedom.

The British were given time to wake up - just barely enough time. Faced

with total disaster, the real British spirit at last asserted itself.
We can never forget the words spoken, after Dunkirk, by Winston Churchill:

"We shall fight with growing confidence and growing strength in the air,
we shall defend our Island, whatever the cost may be, we shall fight on the beaches,

we shall fight on the landing grounds, we shall fight in the fields and in the

streets, we shall fight in the hills; we shall never surrender
They have had to fight in the streets of England, not as yet against
invaders - but against fire and death from the skies.
It was nothing but morale which enabled the common people of London and

Coventry and many other cities and towns to survive the aerial blitzkrieg.
It was morale, above everything else, which enabled the Royal Air Force
to stand up successfully against the most overwhelming air power that the world
has ever known.

During the past year, the British have suffered terrific bombing at home
and grievous defeats abroad. But their spirit has not failed.
The real test of morale is not the ability to conquer, when you have all

the advantages of physical strength on your side. The real test is the ability to
take punishment, to withstand defeat, without surrender.

We can find the eternal proof of that in our own American history.
From the battle of Bunker Hill to the crossing of the Delaware, Washing-

224
ton's little army was constantly in retreat, cut cff from most of its sources of
supply in the thirteen colonies. It endured defeat, and it endured hardship - at
Valley Forge, and through six long years. The quitters deserted Washington's
standard, but Washington himself and the real fighting men of his army never quit,
until they had come to victory and established this nation.
In the Civil War - the war between the States - the same qualities were
displayed on both sides - by Abraham Lincoln and Robert E. Lee alike. In the first
two years of that war, the Northern armies were beaten again and again. In the last
two years, General Lee's lines were constantly falling back. But the unconquerable
American spirit was rallied by both Lincoln and Lee in the face of defeat.

Today, at Fort Meade, in Maryland, there is a division, the 29th, of the
U. S. Army which bears the honorable name, the Blue and the Grey division. It is
composed of men descended from soldiers who fought on both sides in the war between the States.

I have seen this 29th division, marching through a cold, wet night. I
have seen many units of our new Army, and Navy, and Marine Corps. And when we look

at anyone of these units - not a regimented mass of "faceless" men, like the Nasis,
but a force composed of free, individual men - we can truthfully and proudly say,
"There is the United States of America."
Our regular Army, and our Navy and Marine Corps are composed of men who

have chosen the honorable profession of arms; many of them have chosen it as a
lifetime career.
Our National Guard and our organized Reserves are composed of mon who,

year in and year out, have devoted part of their time each week and all of their
vacations to national service.
But the great bulk of our new Army is composed of citizens who are in
uniform today only because they know and we know that the security and integrity of

our country are in peril. These men represent every walk of life, every section

of the nation, every religious faith, every political belief, every racial origin.
They are having a tough time in their training. There is no illusion of
"business as usual" with them.

They have had to endure many hardship Tary have had to learn to use the

225
new and terrible weapons of modern warfare. They have had to do work much harder
than most of them had ever known before.

And they are paid a minimum wage of $21. a month - and there is no legal
maximum limit on the number of hours of their labor.

These men have plenty of cause for complaint - especially about the lack

of sufficient facilities for recreation. And they do complain - and they wouldn't
be good Americans or good soldiers if they didn't complain.

Nevertheless - it is the considered opinion of every expert military
authority that these young Americans of 1941 are forming the finest army that our
country has ever known. They are remarkable in intelligence, in physical strength,

and above all, in spirit.
As the Commander in Chief of our Army has said, these men are "worthy of

the highest traditions of our military service

No better men ever served under

Washington, or John Paul Jones, or Grant, or Lee, or Pershing."
These men are Americans. They could never be drilled or browbeaten into

submission; they could never be "regimented," in the Nazi way. The fact that their

training has gone forward rapidly, that their discipline is good, is due to the
fact that they are free individuals who have realized for themselves the necessity

for service. It is for their very rights as free individuals that they are preparing to fight.
Our soldiers and sailors and aviators and marines are not kidding them-

selves about the seriousness of the situation. The civilians should not try to kid
themselves, either.

We are in a state of unlimited emergency. No one today can say definitely

what the future holds for any of us. Events are moving rapidly, and the pattern of
the future for us will be shaped by these events during the next few months, or even
weeks.

But this we do know: We do not intend to submit to any foreign dictatorship, and to make good that intention WO have got to be strong, spiritually as well
as physically.

226
We are grateful to the men of our armed forces for what they are doing.
Don't let us hesitate to demonstrate that gratitude.

We are proud of them for what they are doing. Don't let us hesitate to
demonstrate that pride.

There is now a great drive for funds, conducted by the U.S.O. - the
United Service Organisations - for the welfare and recreation of the men of our
Army and Navy.

We will contribute - all of us - to the best of our national ability to
the success of that drive.
But contributions of money are not enough.

All the billions of dollars that the Congress has appropriated for
National Defense are not enough. All of the gold buried at Fort Knox is not enough.
We can not buy security.

This is a war in which civilians as well as soldiers and sailors must be
actively engaged.

The war is now being carried right into our own country - into our own
homes - through propaganda, through sabotage, and through the promotion of indus-

trial strife. Every Nasi, every Fascist, every Communist in our midst is actually
fighting this war against the United States.
When a housewife goes to the grocer's to buy some eggs, and learns that
the price has gone up a few cents, she naturally wants to know why. The grocer may

say to her, "Well, they tell me the price is up because the government is shipping

so many eggs to England." Now - that statement is not only false - it is malicious
and dangerous. The grocer who uttered it isn't a Nasi agent, but he is unwittingly
spreading Nazi propaganda - spreading false fear of the consequences of our national
policy.

Every citizen must be on guard against this widespread propaganda of fear

and discontent. That is an essential part of National Defense.
The enemy is striking at our defense through our vital industry. The
Communists are doing their utmost to betray American labor - just as they betrayed

-

227
the workers in France and delivered them into Nazi slavery.

Probably not more than ten per cent of the strikes in our country are
communist inspired. But ten per cent can be of enormous importance. It can be the
one rotten apple which ruins the whole barrel. A ten percent margin in this world
crisis can represent the difference for us between victory and defeat.
If this statement seems exaggerated, just consider what it would mean if
ten per cent of our Army and Navy were under Communist domination.

Our high standard of living - and the rights of free enterprise and free
labor - are among the bulwarks of our democracy which we are sworn to defend.

But - all leaders of capital and labor alike who defy the authority of
our government - who defy the overwhelming will of our people - are actually
Hitler's allies in this war just as the Communists and Fascists throughout the

world are the allies and stooges of the Nazis. In playing Hitler's game, a few
short-sighted leaders of capital and labor are conspiring to cut their own throats.
The vast majority of Americans know this. And they don't like it. And
they won't stand for it.
And when the American people are aroused to anger - let their enemies

beware That applies to enemies at home as well as abroad.
However such we may disagree with each other in normal times on all sorts

of subjects - we are now agreed and determined on this one essential point: we are
going to meet all the demands of this unlimited emergency; we are going to meet
these demands in our own American way, together.

That is the way all Americans have acted, together, throughout our whole

triumphant fight for freedom, since the first men of our first armed forces fired
the shot heard 'round the world..

228

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE June 19, 1941

Secretary Morgenthau

TO

Mr. Kuhn

FROM

Hundreds of companies, many of them nationally known,

have now told us that they have adopted Salary Allotment Plans

for the purchase of Defense Savings Bonds. This is just as
important as the fact that Americans invested $438,000,000 in
Defense Bonds in May. It means that thousands of working people

are starting the systematic, regular buying of stamps and bonds

out of earnings, and doing it of their own free will.
Every one of these Salary Allotment Plans has been adopted

at the request of the employes and with their complete coopera-

tion. Wherever a plant is unionized, the initiative has come
from the union leaders and members.

Attached is a list of a few of the companies that have
already announced Salary Allotment Plans.

Attachment

229
American Telephone & Telegraph Company

Armour & Company

Boeing Aircraft Corporation
Bowery Savings Bank

Federal Reserve Board and all banks and branches

Chrysler Corporation

General Motors
General Electric Company

General Time Instruments Corporation
International Harvester Company
Kraft Cheese Company
Seth Thomas Clock Company

Standard Oil of New Jersey
Sunoco Products Company

United States Steel Corporation & Subsidiaries

United States Rubber Company

Metropolitan Life Insurance Company
New York Life Insurance Company

Lincoln National Life Insurance Company
Jefferson Standard Life Insurance Company
Great American Life Insurance Company
Liberty Life Insurance Company

Chicago & Northwestern Railroad Company
Boston & Maine Railroad

Louisville & Nashville Railroad Company
Seaboard Railway

Texas & Pacific Railway Company

230

DEFENSE SAVINGS STAFF

Secretary Morgenthau
ADVANCE NOTICE RADIO PROGRAMS

Room 280

THURSDAY - JUNE 19

Time:

8:45 - 9:00 A.M.

Program: Hymns of All Churches
Station: WJSV

Time:

3:00 - 3:15 P.M.

Program:

Backstage Wife

Station: WRC

Time:

6:00 - 6:15 P.M.

Program: Fred Waring and his Orchestra
Station: WRC

NOTE: In addition to the above, each of the 868

radio stations in the United States, territories, and possessions are broadcasting

five Defense Bonds and Stamps announcements
each day.

THESE PROGRAMS PROMOTE SALE OF DEFENSE BONDS AND STAMPS.

aboutiath
231
The fifteen most popular radio programs
during the week April 30 to May 6, 1941
ranked according to popularity

:

Program

Sponsor

:

1. Fibber McGee & Molly

S. C. Johnson & Son, Inc.

2, Jack Benny

General Foods Corp.

3. The Chase & Sanborn Program

Standard Brands, Inc.

4. The Aldrich Family

General Foods Corp.

5. Bob Hope Program

The Pepsodent Co.

6. Lux Radio Theater

Lever Brothers Co.

7. Maxwell House Coffee Time

General Foods Corp.

8. Major Bowes Amateur Hour

Chryeler Corp.

9. Kraft Music Hall

Kraft Cheese Corp.

10. One Man '8 Family

Standard Brands, Inc.

11. Walter Winchell

Andrew Jergens Co.

12. Kate Smith Hour

General Foods Corp.

13. Eddie Cantor

Bristol-Myers Co.

14. Mr. District Attorney

Bristol-Myers Co.

15. Fitch Bandwagon

F. W. Fitch Co.

Source: Report No. 5. Vol. XII, issued by the Cooperative
Analysis of Broadcasting - compiled by Crossley, Inc.

232
The fifteen most popular radio programs
during the week April 16 to April 22, 1941
ranked according to popularity

Program

Sponsor

1. Jack Benny

General Foods Corp.

2. Fibber McGee & Nolly

S. C. Johnson & Son, Inc.

3. The Chase and Sanborn Program

Standard Brands, Inc.

4. Lax Radio Theater

Lever Brothers Co.

5. The Aldrich Family

General Foods Corp.

6. Bob Hope Program

The Pepsodent Co.

7. Maxwell House Coffee Time

General Foods Corp.

8. Kate Smith Hour

General Foods Corp.

9. Kraft Music Hall

Kraft Cheese Corp.

10. One Man's Family

Standard Brands, Inc.

11. Major Bowes Amateur Hour

Chrysler Corp.

12. Kay Kyser

American Tobacco Co.

13. Walter Winchell

Andrew Jergens Co.

14. Fitch Bandwagon

F. W. Fitch Co.

15. Eddie Cantor

Bristel-Myers Co.

Source: Report No. 5. Vol. XII, issued by the Cooperative Analysis of Broadcasting - compiled by Crossley, Inc.

233
The fifteen most popular radio programs
during April 1941, ranked according to popularity
Program

Sponsor

1. Jack Benny

General Foods Corporation

2. Fibber McGee and Molly

S. C. Johnson & Son, Inc.

3. The Chase & Sanborn
Program

General Foods Corporation

4. Lax Radio Theater

Lever Brothers Company

5. The Aldrich Family

General Foods Corporation

6. Bob Hope Program

Lever Brothers Company

7. Maxwell House Coffee Time

General Foods Corporation

8. Kate Smith Hour

General Foods Corporation

9. Kraft Music Hall

Kraft Cheese Corporation

10. One Man's Family
11. Major Bowes' Amateur
Hour

Standard Brands, Inc.

Chrysler Corporation

12. Kay Kyser

American Tobacco Co.

13. Walter Winchell

Andrew Jergens Co.

14. Fitch Bandwagon

F. W. Fitch Co.

15. Eddie Cantor

Bristol-Myers Co.

Source: x C.A.B. Set-User Program Report, April 1941, (for period
covered by Report 4)

* cooperative analysis of Broadcasting

RANK

DECEMBER, 1940

NOVEMBER, 1940

OCTOBER, 1940

Jack Benny

32.9

Jack Benny

32.9

Charlie McCarthy

28.8

Charlie McCarthy

31.9

30.4

27.1

Charlie McCarthy

Jack Benny

25.2

29.5

Fibber McGee

Fibber McGee

Fibber McGee

25.9
25.5

Bob Hope

25.0

Bob Hope

26.4

Walter Winchell

24.3

Radio Theatre

23.2

Radio Theatre

26.1

Radio Theatre

Walter Winchell

Walter Winchell

23.9

22.9

22.4

Bob Hope

One Man's Family

20.1

The Aldrich Family

23.1

The Aldrich Family

21.8

One Man's Family

Major Bowes

19.1

Major Bowes

20.3

19.5

17.7

One Man's Family

Major Bowes

Kate Smith

20.1

19.4

We, the People

The Aldrich Family

Kay Kyser

19.6

17.0

17.2

10

Bandwagon

18.5

16.6

Kate Smith

Time To Smile

16.8

11

16.2

18.5

Bandwagon

Edw. G. Robinson

Coffee Time

15.9

We, the People

15.6

Rudy Vallee

17.8

Hit Parade

15.5

Bandwagon

17.7

Coffee Time

15.5

We, the People

17.7

1

2

3

4

5

6

7

8

9

12

Information Please

15.9

14

Kay Kyser

15.5

15

Kate Smith

15.2

13

"FIRST FIFTEEN HOOPERATINGS"
JANUARY, 1941

MARCH, 1941

FEBRUARY, 1941

Jack Benny

36.2

Jack Bermy

37.2

Jack Benny

37.2

Charlie McCarthy

32.2

Charlie McCarthy

32.8

Fibber McGee

33.3

Bob Hope

28.2

Bob Hope

29.6

Bob Hope

29.4

Fibber McGee

27.4

Fibber McGee

29.2

Charlie McCarthy

28.5

Radio Theatre

26.8

Radio Theatre

27.1

The Aldrich Family

27.6

The Aldrich Family

26.3

Walter Winchell

26.9

Radio Theatre

26.2

Walter Winchell

24.8

The Aldrich Family

23.9

Walter Winchell

23.9

Coffee Time

23.4

Major Bowes

21.3

Coffee Time

20.8

Major Bowes

19.8

Soreen Guild Theatre

19.8

Kay Kyser

20.3

Kay Kyser

18.8

Coffee Time

194

Major Bowes

19.8

Bing Crosby

18.6

Kate Smith

19.3

Mr. Distri ct Attrny 19.1

Truth or Consequen. 18.4

Kay Kyser

19.0

Bing Crosby

18.3

Edw. G. Robinson

18.3

Edw. G. Robinson

18.4

Kate Smith

17.8

Kate Smith

18.1

Time To Smile

17.6

Truth or Consequen.

17.7

Bandwagon

17.8

We, the People

16.9

We, the People

17.1

Bob Hope

Kate Smith

Jack Benny
Major Bowes
Coffee Time

APRIL, 1941

Fibber McGee

Time To Smile
Radio Theatre

Walter Winchell

One Man's Family
Edw. G. Robinson
Charlie MoCarthy

The Aldrich Family

Screen Guild Theatre

16.3

Mr. District Attrny 16.2

17.3

17.3

16.7

19.2

17.6

21.2

23.4

27.3

25.7

24.4

30.5

27.8

33.8

Bob Hope

MAY, 1941

Kay Kyser

Jack Benny

Coffee Time

Major Boves
Bing Crosby
Fibber McGee

Guy Lombardo

Radio Theatre
Time To Smile

Walter Winchell

Charlie McCarthy

One Man's Family

The Aldrich Family

Mr. District Attrny

13.6

14.1

13.9

144

14.4

14.6

14,9

15.0

20.5

21,0

21.1

21.7

21.1

22,8

25.5

Bcb Hope

JUNE, 1941
Kay Kyser
Jack Benny

Coffee Time
Fibber McGee

Rudy Vallee
Major Bowes

Bing Crosby

Radio Theatre

Time To Smile

Parker Family

Walter Winchell

Charlie McCarthy

The Aldrich Family

12.5

12.6

13.1

13.5

13.8

14.7
Mr. District Attrny 14.0

15.6

19.3

19.3

20.3

22.5

22.9

25.3

25.3

Bob Hope

Kate Smith

Jack Benny
Major Bowes
Coffee Time

APRIL, 1941

Fibber McGee

Time To Smile

Radio Theatre

Walter Winchell

One Man's Family
Edw. G. Robinson
Charlie McCarthy

The Aldrich Family

Mr. District Attrny

Screen Guild Theatre

16.3

16.2

17.3

17.3

16.7

19.2

17.6

21.2

23.4

24.4

27.3

25.7

30.5

27.8

33.8

Bob Hope

MAY, 1941

Kay Kyser

Jack Benny

Coffee Time

Major Boves
Bing Crosby
Fibber McGee

Guy Lombardo

Radio Theatre
Time To Smile

Walter Winchell

Charlie McCarthy

One Man's Family

The Aldrich Family

Mr. District Attrny

13.6

14.1

13.9

144

14.4

14.6

14,9

15.0

20.5

21,0

21.1

21.1

25.5

22,8

21.7

Bcb Hope

JUNE, 1941
Kay Kyser
Jack Benny

Coffee Time

Fibber McGee

Rudy Vallee
Major Bowes

Bing Crosby

Radio Theatre

Time To Smile

Parker Family

Walter Winchell

Charlie McCarthy

The Aldrich Family

Mr. District Attrny

12.5

12.6

13.1

13.5

13.8

14.7
14.0

15.6

19.3

19.3

20.3

22.5

22.9

25.3

25.3

Bob Hope

Kate Smith

Jack Benny
Major Bowes
Coffee Time

APRIL, 1941

Fibber McGee

Time To Smile

Radio Theatre

Walter Winchell

One Man's Family
Edw. G. Robinson
Charlie MoCarthy

The Aldrich Family

Mr. District Attrny 16.2

17.3

17.3

16.7

Screen Guild Theatre 16.3

19.2

17.6

23.4

21.2

24.4

27.3

25.7

30.5

27.8

33.8

Bob Hope

MAY, 1941

Kay Kyser

Jack Benny

Coffee Time

Major Boves
Bing Crosby
Fibber McGee

Guy Lombardo

Radio Theatre

Time To Smile

Walter Winchell

Charlie McCarthy

One Man's Family

The Aldrich Family

Mr. District Attrny

13.6

14.1

13.9

14.4

14.4

14.6

14.9

21,0

20.5

15.0

25.5

22.8

21.7

21.1

21.1

Bcb Hope

JUNE, 1941
Kay Kyser

Jack Benny

Coffee Time
Fibber McGee

Rudy Vallee
Major Bowes

Bing Crosby

Radio Theatre

Time To Smile

Parker Family

Walter Winchell

Charlie McCarthy

The Aldrich Family

14.7
12.5

12.6

13.1

13.5

13.8

Mr. District Attrny 14.0

15.6

19.3

19.3

20.3

22.5

22.9

25.3

25.3

237
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE June 19, 1941

Secretary Morgenthau

TO

Mr. Kamarok

FROM

Airplane Deliveries

Subject:
Summary

In the latest statement received, a total of 51 airplanes 18 reported as shipped to the British, or somewhat
less than the 60 plane average of the preceding eighteen
weeks. As has been true in the past seven weeks, most of

the airplanes were sent to -the British Isles, 31 going to

the United Kingdom, 10 to the Middle East and 10 to the Far

East.

237
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION

DATE June 19, 1941

Secretary Morgenthau

TO

Mr. Kamarok

FROM

Airplane Deliveries

Subject:
Summary

In the latest statement received, a total of 51 air-

planes 16 reported as shipped to the British, or somewhat
less than the 60 plane average of the preceding eighteen
weeks. As has been true in the past seven weeks, most of

the airplanes were sent to the British Isles, 31 going to

the United Kingdom, 10 to the Middle East and 10 to the Far

East.

238
-2-

Division
of Monetary
Research

Airplane Shipments to the British
(From February 1 to June 15 by air
January 11 to May 24 by sea)

Table A. - Shipments by Area
Total

Latest
Week

Reported
To Date

26

412

To the United Kingdom
Light and medium bombers

Heavy bombers

41

1

Naval patrol bombers
Pursuit

61

4

0
9

Total to United Kingdom
To the Middle East
Light and medium bombers
Pursuit

31

136
275

0

10

Total to Middle East

523

10

411

To the Far East
Light and medium bombers
Naval patrol bombers
Pursuit
Trainers

6

0

0

8

10

133

0

55

Total to Far East

202

10

Totals

Light and medium bombers

Heavy bombers

Naval patrol bombers
Pursuit
Trainers
Grand Total

554

26

41

1

4

69

20

417

0

55

51

1,136

239

-3-

Division of Monetary
Research

Table B. - Shipments by Types
Total
Reported

Latest

To Date

Week

Boeing B-17

21

1

Brewster Buffalo

10

Consolidated Catalina

Liberator

Curtiss Tomahawk
Douglas Boston

4

69

0

20

10

275
114

5

Glenn Martin Maryland

Grumman Martlett II
Lockheed Hudson I

III

Hudson Hudson

133

IV

Hudson V

Electra

North American Harvard II
United Chesapeake

Grand Total - All Types

0

136

0

9

0

1

57

0

18

0

210

19
0

3

55

0

15

2

51

1,136

240
Division of Monetary
Research

Table - Plane Deliveries to the British by Weeks
C.

Light

Week

Ended

and Medium
Bombers

Feb. 8

22

Feb. 15

42

Feb. 22

35

Mar. 1

Naval
Heavy

Bombers

Patrol
Bombers

Pursuit

Total

-

-

3

-

-

-

-

7
5

-

142

27

-

62

-

37

25

16

Mar. 15

26

Mar. 22

17

Mar. 29

25

Apr. 5

21

Apr. 12

21

Apr. 19

20

Apr. 26

23

May 3

61

1

2

May 10

36

1

8

May 17

61

13

May 25

30

10

June 1

28

June 8

37

2

June 15

26

1

4

20

554

41

69

417

3

1

-

4

2

-

3

7

2

2

10

2

5

-

29

-

-

31

22

-

18

-

73

27

41

46

101

-

-

-

4
5

3

-

52

32

-

28

56

15

27

106

3

7

25

100

Mar. 8

.

Trainers

10

-

19

-

25

-

21

-

5

-

55

100
65
59

-

46

-

51

7

55

1,136

The date given is for shipments by air. Shipments by water

start three week earlier. That is, the statement reporting the

shipment of planes by air for the week ending June 15 would report
the shipment of planes by water for the week ending May 24.

241

C

0

DEPARTMENT OF STATE
WASHINGTON

June 19, 1941

In reply refer to
PA 893.51/7224

The Secretary of State presents his compliments to
the Honorable the Secretary of the Treasury and acknowl-

edges the receipt of a letter of May 24, 1941 from Mr.
D. W. Bell, Acting Secretary of the Treasury, requesting
the use of the Department of State's pouch and code serv-

ices for the American group participating in the administration of the recently consummated stabilization arrangement with China.

The Secretary of the Treasury is informed that all
appropriate and necessary telegraphic instructions in the
premises have been sent to Department of State represents-

tives in China.

242
C

CONFIDENTIAL

PARAPHRASE

A strictly confidential telegram dated June 19, 1 p.m. from Fox
through the American Ambassador at Chungking reads substantially as
follows:

General Chiang Kai-shek expressed satisfaction, at a conference
which I held with him on June 14, over further evidence of assistance
coming from the United States. The conference was highly satisfactory.
General Chiang expressed complete agreement with the necessity of

correcting the various economic problems confronting China. He also

agreed with the coordination by the Stabilisation Board of its
activities with remedial measures looking toward correcting pending
economic and financial problems.

Several profitable and informal conferences have been held by the
Chinese members, Fox and Taylor. With the approval of the Minister
of Finance, discussions are proceeding with leading economists and
bankers. The formal organisation of the Board is being postponed

until the reassembly of its members following a short fact-finding
trip of principal Chinese cities to be taken by Frese and the Chinese
members, while Fox and Taylor together with a Chinese economist trained

in the United States visit Shanghai.

COPY - dm - 6/21/41

243
0

0

P

Y

(COPY:AKW;SS)
(COMPARED amf)

COPY via AIR MAIL to STATE DEPARTMENT

Via Air Mail.
AMERICAN CONSULATE GENERAL

Hong Kong, June 19. 1941
STRICTLY CONFIDENTIAL

CONFIDENTIAL.

Subject: Disagreement over appointment
of British Kember of Chinese

currency stabilization board.

The Honorable

Clarence E. Gaues,
American Ambassador,

Chungking, China.
Sir:

I have the honor to repeat for your information certain items from
conversations here regarding the nomination of Mr. Cyril Rogers as the
British member of the Chinese currency stabilization board,
In an informal conversation at a social affair a few days ago Sir
Vandeleur M. Grayburn, chief manager of the Hongicong and Shanghai Bank-

ing Corporation, remarked to me about the absence of Chinese approval
of Mr. Rogers' nomination as British member of the board. He said that

the British interests could readily force the Chinese to accept Mr.
Rogers if they so chose. I did not comment.

On June 18th Mr. Rogers called upon me at the office and unburdened

himself at some length on this subject. I remarked that I had noticed
in the local papers that he was in Chunging. He said this embarrassed
him because he could not go to Chungking until his nomination is approved.
I said that I could not undertake to discuss the matter with him at all,
since Americans have nothing whatever to say about the appointment of
the British member. However, he insisted upon explaining that he had
taken an active part in Washington in arranging that the previous board
should be supplanted by the present one. He said that it really affected
British interests very much because the previous board was strongly backed

244
2

by some of the large British banks which under the new set-up are not
directly connected with the matter except through the British treasury.
He also said that it was his idea to have the Chinese majority on the
board. He added that he had offered Mr. Fox, the new American member,
on more than one occasion the benefit of his tremendous knowledge and
experience of China and felt badly that Mr. Fox had not availed himself

of this offer so far. I replied that Mr. Fox has a high reputation as

an investigator and that while in Hong Kong he expressed his intention

of going thoroughly into various angles of the situation.

Mr. Rogers then said that the question of British representation on
the board has developed into a political incident, that the Generalissimo
"hit the ceiling" when notified of Mr. Rogers' nomination and is supposed
to have said that Rogers is no friend of China. He also added that the
recent visit of British Ambassador Clark-Kerr to Hong Kong was for the
purpose of straightening out this matter. He concluded by saying he
thought it would be unwise for British interests to try to force his
appointment upon the Chinese and therefore considered it unlikely that
he will be on the board.
I later talked over this matter with Mr. A. J. Campbell, American
Treasury representative here, who states that his Chief, Mr. Nicholson,
had informed him from Washington that the original idea had been to
have an American majority on the board and that Mr. Rogers' idea of
having a Chinese majority was presunably to prevent the American domina
tion of the board. Both Mr. Campbell and I are of the opinion that Mr.
Rogers' own actions, including his lack of tact, are probably responsible
for the present embarrassing position in which he finds himself, and
ve are not inclined to sympathize with him.
Reference is also made to this office's telegram Number 502 of
December 27. 5 p.m., 1940 (two sections).
Respectfully yours,
JOHN H. BRUINS

American Consul

Copy to Department by airmail
Copy to Embasey, Peiping by safe means
800/851.5/030
JHB:MM

Copytalm 7-28-41

COPY

245
EMBASSY OF THE

CONFIDENTIAL

UNITED STATES OF AMERICA

No. 36

Chungking, June 19. 1941.

Subject: Suggestions for a Deflation Policy as a
Means for Improving the Price Situation.
Air Mail
CONFIDENTIAL

The Honorable

The Secretary of State,
Washington, D. C.
Sir:

I have the honor to refer to previous despatches
regarding rising prices and to submit the following
views advocating deflation as a means of improving the
price problem and general economic situation.

At present China faces the difficulties of increasing
expenditures, reduced income and shortage of merchandise.

In order to meet current government expenses it has been
necessary to resort to inflation which has thrown more
money into circulation in a market with too much currency

in circulation already.

Persons acquiring large sums of currency find difficulty in disposing of it either by spending or investment.

As mentioned before there is a shortage of commodities on
which money can be spent and an insufficient opportunity
for investment due to blockade conditions. Although every
inducement is made to encourage industrisliration there

is a hesitancy upon the part of persons holding sufficient

capital to start industrial enterprises due to the time

required to obtain the necessary machinery, if obtainable

at all, to start operations. As a result of the lack of

profitable investment opportunities there developed the
tendency to invest in rice which is the most speculative
commodity in unoccupied China today. In addition there
continued to be a steady flow of idle capital to Shanghai.

-2-

246

It is obvious that inflation and currency problems

have had an important bearing on commodity prices and any

attempt made at price control by itself will not solve the
to improve the financial situation.

problem unless it is accompanied by some effective effort

It is the belief of some well informed bankers and
officials (whose opinions are regarded highly) that the
best way to improve the currency is to pursue a deflation

policy. It is agreed that the fapi note issue is too

large and should be reduced and the only way to accomplish

any reduction is to offer the holders of this currency

something they are willing to accept in exchange. Since
it appears impossible to obtain any appreciable increase
in consumers goods for this market due to transportation

difficulties and to inability to expand domestic production, the only alternative is to establish a free exchange
market and to offer foreign exchange in return for fapi.
The aim of a free exchange market should be to absorb

large quantities of idle capital now in the form of fapi

and thus reduce the amount of currency in circulation. In
order for this policy to be most effective there should be
no attempt to maintain the exchange rate at the present
level or to increase the value of fapi in terms of foreign
currencies. A further decrease in the value of fapi in
terms of United States dollars would tend to accomplish
the purpose much quicker and hasten deflation. The advo-

cates of this policy feel certain that holders of large

sums of fapi would exchange it for United States currency

which they would hold. It would provide an outlet for

the speculative factor which is now absent in unoccupied

China.

The pursuance of a financial policy along the broad
lines outlined above would, according to its adherents,
undoubtedly remedy the price situation. Not only would
prices react to deflation but the hoarders of rice would
be given another outlet for investment. It is believed
that important hoarders of rice would sell their stocks
of rice and use the proceeds for purchasing foreign exchange.

The question regarding the amount of United States
currency that would be required to follow this policy Central was

discussed with one of the American advisers to the a

Bank of China. He has been a strong advocate of such
for some time and feels confident that between

$10,000,000 course and $15,000,000 (United States currency) conduct per

month would be the maximum amount required to
such operations.

247
-3-

The suggestions advanced by the adherents of a de-

flation policy deserve consideration. From a purely
theoretical standpoint the desired results should be obtained but there are so many other factors that must be
taken into consideration that it might be necessary to
make certain changes in the policy if it were adopted.
Should a plan similar to the one discussed above be
adopted it would require the utmost cooperation of every
agency under the Ministry of Finance as well as a genuine
attempt to improve the nation's finances if successful
results are to be obtained.
Respectfully yours,
C. E. GAUSS

Original and one copy to the Department by air mail
Three copies to the Department by pouch
One copy to Consulate General at Shanghai
One COTY to the Embassy at Peiping
JJM/Wr
850

Copythr:bj:8-19-41

248
0

0

P

ML

GRAY

Berlin
Dated June 19. 1941

Rec'd 5:25 p.m.

Secretary of State
Washington

2440, June 19. 4 p.m.
The DIENST AUS DEUTSCHLAND tonight in discussing the

freezing of assets in the United States argues that in
addition to suffering far greater immediate harm through

unspecified Axis counter-measures than the injury inflicted
on Italy and Germany the United States has by this action

abused and therefore lost the confidence placed in its
entirety by various European countries as a trustee of funds

just as England allegedly lost that confidence by arbitrary

financial measures in the last war. Besides this it asserts
the Latin American Countries for which the banking function
of the United States was "a community function of the new

world vis a vis a part of the old world" can now only con-

clude and further "the United States has forfeited its
stewardship in economic relations between the new and old

worlds and the countries affected must create almost
complete

249

ml -2- Telegram from Berlin, 2440. June 19. 4 p.m.

complete channel for payment or clearing of claims deriving
from trade".
It is apparent that Germany has been attacking and

will now intensify its attack on American financial policy
in its propaganda to occupied European countries as well

as to South America. It is also probable that German
representatives will use every opportunity in any dealings
they might have with governmental and business leaders in

Latin America to argue along the lines indicated by the

DAD in an effort to hold out to them the prospect of a profitable trade under a system in which Berlin would have
supplanted London and New York as a financial center in
case of a German victory.
Inform Treasury.
MORRIS

WSB

Copyilg 6-23-41

250
0

0

DEPARTMENT OF STATE

P

WASHINGTON

Y

In reply refer to
EA 840.51 Frozen Credits/1950
June 19. 1941.

The Secretary of State presents his compliments to
the Honorable the Secretary of the Treasury and encloses

two copies of telegram no. 839 dated June 18, 1941 from
the American Embassy at Rome, regarding an Italian decree

freezing American properties held in Italy.
Enclosure:

No. 839. June 18,
from Rome. (2)

251
COPY

RS

PLAIN
Rome

Dated June 18, 1941

Rec'd 6:50 p.m.

Secretary of State,
Washington.

839, Eighteenth.
Embassy's No. 830, June 16, 1 p.m.

Regulations for the "freezing" of American properties

held in Italy'are contained in a decree in eight articles
published in the Official Gazette of June 17. In substance
these articles proved as follows:

One. Italians, except those living in the United States,
may not pay debts due to American citizens or carry out

obligations to deliver to them securities or other property.

Foreigners living in Italy are subject to a similar prohibition. If such foreigners live elsewhere, the prohibition
applies as regards American property held by them in Italy.
Two. Americans may not dispose of credits or property

(including real property) in Italy.
Three. Persons and corporate bodies of Italian nationality
domiciled in Italy must, within twenty days from the date of
the decree, declare their indebtedness to American citizens and
property held by them belonging to American citizens. Persons
of whatever nationality must make analogous declarations as regards

property held by them in Italy belonging to American citizens; also

-3-

252

as regards indebtedness to Americans arising from business conducted

in Italy.
Four. The prohibitions under article one are not applicable to
American citizens residing in Italy on the date of the decree.
Five. In cases of demonstrated necessity or for other special
reasons payments and transaction may be authorized in derogation of

the provisions of the decree.
Six. Violation of the prohibition against making payments or
delivering property is punishable by imprisonment up to three years
and by fines equal to five times the value of the payment made or

property delivered with a minimum of 10,000 lire. Lesser fines are

provided for violation of other provisions of the decree.
Seven. Provides for issuance of supplementary regulations.

Eight. Prescribes immediate entry into effect and usual miscellaneous technicalities.
From inquiry of officials concerned with the enforcement of the
decree the Embassy learns that many details as to its application

are still under study. In principle, it was repeated, the treatment
accorded Americans will depend on the treatment accorded Italians

in the United States pending the issuance of further clarifying orders.
The block on deposits in the name of Americans (including the Embassy
deposits with the American Express Company) has not been lifted.
PHILLIPS
RWR

Copy:bj:6-19-41

81 MI

253
C

0

DEPARTMENT OF STATE

P

WASHINGTON

Y

June 19, 1941

The Secretary of State presents his compliments to the
Honorable the Secretary of the Treasury and encloses two
copies of telegram no. 98 dated June 18, 1941 from the

American Legation at Bern, Switzerland, regarding a conversation between a representative of the Consulate General

at Zurich and the President of the Supervision Board of the
Swiss National Bank on the latest executive order freezing
foreign assets.

Enclosure:

No. 98, June 18,
fromBern.

254
COPY

TELEGRAM

BERN

Dated June 18, 1941
Rec'd 2 p.m.

Secretary of State,
Washington.

98, June 18, 3 p.m.
President of Supervision Board of Swiss National Bank
(Bachmann) had conversation yesterday with representative of

Consulate General at Zurich. He expressed gratification that
neutral position of Switzerland had been recognized under the

latest executive order freezing foreign assets; he referred to
the bank's own investigations to determine "legitimate character"

of transactions in which it has accepted funds in dollars from
commercial banks and stated the bank did not want to load up

further wi th dollars if that could be avoided and that he
hoped it would not have to give a general guarantee covering

dollar transactions of individual Swiss banks but that each
bank would secure approval independently.
HARRISON

AUG

Copy:bj:6-19-41

255

of

TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION

DATE June 19. 1941.
TO

Secretary Morgenthan

FROM Mr. Cochran

CONFIDENTIAL

Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
Purchased from commercial concerns

249.000
£14,000

Open market sterling moved from an initial quotation of 4.03-1/2 to 4.03-1/4
at the close. Transactions of the reporting banks were as follows:
Sold to commercial concerns
Purchased from commercial concerns

-0£22,000

The Argentine free peso closed at .2375. as compared with .2380 last night.
The Cuban peso improved to 1% discount, as against yesterday's quotation of
1-3/16%

In New York, closing quotations for the foreign currencies listed below were
as follows:
Canadian dollar

11-7/8% discount

Uruguayan peso (free)

.0505
.4265
.2070

Brazilian milreis (free)
Mexican paso

In Shanghai, the yuan was quoted at 5-7/16 off 1/32 Sterling was 1/4

lower at 3.92.

There were no gold transactions consummated by us today.
No new gold engagements were reported.

A price of 23-7/16d was again fixed in London for both spot and forward silver,
equivalent to 42.55
The Treasury's purchase price for foreign silver was unchanged at 35 Handy
and Harman's settlement price for foreign silver was also unchanged at 34-3/4*
There were no silver purchases made by us today.

256

-2The report of June 11 received from the Federal Reserve Bank of New York

giving foreign exchange positions of banks and bankers in its district, revealed
that the total position of all countries was short the equivalent of $6,681,000,
a decline 'of $468,000 in the short position since June 4. Net changes were as
follows:
Short Position
Country
England**
Europe
Canada

Latin America
Japan

Other Asia

All others
Total

Short Position

June 4

June 11

$ 729,000
3,250,000
199,000 (Long)
552,000
983,000

498,000
373,000

1,862,000

28,000 (Long)
$7,149,000

$1,120,000
3,211,000
372,000 (Long)
1,883,000
32,000 (Long)
$6,681,000

Change in

Short Position®
+ $391,000

- 39,000

- 173,000

- 54,000

- 610,000

+ 21,000

- 4,000
- $468,000

*Plus sign (+) indicates increase in short position, or decrease in long position.
Minus sign (-) indicates decrease in short position, or increase in long position.
**Combined position in registered and open market sterling.

mm

CONFIDENTIAL

257
BRITISH EMBASSY,
WASHINGTON, D.C.

19th June, 1941

PERSONAL AND
SECRET

Dear Mr. Secretary,

I enclose herein for your personal
and secret information a copy of the
latest report received from London on

the military situation.
Believe me,

Dear Mr. Secretary,

Very sincerely yours,

Usuk Brother
The Honourable

Henry Morgenthau, Jr.,
United States Treasury,
Washington, D.C.

258
TELEGRAM RECEIVED FROM LONDON JUNE 17TH, 1941.

1.

Photographs of Broat P.M. June 16th show floating
orane alongside starboard bows of Scharnhoret. Uneisenau

had dockside orane working on port side. Four mines were
detonated off English coast June 16th, thirteen moored mines
were cut in Lyme Bay.
2.

June 16th six Blenheims with fighters attacked Boulogne.
Our fighters destroyed eleven enemy aircraft, probably
destroyed six, and damaged five. All but one were M. B.

109's, two of our bombers failed to return and we lost five
fighters, three fighter pilots were saved.
3.

Night of June 16th - June 17th, we despatched 222

aircraft to Coblens, Cologne, Dusseldorf, Duisberg, Boulogne
and Dunkirk. Four bombers overdue.
4.

Libya and Egypt Advance by three British columns

commencing June 15th, number of aircraft captured at Capuezo

and Bir Waer. Attack on Halfaya Pass repulsed. Loft hand
column captured sidi Omar and attacked Bir Hafid penetrating

defences and inflicting casualties. Daylight June 16th
coastal column resumed attack on Halfaya Pass capturing

high ground overlooking Pass, against heavy opposition.
Since beginning of operations our forward troops immune

from air attack.
5.

Syria. June 15th. Tomahawks successfully attacked

corps of cars and trucks at Isra and shot down two enemy

aircraft. Hurricanes protected naval units, shot down
another and in Kiswe area four Gladiators engaged twelve
French fighters destroying one and probably a second.

Three of our fighters are missing. By June 16th our troops

259

on the right captured Kiswe. Jebel Madani captured and
Aatous being attacked. Defensive detachment covering right

flank of the forces engaged in this sector. Vichy forces
reinforcing Eara which they still hold and their A.F.V.'s
and cavalry are reported on the road south east of Quneitra.
Advance in coastal sector continuing up coastal road.
6.
Home. of about 30 enemy aircraft over United
Kingdom night of June 16th - June 17th, three shot down

by night fighters.

260
RESTRICTED

G-2/2657-220

No. 421 M.I.D., W.D.

12:00 N., June 19, 1941,

SITUATION REPORT

I.

Western Theater

Air: German. Attacks last night by an estimated

50-100 planes on Yarmouth and on airfields in southeastern

England.

British. Normal night attacks last night on

ports in northwest Germany and on Brest. During daylight of
the 18th, British bombing raids across the Channel again

resulted in air fighting.
II.

Mediterranean and North African Theaters.

Ground: No Axis pursuit of the British forces with-

drawing from the Sollum area.

Air: Normal raids on Alexandria, Tobruk, Mersa-Matruh

and Benghazi.

III. Syria
No important changes in the situation.

RESTRICTED

CONFIDENTIAL

261

Paraphrese of Code Cablegram
Received at the Was Department

at 12:57, June 29, 1941.

Lanten, filed June 19, 1941, 19:02.

1. British Air Activity Over the
&. Eight of June 17-18. 1600 insentiaries and 64 tens of high
explosive busbe were dropped by British bombare - the continent.

b. The St. Omer area was attached by s boubers
protested by 84 fighters. Over the low countries and obsamel areas patrels

of offensive and defensive nature were carried out by 10 fighter
The Lassow was observed at Kiel by British recommissionee aircraft. Mines
were laid and shipping attacked in the channel areas by planos of the

constal 2.

Right of these 18-19. 65 bembers attached as Breat and 98

went to Brown.

2. Serves Air Activities Over Britain.
a. Day of June 17. Guarange operated against England with

long reage bombers and - aircraft, 20 of each. Defensive
fighters operated during the day ambured 190.

1. High of June 17-18. 20 long reage because 30 persuits
and 20 mine laying aircraft operated against Regists
2.

Day of June 18. off the French, Dates, and Belgian consta

the operated strong defensive patrols. In the area of Start Bay
5 aircraft were observed.

4. Hight of Jane 18-19. In the area of the Reglish east coast
operations - a small seals were earried out.
INFORMATION COPY

CONFIDENTIAL

CONFIDENTIAL

262

3. Aircraft Logosa Recented
a.

3 Spitfiree and - Barriesse were lost.

2.

British fighter egistrone abot down two M-F's, with 6

probable. Also destroyed were 7 NE-109's. other operations resulted

in the destruction of two 0-50's, two JU-ST's - four NE-109's.

4. Other Territories.

a. " JV-87's were - by
fighters in Seller area. 10 of the - aircraft were reported destroyed.
5. Anta Air Activities. Other
a. No operations reported other then those in the Seller area.

Distributions
Secretary of War
State Department

Secretary of Treasury
Union Secretary of War

Shief of Staff

War Plans Division

office of Nevel Intelligence

0-3
Air George

CONFIDENTIAL