The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
237
-5-
PM 614
§ 1306.56, APPENDIX A, Basing Point Base Prices for Pig Iron (Per Gross
Ton - 2,240 lbs.); Switching Charges: Certain Differentials.
Bethlehem, Pn.
Everett, Mass.
Swedeland, Pa.
Steelton, Pa.
Bridsboro, Pa.
Sparrows Point, Md
Erie, Pa
Neville Island, Pa.
Sharpsville, Pa.
Buffalo,
Chicago
Granite City, Ill.
Cleveland
Hemilton, Ohio
Toledo, Ohio
Youngstown
Detroit,
Basic
Bessemer
Malleable
$25.00
$24.50
$26.00
$25.50
25.00
25.00
26.00
26.00
25.50
25.50
-
-
25.00
25.00
24.50
24.50
24.50
24.50
24.50
26.00
25.50
24.00
24.00
24.00
24.00
23.50
23.50
23.50
23.00
25.00
24.50
24.50
25.00
24.50
24.00
24.00
24.50
24.00
24.00
23.50
23.50
24.50
24.50
24.00
24.00
24.00
24.00
24.00
24.00
24.00
23.50
23.50
23.50
23.50
23.50
24.50
24.00
24.00
24.00
24.00
24.00
-
Birmingham
24.50
20.38
Provo, Utsh
22,00
Duluth
Low
No. 2
Foundry
-
-
-
19.00
-
24.50
24.50
24.50
25.00
25.00
Phos.
$-
-
29.50
29.50
-
24.50
-
-
-
-
29.50
-
-
-
-
-
-
-
-
-
-
-
-
-
HIGH-SILICON, SILVERY
(Base Silicon 6.00 percent to 6.50 percent)
$29.50
Jackson County, Ohio
Buffalo, New York
GRAY FORGE
Valley or Pittsburgh Furnace
CHARCOAL
Lake Superior Furnace
Lyles, Tenn. High Phos. Furnace
Lyles, Tenn. Low Phos. Furnace
30.75
23.50
$28.00
28.50
33.00
238
PM 614
-6Switching Charges. Basing Point Base Prices are to be subject to an addi-
tional charge for delivery within the switching limits of the respective dis-
tricts.
Silicon Differentials. Basing Point Base Prices are to be subject to an additional charge not to exceed $0.50 a ton for each 0.25 percent silicon content in excess of base grade (1.75 percent to 2.25 percent).
Phosphorous Differential. Basing Point Base Prices are to be subject to a
reduction of $0.38 per ton for phosphorous content of 0.70 percent and over.
Manganese Differentials. Basing Point Base Prices are to be subject to an
additional charge not to exceed $0.50 a ton for each 0.50 percent manganese
content in excess of 1.00 percent.
Exception. Pittsburgh Coke and Iron Company (Sharpeville, Pa. Furnace only)
and the Struthers Iron and Steel Company, Struthers, Ohio, may charge $0.50
a ton in excess of Basing Point Base Prices for No. 2 Foundry, Basic, Bessemer
and Malleable.*
239
OFFICE FOR EMERGENCY MANAGEMENT
Office of Price Administration and Civilian Supply
For Immediate Release
PM 616
June 25, 1941
An additional amendment has been made to Price Schedule No. 4,
establishing maximum prices for scrap iron and steel, according to an
announcement by Leon Henderson, Administrator, Office of Price Administration and Civilian Supply.
The change, which became effective as of June 21, 1941, is
designed to simplify the schedule in respect to switching charges of 84
cents per gross ton on scrap originating from railroads operating in Chicago.
Previously, it had been required that this charge be deducted
from the maximum price of scrap when sold by railroads operating in
Chicago to consumers located outside of Chicago. The latest amendment elim-
inates this deduction and, instead, permits Chicago consumers of scrap
originating from railroads operating in Chicago to pay as much as 84 cents
per gross ton in switching charges above the maximum prices set up for scrap
from this source,
Text of the amendment is attached.
240
PM 616
TITLE 32-NATIONAL DEFENSE
CHAPTER XI--OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY
Part 1304 - Iron and Steel Scrap
Amendment to Pri ce Schedule No. 4
1304.17 Appendi x B. Maximum Prices for Iron and Steel
Scrap Originating From Railroads
Section 1304.17, issued June 18, 1941, is hereby
amended by striking out footnote a/ of Paragraph I thereof,
and inserting in its stead the following:
"a/ Where the railroad originator of the scrap
operates in two or more of the Basing Points
named above, the highest of the maximum prices
established above for such Basing Points shall
be the paximum price of the scrap delivered to a
consumer's plant at any point on the railroad's
line."
This amendment is issued pursuant to the authority
contained in Executive Order 8734, 6 F. R. 1917.
Issued this 21st day of June, 1941.
Leon Henderson
Administrator
CERTIFIED TO BE A TRUE COPY OF THE ORIGINAL
/s/ John E. Hamm
John E. Hamm, Deputy Administrator
241
TREASURY DEPARTMENT
As
INTER-OFFICE COMMUNICATION
DATE June 27, 1941
Secretary Morgenthau
TO
Mr. Kamarck
FROM
Subject:
Airplane Deliveries
Summary
A total of 84 planes is reported as shipped in the last
statement received. 46 were Curtiss P-40's sent to the Middle
East. In contrast to the usual destination of Takoradi,
these Tomahawks were shipped to Port Sudan (a port of the
Anglo-Egyptian Sudan on the Red Sea).
242
-2-
Division
of Monetary
Research
Airplane Shipments to the British
(From February 1 to June 22 by air
January 11 to May 31 by sea)
Table A. - Shipments by Area
Total
Reported
Latest
Week
To Date
28
440
o
41
3
64
0
9
To the United Kingdom
Light and medium bombers
Heavy bombers
Naval patrol bombers
Pursuit
554
31
Total to United Kingdom
To the Middle East
Light and medium bombers
Pursuit
136
321
o
46
46
Total to Middle East
457
To the Far East
Light and medium bombers
Naval patrol bombers
Pursuit
Trainers
6
o
9
1
139
6
55
0
Total to Far East
209
7
Totals
28
582
Heavy bombers
0
41
Naval patrol bombers
4
Light and medium bombers
Pursuit
Trainers
Grand Total
73
469
52
55
0
84
1,220
243
-3-
-
Table B.
Division
of Monetary
Research
Shipments by Types
Total
Reported
Latest
To Date
Week
21
O
Boeing B-17
Brewster Buffalo
6
139
Consolidated Catalina
4
73
Liberator
Curtiss Tomahawk
Douglas Boston
Glenn Martin Maryland
Grumman Martlett II
0
20
46
321
10
124
136
O
9
0
1
Lockheed Hudson I
Hudson III
Hudson IV
Hudson V
Electra
North American Harvard II
0
57
0
18
0
224
14
O
3
0
55
4
19
United Chesapeake
Grand Total - All Types
84
1,220
244
-4
Division of Monetary
Research
Table C. - Plane Deliveries to the British by Weeks
Naval
Light
and Medium
Week
Bombers
Ended
Heavy
Bombers
Patrol
Bombers
Pursuit
Feb. 8
Feb. 15
Feb. 22
Mar. 1
Mar. 8
Mar. 15
Mar. 22
Mar. 29
22
-
42
-
-
100
-
-
5
Apr. 5
Apr. 12
Apr. 19
Apr. 26
21
May 3
May 10
61
35
Total
25
-
3
-
-
142
27
-
62
25
-
37
7
16
26
-
10
3
29
-
31
-
-
4
1
17
-
25
-
21
22
2
18
3
7
27
2
2
41
-
46
101
-
73
-
-
52
-
32
-
20
23
36
*
May 17 *
May 25 *
4
5
3
3
2
g
1
13
30
10
28
June 8
June 15
June 22
37
15
2
1
61
June 1 *
10
19
7
-
25
21
5
26
2
28
4
1
-
41
56
27
106
55
-
100
-
65
59
-
-
46
-
7
4
*
28
5
*
582
.
-
Trainers
73
20
52
469
-
-
55
The date given is for shipments by air. Shipments by
water start three weeks earlier. That is, the statement
reporting the shipment of planes by air for the week ending June 22 would report the shipment of planes by water
for the week ending May 31.
51
84
1,220
ADDRESS THECOMMANDANT.U.S.COAST GUAR
AND REVER TO NE
TREASURY DEPARTMENT
UNITED STATES COAST GUARD
WASHINGTON
HEADQUARTERS
From:
Spagent, Shanghai, China.
To :
Secretary of the Treasury.
27 June, 1941.
Message from Mr. Fox.
I found Hall Patch on board ship. I understand that he was
scheduled to go to Singapore, but at the last moment he was ordered to
proceed to Shanghai. In a general discussion the first night out, he
revealed that the Pritish were still working on Rogers appointment to
the board - "They were working on a number of appeals." also stated
very positively that the board could not organize without a British momber. In Hongkong Rogers asserts that "the board cannot organize without
me." These assertions are believed to be based upon some letter passed
between the American and British governments, the existence of which we
do not know, and a copy of which we have not seen yet to the effect that
only a single stabilization board will be organized. It is our impression that under the terms of the American agreement, a board of three
Chinese and one American can formally organize, and that for all prac-
tical purposes, four constitutes a quorum. In view of the cautiousness
of the Chinese members and of the position taken by the British and their
apparent desire to delay the formal organization in order to force the
appointment of Rogers, request legal opinion about this issue and sugges-
tions for organization without a British member if necessary. A formal
request for this information is being forwarded thru regular diplomatic
change
ls. Request reply at Hongkong or Chungking upon our return from
-2-
1.
The present plans are that Taylor and I will spend
about ten days in Shanghai and about four in Hongkong before
returning to Chungking.
247
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE June 27, 1941
TO
FROM
Secretary Morgenthau
CONFIDENTIAL
Mr. Cochran
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
Purchased from commercial concerns
244,000
£31,000
Open market sterling opened and closed at 4.03-1/2, and there were no
reported transactions.
Cancelling yesterday's decline, the Canadian dollar moved from 11-15/16%
discount to 11-3/4% at the close.
In New York, closing quotations for the foreign currencies listed below
were as follows:
Argentine peso (free)
Brazilian milreis (free)
Uruguayan peso (free)
Mexican peso
Cuban peso
.2375
.0505
.4450
.2070
1-3/16% discount
In Shanghai, the yuan moved off 1/32 to 5-3/8. Sterling was 1/4# lower
at 3.91-1/4.
Nominal Swiss franc-dollar rates have been received daily from Zurich since
June 14. As compared with an actual Zurich quotation equivalent to .2320-1/2
(middle rate) on the latter date, the nominal quotation in that center has since
moved up to 2322-7/8 and, this morning, back to .2320-7/8. In response to an
inquiry yesterday from a New York bank as to whether the Swiss National Bank would
accept dollars here and pay out the equivalent in Swiss france to cover commercial
transactions, the National Bank cabled back that there was no actual market for
dollars there, and that they were not buyers of dollars at present, "owing to
enbargo."
It was reported that, on June 25, some transactions in Portuguese escudos
took place in New York at the rates of .0402 and .0402-1/2, under appropriate
Foreign Funds licenses, These rates were a matter of private negotiation, and not
"market quotations" in the technical sense. The last actual market rate quoted for
the escudo was .0401 on June 14.
There were no gold transactions consummated by us today.
248
-2The Federal Reserve Bank of New York reported that the Central Bank of the
Colombian Republic shipped $2,116,000 in gold from Colombia to the Federal for
its account, disposition unknown.
In London, the price fixed for spot and forward silver was unchanged at
23-3/88, equivalent to 42.44
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 34-3/44.
We made one purchase of silver amounting to 31,000 ounces under the Silver
Purchase Act. This silver, bought for spot delivery, consisted of secondary
materials.
CONFIDENTIAL
pm.
249
BRITISH EMBASSY,
WASHINGTON, D.C.
27th 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,
Halifax
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D.C.
250
is
TELEGRAM RECEIVED FROM LONDON JUNE 25TH. 1941
Naval. During air raid on Alexandria June send .
1.
June 23rd, Warspite slightly damaged by near miss.
British Yusang Shanghai to Hong Kong intercepted
2.
off Suntow boarded by armed party from Japanese auxiliaries.
After search the master signed statement under protest,
that he had no objection to the visit.
June 23rd two Blenheims attacked 8,500 ton
3.
ship near Kerkenah. No direct hits seen but crow took
to the boats. Further force of Blenheims sent to sink her.
4. Military, Libyn, Enemy's A.F. V's in frontier
area estimated 200.
5.
Syria. Palmyra still held by Vichy-French, almost
surrounded. Damasous areat Free French attacked from
Barse successfully, Astride Demasous-Beyrouth road.
Our cavalry have occupied Deir Qanoun 12 miles N.W. of
Damascus, infantry brigade has advanced 10 miles from
Damascus from Beyrouth road capturing 9 tanks and 3
other A.F.V.'s. Merjayoun: our advance progressing.
Coastal areas Naval units cooperating with our troops
in bombarding Vichy positions about Damour. Resistance
encountered in Syria has been considerably stiffer than
was anticipated but it is thought that the reserves,
particularly material, must now be running short.
Royal Air Force. June 24th, evening, 243 aircraft
6.
operated over France. 19 squadron fighters provided
escort and support for 15 bombers attacking .... power
station. 9 enemy fighters destroyed, 7 possibly destroyed,
5 damaged. All bombers returned safely, 2 Spitfires lost,
7. Night
/
7.
Night of June 24th - June 25th. 137 bonbers
despatched to Cologne, Kiel, Dasseldorf, Enden,
Boulogne, shipping off Norway. 3 missing. In attack
on Cologne railway centre 34 tons of high explosives
including sixteen 1,000 pound and 5,700 incendiaries
dropped on the main railway station Cologne 21 tons
of high explosives including 16 1,000-lb. and 3,500
incendiariest on Dusseldorf main railway station
39 tons high explosives including 2 4,000mlb. and
38 1,000-lb. and 4,300 incendiaries; Deutsche Schiff
shipyards Kiel 17 tons high explosives including 7
1,000-1b. and 800 incendiaries; shipyards Kiel 16
tons H.S. including 7 1,000-lb. and 700 incondiaries
8.
Libya. June 24th. 20 enemy transport
vehicles destroyed at Agedalam by fighters.
9.
Syria. June 23rd. Hurricanes operating at
Ras Baalbek Talwa and Rayak destroyed seven Vichy=
French aircraft and damaged many others. 3 of
ours missing.
251
CONFIDENTIAL
TENTATIVE LESSONS BULLETIN
No. 126
MILITARY INTELLIGENCE DIVISION
WAR DEPARTMENT
G-2/2657-235
Washington, June 27, 1941
NOTICE
The information contained in this series of bulletins
will be restricted to items from official sources which are
reasonably confirmed. The lessons necessarily are tentative
and in no sense mature studies.
This document is being given an approved distribution,
and no additional copies are available in the Military Intelligence Division. For provisions governing its reproduction
see Letter TAG 350.05 M.I.D. (9-19-40) M-B-M.
COORDINATION OF COMMAND IN GERMAN
ARMED FORCES
SOURCE
This bulletin is based upon information submitted on April
26, 1941, by an American official observer in Berlin.
CONTENTS
1. GENERAL
2. ORGANIZATION OF GERMAN ARMED FORCES
3. SELECTION OF LEADERS
4. PRACTICAL ILLUSTRATIONS OF CAMPAIGNS
a. Polish
b. Scandinavian
C. Western Front
5. CONCLUSIONS
CONFIDENTIAL
-1-
252
CONFIDENTIAL
COORDINATION OF COMMAND IN GERMAN
ARMED FORCES
1. GENERAL
With the possible exception of those of the last year of the
World War, the modern military operations of the present war are much
wider in scope, both geographically and in the employment of means,
than any other in recent history. Germany is probably the foremost
military power in the world at the present time, and much can be
learned from a study of the methods she has used to obtain coordina-
tion of effort.
She may be regarded as a powerful nation organized in every
respect and to the smallest detail for one purpose: the prosecution
of war. She is a great machine of many parts and sections, all under
coordinated control and all headed by one central authority - Hitler.
The organization of Germany can be considered under two
general headings: the military front, and the home front. Coordination of command and effort of military forces will be discussed in
detail in this report. Of the home front, it is enough to say that
it is as well organized and controlled as the military front, largely
through the several agencies of the Nazi Party. There are many dissatisfied elements in Germany, particularly in the occupied territories, but the German Nazi control is 80 strong that those elements
are helpless and will remain 80 until superior force from some other
source can neutralize the national domination.
In general, the organization of the German nation can be
presented as follows:
Personal Staff
of
Adolph Hitler
:
:
:
:
:
PROPAGANDA:
:
Goebbels :
FOREIGN AFFAIRS
MILITARY
Ribbentrop
Keitel
:
:
:
:
Funk
:
FINANCES
POLICE
Himmler
LABOR
MUNITIONS
Ley
Todt
CONFIDENTIAL
-2-
:
Goering
Hess
:
PRODUCTION NAZI PARTY
253
CONFIDENTIAL
The various agencies work together for the total national
effort under the personal leadership of Adolph Hitler.
2. ORGANIZATION OF GERMAN ARMED FORCES
The German Armed Forces are composed of an army, a navy,
and an air force. Each branch has its own distinctive uniforms
and insignias.
The Armed Forces are commanded personally by Hitler, who
is the Commander-in-Chief General Field Marshal Keitel is his
Chief of Staff. General Jodl is Keitel's executive and deals
directly with Hitler on some details.
The main purpose of the highest echelon of command and
organization is to coordinate operations of the three branches of
the military service, and to coordinate, in conformance with
national aims, the effort of the armed forces as a whole with
the other branches of the Government.
The following chart illustrates the organization of the
German Armed Forces:
Commander-in-Chiet
HITLER
:
:
Armed Forces General Staff
Chief of Staff
KEITEL
:
:
Navy
Comdr.
Comdr.
:
:
Chief of Staff
HALDER
:
Army General Staff
RAEDER
:
von BRAUCHITSCH
Navy General Staff
Chief of Staff
SCHOLTE MOENTING
CONFIDENTIAL
-3-
Air Force
Comdr.
GOERING
:
:
:
Army
Air Force General Staff
Chief of Staff
JESCHONNEK
254
CONFIDENTIAL
The outstanding characteristic of the Nazi military operations
has been the remarkable coordination of effort of the Army, Navy, and
Air Force. This coordination operates internally as well within each
of the services, and it extends down to all units and is an inherent
and indispensable requisite to the functioning of the German military
machine.
Hitler himself has some background as a soldier, but ordinarily
he does not personally command active operations. Nor does his own
General Staff, which incidentally is quite small, exercise direct con-
trol over any operations. Hitler's principal function is to allocate
the authority needed to ensure unity of command, and the purpose of
his General Staff is to make certain that the three services function
smoothly together according to the plan adopted.
In accordance with usual general staff procedure, the German
General Staff, under directions issued, or at least approved by the
Commander-in-Chief, has prepared plans for every possible campaign,
covering every conceivable capability and eventuality. The joint
General Staff, headed by Keitel, coordinates the planning assigned
to, and executed by, the Staffs of the three services. The procedure
can best be illustrated by a hypothetical example.
After considering the political, international, and domestic
phases of a problem, Hitler assigns a mission to Keitel, his Chief
of Staff. Keitel, in collaboration with Hitler, then prepares a
directive and calls a meeting of the commanders of the three services
for preliminary consultations with Hitler. Available plans, resources,
and personnel are reviewed with reference to the situation and the
opposition.
This phase of the planning is especially interesting in that
it illustrates a principle which has produced exceptionally good results. That principle is expressed in the following quotation from
a German publication:
"The secret of the success of the German Armed Forces
is that the right man, everywhere and always, is put
in the right place."
At these conferences between Hitler, Keitel, and the three
service commanders, one of the first items of business, after the
directive is announced, is the selection of the superior commander the
who is to accomplish the mission. Depending on the scope of be selected
mission, some of the principal subordinate commanders may formed.
for its accomplishment, and the nucleus of the team is Air Force
Whether these commanders will come from the Army, Navy, or of
is dependent upon the nature of the mission. Since the majority
CONFIDENTIAL
-4-
255
CONFIDENTIAL
campaigns in which all three services have collaborated have been
land campaigns, most of the commanders have come from the Army.
The commander chosen is selected for one reason only: because he
is the man who is most likely to succeed. This is emphasized by
examples, which can now be cited historically, which show that
ability and experience, rather than seniority, influence the final
selection.
Once the commander is chosen he becomes directly respon-
sible to Keitel and the Commander-in-Chief for the successful
execution of the mission. This step is probably the most important
one in the entire German command and control procedure.
Another principle of the German General Staff School is to
assign a mission to the commander, give him the means to accomplish
it, and then allow him the widest exercise of initiative, subject
only to full utilization and coordination of all branches to ensure
the most effective operation. This principle is repeatedly applied
in the course of development of plans for a new campaign.
The new commander is ordered to report to Keitel, who informs him of his selection and issues the directive. The new
commander is then permitted to select his personal staff which,
depending on the nature of the mission, will usually be composed
of members of the general staffs of the Army, Navy, and Air Force.
He then calls his own staff together for the first time
and issues his instructions, the primary one of which concerns
secrecy. Sometimes these staffs are completely isolated for
several weeks 80 that no inkling of the contemplated plan of action
can slip out.
In conformance with the directive, which is usually based
on a previously prepared General Staff plan, the staff studies the
problem from all angles, taking into consideration all of the latest
developments, and works out a general plan. A list of means, based
on this revised plan, is then prepared. The means are the units
to be used by the commander to execute the mission.
The commander next confers with Keitel, who usually makes
available the means requested. It should be noted, incidentally,
that the new commander is given the greatest leeway in selecting
the actual units which are to take part in the operation. As a
rule the commanders of the selected units are personally acquainted
with the new commander, and for that reason control, during the
preparation phase and the operation, is enhanced.
The units assigned to the command of the new commander
CONFIDENTIAL
-5-
256
CONFIDENTIAL
constitute a task force, the composition of which depends entirely
on the mission and the method planned for its accomplishment.
After the task force has been formed, the commander's
staff prepares a training directive, the nature of which in respect
to the different elements of the task force varies according to
the part those elements are to play in the execution of the mission. Keitel then issues the training directive through regular
channels to the various units. During this period these units
are generally entirely unaware of the role they are to play in future
operations. As an example, motorized and mechanised units of Rommel's
command, which are now fighting in North Africa, were transferred
to East Prussia where they could be trained extensively in sandy
terrain. There the troops were somewhat dissatisfied because they
could not understand why they were being required to undergo what
seemed like unnecessary difficulties.
Having prepared and transmitted the training directive, the
staff then works out detailed plans for the operations. This is
the most laborious task of all because every small detail is meticulouely planned. The German General Staff is much more detailed in
this respect than is our own. The result of its care, however, is
that it foresees many difficulties which might otherwise be overlooked, eliminates delays, and thereby facilitates the execution
of the plan. This speed, in turn, makes for surprise, which from
the German standpoint is one of the most important principles of
war.
When the plan for the execution of the mission has been
completed, the next step is to decide when the operations are to
begin. This decision is made by Hitler, in conference with Keitel
and the three service commanders. Once the date has been set, the
task force commander prepares a time schedule of conferences with
the commanders and staffs of the units which comprise his force.
Those conferences between the task force commander and his
staff, and the commanders and staffs of the subordinate units from
all three branches of the service, are extremely important. Every
detail of the operation is carefully explained, and rivalry between
branches disappears. Hitler himself has been known to appear at
some of these earlier conferences. In them the elements of the task
force are welded into a united team, a team which is thoroughly
indoctrinated with one idea, the execution of the assigned and
planned mission. Branch jealousy over weapone is unknown. Any
weapon is used that can best do the job: antiaircraft and antitank
weapons are sent against land fortifications, antiaircraft is used
against tanks, pioneers are put in assault roles, aviation is employed independently and in conjunction with artillery on the
CONFIDENTIAL
-6-
257
CONFIDENTIAL
battlefield, and the navy is sent to support land operations.
The rest of the procedure is comparatively simple. The
actual execution date of the plan is set, march orders are issued,
movements to assembly areas are made, detailed attack orders to
lowest units are sent out, and at the appointed hour, the attack
jumps off.
In outline that is the manner in which a German military
plan of action is conceived, ordered, planned, and executed. The
example taken was, of course, for only one line of action. At the
same time similar plans were being formed to cover all other reason-
able lines of action. In 1940, for instance, while von Falkenhorst
was planning and executing the Scandinavian Campaign, von Brauchitech
was working on the plans and orders for the Western Campaign. The
timing of these two operations was under Hitler's direct control.
At present List is completing the Balkan Campaign, Rommel is conducting operations in North Africa, and von Brauchitsch is probably
completing details for the next major German military effort.
Goering and Raeder are occupied with their separate undertakings,
especially their joint effort in the Battle of the Atlantic, in which
it is understood that one or the other, or their selected representative, has complete command. It is thought that Raeder has direct
command of the naval and air forces operating in the Atlantic.
Special conditions may require some variation in the procedure presented in this section. Occasionally units which have par-
ticularly difficult assignments are drilled under conditions identical
with those to be encountered in carrying out their tasks. This
system was followed by Lieutenant Colonel Mikosch, whose small task
force captured Fort Eben Emael in record time on May 10 and 11, 1940.
Sometimes undated orders are issued in advance down as far as divisions,
or even regiments. Time of attack is issued later. In this way,
advantage can be taken of favorable weather and other transient conditions.
Particular care should be taken to ward against the idea that
the German system is stereotyped and rigid. To the contrary, that
system has never been alike in any two instances. The composition
of the task force itself provides a great degree of flexibility, and
if any organization does not lend itself to a particular type of
mission, that organization is changed. That fact is exemplified in
the organization of the small Panzer division now being used in Africa
and the smaller light air infantry division.
3. SELECTION OF LEADERS
Probably the most important phase of the German system of
CONFIDENTIAL
-7-
258
CONFIDENTIAL
coordination of command is the selection of able military leaders.
Germany is fortunate in having a wealth of qualified officers,
partly because a very large percentage of the male military population has combat experience, and partly because it has an extensive system of military education, combined with a strict method
of selection at every point and in every category.
The value of leadership has long been recognized, but not
always applied. Jealousy and rivalry have done much harm. In the
German Armed Forces the application of principles of leadership is
given complete play in the fullest sense of the word. The Nazi
theory is to select the man who is most able to do the job, give
him the means to do it, and let him do it his own way.
Lieutenant General Rommel, Commander of the German Expe-
ditionary Force in Africa, is a splendid example of the German
system. Rommel is a man of great energy for his age, well prepared to meet and overcome new conditions of warfare, and a tried
and proven commander of mechanised and motorized forces. He
speaks Italian fluently and has many Italian friends, he has
lived in Italy and understands the Italian people and their paychology. Although there were many officers senior to him in the
German Armed Forces, he was selected to command the important
North African expedition.
4. PRACTICAL ILLUSTRATIONS OF CAMPAIGNS
In order to illustrate the application of the German
principles of command and control, the organization of some of
the earlier campaigns will be reviewed.
a. Polish
The Polish operations constituted a major campaign. Since
the invasion of Poland was primarily a land campaign, it was commanded personally by von Brauchitsch, who had command of all units
taking part, including the elements from the air force and navy.
The following is a diagram of the organization of the
German Armed Forces for the Polish Campaign:
CONFIDENTIAL
-8-
259
CONFIDENTIAL
Commander- in-Chief
HITLER
Chief of Staff
Col. Gen. KEITEL
:
:
Field Commander
Col. Gen. von BRAUCHITSCH
:
:
Northern Group of Armies
Southern Group of Armies
Col. Gen. von BOCK
Col. Gen. von RUNDSTEDT
Tenth
Eighth
Army
Army
Army
Col.Gen.
Gen.of
Gen.of
Fourteenth
LIST
Third
Fourth
Army
Army
Gen.of
Gen.of
Artillery
Artillery
Artillery Infantry
von REICHENAU von BLASKOWITZ
von KUECHLER
von KLUGE
:
Air Fleet One
:
Air Fleet Four
:
:
:
:
LOEHR
:
General of Aviation
Naval Units
General Admiral
ALBRECHT
CONFIDENTIAL
-9-
General of Aviation
KESSELRING
260
CONFIDENTIAL
Air Fleet Four, stationed in southeastern Germany, was in
direct support of the southern group of armies, and Air Fleet One,
stationed in Pomerania and East Prussia, was in direct support of
the northern group of armies. Naval units operated with the Third
Army in taking Gdynia and Danzig, but they too were under the direct
control of von Brauchitsch and his staff.
A German military author recently wrote:
"General Loehr, the Chief of Air Fleet Four and Air
Commander in the southeast, from the beginning placed
the highest importance on the closest cooperation of the
service posts of the air fleet with the corresponding
staffs of the Army. Loehr himself maintained personal
contact with the Commander of the Southern Group of
Armies, General Rundstedt, in keeping with the preceding
conferences of generals and admirals of the Armed Forces
which had taken place in the presence of the Fuehrer and
Commander-in-Chief."
b. The Scandinavian Campaign
Operations in the Scandinavians took the form of a minor
campaign, commanded by an Army commander. The German official
communique of April 10, 1940, stated: "Supreme Commander of all
units of the Army, Navy, and Air Force is General of Infantry
von Falkenhorst."
The organization of the German Armed Forces for the
Scandinavian Campaign may be diagrammed as follows:
CONFIDENTIAL
-10-
261
CONFIDENTIAL
Commander- in-Chief
HITLER
Chief of Staff
Col. Gen. KEITEL
:
:
Field Commander
General of Infantry
von FALKENHORST
:
:
:
Air Units
Lt. Col.
von FALKENHORST
KAUPISCH
:
MILCH
Gen. of Infantry
Gen. of Aviation
Naval Units
Norway
Lt. Gen.
DIETL
:
:
Col. Gen.
Norway
Command
Northern
:
:
Command
:
Special Air
South and Central
Denmark
Naval Units
Naval Units
Group B
Group 0
Group A
GEISSLER
Commanders of Naval Units were General Admirals Saalwaechter,
Carls, Boehm, and Admiral Luetjens.
C. The Western Campaign
The Western Campaign was also A major land operation commanded personally by von Brauchitsch.
(1) The following diagram shows the organization for the
first phase of the campaign in the West:
CONFIDENTIAL
-11-
CONFIDEAL
Commander-1n-Chief
HITLER
Chief of Staff
Col. Gen. KEITEL
:
:
Field Commander
Colonel General
von BRAUCHITSCH
:
:
:
:
Army Group A
Col. Gen.
Army Group B
Col. Gen.
von RUNDSTEDT
von BOCK
:
:
:
:
18th Army
Gen. of Arty.
von KUECHLER
4th Army
6th Army
Col. Gen.
Col. Gen.
von REICHENAU von KLUGE
Mechanized
Units
2nd Army
9th Army
16th Army
12th Army
Col. Gen. Gen. of Inf. Gen. of Inf.
STRAUSS
BUSCH
LIST
Gen. of Cav
ven WEICHS
:
Kleist Group - Armored
:
Air Command
General
Gen. of Cav.
von KLEIST
Field Marshal
:
GOERING
:
:
:
:
Supported Army Group B
:
KESSELRING
Rheinhardt
Air Fleet Three
Gen. of Aviation
Group
General
SPERRLE
RHEINHARDT
Supported Army Group A
:
Air Fleet Two
Gen. of Aviation
Guderian
Group
Gen. of Tanks
GUDERIAN
CONFIDENTIAL
-12262
263
CONFIDENTIAL
(2) The following diagram shows the organization for the
second phase of the Western Campaign:
CONFIDENTIAL
-13-
CONFIDENTIAL
Commander-in-Chief
HITLER
Chief of Staff
Col. Gen. KEITEL
:
:
Field Commander
Colonel General
von BRAUCHITSCH
:
:
:
:
:
Army Group B
Col. Gen.
Army Group A
Col. Gen.
Army Group C
von BOCK
von RUNDSTEDT
von LEEB
Col. Gen.
:
:
:
:
18th Army
4th Army
6th Army
Gen. of Arty. Col. Gen. Col. Gen.
von KUECHLER von REICHENAU von KLUGE
16th Army
12th Army
9th Army Armored 2nd Army
Gen.
of
Cav.
Col.
Gen.
Gen.
of Inf.
Force
Gen. of Inf.
STRAUSS
von WEICHS
LIST
BUSCH
1st Army 7th Army
Col. Gen. Gen. of
WITZELEBEN Arty.
DOLLMAN
:
:
Kleist Group - Armored
:
Air Command
Gen. of Cav.
Field Marshal
von KLEIST
GOKRING
:
:
:
:
:
KESSELRING
:
Air Fleet Two
Gen. of Aviation
Air Fleet Three
Gen. of Aviation
Rheinhardt
Guderian
Group
Group
SPERRLE
Supported Army Group B Supported Army Group A
CONFIDENTIAL
265
CONFIDENTIAL
One noteworthy feature of the Campaign in the West, and of
the Polish Campaign, too, is the coordination of the air and ground
forces participating. It appears that the German Air Force is
divided into two elements, a group for purely strategic missions
under the direct control of Goering, and a direct support group
under the control of von Brauchitsch. The operations of the strategic group are coordinated between von Brauchitsch and Goering
through Keitel. It is, in a sense, an independent air war, but the
operations are coordinated with those of other forces participating.
Air elements are shifted between the two forces at will, according
to the situation. Initially, the bulk of the air power is in the
strategic group 80 that it may establish air supremacy; later, more
strength is added to the direct support group to reduce resistance
in front of the fast-moving mechanized thrusts and to neutralize
counterattack threats. The importance of the various uses of air
power in these campaigns is indicated by this organizational arrangement.
The assignment of armies to a group of armies is usually
fixed for a definite phase of the operations. Depending on the
tactical situation, however, divisions, and even corps, can be
transferred from one corps or army to another overnight. The
German command system is very flexible in this respect.
5. CONCLUSIONS
a. From observation of the German military command and control
system, the following conclusions may be deduced:
(1) The German Armed Forces follow the principle of absolute unity of command for any particular command or operation,
including elements of all services assigned to the task force.
(2) The commander is responsible to one authority only.
the Commander-in-Chief.
(3) The secret of successful leadership, from the German
standpoint, is the selection of the leader for A particular mission
who is the best qualified and the most likely to carry out the
assignment to a successful conclusion.
(4) The widest latitude is given the commander in the
selection of his staff officers, units, and subordinate commanders.
(5) The means, when available, are always granted.
(6) The commander of a task force is permitted to use his
own initiative and methods in accomplishing his mission.
CONFIDENTIAL
-15-
266
CONFIDENTIAL
(7) The task force, a unit of all arms and services, is the
basic force in the German Armed Forces. Its composition depends on
the mission, the commander, and the method for executing the plan.
The task force will be the same in any two instances only coinciden-
tally. The principle of the task force is applied in all echelons
of command from the squad to the army group.
(8) Greater detail in general staff planning eliminates
confusion and facilitates speed and surprise.
(9) Since knowledge of a German commander's specialties
may enable our military intelligence to deduce the enemy's line of
action, the records of German commanders should be studied carefully
to determine their qualifications.
(10) German commanders often operate in teams.
(11) Propaganda is carefully regulated in order to avoid
giving too much publicity to individual commanders, or to any particular arm or branch of the service. Excess publicity is considered
detrimental.
(12) A unified command system facilitates the making of joint
war plans and renders general staff planning work as a whole, less
difficult.
(13) The great effectiveness of the German air arm in its
joint operations with the Army and Navy under the direction of a
high ranking commander And his general staff is due mainly to the
position this commander holds in the German government organization.
He has been convinced of the importance of air power and the part it
should play in relation to the other arms and has had the influence
and ability to translate his convictions into reality.
b. Because of the broad scope of German military operations,
which extend over wide areas and involve operations on land and sea
and in the air, the High Command has deemed it necessary for all
branches of the military service to operate under one command, in
order that efforts of various branches of the service can be efficiently combined into a smooth-working machine of great combat
efficiency. American official observers on duty in Berlin have
noted many advantages in this arrangement, some of which follow:
(1) The independent services, the army, navy, or air force,
have not lost their identity as such.
(2) The commanders of these services continue to function
in their normal capacities as the heads of their respective services.
CONFIDENTIAL
-16-
267
CONFIDENTIAL
(3) The air force comprises not only powerful striking
forces, but also units for operation with the army and navy.*
(4) Basic training, particularly of officers, is standard-
ized and simplified.
(5) Personal friendships established in common basic
training
later
on. schools have made for better cooperation in operations
(6) There is free exchange of technical information among
the representatives of the three services.
(7) Considerable economy in development and procurement
has been effected.
(8) Standardization of equipment and material for two, or
all three, of the services has resulted in simplicity in production
and supply.
(9) An effective system of communication between all three
services has been standardized and duplication of communication
systems has been eliminated.
(10) Coast defense units comprising units of coast artillery, naval, and air force - both air and antiaircraft - have been
formed into compact task force teams.
(11) Service and branch rivalry, which is detrimental to
close coordination and cooperation, has been eliminated.
(12) Speed of execution, which is 80 essential in accomplishing surprise, has been developed to a high degree.
(13) Equality of treatment to all members of the services
has resulted in greater satisfaction to all concerned.
(14) Single control has facilitated the use of the task
force principle with the result that there is a higher degree of
specialization which ultimately will make for A more effective
system of combat teams.
(15) When joint operations are essential, as in the
Scandinavian Campaign, the number of mistakes was reduced to a
minimum by the use of a system which is adapted to joint operations.
Insofar as coordinated work of the army and navy is concerned, conditions the
system appears to function satisfactorily under the present integral
in Germany; but it should be remembered that the question of
naval and army air arms has not yet been completely solved.
CONFIDENTIAL
-17-
268
CONFIDENTIAL
(16) The united German Armed Forces command has placed an
effective instrument in the hands of the leader of the nation to
enable him to reach his objectives.
CONFIDENTIAL
-18-
269
RESTRICTED
G-2/2657-220; No. 428 M.I.D., W.D. 12:00 M., , June 27, 1941.
SITUATION REPORT
I. Eastern Theater.
Hungary has proclaimed a state of war with the U.S.S.R.
The German main attack is making progress in the direction Grodno-Minsk. Minsk may be in German hands. Pattern of
German bombing suggests continuation of this thrust Minsk-Moscow.
Farther north German forces are approaching the Latvian
border and are close to Riga.
South of the Pripet (Pinsk) marshes another German attack
on a narrower front, operating along the axis Lublin-Luck (Lutsk)Kiev is in the vicinity of Luck.
German-Rumanian forces may have captured Cernauti (Czer-
nowitz). They do not appear to have crossed the Pruth River, boundary between Rumania and the Ukraine.
II.
Western Theater.
Air: German. Extremely limited activity over Great Britain.
British. Normal day attacks along the French coast
and night raids on Kiel, Cologne and Dusseldorf.
III.
Middle East Theater.
Libya: Local attack by the Tobruk garrison.
Syria: The invaders are advancing to the north and west
of Damascus, thus developing pressure against Homs and Beirut.
RESTRICTED
270
CONFIDENTIAL
Persphases of Sade Cablegree
Received as the Mar Department
as 8:27, June 27, 1941.
Losion, filed 13:48, June 27, 1941.
Following is a - of British Military Intelligence infernation to date:
1. Arria.
a. British adventing along the Beires highway are within
18 miles of Democrac. Heavy artillery fire has prevented their adventing
any further.
P. Cavalry patrole of the British not with similar wite or
the Vishy foress in the visinity of A large part of the
latter gave themselves up.
2. The British have make - progress around Palaysa.
4. A partially counter-attack was staged by Vicky
forces around Jessine.
2. Free French foress have taken Marche and are " miles
northeast of Demaces at Gastal (i).
2. Based on incomplete but authoritative reports, the following
is the situation in the Seviet war as of June 26:
a. Majority of the German Armored Force is north of the Priget
Swappe. According to latest information, those were battling at Vilma,
Liobiedsou and Michaliski on a wide front.
.
South of the Pripos Surage, at Lask, Leeve and Broty there
was fieree fighting.
CONFIDENTIAL
INFORMATION COPY
271
CONFIDENTIAL
2. There is not made - signing in the section -
vinces of the U.S.S.B., Beseavabia and Buturina. The - Air Funee
appears to have consentered greater difficulty than me antistigated.
3. In Minge the British Foress at Schree have again bettered
their position.
Distributions
Secretary of War
State Department
Secretary of Treasury
Mater Bearetary of War
Chief of Staff
Assistant Shief of Staff, as
Mar Please Division
office of Nevel Intelligence
Assistant Chief of Staff, 6-3
CONFIDENTIAL
INFORMATION COPY
272
CONFIDENTIAL
Paraphrase of Code Gablegree
Received at the War Department
at 12:30, June 27, 1941
Berlin, filed 14:48, June 27, 1941.
Reports considered fairly reliable indicate that
Fiesler-Storch airplane was successfully used by the Germane
in the Balkans as a command and artillery plane. Improvement
is being made by installation of more powerful maters. The
plane was used in Africa as a command plane.
PRYTON
Distributions
Secretary of War
State Department
Secretary of Treasury
Under Secretary of War
Chief of Staff
Assistant Okief of Staff, 0-2
War Plans Division
Office of Naval Intelligence
G.H.Q.
Assistant Chief of Staff, 0-3
Air Gorps
CONFIDENTIAL
INFORMATION COPY
273
SECRET
By authority A.C. of S., 0-2
Date
JUN 28 1941
(
Paraphrase of Code Cablegrea
Received at the War Department
at 19:11, June 27, 1941.
TOH
Initials
Cairo, filed 21:15, June 25, 1941.
In combat with Tomahawks the enemy has lost: 5 JU-88's destroyed,
1 damaged; 1 Cant 1007 destroyed; 2 Vichy Martine destroyed, 2 ME-109's dam-
aged. The Tomahavk losses have been four, as outlined in other parts of
this cable, and several received minor damages as detailed in cables of
June 20 and 21.
Rear and beam-quarter attacks have been most common. Most of
the combat has started above twenty thousand feet. Against armor, fifty
caliber guns have been used and against engines and gasoline tanks,
thirty caliber guns.
It is believed by some pilots that if thirty caliber armor
piercing and both thirty and fifty caliber incendiary bullets were
available many more airplanes would have been destroyed. Hits on leak
proof tanks are not effective unless incendiary bullets are available.
Against armored vehicles, the fifty and thirty caliber guns are not heavy
enough to be effective, nor are they as effective as would be possible,
if incendiaries were used, against airplanes on the ground and motor
transports.
FELLERS
Distribution:
Secretary of War
State Department
Secretary of Treasury
Under Secretary of War
Chief of Staff
Assistant Chief of Staff, G-2
War Plans Division
Office of Naval Intelligence
GHQ
Assistant Chief of Staff, G-3
Air Corps
SECRET
INFORMATION COPY
CONFIDENTIAL
274
Paraphones of Sede Sublegres
Received as the Mar Department
as 19:17, Jane 27, isks.
Sushareat, filed 19:10, June 26, M
Each attack division has a night of Ticoller Starch please.
This plane is part of the regular equipment of the any and was se need in
the Believe compaign. It is primirily a - and liaison please. n is the
hill from which the noters committer observes and even directo fast moving
operations.
During the Balka enageign artillesy accompanying was the
rule rather than the exception. Terrestial observation with every forward
observation post in close listeen with supported swoope and with - close
to targets is instated upon. Airplane observation for light and medium
artillery is now less frequently used. If conditions are such that observation
is impossible from the air, dive bembers (Stakes) provide the best observed fire
imaginable. To our - - in general, Stakes have supplanted artillery five
with airplane observation.
Attention is invited to the Menschol 186, another special purpose
plane, which is used for close recommissence. As least - flight is
attached to each averal division. These please are called the eyes of the
Panser divisions. Their mission is to fly close to the ground just ahead of
their division on the march and in the attack) recommetter the roube, observe
the smallest details of testain and hostile positions, photograph the more
important objects, machine g - drop wall business to kill and harees. The
Germans consider as absolately essential the close cooperation and team work
of such types of planes with the assured forese.
Distributions
RATAY
Division
Intelligence
Assistant
Under Secretary of Mar
2
Assistant Chief of staff, 6-3
AF Gorga
Field Artillery
CONFIDENTIAL
INFORMATION COPY
275
SECRET
By
Paraghanse of Code Cablegree
Received at the Year Department Date
JUN 3
V
1941
of
S.,
G-2
Initials
as 10.03, Jame 27, 1941.
Cairo, filed 18:16, June 26, 1941.
High prestone and all transportures are probused quickly in the
Allison engine w prolenged testing and saling on the ground. These tares quickly bocume needad, however, - the airplane has taken off. the P-40
cools much better than the British Burrieses. In connection with
and gaseline consumption tests Velve air closure have bosa installed in -
or two aircraft. No ovidence of maintenation, increased oil - or
loss of power has been observed in the ease of a large number of enginee that
have been F from seventy to ninety hours or in the case of a for that have
reached a total of one hundred and twenty hours. The Merlin engine in the
Murricans, when operated without as air filter, has to be taken out for overhaul after being in operation sixty or seventy hours. Observations made is
connection with both the P-40 and the Markin seen to disclose that an air sereon
will not be required for use with a down draft carburetor arranged with the
intake opening on the top of the coul. It is pleased not to use air sereons
unless severe cylinder wear and less of power develope. The overheal time for
the Allison engine, originally set for one Instrud - twenty hours, has been
extended to - Insured and eighty hours.
FELLING
Distributions
Secretary of Mar
State Department
/ Secretary of Treasury
Union Secretary of me
Chief of the Away Air Fores
Assistant Chief of Staff, as
War Please Division
Office of Naval Intelligence
#
are
Assistant Chief of Staff, 6-3
Air Garge
SECRET
INFORMATION COPY
276
Paraphrase of Code Cablegram
Received as the War Department
at 12:56, June 27, 1941.
SECRET
By authority A.C. of S., G-2
Date JUL 1 1941.Initials
wang,
Gairo, filed 12:00, June 26, 1941.
A large number of airplanes were stored at Televadi awaiting
pilote and some corresion of front threet bearings, thought to be due to
high humidity, cocorred. Several threst bearings were removed here when
the airplanes were received, however, no failures have developed as yet from
this cause. The day air here is not believed to be a serious source of
difficulty.
The information concerning the maintenance emi performance of
the P-40 furnished in this series of cables was obtained from individual
combat reports on file in the Middle East hosiquartere. Various persons
in the interested departments of the hondquarters here and personal observation were the sources from which the other information transmitted was
gathered.
This week and next Peria and Royee are on a visit of depote and
equadrons and will obtain additional information. It is suggested that you
read the cable sent by Marriasa to Arnold and Hopkins through the State
department for data with reference to facilities for repair and overhaul.
FELLERS
Distribution:
Secretary of War
State Department
-Secretary of Treasury
Under Secretary of War
Chief of Army Air Force
Assistant Chief of Staff, G-2
War Plans Division
Office of Naval Intelligence
GHQ
Assistant Chief of Staff, 6-3
Air Gorge
SECRET
INFORMATION COPY
277
June ⑉ 1943
Filee
w. dechres
While talking with as as mo35 on June as Mr. told we that w.
President of the 2.1.8., had inquired abother he should - to the United States
68 a visit. President Spreal had spakes with Under Secretary Bell who had -
as - my Mr. Melistrick checks ant - the visit. s massage had - I
received from No. Nokissrick to the effect that he had desided to postpose the
visio intefinitely.
my
June 30, 1941
A letter from Mr. Knoke giving the above information has been received this morning
and is attached hereto.
278
0
FEBERAL RESERVE BANK
0
OF - TOME
June w. 1941.
Attentions Nr. federal
Dear Mr. Secretary:
two weeks age Mr. Spreal mentioned to
Mr. Bell ever the telephone that Mr. MeKistrick,
President of the Beak for International Settlements,
was pleasing a short trip to this country during July
or August.
I - new writing to advice the Treasury
Department that according to a cable received yester-
day, Mr. MeKistrick has decided to postpose his trip
indofinitely.
Respectfully.
(a) L. W. Knoke
L. W. Encite
Vice President.
Non. Heavy Morgoathes, St.,
Secretary of the Treasury.
Washington, B. c.
Enc.
279
OFFICE OF THE COMMISSIONER OF CUSTOMS
June 28, 1941.
TO: SECRETARY MORGENTHAU
FROM: W. R. JOHNSON
In a letter dated June 24, 1941, the assistant
collector of customs at San Francisco advised me that
the German Consul General at San Francisco intended to
ship seven cases of household goods and personal effects
to Santiago, Chile, on the Japanese Steamship KUNIKAWA
MARU, departing on or about July 3, 1941.
This information was reported to you at the staff
meeting on June 27, 1941.
Pursuant to your instructions I called Dean Acheson
during the morning of June 27 and told him that customs
would examine the shipment unless the State Department
should tell us why no examination should be made. Mr.
Acheson asked for time to consult his associates and prom-
ised to call me back during the afternoon of June 27. He
did not do so, and I was unable to get in touch with him
up to 7:20 p.m., when I discontinued my efforts.
I finally contacted Dean Acheson by telephone on
the morning of June 28. He stated that he proposed, if
280
-2agreeable to Treasury, to call the German Embassy, tell
them about the proposed shipment from San Francisco to
Chile, and advise them that household goods and effects
sent by German consular officers and employees from the
United States to Germany would not be subject to examina-
tion prior to departure from this country, but that such
shipments to other destinations would be subject to the
same treatment accorded to shipments by any private person.
I replied that insofar as such advice indicated
that shipments not destined to Germany would be inspected
it was entirely satisfactory, and that I understood that
our Mr. Bernstein would give him the Treasury's position
as to exempting shipments to Germany from inspection.
Mr. Acheson stated that Mr. Bernstein was then with him
and agreed with the proposed statement to the German
Embassy insofar as it indicated that the shipments to
Germany would not be inspected. It was thereupon agreed
that Mr. Acheson would communicate the message to the
German Embassy.
A short time later Donald Hiss called for Dean
Acheson and advised me that the message had been given to
281
-3the German Embassy; that the Embassy had telephoned to
San Francisco and had been advised by Wiedemann, the
Consul General, that his office was sending nothing to
Chile; and that so far as the State Department was concerned we could go ahead with any inspection of the ship-
ment that we desired. I then instructed the collector of
customs at San Francisco by teletype to have a careful
inspection made of the contents of the packages with a
particular view of finding any indication that any foreign
officer, employee, or agent intended to go from the United
States to Chile directly or indirectly, as well as with a
view of detecting any violation of the freezing controls.
Just after these instructions were dispatched,
Hiss called again to say that the German Embassy had a
later message from San Francisco that the shipment in
question consisted of household effects being sent by one
Kapp, German Consul General at Cleveland, to his brother
in Chile. I told Hiss that the goods would be examined,
and he indicated that this was still agreeable to the State
Department.
R,Johnson
282
TREASURY DEPARTMENT
Funched
INTER OFFICE COMMUNICATION
DATE June 28, 1941
Mr. Bell
Mr. Cairns
Acheson called the German Embassy, which telephoned the Consul
General in San Francisco, who said he was sending nothing to Chile.
Acheson's office (Donald Hiss), therefore, told Johnson to "go ahead
and examine as far as you want." Johnson is now sending a teletype
to San Francisco instructing them to examine the contents of the
packages and to look carefully for any indication therein of any
intended movement of a foreign officer, employee or agent from the
United States to Chile, as well as for any possible violation of
freezing control.
283
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Enbassy. Berlin
DATE: June 28, 1941, 9 a.m.
NO.: 2004
Please inform the Treasury Department in regard to
the following:
Reperts here indicate that consideration is being
given to the introduction of a new "estmark" for use as
currency in any occupied area in the East, including
General Government Poland.
MORRIS
EA:PAK
10 THE
8600.515/100
OLLICE OE THE
20 bW 3 38
RECEIVED
284
of SELECRAN REGEIVED
FROMS american Babasay, Bertia
DATES June m. 1941, 6 Domo
no.1 9618
NUM - MOTION -
Reference is make to the - sategram of June
27, 1941, s Dolloo No. seee.
From conversations which members of my staff and I
have had is the last two days with the officials of the
Foreign office and the as is evident that the
German retallatory action, in respect to derean assets
fresen in the U.S., alas as suising the personal exemption
of $800 in the U.S. and the artistancy equivalent of 1,000
reichanants established here which, under general 1100mee,
May be within monthly.
should this be accomplished w the present pressure
which tends to anny the States officiale is dermaly
sufficient funds for their normal Living expenses, the
German Subasury at Washington would be in a position. enter
general license, to withing some funds placed to the
credit of various minor employees (esting morely as straw
mea) in order presumably to have a certain elbew room to
continue the financing of as least some of the German official
propagants activity MIX II was one object - freesing
order to prevent the - of the - w eirounvent
this design and at the same time provide this with
working funds for its official purposes and sufficient
living expenses for individual employees and officers.
is is
285
5t is the Enbassy's suggestion that the United States
should raise the monthly personal esseption under general
license to $2.000 for recognized diplomatic officers, and
to retain for all others, as at present, see. the
further suggests that the Comman Salesm be requested to
submit to the State Department immediately a statement of
the funds which are needed monthly for its official reasing
expenses, with a break-town of the object of these expenses
in such detail as may be accessary to give to the state and
Treasury Departments a general picture of the German Tobasay's
activities.
The American Subasay at Berlin could then do likenise
to the Heighsbank and to the German Foreign office. The
Kabasay has nothing to cenecal is respect to the objects
of its expenditures, Therefore, no objection 10 perceived
to submitting such a statement to the sources mentioned
MORRIS
KASAPAK
10 THE
OLLICE OF THE
DVI YOU 30 bM 3 VI
RECEIVED
286
(CONFIDENTIAL)
C
0
P
PARAPHRASE
Y
A telegram (no. 261) of June 28, 1941 from the American
Ambassador at Chungking reads substantially as follows:
The Vice Minister of Finance considers that the results
of the third financial conference held from June 16 to June 24
at Chungking were very satisfactory. More than 400 officials
of the Central and Provincial Governments attended this
conference. The most important measures approved were as
follows: (a) provincial finances will be taken over by the
Central Government; (b) in unoccupied China land tax will be
collected in kind, which will represent approximately ten per-
cent of the rice crop: (c) all of the tax system will be reorganized special emphasis being placed on improving the national
budget and increasing revenue. Although it is expected that
important landlords in Szechuan Province will offer a certain
amount of opposition, the Ministry of Finance plans to pursue
a strong policy and has received from General Chiang Kai-shek
assurances of his full support. That the price situation will
be favorably affected by an improvement in the national budget
is hoped.
10 THE VBA
VAL
044105
W a 03
AVE Y208A DELVISCHEWL
RECEIVED
Copy: bj:7-1-41
287
TELEGRAM SENT
GRAY
GMW
June 28, 1941
6 p.m.
AMEMBASSY,
ROME.
449.
Your 869, June 25, 7 p.m.
1. There are no general licenses applying to your
diplomatic colleagues as a class although they fall within
the terms of General License No. 32 referred to in the
Department's 429 of June 21, being "nationals" of Italy
within the meaning of the Executive Order by reason of
their residence in Italy.
2. It is suggested that your colleagues Either:
(a) instruct banks in the United States holding their
accounts to apply for licenses for the release of such
accounts, or (b) request their Embassies at Washington to
take the matter up with the. Department or directly with
the Treasury Department.
3. Your colleagues may also wish to inquire of their
respective Embassies in Washington as to any general
arrangements that may be made for the missions of particular Latin American countries.
4. The
288
-2-
449 June 28, 6 p.m. to ROME
4. The Department cannot give any definite answer
as to the status of dollar accounts held in Switzerland.
Details of the precise way in which such accounts are
carried would be necessary in Each case.
WELLES Acting
(PWB)
840.51 Frozen Credits/2294
EA:GL:VCL
289
June m. 1948
Enter Secretary Bell
Mr. Beckres
the question of funds for the American Marry as Parts is one which has had
the attention of Foreign New amtrel for neveral months. I introduced to my ock-
leagues ea the Central Mr. Bivard A. Summers, - we and is still head of the team Library is Parte, but who returned to the United States free Frence normal
months age. No 10 a highly respected merican offices. as official of the mericon
Redistor Company. Naturally there is 120020 that the American is Parts
- do now for the benefit of Americans. but I have always favored licensing sefflclass funds to prevent 19 from falling tate the hands of the Governo so long as the
or
Americans who are responsible for " are enleavering to hold 11 together.
290
C
0
b
P
Y
THE LIBRARIAN OF CONGRESS
Washington, D. C.
June 25, 1941
My dear Mr. Bell:
Here is a tough one which I hesitate to pass on to you
but that is the way things seem to go.
The President of the American Library in Paris. Mr. E.
A. Summers, came around to see me sometime ago and told me his
trustees were ready to hand the whole American Library in Paris
over to the Bibliotheque Nationale. This would have been a
disaster since the new Director of the Bibliotheque Nationale,
put in office by the Nasis, is pro-fascist and viciously anti-
American. I told Summers this and dissuaded his trustees. Now,
however, he is faced with a real difficulty since the Library,
if it is not to give the German authorities an excuse for seising
it, must pay its bills and continue to operate as long as possible.
The Comtesse de Chambrun (Clara Longworth of Cincinnati) has been
sleeping in the Library to protect it and thus far the Board of
License Control has granted permits for sending funds to Paris
to continue operations on a limited scale. Summers, however,
is apprehensive that "some general ruling by the Treasury regarding sending funds to France may stop the approval of licenses at
any time through a lack of understanding of the Library's utility
and possibilities". He therefore asks me if I would do what I
can toward assuring continued approval of applications to send
funds up to $1000 per month.
I think I appreciate some of the difficulties involved
in Mr. Summers' request but since it is quite true that the
continued existence of the Library has cultural and propaganda
significance, I feel justified in putting the problem on your
desk. Forgive me for troubling you again.
Faithfully yours,
(Signed) Archie MacLeish
Archibald MacLeish
The Librarian of Congress
The Honorable
Daniel Bell
Under Secretary of the Treasury
Treasury Department
Washington, D. C.
Copy:1g 6/28/41
291
Juse 28. 1941
Files
Mr. Bechres
Reference 10 made to my dated June 24 is regard to the desire of
the Central Bank of m Salvador to obtain a $1,000,000 credit.
AS 4:35 en June 26 Mr. Encite told - that the Directors of the Federal Reserve
at New York had agreed to the 100m of its greating a leas for one year to the
Bank of Salvator, with the provision that the borrover sight repay say time
of the year. the
prior Central to Bask the expiration Federal Receive Bank of at New Weshington Test was
to the Board of Governors of the Federal Receive System a
letter seating saking the Board's approval to the contemplated credit. I telephoned this
information to Mr. Collado as seen as I received 19.
Mr. Eneke had also told no that his Legal Department would raise with the
the question as to whether any special license would be required for such
treasury 1. is ters. talked with Mr. Devasteis lates is the evening. No
a said transaction. that Mr. Releas had called from the Federal and that Mr. Berastois agreed that
so special license was accessary.
This morning Mr. Engine telephoned m that a telegram had been received last
free the Federal Reserve Board approving the credit arrangement York is favor contem- of
sight Gentral Bank of ml Salvador which the Federal Receive Bank of New in
plated. the Mr. Enoke said that he would mil a seneration addressed by his to no.
the following text:
'June 28. 1941.
Your memorandum of June 24, 1941.
Ve have discussed the question of a $1,000,000 one-year lean (against obtained
to the Banco Central do Receive de B1 Salvador and have new rate, at
gold) the accessary authorisation to sake each lean, at our discount
present 15.
will therefore please suggest to Mr. Collado that Collado's) he advise understand the
of you B1 Salvador informally that 11 is his (Mr. Reserve
Minister for leas as above. addressed to the Federal favorable
Bank ing that of New a request York by the a Sease Central will be gives prompt and con-
sideration to the Fectoral Receive Bank of New York.'
Is accordance with this message, I have telephoned 11 to Mr. Collado is the
Department of State this morning.
June 30. 1941
mr
A letter from Mr. Knoke received in this morning's mail confirms the telephone
message and is attached hereto.
HMC:1ap-6/28/41
292
C
0
(Dictated over the telephone to
Mr. Cochran's secretary by
P
Y
Mr. Knoke - June 28, 1941)
To:
Mr. Cochran
From: L. W. Knoke
Your memorandum of June 24, 1941. We have
discussed the question of a $1,000,000 one year loan
(against gold) to the Banco Central de Reserva de E1
Salvador and have now obtained the necessary authoriza-
tion to make such loan at our discount rate at present 1%
Will you therefore please suggest to Mr. Collado
that he advise the Minister of E1 Salvador informally
that it is his (Mr. Collado's ) understanding that a
request for a loan as above, addressed to the Federal
Reserve Bank of New York by the Banco Central, will be
given prompt and favorable consideration by the Federal
Reserve Bank of New York.
(a) L. W. Knoke
Copy bj:6-30-41
293
W
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE June 28, 1941
Secretary Morgenthau
Ferdinand Kuhn, Jr.
These radio programs look so wonderful to me
that I think you will want to see them, even up at
the farm. You may remember that you asked me to send
them up to you.
I think they carry out your ideas better than
almost anything we have yet done.
J.K.
294
"AMERICA PREFERRED"
Irvin Sulds
A half-hour Sunday afternoon program sponsored by the Defense
Savings Staff over the Mutual Broadcasting System.
This program will be designed for the classical and cultural
type of listener.
Pierre van Paassen has definitely agreed to be the Master of
Ceremonies for the first three or four programs and will probably
be able to do them all. Justice Ferdinand Pecora may be the Master
of Ceremonies for one or two programs. He is available and willing.
The following tentative line-up is a complete list of names that
will be used. They are being supplied through the cooperation of
the Legion for American Unity and Mr. Sol Hurok, internationally
famous manager of outstanding artists in the musical field.
TENTATIVE LINE-UP
Sunday afternoon, July 6 - Pierre van Paassen, Master of Ceremonies
Angelo Patri - Italy
Guest speakers
Guest artist
Thomas Mann - Germany
Mischa Elman - Violinist
Sunday afternoon, July 13 - Pierre van Paassen, Master of Ceremonies
Louis Adamic - Jugoslavia
Guest speakers
Guest artist
Dean Alfange - Greece
Josef Hofmann - Pianist
Sunday afternoon, July 20 - Pierre van Paassen, Master of Ceremonies
Albert Einstein - Germany
Guest speakers
Guest artist
Justice Ferdinand Pecora - Italy
Yehudi Menuhin - Violinist
295
Page 2.
Sunday afternoon, July 27 - Pierre van Paassen, Master of Ceremonies
Sing Kee - China
Guest speakers
Guest artist
Spyros P. Skouras - Greece
Jascha Heifets - Violinist
Sunday afternoon, August 3 - Pierre van Paassen, Master of Ceremonies
Lily Pons - France
Guest speakers Andre Kostelanets - Poland
Walter Damroach - Germany
Sunday afternoon, August 10 - Pierre van Paassen, Master of Ceremonies
Lieutenant Governor Charles Poletti - Italy
Guest speakers
Guest artist
Dr. Bella Schick - Hungary
Ania Dorfmann - Pianist
Sunday afternoon, August 17 - Pierre van Paassen, Master of Ceremonies
Otto Struve - Russia
Guest speakers
Guest artist
Anton J. de Haas - Netherlands
Efrem Zimbalist - Pianist
Sunday afternoon, August 24 - Pierre van Paassen, Master of Ceremonies
Lotte Lehmann - Germany
Guest speakers
Guest artist
Professor P. A. Sorokin - Russia
Artur Schnabel - Pianist
296
Page 3.
Sunday afternoon, August 31 - Pierre van Paassen, Master of Ceremonies
Carol Aronovici - Rumania
Guest speakers
Martha Ostenso - Norway
Guest artist
Sergei Rachmaninoff - Pianist
Sunday afternoon, September 7 - Pierre van Paassen, Master of Ceremonies
Dr. Harry D. Gideonse - Netherlands
Guest speakers
Quest artist
E. F. V. Alexanderson - Sweden
Vladimir Horowits - Pianist
Secretary Morgenthau - Room 280
297
DEFENSE SAVINGS STAFF
SPECIAL NOTICE
ADVANCE NOTICE RADIO PROGRAMS
SATURDAY, JUNE 28, 1941
Time:
9:15 - 9:45 P.M.,E.S.T.
Station: WJSV
Network: Columbia Broadcasting System
Program: Defense Bonds and Stamps Round Table Discussion.
The discussion will be led by Vice-President
Henry A. Wallace from Washington, D. C. over
a coast to coast hook-up. Those who will participate with the Vice President are the Honorable Sam Rayburn, Speaker of the House of Repre-
sentatives; Senator Arthur Capper of Kansas;
Senator Scott Lucas of Illinois; Congressman John
W. McCormack of Massachusetts; and Congressnan
Fred L. Crawford of Michigan.
THIS PROGRAM PROMOTES THE SALE OF DEFENSE BONDS AND STAMPS.
298
DEFENSE SAVINGS STAFF
ADVANCE NOTICE RADIO PROGRAMS
SATURDAY - JUNE 28, 1941
Time:
4:30 - 5:00 P.M.
Program: "Bonds For Defense"
This program is dedicated entirely to the sale
of Defense Bonds and Stamps with Gale F. Johnston,
Field Director, Defense Savings Staff, as guest
speaker.
Station: WJSV
Time:
7:30 - 8:00 P.M.
Program: Wayne King and His Orchestra
Station: WJSV
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.
299
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE
June 28, 1941
Secretary Morgenthau
FROM
CONFIDENTIAL
Mr. Cochran
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
Purchased from commercial concerns
£5,000
£6,000
Open market sterling held steady at 4.03-1/2. The only reported transaction
consisted of £1,000 sold to a commercial concern.
The Argentine peso closed at .2380, as against .2375 last night.
In New York, closing quotations for the foreign currencies listed below were
as follows:
Canadian dollar
11-3/4% discount
Uruguayan peso (free)
.0505
.4450
.2070
Brazilian milreis (free)
Mexican peso
Cuban peso
1-3/16% discount
In Shanghai, the yuan was quoted at 5-13/324. up 1/32 Sterling advanced
2-1/44 to 3.93-1/2.
There were no gold transactions consummated by us today.
The Federal Reserve Bank of New York reported that Bank of Mexico shipped
$380,000 in gold from Mexico to the Federal for its account, disposition unknown.
XYR.
300
BRITISH EMBASSY,
WASHINGTON, D.C.
June 28th 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,
Halpfa
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D.C.
TELEGRAM FROM LONDON DATED June 26th 1941,
His Majesty's ship Aukland (sloop) sunk by air
1.
attack 20 miles ENE of Tobruk afternoon June 24th.
Reconncissance on June 25th showed two battle
2.
cruisers and Prinz Eugen still at Brest, Emden cruiser
at Oslo and e Leipzig class cruiser at Horten near Oalo.
Early on June 23rd nevel units off Beirut
3.
damaged two French destroyers by fire who retired to
harbour behind smoke screen.
Morning of June 26th enemy dive bomber un-
4.
successfully attacked east coast convoy and was shot down
by gun-fire from convoy escort.
R.A.F. June 25th. Twenty-four Blenhein
5.
bombers escorted by fighters attacked 2 objectives in
Northern France. At Hazebronck direct hits made on
amunition train and two railway bridges. at aerodrome
near St. Omer bursts seen among aircraft and hangers.
During operations 13 enemy aircraft destroyed, 7
probably destroyed and 7 damaged. Our losses one bomber
and 6 fighters.
6.
Night of June 25/26th.127 bombers despetched
against Bremen, Kiel, Rotterdom. Two aircraft missing.
Bremon shipyards and goods station 23 tons H.B. 1400
incendieries; Bremen industrial centre 6 tons H.
1200 incendiaries; Kiel shipyards 42 tons S.E. 2200
incendiaries.
7.
Libya Night of June 23rd/24th. Five
Swordfish scored direct hits on reilway lines and two
or three quays at tripoli (L). Following night 5
ellingtons/
302
2-
Wellingtons attacked Benghazi causing fires.
German Air Force, Night of June 25/26th.
8.
Eighty aircraft operated against this country of
which 40 penetrated inland.
Libya and Egypt.
9.
Enemy AF(V patrols active June 24th
neighbourhood of Sidi Suleiman.
10.
Abyssinia,
Gondar area. June 22nd enemy attacked
patroits near Wolchefit inflicting heavy casualties.
11.
Gimma area. Troops supported by
patriots have mopped up enemy forces west of
Argio taking 60 prisoners. We encountered resistance
on R. Didesse but are advancing along Gimma except
in Bedelle Road.
12.
Syria.
Our troops are meeting with considerable
resistance from MG's and aircraft at Palmyrs. We
have occupied Merjayoun and hold E1 Aichive, 4 miles
to North West. Vichy French holding Habaya (7 .miles
ENE) in force. Indian troops fought magnificently in
operations leading to capture June 7th.
303
RESTRICTED
M.I.D., W.D. 12:00 M., June 28, 1941.
0-2/2657-220; No. 429
SITUATION REPORT
I. Eastern Theater.
Ground - Russo-Hungarian hostilities have begun in the
Carpathians.
Northern Zone - German attack continues on a broad front
with heaviest pressure west and north of Minsk. Russian counterattacks are being delivered to the north of Minsk,
Central Zone - The German thrust on a rather narrow axis
Lublin-Luck-Kiev is meeting strong resistance.
Southern Zone - No important operations between Przemyal and
the Black Sea, although the Axis forces hold a few bridgeheads on the
east bank of the Pruth.
Air - No change in the situation. Principal German air
effort continues in the North.
II. Weatern Theater.
Air: German - Very light offensive activity.
British - Heavy night attacks were renewed along the
German-Dutch-French coast. Particular targets were Bremen, Vegesack,
Enden and Wilhelmahaven. Twelve bombers were reported lost.
III.
Middle Eastern Theater.
Ground - Continued slow allied progress from Damascus toward
Home and Beirut.
RESTRICTED
304
CONFIDENTIAL
Paraphrase of Code Cablegram
Received at the War Department
at 10:02, June 28, 1941
London, filed 15:46, June 28, 1941
1. British Air Activity ever the Continent.
& Eight of June 26-37. The number of tons of high plesive bombs and members of incendiary bembs dropped, together with
the names of the objectives, during this night are as follows:
Cologne, 20 and 1700, Dusselderf, 20 and 1300g Kiel, 86 and 2700g
and Enden, 4 tens of high explosive bombs.
be Day of June 27. In the areas of Calais, Holy Head
and Montrose, sweeps were made by eight squadrons of fighters, dur-
ing which a very small amount of enery activity was encountered.
Some direct hits were obtained upon the steel works at Lille in an
attack by twenty-four Elembeins escorted by nineteen squadrons of
fighters.
&.
Eight of June 27-26. During this night Great Britain
dispatched 108 bombers to Bremen, 28 to the Vegesack Ship yards at
Bremen, 4 to Dunkirk, 3 to Endon, 1 to Dusselderf and 1 to Cologne.
Four sea mining aircraft were sent to Brest and 3 to the Frisian
Islands. Four aircraft dropped leaflets over Paris.
2. German Air Activity over Britain.
a Right of June 25-26 Germany operated against Britain
with 25 long range bombers, 10 fighters and 15 mine laying aircraft.
be
Day of June 26. On this day Germany employed 5 long
INFORMATION COPY
CONFIDENTIAL
eds.
305
CONFIDENTIAL
- i and = - airecth Over team
tory defensive patrels were maintained by 200 fighters.
s Invoice with the asseption of the essying
out of defensive patrols, Common air activity was - a niner sale.
s Mine laying and other operations
against shipping were earried out off the Corniab Penineula Flamberough Head and Estuary.
3. Minute Lames Invoice
s - Fifteen bombers were - from
the raids of the night of Jane 27-28. In contact on the day of June
27, eight Spitfires were lost.
s
Axis
leases. On June 27, five No-309's were shot
down, three more probably destroyed and eight of the game damaged.
LEE
Distributions
Secretary of For
State Department
Secretary of Treasury
Under Secretary of War
Chief of The Anny Air Foress
Assistant Chief of Staff, 6-2
Mar Plans Division
-
office of Naval Intelligence (2)
6-3
Air Gauge
-2-
CONFIDENTIAL
306
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE June 29, 1941
Mrs. Klotz
FROM
Mr. Kuhn
For the Secretary's Diary:
Secretary Morgenthau telephoned tonight to suggest that
we invite the following to take part in a radio round-table discussion of Defense Bonds and Stamps:
William Green, President, A. F. of L.
Phillip Murray, President, C. I. 0.
J. A. Phillips, Railroad Brotherhoods Ass'n.
The President of the National Association
of Manufacturers.
The President of the United States Chamber
of Commerce.
The Secretary said that if this discussion could be
arranged, he would be glad to take part in it himself as "interlocutor".
The Secretary added that he would like to have this
program fixed for some evening in the middle of the week, preferably a Thursday in the near future.
F.K.
307
Secretary Morgenthau
Room 280
DEFENSE SAVINGS STAFF
SPECIAL NOTICE
ADVANCE NOTICE RADIO PROGRAMS
SUNDAY - JUNE 29, 1941
Time:
8:30 - 9:00 P.M.
Station: WRC
Program: The American Album of Familiar Jusic
The sponsor of "American Album of Familiar
Music", the Bayer Aspirin Company, contributes his
entire program Sunday. This is a musical performance
dedicated entirely to the Defense Bonds and Stamps.
The usual commercial announcements for the sponsor's
product will be replaced by similar copy promoting
the sale of the Bonds and Stamps.
THIS PROGRAM PROMOTES THE SALE OF DEFENSE BONDS AND STAMPS.
308
DEFEESE SAVINGS STAFF
ADVANCE NOTICE RADIO PROGRAMS
SUNDAY - JUNE 29, 1941
Timo:
4:30 - 4:45 P.M.
Program:
James F. Twohy, Governor
Federal Home Loan Bank System
Speaking on United States Defense
Bonds and Stamps.
Station: WOL
Time:
5:30 - 6:00 P.M.
Program: Gene Autryls "Melody Ranch"
Station: WJSV
Time:
7:00 - 8:00 P.M.
Program:
Chase & Sanborn Hour with
Charlie McCarthy
Station: WRC
THESE PROGRAMS PROMOTE THE SALE OF DEFENSE BONDS & STAMPS.
309
PLAIN
MD
Berlin
Dated June 29, 1941
Rec'd 2:48 p.m.
Secretary of State,
Washington.
2614, twenty-ninth.
Embassy's 2588, June 27, 2 p.m.
The Reich Minister of Economic Affairs has
issued a foreign Exchange circular order no. 54
41 D. ST.--19--41 R. ST., under date of June 25
and Effective at once of which the following are the
main provisions:
OnE. Outstanding permits for the acquisition
or utilization of foreign Exchange are declared involid
if they allow payments in free foreign Exchange, directly or indirectly, to the United States Government
and its subdivisions and agencies, citizens and
residents of the United States and its possessions,
legal entities situated in the United States or its
possessions or based on American law, branch establishments in the United States and its possession and branch
Establishments or representatives in other countries
of legal Entities having their headquarters in the
United States or its possessions.
Two.
310
-2- 2614, June 29, 1941 from Berlin
Two. Permits are likewise invalid which would
allow payments into a German Clearing Office for the
direct or indirect benefit of American citizens, legal
entities or branch establishments or their representatives located in countries with which Germany has a
clearing agreement.
Three. No new permits for the above types of
payment are to be issued and care is to be taken
against the putting forward of dummies to receive
payment on behalf of American interests. Permits
allowing payment of patent and trademark fees, however,
will be issued under the general regulations for the
time being.
Four. Permits will still be issued for payment
into American owned blocked accounts and into the con-
version office for German foreign debts under the
general regulations.
Five. So-called free foreign currency accounts
and free reichsmark accounts belonging to the above
categories of persons and entities are blocked but
payments may be made from them to persons in Germany
who are not American citizens and who have legitimate
claims.
Six. Securities may not be sent or taken from
Germany to the United States or in favor of American
citizens,
311
-3- 2614, June 29, 1941 from Berlin
citizens, residents, Entities or branch establishments abroad. Securities may likewise not be transferred
or delivered from depositories in Germany to such
persons or entities.
SEVEN. Otherwise, the disposition of property
within Germany remains subject to the general foreign
Exchange regulations EXCEPT that the transfer of
title to property in Germany, such as the cession of
blocked accounts by the above categories of persons
and Entities to persons in other countries or in Germany
is prohibited.
Eight. Where the foreign Exchange control offices
and commodity control offices are allowed discretion
in the granting of permits they are instructed to
avoid any action which would in any way benefit American
citizens, residents, Entities or branch establish=
ments abroad EXCEPT as provided above with regard to
blocked accounts. The payment of costs of administration
of property in Germany and writeoffs on current accounts
may, however, be permitted.
Nine. The Minister of Economic Affairs reserves
the right to allow EXCEPTIONS to the above restrictions
and prehibitions in cases which are Economically well
founded, particularly if the issuance of a permit appears
in the interests of German Economy.
Text
312
-4- 2614, June 29, 1941 from Berlin
Text and translation of order follow by air mail.
MORRIS
ALC
313
C
0
P
Y
GRAY
GMW
Buenos Aires
Dated June 29, 1941
Rec'd 8:15 p.m.
Secretary of State,
Washington.
645, June 29, 9 a.m.
A responsible Argentine Government official (*)
the Embassy that under new exchange control regulations
scheduled to be promulgated July 1, 1941, exchange
treatment accorded considerable number of imports of
United States origin will be liberalized and that further simplification of regulations will be effected
through the substitution of exchange control numbers by
numbers corresponding to Argentine tariff items. Accordingly, numbers cited hereinafter correspond to items
of Argentine schedule of tariffs.
United States products classified under following
tariff items and now prohibited will be allowed to enter
Argentine without limitation: (1) At official exchange
rate of 3.73 pesos to the dollar: 4308, 4309, 4396,
4399,4401,4404, 4630, 4641, 4677, 80, 4868. (2) At
official exchange rate of 4.23 pesos to the dollar:
314
-2-
1482, 1483, 1916/21, 2310, 2501, 2505, 2585, 2603,
2605, 2607, 3612, 3621, 3761, 3762/65, 4250, 4348,
4432, 4451, 4659, 4906, 1814. (3) At the auction market
rate of exchange: 1139, 1160, 1247/48, 1624, 1873/74,
2062, 2177/79, 2344, 2868, 3396, 3626, 3498, 4388,
4447, 4776.
Parity with Japan and all countries other than the
United Kingdom and neighboring countries will be extend-
ed to a long list of United States products now pro-
hibited or restricted including chiefly earthenware
articles (largely tableware) cotton, rayon and woolen
textiles, cardboard (tariff items 3828-29), toys,
woolen yarn (items 3609 and 11) and rayon yarn (items
3614/18). Articles belonging to this category will be
subject to quotas designed to favor the United States,
according to our informant.
United States products now allowed auction exchange
and which will be granted: (1) official rate of 4.23
pesos to the dollar include chiefly plywood (including
items 1772/74) and silk yarns (items 3613 and 3619):
(3) official rate of 3.73 pesos to the dollar includes
copper sulphate (items 4466), carbonate of soda and
caustic soda.
Our informant states that the projected modifications of exchange control regulation are designed to
conform to the terms of the proposed trade agreement.
TUCK
KLP
Auparent omission
*
314
-2-
1482, 1483, 1916/21, 2310, 2501, 2505, 2385, 2603,
2605, 2607, 3612, 3621, 3761, 3762/65, 4250, 4348,
4432, 4451, 4659, 4906, 1814. (3) At the auction market
rate of exchange: 1139, 1160, 1247/48, 1624, 1873/74,
2062, 2177/79, 2344, 2868, 3396, 3626, 3498, 4388,
4447, 4776.
Parity with Japan and all countries other than the
United Kingdom and neighboring countries will be extend-
ed to a long list of United States products now pro-
hibited or restricted including chiefly earthenware
articles (largely tableware) cotton, rayon and woolen
textiles, cardboard (tariff items 3828-29), toys,
woolen yarn (items 3609 and 11) and rayon yarn (items
3614/18). Articles belonging to this category will be
subject to quotas designed to favor the United States,
according to our informant.
United States products now allowed auction exchange
and which will be granted: (1) official rate of 4.23
pesos to the dollar include chiefly plywood (including
items 1772/74) and silk yarns (items 3613 and 3619):
(3) official rate of 3.73 pesos to the dollar includes
copper sulphate (items 4466), carbonate of soda and
caustic soda.
Our informant states that the projected modifications of exchange control regulation are designed to
conform to the terms of the proposed trade agreement.
TUCK
KLP
Apparent omission
315
C
0
P
Y
PLAIN
KD
Tokyo via Shanghai & N.R.
Dated June 29, 1941
Rec'd. 11:30 p.m.
Secretary of State,
Washington.
899, June 29, 4 p.m.
Today's vernaculars comment favorably on governments
decision extend Chinese National Government loan to maximum
three hundred million yen as announced yesterday by information
board. This action called first concrete step in strengthening
Nanking Government enabling it achieve economic structure.
Loan is characterized blow to Chungking and powers supporting
it. Sent Department via Shanghai.
GREW
WWC
31
Copy:bj:7-3-41
01
315
C
0
P
Y
PLAIN
KD
Tokyo via Shanghai & N.R.
Dated June 29, 1941
Rec'd. 11:30 p.m.
Secretary of State,
Washington.
899, June 29, 4 p.m.
Today's vernaculars comment favorably on governments
decision extend Chinese National Government loan to maximum
three hundred million yen as announced yesterday by information
board. This action called first concrete step in strengthening
Nanking Government enabling it achieve economic structure.
Loan is characterized blow to Chungking and powers supporting
it. Sent Department via Shanghai.
GREW
WWC
as
Copy: 1:7-3-41
316
June 30, 1941.
MEMORANDUM FOR THE SECRETARY'S RECORD
Secretary Morgenthau telephoned Mr. White on
June 30, 1941 at 7:30 a.m.
1. He stated that after reading the memorandum
submitted by the British Treasury on ferrying planes
to Africa he had the idea that it may be feasible to
have the planes ferried over by the Navy personnel
and thereby save the British substantial amounts of
dollar exchange. He asked me to first check up with
our own Legal Division to see whether such action
would be legal and then to take the matter up with
Mr. Cox. If there were no legal or policy obstacle,
he would take up the proposal on Tuesday with
Assistant Secretary McCloy.
2. The Secretary also said he had had lunch
with Mr. J. M. Keynes Friday and that during the
luncheon Mr. Keynes had stated that his mission with
the U. S. Treasury for which he had come to this
country had been completed successfully and that had
it not been for some other matters which he had been
assigned to take up here (presumably with other
agencies), he would return to England.
The Secretary asked me to contact Mr. Keynes
and ask him for a letter from him to the Secretary
confirming the statement that his mission with the
U. S. Treasury had been completed successfully.
How
317
The Secretary was present on
this occasion.
318
ADDRESS OF THE PRESIDENT, AT
THE DEDICATION OF THE FRANKLIN
D. ROOSEVELT LIBRARY, HYDE
1862
PARK, NEW YORK, JUNE 30, 1941.
The dedication of a library is in itself an act of
faith.
To bring together the records of the past and to house
them in buildings where they will be preserved for the use of
men living in the future, a nation must believe in three things.
It must believe in the past.
It must believe in the future.
It must, above all, believe in the capacity of its
people so to learn from the past that they can gain in judgment
for the creation of the future.
Among democracies the building of libraries and museums
for the use of all the people flourishes. That is especially true
in our own land, for we believe that people should work out for
themselves, and through their own study, the determination of their
best interest rather than accept such so-called information as may
be handed out to them by self-constituted leaders.
It is in keeping with the well considered trend in these
difficult days that we are distributing historical collections more
widely than ever before throughout our land. From the point of
view of the safety -- the physical safety -- of our records, it is
wiser that they be not too greatly concentrated. From the point
of view of accessibility, modern methods make dissemination practicable.
This is but one of many new libraries. As President I
accept this newest house in which the people's record is preserved -public papers and collections which refer to one period in our
history.
This latest addition to the archives of America is dedicated at a moment when government of the people by themselves is
everywhere attacked.
It is, therefore, proof -- if any proof is needed -- that this
our confidence in the future of democracy has not diminished in
nation and will not diminish.
Into this Library has gone, and will continue to go, the old
loving care of many people. Most of you who are here All today of are are
friends and neighbors of mine throughout the years. you
in a sense Trustees of the Library in the future.
We hope that millions of our citizens from every part to future of
the land will be glad that what we do today makes available
Americans the story of what we have lived and are living.
I am grateful to all of you for all that you have done.
319
8/1 H
FRANK ALTSCHUL
120 BROADWAY
me
NEW YORK CITY
June 30, 1941
Dear Henry:
Thank you very much for your
recent letter.
I have been in touch with Mr.
Malter Stewart, and also with the Rockefeller Foundation, but do not know as yet
what luck we shall have.
I have received a funder letter from
A
Bloch-Laine expressing an urgent desire to
get out as soon as possible.
With renewed thanks for all
your help, I am
Yours sincerely,
James
me
Hon. Henry Morgenthau
The Secretary of the Treasury
Tashington, D. C.
FRANK ALTSCHUL
June 20, 1941
Dear Walter:
I am enclosing herewith a copy of a
letter from Mr. Frank Altschul. You will
note his reference to the Rockefeller Institute.
Mr. Bloch-Laine was Assistant Director
of the British-French Purchasing Commission
and in the last few days of the debacle was
extremely helpful to the American Government
in letting us know what contracts the French
had and where the various material was 10-
cated. I feel that our Government really
owes him something.
If the Rockefeller Foundation could
see its way clear towards bringing him to
the United States, I would appreciate it
very much.
Yours sincerely,
(Signed) Henry
Dr. Malter Stewart,
Gladstong, New Jersey.
320
321
June 20, 1941
Dear Frank:
I beg to acknowledge receipt of your
letter
of June 16th in regard to Mr. BlochLaine.
I an forwarding a copy of your letter
to Mr. Walter Stewart who is Chairman of
the Rockefeller Foundation, and asking him
whether he will interest himself in Mr. BlochLaine's case.
I will let you know what re-
sponse I get from Mr. Stewart.
Yours sincerely,
(Signed) Henry
Mr. Frank Altschul,
120 Broadway,
New York, N. Y.
322
FRANK ALTSCHUL
120 BROADWAY
NEW YORK CITY
June 16, 1941
Dear Henry:
When Bloch-Laine was over here I used to
hear from him quite frequently regarding the extremely
amiable way in which you always received him, and
since his departure I have heard at various times that
you have asked after him in a manner expressing a real
personal interest.
I have just had a letter from him from which
I quote as follows:
"About six weeks ago I gave a letter for you
to my old friend Roger Picard, professor at the
"Faculte de Droit Rockefeller Institute. I just
got a card from him from Lisbon saying he hoped
to sail next week! Picard believes the Rockefeller people would willingly extend a similar
invitation to your humble servant. - I told him
to have a chat with you about it. Although I have
never done any lecturing nor writing, so to speak,
Picard insists that I qualify as an "economiste
distingue". If the Rockfeller people think so too
and if they ask me, I shall feel very much honored
and accept with pleasure.
"I hardly need say that the monetary side of the
question is of secondary importance but I think
some valuable transportation facilities are provided and I believe some kind of financial compensation should at least be mentioned so as not to differentiate with others.- If I am to see you again in
the near future and, since most of the work of 11-
quidation is now done, it is my earnest desire - I believe this is thebest - if not the only way of succeeding without too much difficulty and delay.
"In order to gain time, an offer could very probably be transmitted by cable through the American
Embassy in Vichy where I am well known. Your friend
Matthews is still there and very helpful.
323
"As for qualifications: I happen to be Doctor in
Law, to have graduated with a first prize from the
"Ecole des Sciences Morales & Politiques in 1907 or
1908, to have been received, also first, at the competitive exam for l'Inspection des Finances in 1911,
to have been Financial Agent of the French Government
in New York during theWorld War and Director General
of Purchases in 1939-40, and to have occupied myself
between the two wars with international banking and
such like amusements."
I should like to help in any way I can, and I
shall take this matter up with the Rockefeller Institute
in my own name after hearing from you, although I have no
particular access to them that would lead me to anticipate any favorable action.
Before doing so, however, I wanted to ask you
whether you could think of anything you could consistently
do that would help advance Jean's desires. I can only
say that if he is now willing to come to the United States,
leaving his family in occupied France, there must be reasons of impelling importance urging him in this direction.
Knowing how busy you are, I dislike bothering
you with a personal matter, but I felt from what Jean
told me that you and he had formed the kind of mutual
regard that made me feel justified in imposing upon you.
Yours sincerely,
June
324
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE June 30, 1941
TO
FROM
Secretary Morgenthau
John Wiley
I have just received a note from Herve Alphand saying that
he is coming to Washington tomorrow when he expects to be received
by you at 3:00 P. M. He sends me, for your information, the text
of his letter of resignation. A translation is attached and I
think you will read it with interest and sympathy.
and
325
June 14, 1941.
Your Excellency :
In accordance with our conversation of the eleventh
of June, may I ask you to transmit my resignation to His Excellency,
the Minister of Finance.
This decision, which I consider myself bound to make,
twelve months after the signing of the Armistice, may appear to you to
require some explanatory comment. I shall, therefore, attempt to furnish
you, Your Excellency, with as clear and complete an explanation as possible.
Permit me to affirm, at the outset, that my action implies
no surrender of the ideas which I have had the honor of advocating, on
your behalf, during my stay in the United States. I particularly believed,
and I persist in thinking, that it was possible to replenish France's food
supply with American products without aiding thereby the military activity
of Germany. The success of these negotiations not only would have
alleviated the suffering of the French people, which feels the consequences
of German requisitions so cruelly, but would also have sustained its
spirit of resistance. It is, then, in my opinion, a political mistake
on the part of the English and the Americans not to have understood, at the
opportune moment, the benefit which they themselves might have derived
from a generous feeding agreement. The stand taken by the Governments
of the United States and of Great Britain perhaps explains the recent
developments of French policy. It does not excuse them, as far as I
am concerned.
I am indeed profoundly convinced that on the one hand
France cannot hope to exist as a nation unless Germany is defeated, and
that, on the other hand, the present attitude of the French Government
-2-
326
tends to facilitate a German victory. Do you think that, in these
circumstances, it would be honest of me to remain at the post which I
occupy today ?
Some of these thoughts would have appeared fundamental
truths to us one year ago. German propaganda has permeated our psychology
so insidiously, shattering, in the space of several months, conceptions
acquired in our childhood and for centuries transmitted from father to son
in each French family, that the elementary truths themselves are suspect
today and are subjected to discussion.
I have heard certain individuals amongat us, for whom the
victory of Germany is already a fact, pretend that, in the face of this
hypothesis, a sort of charm natural to the French, a talent for invention
and organization - which unfortunately scarcely manifested itself in the
course of the last years - would render the participation of our country
indispensable in establishing a new Europe; that thus, in the future concert
of nations, France would be called upon to play, with the consent of
Germany, a role worthy of its past and its genius.
Despite numerous examples, recent or old, despite the not
at all ambiguous warnings of Mein Kampf, despite the weights of evidence,
those illusions are still harbored by some of our compatriots.
May I be permitted to refer to an experience of four years
of Franco-German discussions ? As Director of Commercial Agreements, I used
to meet for a fortnight every three months notorious Germans, Schacht, Abetz,
my colleague Hommen, who now directs the German Commission of Wiesbaden,
and used to regulate with them the economic relations between our two nations
I was able to analyze their character during these negotiations, and we ended
by understanding one another because I spoke to them firmly, often even
brutally.
3-
327
My conversations before the war, and the contacts which I
have had since then with the functionaries or the industrialists in touch
with the German Authorities, leave me in no doubt as to the lot which would
be reserved to France in a Germanic Europe. It is this picture which the
French should never lose sight of in seeking to define their duty.
Economically, France will be the vassal of Germany. The
Northern regions, joined to Belgium, will furnish the Reich with high
quality industrial commodities. They will receive in exchange, through
a European clearing system, food products; but following the method experienced
by the Balkans before the war, and by France since then, the rate of exchange
will be so fixed that having given much, we shall receive very little and
the standard of living of the inhabitants will be reduced to a strict minimum.
Germany will swamp the world with this cheaply acquired merchandise, forcing
out all her former competitors and thus procuring for herself the raw
materials which are indispensable to her.
Alongside of these industrial slaves, the agricultural slaves
of Central and Southern France will furnish, by an analogous financial
mechanism, the staple foods, the quota of which will be fixed by the Reich.
Needless to say, only the manufacture, under German control, of luxury
articles will be permitted.
The former French colonies will be exploited by a tripartite
organization of Germans, Italians and Frenchmen, in which we shall consequently
become a minority.
The practical operation of this system is currently being
studied in all details by the Bureau of Economic Organization of the
Reischawehr, with headquarters in Brussels.
A country which would be thus dominated economically could
not bepolitically
independent. Presumably, France will no longer have
--
328
diplomatic representation abroad. Her delegates will have the right to a
seat at the European table, but can only express desires and obey orders.
Do not think that I am surmising: this picture was brought back from
Viesbaden last July by a high French official.
It is a necessary corollary that we shall be compelled to
abandon the traditions of France and her ways of thinking; history learned in
the schools will be distorted at German will. The men who invent, who write,
and that force of resistance in our country, formerly expressed by the
bourgeoisie, will be mercilessly reduced to silence and inactivity, or
annihilated. Every Frenchman will become nothing more than a human machine
functioning for the sole satisfaction of German needs. That is what Hitler
rather sinisterly calls the "new European order".
One may find this picture too sombre, one may claim that in
the course of the initial conversations between Admiral Darlan and the German
Authorities much more enticing perspectives were unveiled to us. It is
certainly to Hitler's advantage to adopt, for the time being, a conciliatory
attitude toward the French. Perhaps that is why he dazzles them with a
future full of promises in the event of the Reich's victory. It is plainly
a trap, and only those who know nothing of Germany, of German character and
history, and who believe in the magnanimity of Hitler, can be taken in by it.
They imagine that the chiefs of the German army, confronted with the possibility
of destroying or annihilating the hereditary foe that we are, will let the
occasion slip by.
For an indeterminable period, France will be the protectorate
of the Reich. French Administration in the metropolis, as well as in the
Empire, will function for the benefit and under the control of Germany.
Deprived of weapons, and of the heavy industries that produced these,
demoralizedandunsupported. undoubtedly decimeted has the +ransfer of
-5-
329
populations, how could the French people, whatever their views, hope to
throw off the yoke ?
Nevertheless, this is, Your Excellency, the hypothesis which
the French Government accepts. Not only does it accept it, but it seems to
desire it, to prefer it to any other. The speech made by Admiral Darlan on
May 31st no longer leaves any room for doubt in this respect.
At a time when the sole hope for the overwhelming majority of
Frenchmen lies in a German defeat, and therefore in an Anglo-American victory,
the French Government proclaims that a British victory would give us the status
of dominion while a German victory would permit us to remain a great European
and colonial power. Admiral Darlan - whose addresses seem to enjoy the
approval of the Marshal - Mr. de Brinon, Mr. Laval, affirm this, contrary to
all facts, and, without offering the shadow of an explanation, present this
argument to a people which is said to be the most intelligent on the face of
the earth.
If, for my part, I consider the victory of Great Britain to
be the best solution possible for us, it is not merely because I have blind
faith in English generosity or in the words of Mr. Churchill. I willingly
recognize with the Admiral that the English, like many other people, are
selfish and that in the past twenty years they have committed grave errors.
But I also know that the interest of England, supported by the United States,
demands that there exist in Europe a France sufficiently strong to counterbalance the Germanic mass. The German interest, on the contrary, presupposes
the subjugation of all Europe before embarking on world domination. This is
so evident that one entertains scruples in dwelling on the matter at such
length. May I add that, even admitting - what I have no reason to suppose that after an English victory France will be transformed into a dominion, I
prefer to become a subject of the British Empire rather than a protege of the
-6-
330
Reich; the rights and laws of Canada appear infinitely more liberal to
me than those of present day Czechoslovakia.
The doctrine of the French Government is thus clear :
collaboration with Germany, furtherance of the hoped-for German victory,
that is, precipitation of an English defeat. The events in Syria are a
decisive illustration of this thesis. It is certain that in attempting to
control the States of the Levent, England, and our compatriots who fight at
her side, have no other aim save that of halting the German advence towards
the Near East, which might lead to a German victory. In opposing this
action the French Government is playing directly into the hand of Germany,
which, in a Machiavellian way, has temporarily retired from the field of
battle, leaving the two Allies of yesterday face to face. I cannot, for
my part, subscribe to a policy which is so contrary to the permanent
interests of our country.
I vainly seek an excuse for the attitude taken by the
French Government : will we, at least, derive immediate gains from our
concessions ? We have not yet heard that the treatment imposed upon us has
been softened; the line of demarcation between the two zones has not been
modified; despite the specific stipulations of the Armistice, Paris is still
under enemy control; the crushing indennity which we must pay, and which
permits the scientific plunder of all our agricultural, industrial and
financial resources, has not been perceptibly reduced; the requisitioning
of food, which causes the French people to suffer starvation and which
threatene the future of the race, has not come to an end; the number of our
released prisoners is insignificant while the majority of the prisoners
of "non-collaborating" Belgium have been liberated. Moreover, a temporary
lightening of our terrible burden should never allow us to forget the fate
reserved for us should Germany defeat England.
331
-7There are those who will say that the French Government
acts thus because it cannot do otherwise. I would admit this explanation
but it is contrary to the declarations of our Government, which misses no
opportunity to proclaim the full independence of its acts.
There are, finally, others who will maintain that the
policy of the French Government is based on the certitude of a German
victory. From the last conversations which I had in Bordeaux and in
Vichy with Mr. Beaudoin and Mr. Bouthillier I received the impression that
this was the firm conviction of the authorities responsible for the future
of the country. I have every reason for believing that this opinion still
prevails today. To this one must reply that no one can say, at the present
moment, what the outcome of the conflict will really be.
In accepting collaboration with Germany, France tilts the
scale in the direction which is the most unfavorable to its essential
interests. In this kind of struggle any assistance, however slight, has
a decisive influence.
Even if we were assured of a German victory, it would be
our duty to resist step by step, to recognize none of the victor's claims,
to refrain from becoming associated with any of his enterprises. "Take
if you wish, you are the stronger; but we will not give to you," such
should be our attitude. Such was the attitude of the Reich in 1918.
You are too familiar, Your Excellency, with the character of the Germans
not to know that the weakness of those dealing with them merely engenders
their contempt, that they respect firmness alone, that wherever in this
crushed France there was a mayor (did you not experience this yourself?),
a priest, an officer who made a stand, the Germans ended by retreating;
that on the contrary, the concessions granted by us only served as pretexts
for new and accrued demands.
-8-
332
When I was leaving France in August of 1940, the Government
relieved me of functions in which I would naturally have participated, in the
mic relations.
The most intimate
establishment of Frence
collaborator of the Minister of Finance confided to me then the reasons for
the measure which concerned me $ "You have shown too much resistance to
Germany in the past to hope to continue to work with us today," he said to me.
This statement, which personally afforded me much pleasure, had also filled
me with consternation, because it revealed a complete misunderstanding of
German psychology.
It is because I realize where this state of mind is leading
us, and because I an certain that the very existance of our nation is
imperilled, that I have made the decision to sever the ties which bind me
to those who administer the French State today. It is with very great
sadness that I see myself constrained to take such a grave step. For two
and a half centuries, without interruption, all my forebears, magistrates,
military men, engineers or diplomats, have constantly served the Administration
of their country, and this under all the political regimes - Kingdom, Empire
or Republic - because they were always convinced that they were serving
France. It is because I have not the same certainty today that, the first
in a long line, I renounce this family tradition. I am not one of those
who believe that one can perform his duty towards his country while
remaining a functionary of the Government and disapproving of ani oriticizing
the fundamental principles of its policy.
hope, Your Excellency, that after having read these lines,
I
you will not be able to doubt the feelings which motivate my action. Do
a
not think that there is any pride in my case or any desire to teach anyone
lesson. This decision is diotated to me by instincts which are much deeper
and which have little bearing upon my personal interests. I simply believe
333
-9-
that one of my age, too young to have taken part in the first war and
whom his duties have removed from the second, must now make sacrifices
for what he considers in the best interests of his country.
I have still to thank you, Your Excellency, for the
kindness which you have always shown me. I have never concealed my views
from you, and you have always accepted my ideas with the greatest understanding.
In transmitting my resignation to the Government may I hope that you convey
the significance of and the reasons for the decision I have reluctantly
arrived at.
Please accept, Your Excellency, the assurance of my
respectfully devoted sentiments.
334
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE June 30, 1941
Secretary Morgenthau
John Wiley
I have received a note from Genevieve Tabouis in which
she says that last Wednesday she had a very interesting conversation with Mr. Nelson Rockefeller who received her with Dean
Acheson. They foresee the possibility of sending her to South
America next September. The matter is now before Mr. Rockefeller's
committee and she hopes that you might find it possible and con-
venient to give the project your support. She will be in Washington next Wednesday and will look me up.
335
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
STRICTLY CONFIDENTIAL
June 30, 1941
Secretary Morgenthau
Mr. Wiley
FROM
ONI reports, June 20, 1941, concerning the types, strength, and distribution of the Soviet Navy as of March 1941. This shows that the Soviets have
a total of 253 submarines of which 98 are in the Pacific Fleet, 45 in the
Black Sea Fleet, and 110 in the Baltic Fleet. There is also said to be one
aircraft carrier whose whereabouts is unknown. There are 3 battleships, 7
cruisers, 7 destroyer leaders, 18 mine layers, 70 mine sweepers, 8 despatch
vessels, and with regard to the following the precise number is subject to
doubt: 1,500-ton destroyers 24, old-type destroyers 15, torpedo boats 23,
torpedo cutters 375, and depot oilers 10.
Green
House
336
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE June 30, 1941
TO
FROM
Mr. White
Mr. Gass
Subject: Bernard M. Baruch, American Industry in the War, N.Y., 1941,
pp. xii t 498.
A reader unblinded by Mr. Baruch's reputation who goes to this
book for suggestions on how the United States can today enlarge its
defense effort and perfect the organization of its defense economy
will close the book in disappointment.
The book consists of three parts, written at intervals of ten
years, one in 1921, one in 1931 and one in 1941. Each later part
shows some progress, some refinement of thought, by comparison with
the earlier ones. The last part (pages 465-477, entitled Priorities The Synchronizing Force)definitely merits reading. Priorities were
always Mr. Baruch's strong point, and in this last part he explains
admirably their strategic significance for the whole system of war
economic planning and war production.
For the greater part, however, this book is now merely of historical interest. It does not stand on the frontier where new ideas
are being suggested for expanding our defense effort and improving its
administration. It does have some strong points, particularly in its
emphasis on the necessity of priorities, price controls and centralized
administrative responsibility for defense output. But the book's strong
points are much more than counterbalanced by the following grave deficiencies:
1. It has no conception of the possibilities of expanding our
defense production through increasing employment and plant
facilities.
2. It is timid and unimaginative in its proposals for diverting
industrial resources from civil to military purposes.
3. It approaches but does not reach the basic idea that what is
needed for an efficient war economy is centralized government production planning for the whole economy, with authority out
under proper legal and political safeguards -- to carry
the plans.
4. Its ideas about the proper reorganization of the government
agencies charged with administering the war economy are unjus-
tifiably conservative.
337
-2-
Division of Monetary
Research
Mr. Baruch appears to have been mesmerized by his 1918 experience with
the War Industries Board. He refers constantly to what was done in 1918
as if it were self-evident that the 1918 organization was so successful that
it should be reproduced today.
Actually the War Industries Board was a rather jerry-built structure.
It had full authority over priorities but could enforce that authority only
by securing the cooperation of other independent agencies, such as the Fuel
Administration and the Railroad Administration. It had practically no authority over price fixing. It had merely a vague "clearing" authority with
regard to government purchasing and contracts.
For the rest, the War Industries Board consisted of a large number of
"commodity sections" which brought together the representatives of the
government agencies which wished to buy (what Mr. Baruch calls "organized
demand") and the representatives of the trade associations which wished to
sell (what Mr. Baruch calls "organized supply"). Government purchasers
net trade association sellers through the mediation of the War Industries
Board's commodity chiefs, who were generally the most distinguished members
of the trade group in question. It is very unlikely that a Board with this
kind of personnel and so amorphous an organization will be of the character
to afford all possible protection to the public interest or of the quality
to do a great job of production planning.
To take the volume section by section,
1. Pages 1-369, which are merely a reprint of Mr. Baruch's March 1921
Report Of The War Industries Board, are particularly disappointing. The
Report was written in the first flush of victory, and it is full of un-
critical self-congratulation.
The limits on the justifiable self-congratulation of the War Industries
Board are very narrow. The Board never succeeded in expanding production; In 1916 the
it merely diverted production from civil to military purposes. = 100);
index of physical manufacturing output 1/stood at 259 (base, succeeded 1899 in
in 1917 it was 257 and in 1918 it was 254. The Board never to rise
stopping inflation; its own index of 1366 commodities 2/continued on the
throughout 1917 and 1918 and was twice as high at the armistice as
day the war began.
Solomon Fabricant, The Output of Manufacturing Industries, 1899-1937,
National Bureau of Economic Research, 1940, page 44.
2 Wesley C. Mitchell, History of Prices During the War, War Industries
Board, 1919, vol. I, page 26.
338
-3. -
Division of Monetary
Research
2. Pages 373-462, written in 1931, present Mr. Baruch's case for
price stabilization during war-time. This section has more iron and general less
soft soap than the 1921 Report. Indeed it is hard to recognize the 1921
author in the man who argues so aggressively that war-time controls need
legal authority and cannot be based on agreement, negotiation, leadership,
and voluntary sacrifice. He says, striking an entirely new note:
"My recollection is of a long and tedious period of
bickering.. recall a bitter controversy Owing to
the inability of the government to reach agreement
with the steel industry I was compelled to - and did secure authority from the President to commandeer cer-
tain companies in that industry if it should become
necessary We must have statutory authority in the
broadest conceivable language.. We use a good many
euphenisms during war for the sake of national morale,
and this one of 'price fixing by agreement is a good
deal like calling conscription 'Selective Service' and
referring to registrants for the draft as 'mass volunteers' Let us make no mistake about it: We fixed prices with the aid of potential federal compulsion and we
could not have obtained unanimous compliance otherwise".
On the whole this section is a creditable performance -- except in moments of enthusiasm, such as that when (page 415) Mr. Baruch argues that ex-
cess profit taxes stimulate inflation. But this section contains nothing new
to serious students of price problems. Furthermore, Mr. Baruch's whole point
in 1931 was that no price control would work equitably and effectively if it
limited itself to individual commodities, and that an effective price control
would have to use the "price stop it principal, stabilizing all prices as of
some base date. In 1941 Mr. Baruch was ready to give up this most essen-
tial point in his 1931 thesis. He says (page 473):
"There is no need for such a thoroughgoing plan until a
general rise in the price level is threatening. If industry is working below capacity and the price level is
resting fairly stable, it will be sufficient to attack
the prices of individual commodities where scarcity is
causing the price to be bid up above all equitable cost
relationships."
This is good sense but it destroys the distinctiveness of Mr. Baruch's
position.
339
-4-
Division of Monetary
Research
3. Pages 465-477, which were written recently, are almost wholly unexceptionable. They contain Mr. Baruch's best thought on priorities,
rationing, price control and related topics. His best is quite good.
But even here there is a residual timidity and lack of imagination,
particularly as concerns the diversion of industrial resources from
civil to military purposes. As in most current discussion, diversion
stops before it reaches the one point at which it is really efficient,
namely where whole plants (but not necessarily whole firms) are diverted from civil to military purposes. All other measures, which work
not by taking whole factories but by reducing their scale of opera-
tions, release little labor and no plant and equipment. The British
have slowly become aware 1/ of this problem and are meeting it by their
policy of "concentration". Mr. Baruch, like the officials in O. P. M.
who have been making "plans" for curtailing automobile output, does
not seem to be aware of the basic terms of the problem.
See on this point the brilliant theoretical work of Thomas Balogh Oxford
and the related statistical studies in the Bulletin of The
Institute Of Statistics.
1
340
liss Chauncey
June 30. 1941.
CONFIDENTIAL
Dear Mr. Enoke:
Permit no to acknowledge, on behalf of the
Secretary, the receipt of your letter of June 26. 1941.
enclosing your compilation for the week ended June 18
showing dollar disbursements out of the British Repire
and French accounts as the Federal Reserve Bank of New
York and the means by which these expenditures were
financed.
Faithfully yours,
(Signed) H. Merle Cochran
R. Merle Coohren.
Technical Assistant to the Secretary.
L. V. Knoke, Require,
Vice President,
Federal Reserve Bank of New York,
New York, New York.
HMC:dm:6.30.41
341
For Miss Chauncey
FEDERAL RESERVE BANK
OF NEW YORK
June 26, 1941.
CONFIDENTIAL
Dear Mr. Secretary:
Attention: Mr. H. Merle Ceohran
I am enclosing our compilation for the week
ended June 18, 1941, showing dollar disbursements out of
the British Empire and French accounts at this bank and
the means by which these expenditures were financed.
Faithfully yours,
(Signed) L. W. Knoke
L. W. Knoke,
Vice President.
Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, D. c.
Enclosure
COPY - da - 6/28/41
ANALYSIS OF BRITISH AND FRENCH ACCOUNTS
DEBIT
First year of war
3/29/39-8/28/40)*
1940
Aug. 29 - Oct. 2
Oct. 3 - 30
Oct. 31 - Nov. 27
Nov. 28 - Dec. 31
NO period through Dec.
1941
Proceeds of
Sales of
Securities
Gold
Official)(b)
Other
1,793.2
605.6
1.187.6
828.2
,356.1
52.0
420.1
35.0
866.3(e)
516.8
244.5
208.9
271.5
6.0
31.4
7.9
196.7
241.0
167.8
72.5
23.9
198.5
160.5
6.0
32.0
8.6
0.5
201.1
39.9
210.0
18.0
234.6
206.8
27.8
259.5
198.0
111.4
1,356.72
793.1
259.9
101.4
237.9
218.9
91.0
2,782.3
1,425.
Credits(c)
31.5
26.0
60.6
36.6
2.1
2,109.5
108.0
575.6
10.8
878.3
176.2
52.0
26.0
31.7
48.8
62.5
- 63.2
103.7
72.0
62.2
8.2
1.7
0.2
0.7
125.6
15.0
78.3
+92.9
0.9
-31.6
0.4
137.8
26.8
157.8
32.1
101.
24.1
122.6
90.6
32.0
27.0
19.6
7.4
34.6
30.
5.3
33.9
-
35.3
4.0
25.9
23.2
6.4
11.7
2.0
9.7
11
16.
-
27.8
23.
4.1
37.1
-
18
May 29 July 2
July 3 July 30
in Balance
1.8
18.5
34.7
May 1 - May 28
Dear. (-)
Total
Debits
Debits
162.7
Apr. 3 - Apr. 30
(+) or
tures(a)
Other
197.4
164.6
229.7
126.0
Jan. 2 - 29
Jan. 30 Feb. 26
Feb. 27 - Apr. 2
23
Net Inco
Total
Credits
Total
Debits
PERIOD
Gov't
Expendi
26.G
6.3
32.0
52.7
4.0
30.6
Strictly
Cook Ended June 18, 1941.
In Killions of Dollars)
0.8
Gov's
Expendi-
BANK
Certificential
FRANCE
OF
of Gold
other
Other
Total
tures (d)
Debits
Credit a
Sales
Credits
416.6 (e)
449.7
1.095.3(e)
900.2
195.1(0)
1.3
1.3
4.4
4.2
0.3
0.2
0.5
-
0.7
0.7
-
2.1
0.6
1,098.4
0.1
456.9
421.4
1.7
0.2
0.7
-
-
-
-
-
-
0.2
1.6
0.9
0.9
0.4
0.8
+229.0
7.3
0.5
900.2
0.5
in Balance
-
-
0.7
0.6
0.1
1.5
198.2
+220.1
0.5
0.2
1.2
1.6
0.9
0.9
0.8
+ 0.4
0.3
t.0.3
July 31 - Aug. 27
Second year of var
(29/40-8/27/41)
Aug. 28 - Oct. 1
Oot. 2- Oct. 29
Oct. 30 - Dec. 3
Doo. 4 - 31
BANK ENDED:
May 28
June 4
Averago Weekly Expenditures
Outbreak of War
-
$19.6 million
27.6 million
England (through June 19)
49.0 million
Enrland (since June 19)
For monthly breakdren see tabulations prior to April 23, 1941.
France (through June 19) 194
3.0
34.1(f)
+ 7.6
0.2
0.3
0.2
-
0.2
0.1
-
20.4
- 1.4
0.2
-
-11.5
0.2
+9.3
20.4(g)
Transfers from British Purchasing Commission to
Bank of Canada for French Account
million
Feek ended June 18,1941
million
162.7
Cumulation from July 6
0.3
-
-
0.2
0.1
0.3
-0.1
=20.1
See footnotes on reverse side)
AHALYSIS OF CANADIAN AND AUSTIC ACCOUNT
Week Ended June 18. 1941. Confidential
(In Millions of Dollars)
Total
Debits
to
official
British
PERIOD
Other
Debits
Credits
A/C
First year of war
(8/29/39-8/28/40)*
323.0
Aug. Oct. 2
44.3
Oct. 3-30
Oct. 31 - Nov. 27
Nov. Deo. 31
Mary through Dec
26.7
35.2
477.2
Jan. 2-29
Jan. - Fob 26
Feb. Apr. 2
33.7
31.1
60.9
Apr. 3 - Apr. 30
34.9
May
May
39.2
May 28
July
30.0
27.3
0.2
8.7
2.5
6.2
8.0
14.3
0.3
0.4
1.9
10.1
7.5
2.6
16.7
13.7
3.7
34.4
3.1
0.6
2.5
7.9
3.6
4.4
12.6
4.8
110.7
41.0
+230.
57.9
14.5
4.8
43.4
15.0
2.0
-
35.2
8.0
50.6
707.4
534.8
34.9
-
39.2
25.6
16.9
14.3
23.1
-
-
-
-
20.9
-
-
-
12.5
15.8
-
-
6.8
3.2
0.2
6.8
19.1
3.8
14.9
10.5
12.9
9.3
1.0
- 13.7
0.5
4.8
-
5.0
1.7
0.8
5.8
2.8
-
5.4
Credits
6.8
52.4
6.8
3.2
4.8
3.3
5.0
13.7
2.8
5.9
5.4
4.9
1.8
0.4
0.2
Deor. (-)
in Balance
Sales
36.1
14.0
49.2
42.5
60.9
Gold
27.3
28.6
69.6
60.6
-
Credits
3.9
26.7
31.1
Debits
A/C
31.2
-
-
Other
+181.7
16.4
33.9
24.3
46.0
35.9
in Balanoo
Official
British
32.4
43.9
33.7
Total
Debits
38.7
44.3
-
Credits Dear. (-)
20.9
-
1941
For French
A/C
412.7
16.6
For Own
() or
Other
A/C
504.7
48.0
Not Incr
British A/C
Sales
306.4
16.6
1940
July
of
Gold
Total
BAN - ENTRALTA
6.1
4.9
6.7
1.3
0.7
6.5
1.4
2.2
2.1
1.5
4.8
50.1
2.0
0.5
2.0
4.5
12.5
5.1
1.7
0.6
12.5
2.6
4.6
4.1
1.2
1.3
2.0
-
+
0.8
1.8
7.91
3.1.
0.5
2
July
Aug. 27
33
Jul
war
of
(8/ -8/27/41)
Aug Oct. 1
Oot.
Oct-30
Deo.
4
Oct. 29
Doo. 3
31
WEEK ENDED:
28
June 4
11
18
12.5
11.3
5.7
11.8
0.3
12.5
11.3
4.4
9.9
4.1
5.1
4.0
3.8
-
11.8
26.0
3.5
-
7.6
War
Weekly Average of Total Debits Since Outbroak of
million
0 18
Through June 18, 1941
-
-
- 8.1
1.8
-
0.2
6.3
-1.4
2.1
0.2
- 1.7
1.5
-
1,5
0.6
-
+14.2
3.4
-
3.4(b)
0.2
-
22.5(a)
-
2.1
-
0.2
0.2
0.6
0.2
(a) Includes $20 million received in connection with payment by the R.F.C. for the purchase of
aluminum from the Aluminum Co. of Canada.
For monthly breakdown see tabulations prior to April 23, 1941. (b) $3 million transferred to British account.
1.4
-1.9
-0.9.
=3.2
(a)
Includes payments Yord Purphasing Commission, British Air Ministry, British Supply Board
Supply Timber Control, and Ministry of Shipping.
(b) Estimated figures based on transfers from the New York Agency of the Bank of Montreal, which apparently represent
the
proceeds of official British sales of American securities, including those effected through direct negotiation. In addition
to the official selling. substantial liquidation of securities for private British aconunt occurred, particularly during the
early months of the wet. although the receipt of the proceeds at this Bank cannot be ident ified with any accuracy. According
to data supplied by the British Treasury and released by Secretary Morgenthau, total official and private british liquidation
of our securities through December, 1940 amounted to $334 million.
(a) Includes about $85 million received during October, 1939 from the accounts of British authorized banks with New York banks,
presumably reflecting the requisitioning of private dollar balances. Other large transfers from such accounts since October,
1939 apparently represent the acquisition of proceeds of exports from the sterling area and other currently adoruing dollar
receipts.
(d) Includes payments for account of French Air Commission and French Purchasing Commission.
(e) Adjusted to eliminate the effect of $20 million paid out on June 26, 1940 and returned the following day.
(f) Includes $18.0 million representing the final payment on the sale of the American Viecose Corporation; also includes $3.0 million from the
Commonwealth Bank of Anstralia and $7.0 million representing proceeds of rubber and tin exporte from Singapore.
(g) $20 million transferrel by order of French Treasury to account of French Fontmaster General in N.Y.C. bank.
345
TREASURY DEPARTMENT
Dochran
socoa
INTER-OFFICE COMMUNICATION
B:
8.
Chauncey
DATE
June 30. 1941
Miss
For
TO
Secretary Morgenthan
Mr. Cochran
FROM
STRICTLY CONFIDENT
Official sales of British-owned dollar securities under the vesting
order effective February 19, 1940:
$ Proceeds of
Shares Sold
June 23
24
25
26
27
28
$ Proceeds of
Bonds Sold
Total
252,045
146,446
149,897
152,654
99,453
9,617
3,718
81,007
24,991
53,395
66,743
Nil
255,763
227,453
174,888
206,049
166,196
9,617
810,112
229,854
1,039,966
35,705,945
306,941,066
35,935,799
307,981,032
Sales from
Feb.22,1940
to June 21,1941 271,235,121
Total
Feb.22,1940
to June 28,1941 272,045,233
$ proceeds of non-vested securities sold
June 14, 1941 - June 21, 1941
proceeds of non-vested securities sold
Sept. 1. 1939 - June 14, 1941
$ proceeds of non-vested securities sold
Sept. 1. 1939 - June 21, 1941
m
307,981,032
200,000
228,100,000
228,300,000
GRAND TOTAL
228,300,000
536,281,032
346
Miss Chauncey
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
June 30. 1941
DATE
Secretary Morgenthau
TO
Mr. Cochran
FROM
STRICTLY CONFIDENTIAL
Official sales of British-owned dollar securities under the vesting
order effective February 19, 1940:
No. of Shares $ Proceeds of Nominal Value $ Proceeds of
Shares Sold
Sold
June 23
24
25
26
27
28
8,533
3,330
10,621
12,310
8,425
200
43,419
of Bonds Sold
252,045
146,446
149,897
152,654
99,453
9,617
810,112
3,000
162,000
89,000
101,000
113,000
Bends Sold
3.718
81,007
24,991
53.395
66, 743
Nil
Nil
468,000
229,854
271.235.121
43,205,350
35,705,945
272,045,233
43,673,350
35,935,799
Sales from
Feb.22, 1940 to
June 21, 1941
9.434.087-1/2
Total
Feb.22, 1940 to
June 28, 1941
pm
9,477,506-1/2
347
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE June 30, 1941
TO
Secretary Morgenthau
CONFIDENTIAL
FROM Mr. Cochran
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
Purchased from commercial concerns
£36,000
£60,000
The Federal Reserve Bank of New York purchased £2,000 in registered sterling
from the New York agency of the Swiss Bank Corporation.
In the open market, sterling was quoted at 4.03-1/2. Transactions of the
reporting banks were as follows:
Sold to commercial concerns
Purchased from commercial concerns
£ 2,000
£ 6,000
The Uruguayan free peso, which has been steady of late at the rate of .4450,
moved off today to close at. . 4400.
The Cuban peso discount narrowed to 1%, as compared with 1-3/16% on Saturday.
In New York, closing quotations for the foreign currencies listed below were
as follows:
Canadian dollar
11-11/16% discount
Argentine peso (free)
.2380
.0505
.2070
Brazilian milreis (free)
Mexican peso
In Shanghai, the yuan was again quoted at 5-13/32 and sterling remained
at 3.93-1/2.
There were no gold transactions consummated by us today.
No new gold engagements were reported.
In London, a price of 23-3/8d was again fixed for spot and forward silver,
equivalent to 42.444.
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 34-3/44.
We purchased 175,000 ounces of silver from the Bank of Canada under our
regular monthly agreement.
a 348
-2-
During the month of June, our purchases of silver under the Silver Purchase
Act amounted to 3,617,900 ounces, the sources of which were as follows:
Type of Silver
Ounces
New production
1. From various countries
2. From Canada under agreement
Secondary materials
2,386,900
1,200,000
31,000
Total
3,617,900
It will be noted that, for the first time since July, 1940, our monthly purchases
from the Bank of Canada under agreement reached the agreed monthly limit of
1,200,000 ounces.
pm.
CONFIDENTIAL
349
EXPORTS OF PETROLEUM PRODUCTS, SCRAP IRON AND SCRAP STEEL
FROM THE UNITED STATES TO JAPAN, RUSSIA, SPAIN, AND GREAT BRITAIN
AS SHOWN BY DEPARTURE PERMITS GRANTED
Week ended June 28, 1941
RUSSIA
:
JAPAN
SPAIN
GREAT BRITAIN
:
PHROLEUM PRODUCTS
Fuel and Gas 011 (including
Diesel 011)
226,500 Bble.
--
--
72,000 Bbls.
120,400 Bbla.
---
--
--
--
--
--
---
----
239,000 Bble.
110,000 Bbls.
--
--
--
--
23,597 Bbls.
1,041 Bbls.
--
--
--
--
43,000 Bbls.
--
--
--
8,447 Tons
--
--
--
6,714 Tons
431,750 Bbls.
Orude -
Blended or California
High Octane Crude*
All Other Crude
Gasoline -
Gasoline A**
Gasoline B*
--
11,700 Bbls.
All Other Gasoline
Lubricating 011 -
Aviation Lubricating 011***
All Other Lubricating Oil
--
8,897 Bbls.
Tetraethyl Lead***
"Boosters", such as IsoOctane, Iso-Hexane, or
Iso-Pentane
-.
SCRAP IRON AND SCRAP STEEL
Number 1 Heavy Melting Scrap
All Other Scrap
Office of the Secretary of the Treasury, Division of Research and Statistics.June 30, 1941.
Source: Office of Merchant Ship Control, Treasury Department.
Any material from which by commercial distillation there can be separated
more than 3 percent of aviation motor fuel, hydrocarbon or hydrocarbon
mixture - President's regulations of July 26, 1940.
Aviation Gasoline.
As defined in the President's regulations of July 26, 1940.
action!
touse
350
THE UNDER SECRETARY OF THE TREASURY
WASHINGTON
June 30, 1941
MEMORANDUM TO THE SECRETARY:
INSTALMENT CREDIT
In response to your request for a memorandum as to
whether anything has been done in Washington to study
ways and means of controlling instalment buying, who is
making such a study, if any, and what progress has been
made.
The Problem
About one-eighth of the country's total retail sales
is sold on the instalment plan, which probably amounts to
between 5 and $6 billion a year. Open credit sales,
ordinarily paid much more quickly, say from 30 to 60 days,
make up 22 per cent of the retail sales which is in addition to the 12 per cent of instalment sales. However, in
particular lines instalment sales constitute a much greater
proportion of the total sales; for example, 60 per cent of
the automobile sales, 40 per cent of furniture store sales,
of
50 per cent household appliance sales, and 27 per cent
of jewelry sales, are made on the instalment basis.
Probably the largest proportion of any line of sales made
351
-2on the instalment basis is in housing. A house is rarely
ever purchased on a 100 per cent cash basis. It has been
estimated that the total loans may amount to as much as
$20 billion. The Government is encouraging home construction and also encouraging the instalment buying of homes
on a very liberal basis. Lending on farms is also another
major item and is encouraged by the Government.
There are of course many channels through which people
can borrow money. Any attempt to control instalment buy- -
ing would probably reveal the necessity of controlling
practically all forms of consumer credit. Great care
would have to be exercised in the administration of any
such project as consumer credit might be closed in some
channels and would become a racket in other channels.
Furthermore, it is not certain that all lines of consumer
credit should be reduced. It might even be advisable to
increase certain types.
Background History
An extensive study of consumer credit by the National
Bureau of Economic Research was made in 1938 and 1939,
after which it published eight volumes in 1940 and 1941
covering various aspects of the subject. There are four
volumes still in process. There have been a number of
-3-
352
articles written on it by economists, such as Rolf Nugent,
Charles 0. Hardy, and others. Mr. Eccles referred to
the subject in his speech of May 1 before the United
States Chamber of Commerce in discussing the subject of
"Controlling Inflation." This speech and a memorandum
prepared by Rolf Nugent in 1940, the resolution of the
National Association of Manufacturers in May 1941, and a
statement on consumer credit by the American Bankers Asso-
ciation are the only statements thus far found which con-
cern specifically the defense aspect of instalment credit.
The Current Study in Washington
Dr. Carl E. Parry of the Federal Reserve Board has
been studying consumer credit for more than a year and
Mr. Rolf Nugent of Mr. Henderson's office studied this
subject for some time before he joined the Government and
has been studying it in its relation to the National
Defense program for several months since he joined
Mr. Henderson's office. More than three months ago the
Governors of the Federal Reserve Board and Mr. Henderson
conferred and went over the work that the two offices
had done on the subject. It was decided at this meeting
that Dr. Parry of the Board and Mr. Nugent of Mr. Henderson's
office would continue to work on the problem and collaborate on a memorandum for the two organizations. The
353
-4Board and Mr. Henderson's office would then review the
work and decide what should be done as to a control.
While it has not been definitely decided, I think it is
generally agreed, certainly in the Federal Reserve Board,
that the Board should be the agency to control this
matter. Dr. Parry tells me that he considers it a most
important subject and one on which some action should be
taken very soon. I believe that he and Mr. Nugent are
pretty well agreed on all phases of the problem, but I
do not believe they have agreed on the methods of control
and the extent to which the control should go.
I also understand that the Department of Commerce is
carrying currently certain statistical series worked up
in their studies of this problem.
The Friday luncheon group in the Treasury has had one
discussion of this subject. Mr. Eddy of Dr. White's office
has given some thought to the subject and he discussed it
with our group about two weeks ago. I have made arrange-
ments whereby Dr. Parry and Mr. Nugent will discuss this
problem at the Friday luncheon meeting on July 11.
out
354
June 30, 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
3:00 p.m., June 30, 1941, attended from time to time by the
following:
Messrs. Foley, Cochran, Bernstein, Pehle, Coe and Aikin
for the Treasury, Messrs. Acheson and Luthringer for State,
Messrs. Shea, Kreeger, Rosenwald and Jurenev for Justice.
In reply to Mr. Pehle's question, Mr. Acheson said that
it would be in order to accept instructions from Mr. Corbett
of the State Department relative to changes in Schedule A of
General Authorization 57. Since Schedule A is confined to
Latin America, Mr. Pehle raised the question of the compilation of a world-wide black list. Mr. Acheson remarked that
such a list had been under consideration for some time. There
was some discussion regarding a world-wide list, particularly
in relation to export control.
Mr. Pehle described an application for a license relating
to a shipment of quicksilver, valued at approximately $500,000,
from Spain to Japan. It was decided that this transaction should
be approved, since effective control of it could only be exercised through an extension of the freezing regulations to
Japan. Mr. Pehle pointed out that, if and when a General
License is granted to Spain, a transaction of this nature could
be effected under such a General License.
It was agreed that a General License to cover trade be-
tween the Western Hemisphere and Switzerland should be granted.
Mr. Pehle explained in this connection that the real problem
was the South America-Switzerland angle, in respect to which
Mr. Bernstein observed that it would be necessary to rely ex-
clusively on the effectiveness of the British blockade. Mr.
Acheson said that reports of transactions under such a trade
license would have to be scrutinized carefully.
355
-2Mr. Shea stated that representatives of the Pilot
Insurance Company had called to discuss what steps might now
be taken in anticipation of Government action relating to
alien property. Mr. Bernstein said that it was impossible
to predict what the Government's policy would be and that
Pilot's problem was one to be worked out by themselves. Mr.
Shea suggested that the Company be restricted to the reinsurance field on a treaty basis, that a government representative be placed in the Company to observe its operations, and
that the Company be required to furnish detailed reports. Mr.
Foley stated that he was opposed to the assignment of a government representative to be placed in the plant. Mr. Pehle
pointed out that if Justice had some definite ideas with respect to the licensing of Pilot and similar companies Foreign
Funds Control would be glad to have them. Mr. Bernstein expressed the opinion that the whole field of Government policy
relating to alien property should be canvassed. Would It be
desirable to force liquidation, sale, or changes in management
at this time? It was generally agreed that this was a real
problem to which consideration should be given.
356
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
JUN 30 1941
Secretary Morgenthau
FROM
Mr. Foley
I have discussed with Herbert Gaston, Elmer Irey
and others in the Treasury, as well as Dean Acheson,
Frank Shea and others of the Foreign Funds Control Com-
mittee, in a preliminary way, the problem of investigations under the freezing control Order.
Attached is a memorandum which, if you approve,
I
shall submit to State and Justice for their consideration. The memorandum indicates that the responsibility
of carrying out investigations under the freezing
control Order rests with the Treasury, and that the
Treasury, using the large investigative force that
already has, such as Customs, Internal Revenue
it
today's
offee 718
Intelligence, bank examiners, secret service, and
others, would set up a division under John Pehle, to
carry out this function.
The memorandum also indicates that close coopera-
tion will be maintained with the other departments and
agencies as well as the categories of investigations
which FBI and the State Department would be expected
to carry on. In this manner the Treasury will in no
way interfere with investigations by FBI relating to
subversive activities. With the predominant investigative
control residing in the Treasury, it will be possible
for you to determine what form investigations should
take, thereby avoiding forms of snooping and witch
hunting which we all dislike. There is also attached
a memorandum prepared by Elmer Irey indicating the form
that the Treasury freezing control investigative force
would take.
357
-2I am also attaching, for your information, a
copy of a letter from J. Edgar Hoover in which he
indicates that "In view of the general freezing
order of June 14, 1941, authorizing the Treasury
Department to carry out the enforcement thereof,
this Bureau assumes that the functions previously
performed by it in connection with the monitoring
of foreign funds will no longer be necessary, and
we are accordingly discontinuing this work.
If you approve this procedure, I shall try to
obtain the approval of State and Justice and there-
after go forward with setting up the Division of
Investigations of Foreign Funds Control as indicated.
John Pehle and Herbert Gaston are in accord
with this proposal.
S.w.Jh
wrs.
Approved:
Secretary of the Treasury
Attachments.
358
Investigations Under Executive Order No. 8389, as amended.
Full responsibility for carrying out all investigations in
connection with Executive Order No. 8389, as amended, will rest with
the Treasury Department. In order to carry out these functions, the
Treasury will establish in the Bureau of Foreign Funds Control a
Division of Investigations with a staff in Washington. Subdivisions
will be established in the field, particularly in the New York
District, which will handle investigations under the direction of
the Washington office. Pending completion of the field organizations,
investigations will be handled by other enforcement agencies of the
Treasury in the area. The Washington office of the Investigation
Division will also maintain liaison with the other Treasury enforcement agencies and make use of the enforcement agencies of Customs,
Internal Revenue Intelligence, National Bank Examiners, Secret Service,
etc., to carry out investigations for which they are particularly
suitable. In carrying out its investigatory responsibilities, the
Treasury will among other things investigate:
Applications for licenses.
The acts purportedly done pursuant to general or
special licenses.
Reports filed under general and special licenses.
Whether a person is a blocked national, where he
has his accounts and whether his accounts have been blocked.
The census reports including determination of what
persons should file reports and what property should be
reported.
The ferreting out of existing camouflaged accounts
belonging to blocked nationals and also newly created
camouflaged accounts belonging to blocked nationals.
Real beneficial ownership or other interest in such
things as Panama corporations and assets held nominally
in Swiss account.
Activities by banks and brokers.
Business enterprises which are blocked nationals to
determine what form of license to do business should be issued.
359
-2in theSchemes
Order. to avoid the Executive Order and loopholes
Evasions and other violations of the Order.
Books, records and other documents in connection with
any of the foregoing.
The Treasury investigative force will, of course, maintain close
coordination with other interested Departments and agencies of the
Government and will ask for the assistance of such Departments or
agencies where their facilities with regard to any situation are more
adequate than the Treasury. For example, State, Justice, Rockefeller's
organization, and Export Control will be asked for names of persons and
organizations to be blocked as nationals under the Order. The State
Department facilities throughout Latin America will, of course, be
extensively employed in passing upon applications affecting persons in
Latin America. In considering licenses to be given to blocked business
organizations, the Department of Justice, and particularly the Anti-Trust
Division, would be consulted as to the pernicious activities of such
companies which can appropriately be regulated or controlled through the
device of attaching conditions to the granting of licenses. The
exclusive jurisdiction of FBI to handle all matters relating to subversive
activities is recognized and the FBI is welcome to monitor any unblocked
accounts which it desires. Justice will also be asked to conduct
investigations where its facilities are more adequate than the Treasury,
as for example, in the field of monopoly practices. Justice will, of
course, be responsible for grand jury investigations and other
judicial proceedings.
Information obtained by any Department in the course of its
investigations, etc., which is of interest to another Department in the
discharge of duties will be made available to the latter Department.
Similarly, freezing control will be administered in such a way as to
carry out recommendations of other Departments. For example, FBI might
desire to have certain accounts blocked and other accounts not blocked or
Anti-Trust Division of Justice might want to have Treasury obtain
records and other information through the freezing control to use in
connection with Anti-Trust investigations.
360
Memorandum of Mr. Irey
361
To enable the Bureau of Foreign Funds Control to
handle investigations of matters within its jurisdiction,
it is recommended that:
1. There be created within the Bureau an organi-
zation to be known as the Division of Investigations, with
a chief and assistant chief who will be under the immediate
supervision and direction of Mr. Pehle, head of the bureau.
2. A subdivision be established in the Third Treasury
District, with headquarters at New York, to handle these
investigations under the direction of the head of the
division in Washington.
3. Pending completion of field organizations throughout the country to handle this work, requests for investi- gations in other sections be forwarded to the appropriate
district coordinator, with instructions to arrange for such
investigations by agents of one or more of the Treasury
enforcement agencies within his district, preferably the
Customs agents when available.
4. Immediate consideration be given to the organiza-
tion of other divisions throughout the country and the
selection of suitable personnel to staff such divisions.
5. The Division of Investigations in the Bureau of
Foreign Funds Control be considered as an additional
362
-2Treasury enforcement agency and as such operate as one of
the coordinated group of agencies headed by the Chief
Coordinator of Treasury enforcement agencies.
The recommendations for making use of the existing
personnel such as coordinators and other enforcement agencies
throughout the country are made in order that the situation
immediately confronting the Department may be met. It is,
however, the thought that prompt attention should be given
to the selection of suitable personnel in various districts
of the United States, in order that immediately when occasion
requires additional divisions may be created and take up the
work which it is now proposed be handled through the co-
ordinators. In making appointments to staff this organization, it is not contemplated that persons be selected from
outside the Treasury Department. It is the suggestion rather
that, so far as possible, qualified personnel within the
various Treasury agency services be utilized.
mer
363
COPY
JOHN EDGAR HOOVER
DIRECTOR
FEDERAL BUREAU OF INVESTIGATION
UNITED STATES DEPARTMENT OF JUSTICE
WASHINGTON, D. C.
June 23, 1941
PERSONAL AND CONFIDENTIAL
BY SPECIAL MESSENGER
Honorable Henry Morgenthau, Jr.
The Secretary of the Treasury
Washington, D. C.
Attention:
Mr. J. C. Wiley
My dear Mr. Secretary:
In view of the general freezing order of
June 14, 1941, authorizing the Treasury Department
to carry out the enforcement thereof, this Bureau
assumes that the functions previously performed by
it in connection with the monitoring of foreign
funds will no longer be necessary, and we are
accordingly discontinuing this work.
Any information coming to our attention
which would indicate a possible evasion of the
freezing order will, of course, be immediately
called to your attention.
Sincerely,
(Signed) J. Edgar Hoover
364
THE UNDER SECRETARY OF THE TREASURY
WASHINGTON
>
June 30, 1941
To the Secretary:
This is a report on your request that consideration be given to the
establishment of Treasury offices at Army Posts for the following purposes:
(1) Cash checks for officers and enlisted men;
(2) Receive funds for transmittal to persons or banks
designated by officers and enlisted men;
(3) Handle subscriptions to Defense Savings bonds and
Postal Savings stamps; and
(4) To perform any other Treasury function that might
arise.
General
We are advised that during the fiscal year 1942 there will be in
operation approximately 150 separate Army Stations, ranging from a few
hundred men to a maximum of 70,000. Present plans call for an enlisted
personnel averaging about 1,410,000 during the next year. Payrolls for
the enlisted personnel will approximate $57,000,000 a month or about
$700,000,000 for the year. The War Department plans call for an officer
personnel averaging about 87,000, of which 72,000 will be National Guard
and Reserve officers called to active duty. Pay of officers (including
subsistence, etc.) is estimated at about $300,000,000.
Each of the points set out above are commented on in the order given:
(1) Cash checks for officers and enlisted men.
All of the enlisted men of the army are paid in currency. The Treasury
has endeavored to provide depositary facilities to Army Finance Officers in
365
-the various Army Posts throughout the country, through which they can procure
all currency necessary to permit them to make these payments in cash. If it
is not possible or practicable to furnish depositary facilities, arrangements
are made with the closest Federal Reserve Bank to ship the required currency
against the Finance Officer's check on the Treasurer of the United States.
Many of the Army Posts are now being furnished currency through 101 general
depositaries. 52 of such Posts are having their currency requirements met
directly by the Federal Reserve Banks, but 20 of these will soon have
arrangements whereby they can get their currency from local general deposi-
taries. The creation of the 2% depositary bond has helped a great deal in
our contacts with the banks on this depositary problem.
The Officer personnel, for the most part, are paid by checks. If they
want currency, it is certain that arrangements could be made with the Finance
Officer for the officer to receive his pay in that form instead of by check.
If ei ther enlisted men or Officers receive checks from or draw checks
on outside sources, they can be cashed at the Commissaries or Post Exchanges.
(2) Receive funds for transmittal to persons or banks
designated by Officers and enlisted men.
The War Department already provides facilities whereby the Officers
and enlisted men may make allotments from their pay to be sent back home to
relatives or to be deposited in a bank.
Furthermore, the Act of June 12, 1906 provides that enlisted men can
make deposits in the Army Deposit Fund in multiples of $5 and receive interest
thereon at the rate of 4% per annum, to be paid to the soldier upon honorable
discharge or to his heirs.
366
-3- During the last war the Post Office Department established branch
post offices at some of the larger Army Camps which enabled the men to pur-
chase money orders. It is assumed that this will again be done in some
cases.
(3) Handle subscriptions to Defense Savings bonds
and Postal Savings stamps.
During the last war arrangements were made whereby the enlisted men
could make allotments and have them deducted on the payroll for the purchase
of Liberty Loan bonds. These matters were handled entirely by the Army
through the Quartermaster General's Office with the cooperation of the
Finance Officer.
There is a Finance Officer, or an Agent Finance Officer, an Officer
of the Quartermaster General's Office and the Commanding Officer at each
station. It would seem that arrangements could better be made through one
or more of these officers to provide facilities whereby the Army personnel
could buy Defense Bonds and stamps. No doubt in many cases the branch
post offices could provide these facilities.
Expense of Treasury Facilities
If we are to establish Treasury offices at these Army Stations, it
would seem that the minimum of funds required would be about $8,300 per
station, made up of an Agent Cashier $3,500. Assistant Agent Cashier $2,500.
Clerk-stenographer $1,800, and miscellaneous such as desks, typewriter,
file cases, etc. $500. If we establish them in one hundred places it would
cost about $850,000 on this basis. In view of the size of some of the
camps these costs would probably have to be greatly increased. In all we
367
-4
should say it would cost considerably in excess of $1,000,000. We do not
have appropriations available at this time for this purpose. It would
therefore require that an estimate be submitted to the Budget and then to
Congress. I do not believe that either Budget or Congress would look with
favor on this additional expense.
Recommendation
In view of the foregoing we strongly recommend against the establishment of Treasury offices at Army Posts, that arrangements be made with the
War Department that Army officers (Finance Officer or Quartermaster)
stationed at these Posts be requested to make facilities available whereby
the Army personnel can buy Defense bonds and stamps; that in cases where
branch post offices are established, the Post Office Department be requested
to authorize such officers to sell Defense bonds and stamps where practicable,
and that, should the need develop for additional facilities for cashing
checks or for the transmission of funds by officers or enlisted men, the
Treasury provide such facilities by extending the duties of depositary
banks located at or near the Army Stations.
In case you should like to experiment with one Army Post, we believe
the Treasury could absorb this cost, but we are certain to encounter opposition from high Army Officers.
MWB
m. Inno Concurs.
368
THE WHITE HOUSE
WASHINGTON
June 30, 1941
My dear Mr. Administrator:
As part of the reduction of $700,000,000 in excess
funds of Federal Corporations recommended in my Budget
Message of January 3, 1940, I requested you on June 29,
1940 to direct the Reconstruction Finance Corporation to
purchase securities from the Public Works Administration
on or before June 30, 1941, amounting to approximately
$50,000,000.
It has now come to my attention that it would be inadvisable as a result of the defense program to dispose
of some of the securities which were originally contemplated
for sale in arriving at the amount of $50,000,000. I am,
therefore, reducing the amount of securities which the Reconstruction Finance Corporation should purchase during the fiscal
year 1941 to an amount, which with the funds on hand of the
Public Works Administration will permit $23,000,000 to be
covered into the Treasury for this purpose.
I am sending a copy of this letter to the Secretary of
the Treasury and the Director of the Bureau of the Budget.
Sincerely yours,
(Signed)
FRANKLIN D. ROOSEVELT
The Honorable
The Administrator,
Federal Loan Agency.
369
THE WHITE HOUSE
WASHINGTON
My dear Mr. Administrator:
As part of the reduction of $700,000,000 in excess
funds of Federal Corporations recommended in my Budget
Message of June 3, 1940, I requested you on June 29,
1940 to arrange to have the Federal Savings and Loan
Associations under the supervision of the Federal Home Loan
Bank Board, retire and pay to the Treasury on or before
June 30, 1941, the amount of capital stock then held by
the Treasury in such associations.
I am informed that the Treasury's investment in these
shares has been reduced from approximately $35,000,000 at
January 1940 to $23,000,000 at May 31, 1941.
In view of the extent to which these associations are
called upon to participate in relieving the existing housing shortage with particular reference to defense needs,
I think it would be inadvisable at this time to arrange for
the retirement of the remaining investment of the Treasury
in these shares at a more rapid rate than is provided by the
existing provisions of the Home Owners' Loan Act of 1933, as
amended.
I am sending a copy of this letter to the Secretary of
the Treasury and the Director of the Bureau of the Budget.
Sincerely yours,
(Signed)
FRANKLIN D. ROOSEVELT
The Honorable,
The Administrator,
Federal Loan Agency.
370
0
THE WHITE HOUSE
WASHINGTON
June 30, 1941
My dear Mr. Administrator:
As part of the reduction of $700,000,000 in excess
funds of Federal Corporations recommended in my Budget
Message of January 3, 1940, I requested you on June 29,
1940 to direct the Commission/of the Public Works Admin-
istration to sell securities held by him to the Reconstruction Finance Corporation on or before June 30, 1941, to a
total of approximately $50,000,000.
It has now been brought to my attention that due largely
to the defense program, it would be inadvisable for the
Public Works Administration to dispose of some of its holdings of securities which were originally contemplated for sale
in arriving at the amount of $50,000,000. The amount of
securities which should be sold during the fiscal year 1941
to the Reconstruction Finance Corporation is, therefore, reduced to an amount which, together with the available cash
balance of the Public Works Administration will permit the
payment into the Treasury for this purpose of the amount of
$23,000,000.
I am sending a copy of this letter to the Secretary of
the Treasury, the Director of the Bureau of the Budget, and
the Administrator of the Federal Loan Agency.
Sincerely yours,
(Signed) FRANKLIN D. ROOSEVELT
The Honorable,
The Administrator,
Federal Works Agency.
371
June 30, 1941
TO:
The Secretary
Mr. Adams
Mr. Callahan
Mr. Dietz
Mr. Graves
Mr. Gerety
Mr. Houghteling
Mr. Kuhn
Mr. Mahan
Professor Odegard
Mr. Olney
Mr. Paige
Mr. Powel
Mr. Sloan
Mr. Taplinger
FROM
Mr. Duffus
All five newsreels released nationally, June 27th,
the story on the White Family of Washington.
In Warner Brothers feature picture MANPOWER, reference
is made to Defense Bonds in the following manner:
Alan Hale:
"Now don't you wish you'd saved
your dough?"
Ward Bond: "What are you talking about?
I just bought two Defense Bonds."
372
DEFENSE SAVINGS STAFF
ADVANCE NOTICE RADIO PROGRAMS
MONDAY - JUNE 30, 1941
Time:
9:30 - 9:45 A.M.
PROGRAM: Stepmother
Station: WJSV
Time:
1:15 - 1:30 P.M.
Program:
Joyce Jordan
Station: WJSV
Time:
6:00 - 6:15 P.M.
Program: Fred Waring
Station: WRC
THESE PROGRAMSPROMOTE THE SALE OF DEFENSE BONDS & STAMPS.
STRICTLY CONFIDENTIAL
373
ALLISON DIVISION, GENERAL MOTORS CORP.
Shipments of Airplane Engines
Estimated shipments
:
Actual
shipments
on existing orders
1940
January
10
May 24 - June 22
28
June 23 - July 20
July 21 - Aug. 17
Aug. 18 - Sept. 14
Sent. 15 - Oct. 12
Oct. 13 - Nov. 9
Nov. 10 - Dec. 7
Dec. S - Jan. 4
43
47
140
263
233
154
228
1941
January 5 - February 1
February 2 - March 1
March 2 - 29
March 30 - April 26
193
323
313
199
April 27 - May 3
May 4 - 10.
May 11 - 17
May 18 - 24
9
38
93
118
May 25 - 31
June 1 - 7.
June 8 - 14
June 15 - 21
June 22 - 28
79
91
95
112
June 29 - 30
July
August
September
October
November
December
1942
January
February
office of the Secretary of the Treasury,
Division of Research and Statistics.
68
71
459
580
700
800
900
1,000
1,000
730
June 30, 1941.
STRICTLY CONFIDENTIAL
374
ALLISON SHIPMENTS
British
Total
C
Mar. 2 - 8
6
Mar. 9 - 15
6
Mar. 16 - 22
36
Mar. 23 - 29
87
Mar. 30 - Apr. 5
24
Apr. 6 - 12
60
Apr. 13 - 19
12
Apr. 20 - 26
-
Apr. 27 - May 3
-
-
6
6
-
-
2
-
-
1
5
-
2
3
3
-
-
24
May 11 - 17
53
11
May 18 - 24
60
13
May 25 - 31
24
June 1 - 7
12
-
-
-
May 4 10
June 8 - 14
Army
-
-
E
69
-
2
72
-
14
89
10
24
41
1
8
1
2
1
2
1
3
66
14
-
6
-
74
-
17
-
14
5
47
-
3
12
10
7
2
3
-
24
16
89
-
14
14
52
-
25
16
53
23
22
45
22
16
24
62
June 22 - 28
-
21
12
33
426
135
117
678
8
1
Total
77
80
53
103
71
88
21
19
-
9
9
-
38
13
20
-
93
23
29
-
22
27
-
5
5
23
28
10
91
3
35
38
12
95
34
50
7
7
7
6
-
-
- 16
-
13
22
35
215
78
202
495
Office of the Secretary of the Treasury,
Division of Research and Statistics.
10
Grand
14
-
-
-
2
1
-
0
71
5
73
9
Total
F
36
June 15 - 21
TOTAL Mar. 2 June 28
a
China
118
79
-
112
-
68
42
1, 215
June 30, 1941.
375
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
CONFIDENTIAL
DATE June 30, 1941
TO
Secretary Morgenthau
FROM
Mr. Haae CA
Subject: The Business Situation,
Week ending June 28, 1941.
Summary
(1) The renewed upswing of basic commodity prices ended
its fourth week with no sign of abatement. The BLS index of
28 basic commodities now stands at approximately 150 percent
of the August 1939 level. Food prices have advanced 8 percent
since the end of May.
(2) Cottonseed oil was the leader in price advances last
week, having gained 30 percent since the end of May. Other
fats, oils, and related products moved upward under similar
influences. Announcement by the OPACS at the end of the week
that a ceiling will be put on cottonseed oil prices below
current quotations caused a sharp drop in agricultural prices
on Saturday.
(3) The very rapid rise in food prices and commodity
prices in general emphasizes the urgent need for much more
effective measures for controlling inflation than have yet
been tried. General commodity prices are rising almost as
fast as they did during the comparable World War period,
while food prices have already risen more.
(4) Preference ratings on steel for direct and indirect
defense purposes have increased to the extent that civilian
consumers are unable to obtain adequate supplies of steel.
Maximum prices have been fixed for pig iron.
(5) The New York Times and Barron's weekly indexes of
business activity have moved into new high ground. Freight
carloadings have risen well above the May peak and already
have exceeded last fall's seasonal high by nearly 6 percent.
376
-2Food prices rising with continued vigor
In basic commodity prices the renewed upswing has ended
its fourth week with no sign of abatement. By the end of
last week the BLS index of 28 basic commodity prices had
reached almost 150 percent of the August 1939 level, an in-
crease of practically 5 percent since the end of May. The
rise in this index during the latter period is largely the
result of an increase of nearly 8 percent in prices of
foods, the increase in raw material prices having been
moderate. (See Chart 1, upper section.)
During the past week alone, the advance in food prices
was as much as 2.2 percent, with cottonseed oil in the lead,
registering a gain of almost 9 percent. (See Chart 1, lower
section.) Spot prices of various other agricultural products
also showed steep advances, including lard, hogs, tallow,
butter, and wheat. Futures prices of farm products likewise
showed striking gains, with cottonseed oil again the leader.
(See Chart 2.)
Cottonseed oil prices have risen practically 30 percent
since the end of May, having now advanced even more than tallow.
Agricultural price advance an inflationary threat
It is becoming increasingly evident that one of the most
serious inflationary threats is the present advance in agricultural prices, which has resulted largely from such inflationary agricultural policies as the 85 percent parity loan
and the agricultural buying programs. More legislation which
would contribute to further price advances in agricultural
products appears still to be contemplated. The Senate
Agriculture Committee is to begin shortly an investigation
of the methods of computing parity prices, with the object
of trying to raise computed parity bases for various agricultural products.
On the other hand, the OPACS took very important steps
at the end of last week toward halting the rise of agricultural prices by announcing that ceilings would shortly be
imposed on cottonseed oil and on six divisions of cotton gray
goods markets, at levels far below present quotations. On
Saturday, price quotations for agricultur products, especially
wheat and lard, declined sharply in consequence. (Refer to
Chart 2.) Regulatory action is very important because,
377
-3 according to press reports, speculative buying has been
based partly on the belief that the OPACS would not dare to
interfere with agricultural prices.
Effective inflation control urgently needed
The rapidly rising trend of general commodity prices,
at a recently accelerated rate, emphasizes the urgent need
of much more effective inflation control measures than have
yet been imposed, 1f we are to avoid a repetition of our
World War price experience.
As we approach the end of the second year of the war,
general commodity prices are rising almost as fast as they
did during the second summer of the World War. (See Chart 3,
upper section.) The principal difference lies in the fact
that this rapid upturn, following the first year's levelling-
out period, has begun a few months later than during the
World War, and the total rise to date has consequently not
been as great. In the past 7 weeks, however, the BLS allcommodity weekly index has risen as much as it did during
the previous 5 months.
An important factor in the recent price upturn has been
a very rapid advance in food prices, which is particularly
significant as an inflation factor in view of its effect on
living costs. The trend of food prices since the beginning
of the war has been closely similar to that during the World
War (see Chart 3, lower section), but food prices to date have
risen even more than during the same period after the World
War began.
The commodity price situation contains many of the inflationary elements that were present at this stage after
the beginning of the World War:
(1) In many industries a point has been reached
where demand can no longer force increased production,
owing to capacity limitations or material shortages,
hence the demand is tending to lift prices instead.
(2) The full effects of the huge defense demands
are still to come, as they were at this stage in 1916.
Of the $38 billions appropriated or authorized for
the defense program (exclusive of British orders),
only about $6 billions had been expended by June 1.
(3) The rapid increase in employment and payrolls
is bringing a concentrated demand for consumer goods,
378
4-
while the supply of these goods is being curtailed
because of defense requirements. The Conference Board
reports that more than one-fourth of the companies surveyed at the middle of June had already
goods,
and nearly
expected
output curtail of civilian
the production
percent 80
reduced
their
future.
to of such goods in the near
(4) The Government's fiscal policy will be inflationary to the extent that the deficit is not financed
through savings. In addition, the large expansion of
commercial loans by banks is contributing a further
inflationary influence of considerable magnitude.
In view of the above influences, which will become more
and more pronounced as the year progresses, it will doubtless
be impossible to prevent a marked advance in prices without a
more effective general program of inflation control.
Control of raw material prices not sufficient
Effective price control by the OPACS to date has been
limited chiefly to certain basic materials, principally in
the metals group. The control of raw material prices, however,
18 not sufficient to prevent inflation in general commodity
prices, as the British experience proves.
The general price index of the British Board of Trade has
risen more than 50 percent since the beginning of the war (see
Chart 4, upper section), despite the fact that all principal
raw materials are completely controlled by the Government. It
will be noted that Reuter's index of British raw material
prices (lower section of chart) has held relatively steady
over the past year, contrasting with the steep advance in
Moody's index of raw material prices in the United States.
National income estimated at $85 billions
National income for 1940 has been revised upward from
$74 billions to $76 billions, as compared with $71 billions for
1939. National income in June, according to Department of
Commerce estimates, was running at an annual rate of approxi-
mately $85 billions. If the advance for the rest of the year
equals that already reported, national income in 1941 will be
around $85 billions, thus exceeding the $83 billion peak
reached in 1929.
379
-5Factory payrolls in May increased by the substantial
amount of 5.3 percent over April, and total civil nonagri-
cultural employment expanded sharply to an all-time peak of
38,278,000. This represents a gain of 3,115,000 workers
since May 1940. In spite of the strikes in April, no de-
cline was reported for that month in either employment or
payrolls; instead they increased together by about the
same percent, indicating that average weekly earnings were
unchanged. Factory average hourly earnings, however, increased 1.6 percent in April over March.
Defense requirements restrict steel for civilian consumption
The amount of steel earmarked directly or indirectly
for defense purposes has grown to the extent that, according
to the Iron Age estimates, 65 to 70 percent of current steel
production at Pittsburgh has a preference rating. As a result it is asserted that non-defense consumers of steel are
likely to be more severely restricted than has been generally expected. In addition to large tonnages placed for
shipbuilding, munitions, pipelines and exports to Great
Britain, the railroads have been given a preference rating
and have placed large orders for freight cars, locomotives
and rails.
During the past week Price Administrator Henderson fixed
maximum prices for pig iron. Previously price ceilings had
been fixed on steel prices and scrap.
New orders for steel booked by the U. S. Steel Corpora-
tion in the third week in June, the latest available, de-
clined 5 percent but still amounted to 149 percent of capac-
ity. Despite recently reiterated fears that the tight supply situation in steel scrap might cut into the rate of
steel ingot production, steel operations during the past
week rose 0.9 point to equal the previous high for the year
at 99.9 percent of capacity. Operations during the current
week are scheduled at 93.7 percent of capacity, indicating
much less than the usual curtailment over the Fourth of July
holiday.
New orders index advanced
Our new orders index for the week ended June 21 advanced to 209.6 from 198.4 in the preceding week. (See
Chart 5.) New orders for steel were moderately lower, but
380
6
new orders for textiles increased somewhat, and the total
excluding
steel
textilesweek.
regained the considerable loss
reported for
the and
preceding
Weekly business indexes higher as carloadings rise
Largely as a result of a greater than seasonal rise in
freight carloadings, the New York Times index of business
activity during the week ended June 21 showed a further
rise of 0.7 point and reached a new high at 131.4. (See
Chart 6, top section.) During the same period an even
sharper gain was scored by Barron's index of business activ-
ity, which rose 3.1 to 138.0, also a new high.
The rise in freight traffic carried total carloadings
for the week up to 886,000 cars, or 20,000 cars above the
May peak and 48,000 cars above last October's seasonal high.
(Refer to Chart 6, bottom section.) Normally a further rise
in freight carloadings of about 14 percent occurs between
mid-June and early October due to seasonal factors. Such
an increase would carry this fall's peak in weekly freight
carloadings up to a little over 1,000,000 cars, as compared
with last year's peak of 838,000 cars.
A strong contributing factor to the current high level
of freight carloadings is the heavy movement of coal, which
ran 30 percent above year-earlier levels in the third week
of June. Soft coal output, in the past several weeks, has
also been running about 30 percent above 1940. (Refer to
Chart 6, bottom section.) However, due to the strike, production in the first 25 weeks of the year was less than
3 percent above the corresponding period of 1940, in the
face of a much sharper rise in industrial production.
Supplies of coal are consequently still short. It is
now estimated by the National Coal Association that coal
production in the first half of the year will be about 8 per-
cent less than consumption, thus necessitating a sustained
high level of production throughout the remainder of the
year. In view of this situation, the country could ill af-
ford further labor troubles in the coal industry, such as
is now threatened in the southern soft coal area unless a
new wage agreement 18 signed by July 8.
381
-7Tanker diversion and drought affect oil and power supplies
Some additional demand for coal appears likely to 00cur as a result of recent developments affecting the supply
of oil and hydro-electric power in certain areas in the
eastern part of the country. Petroleum production in the
first four months of 1941 ran about 5 percent under yearearlier levels, due to production curtailments imposed by
state regulatory bodies. However, production recently has
risen to the highest levels of the year, (refer to Chart 6,
middle section) and producing and refining capacity for
basic petroleum products is adequate. Nevertheless, a
shortage threatens to develop this winter along the eastern
seaboard due to a lack of shipping facilities, which is
likely to cause some shifting from the use of fuel oil to
coal.
Electric power production during the week ended June 21
showed a moderate contra-seasonal decline from the previous
week's high figure and ran 15 percent above year-earlier
levels. (Refer to Chart 6, middle section.) Despite the
further substantial increase in electric power output this
year, shortages have occurred in the southeastern part of
the country due to drought conditions. The Federal Power
Commission has consequently declared a power emergency in an
area embracing 8 Southeastern States, extending from
Mississippi to Virginia, in which nonessential and non-defense
uses of electricity are to be ourtailed.
MOVEMENT OF BASIC COMMODITY PRICES
AUGUST 1939-100
PER
PER
PER
CENT
CENT
CENT
PER
Weekly Average
CENT
150
150
Daily
160
160
155
155
140
140
16 Row Industrial
Materials
150
150
12 Foodstuffs
130
130
145
145
120
120
140
140
110
16 Row Industrial
Materials
135
130
130
M
A
F
J
S
J
J
1940
M
J
D
J
N
A
o
S
O
5
A
1941
12
24
APR
,
is
M
17
10
24
31
100
100
135
14
7
110
21
20
JUNE
MAY
$
12 Foodstuffs
12
JULY
1941
Percentage Change for Individual Commodities. August Low to June 20 and to June 27 1941
Cottonseed Oil 147.7X
PER
PER
16 Raw Industrial Materials
CENT
12 Foodstuffs
CENT
Tellow 139.4%
+120
*120
Lord 108.5%
Burlap 9922
+100
+100
Print Cloth 94.7
Shellac 82.8 %
Cotton ssox
+80
Cocoo 89.3%
+80
*Coffee 73.2%
Hides 538%
Hoor 6932
Wool 47.2 X
Flaxseed 398%
.60
+60
Wheat 53.7%
Resin 24.5%
alead232X
Silk 1932
+40
"Butter 396%
+40
Sugar 34JX
Rubber 16.9%
Barley 28.2X
Zinc 15.1%
Copper 11.8 x
Corn 171%
+20
Steel Scrap.dom. 8.7%
+20
Steers 8.8%
Tin 4.5%
0
Aug. 1940
June 20
0
Steel Scrap.exp. 27%
June 27
Aug 1940
June 20
June 27
Low
Low
P-187-R- .
A
-
PRICES OF SELECTED AGRICULTURAL COMMODITISS
Daily Patures
Feekly Averages (Peturea)
1940
CENTS
Mile
any
mm
PER
source
1941
APRIL
on
MES,
NO.
DENTS
GENTS
costs
FITTE
TTT
PER
PER
PER
POLICE
PER
PER
FOUND
POUND
13
ARE
MAY
Cotton
13
14
Cotton
14
12
12
13
13
"
11
10
12
10
12
MAY - OCT. FUTURE
9
9
"
"
Fool Tops
Bool Tops
130
130
130
130
120
120
120
120
110
100
I
110
110
110
100
NETS
MY-MM., OCT. FUTURE
90
-
CENTE
PER
90
PER
BUSKED
Theat
CENTS
PER
PER
INSIDE
BUSHEL
100
Wheat
90
90
90
so
-
-
CENTS
PER
SENTS
DENTS
PER
PCS
POUND
Lard
PER
FOUND
10.5
10.5
10.0
.
10.0
Lard
9.5
9.5
7
9.0
9.0
8.5
8.5
8.0
$
8.0
12.5
12.5
12,0
Cottenseed on
12.0
Cottonsood 011
11.5
11.5
11.0
11.0
,
10.5
10.5
6
6
10.0
10.0
10
10
9.5
N
Coffee
11.0
11.4
,
Coffee
10.5
10.5
10.0
10.0
,
9.5
9.5
6
6
2.0
2.8
9.0
9.0
2.8
2.8
Begar
2.4
2.6
2.4
Begar
2.4
2.4
2.4
2.2
2.2
2.4
2.4
2.0
2.0
2.2
2.2
1.0
--
- FUTURES MAY SEPT. DUTY - FUTURES .
1.4
2.0
1111
11111
20 27
APRIL
IIII
11444
..
4
40
MAY
MAY SEPT. 1941
10
25
MAY
.
1.4 I
SEPT. - - -
1.8
-
still
2.0
IS
22
29
SEPTOMER FUTURES
383
Other of the Security of the Treasury
P 190 15
PRICES, 1039 - 1941 COMPARED WITH 1914-1916
All Commodities and Foods
JULY 1914 - 100. WORLD WAR PERIOD: AUGUST 1939 = 100. PRESENT PERIOD
PER
PER
CENT
All Commodities
DENT
145
145
140
140
135
135
130
130
125
125
1916
120
120
Week Ended June 21
115
115
1941
110
110
FIRST MONTH OF WAR
1939
105
1940
105
1914
1915
100
100
95
95
PER
PER
CENT
CENT
Foods
135
135
130
130
125
125
Week Ended June21
120
120
1941
115
115
FIRST MONTH OF WAR
1916
110
110
1940
105
105
1939
1915
100
100
1914
95
95
90
90
$
A
SOURCE: BUREAU OF LABOR STATISTICS
Office of the Secretary of the Treasury
Dividen of Sussarch and I
P 222
PRICES. UNITED STATES AND UNITED KINGDOM
August 1930 - 100
19 39
PER
1940
1941
1942
CENT
PER
CENT
All Commodities
160
160
150
150
140
140
130
130
UNITED KINGDOM
(BOARD OF TRADE
120
120
Week Ended June 21
UNITED STATES
(B.L.S.)
110
110
100
100
90
90
N
M
N
1940
$
.
J
J
J
$
J
M
J
1939
M
.
M
1941
1942
PER
CENT
PER
CENT
Raw Materials
150
150
140
140
UNITED KINGDOM
(REUTER'S)
130
130
120
120
110
110
UNITED STATES
(MOODY'S)
100
100
90
90
J
.
$
1941
J
J
- of - - -
1940
J
N
.
1939
M
1942
Office of the Secretary of the Treasury
P - 221
INDEXES OF NEW ORDERS
Combined Index of New Orders and Selected Components
PERCENTAGE
POINTS
240
240
230
230
220
220
210
Total
1988
210
Index
200
200
190
190
180
180
170
170
106
160
150
150
140
140
130
130
120
120
110
110
100
100
90
80
N
90
Total excluding Steel and Textilee
80
70
70
60
60
50
50
40
Steel Orders
30
IV
20
Textile Orders
10
0
1940
1.85.D
Chart 6
387
SELECTED BUSINESS INDICES
BUSINESS ACTIVITY
PER
Seasonally Adjusted
Est Normal 100
CENT
130
120
40
110
39
100
90
N Y Times
80
JAN
MAR
MAY
PETROLEUM PRODUCTION
CENT
NOV.
SEPT.
ELECTRIC POWER PRODUCTION
KW HBS
1923-25 100
PER
JULY
BILLIONS
200
30
190
28
180
26
170
40
-
24
160
22
-
150
/ Dise -
Dept of Contine
140
MAR
JAN
20
MAY
JULY
SEPT
NOV
FREIGHT CAR LOADINGS
BITUMINOUS COAL PRODUCTION
MORT TONS
JAN MAR MAY JULY REFT NOV
CARS
Total
THOUSANDS
MILLIONS
24
900
20
"
4/0
00
14
-
800
700
-40
12
600
.
500
.
Am Ry Agen
M Cool Comm
AN
400
MAR
- - - India
MAY
0
Office of the Secretary of the Treasury
JULY
EXPY
NOV
JAN
MAR
MAY
JULY
HOT
NOV
C-404
388
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE June 30, 1941
TO
FROM
Secretary Morgenthau
Mr. Haas
During the week ended June 18, 1941, Work Projects
Administration employment stood at 1,410,000 persons, or
13,000 less than the number employed during the previous
week.
Attachments
389
WORK PROJECTS ADMINISTRATION
Number of Workers Employed - Weekly
United States
Week ending
1940-41
November 6
November 13
November 20
November 27
Number of Workers
(In thousands)
1,783
1,786
1,807
1,822
December 4
December 11
December 18
December 25
1,832
1,855
1,872
1,878
January 1
January 8
January 15
January 22
January 29
1,880
1,887
1,894
1,895
1,895
February 5
February 12
February 19
February 26
1,892
1,893
1,885
1,867
March 5
March 26
1,806
1,764
1,736
1,708
April 2
April 9
April 16
April 23
April 30
1,662
1,634
1,607
1,586
1,560
May 7
May 14
May 21
May 28
1,519
1,497
1,474
1,464
June 4
June 11
June 18
1,442
1,423
1,410
March 12
March 19
Source: Work Projects Administration
390
WORK PROJECTS ADMINISTRATION
Number of Workers Employed - Monthly
United States
1938
July
August
September
October
Number of Workers
(In thousands)
November
December
1939
January
February
March
April
May
June
July
3,053
3,171
3,228
3,346
3,287
3,094
2,986
3,043
2,980
2,751
2,600
2,551
2,200
1,842
August
September
October
1,790
November
December
2,024
2,152
1,902
1940
January
2,266
February
2,324
March
April
May
June
July
August
September
October
November
December
1941
January
February
March
April
May
2,288
2,092
1,926
1,665
1,701
1,691
1,704
1,779
1,821
1,878
1,895
1,867
1,708
1,560
1,464
Source: Work Projects Administration.
Monthly figures are weekly figures for the latest week of
the month.
They include certified and noncertified workers.
391
WORK PROJECTS ADMINISTRATION
Number of Workers Employed
United States
Monthly V.P.A. Employment
1937
1938
I
Weekly W.P.A. Employment
1939
1940
'42
MAR.
MILLIONS MILLIONS
MAY
JULY
any
total
BORKERS BORKERS
1941
-
MAY
SEPT,
NOV,
- 1942
WWWILLIONS
or
WORKERS
2.7
2.7
2.6
2.6
2.5
2.5
2.4
2.4
2.3
2.3
2.2
2.2
2.1
2.1
2.0
2.0
3.2
3.2
2.8
2.4
2.4
2.4
2.0 1.9
2.0
1.9
1.8
1.8
1.7
1.7
1.6
1.6
1.4
1.6
1.5
1.5
1.2
1.2
1.4
1.4
1.3
1.3
.0
1.2
1.2
1.1
1.1
1.0
.4
1.0
.9
.9
0
1935 1936
1937
1938
1939
1940
1941
.8
JAN.
'42
MAR.
MAY
JULY
1940
SEPT.
NOV.
JAN.
MAR.
MAY
JAY
1941
SEPT.
NOV.
-
am
.8
MAR.
1942
SOURCE: WORK PROJECTS ADMINISTRATION
- - States
Office of the Secretary of the Treasury
Z - 221 -c
392
JUN 3 0 1941
Secretary Morgenthan
Mr. Foley
Now that the President has approved the
legislation extending the stabilisation powers, I
think we should immediately approach the Chinese
and the Argentines with a view to extending the
outstanding stabilisation arrangements for an
additional year.
Drafts of the Agreements are prepared, and we
should ask T. V. Soong and Kan Lee to sign for the
Chinese and Ambassador Espil to sign for the
Argentine Government. Ambassador Espil can also
indicate who is to sign for the Argentine Central
Bank. The Agreements will be dated as of June so,
1941.
(Initialed) E. H. F., Jra
BB:nrd - 6/30/41.
393
AGREEMENT dated as of the 30th day of June, 1941, at the City
of Washington, District of Celembia, between the National Government
of the Republic of China (hereinafter called China), the Central
Bank of China (hereinafter called the Bank), and the Secretary of
the Treasury of the United States (hareinafter called the Secretary).
1. China, the Bank, and the Secretary agree that the date
"June 30, 1942 is hereby substituted for the date "June 30, 1941"
in paragraph 9 of the Agreement dated as of April 1, 1941 entered
into between China, the Bank, and the Secretary, and that all of
the provisions of the Agreement dated as of April 1, 1941 shall
continue in full force and effect in accordance with their terms.
2. China and the Bank, and the officers signing this Agreement
on behalf of China and the Bank, each for itself or themselves,
represent and agree that the execution and delivery of this
Agreement by such officers on behalf of China and the Bank have in
all respects been duly authorised, and that all acts, conditions,
and legal formalities which should have been performed and con-
ploted prior to the making of this Agreement, or in order to make
this Agreement and the Agreement dated as of April 1, 1941, as
extended by this Agreement, binding and effective upon China and
the Bank, have been performed and completed as required by, and
in conformity with, the laws, decrees, statutes, and regulations
affecting China and the Bank.
394
This Agreement shall be governed by the laws of the District
of Columbia, United States.
IN WETHESS - the parties herete have executed this
Agreement in triplicate.
Secretary of the Treasury of the United States
National Government of the Republic of China
By
Central Bank of China
by
OJO
395
AGREEMENT dated as of the 30th day of June, 1941, at the
City of Washington, District of Columbia, between the Secretary
of the Treasury of the United States of America (hereinefter
called the Secretary), the Banco Central de la Republica Argentina
(hereinafter called the Bank), and the Government of the Argentine
Republic (hereinafter called Argentina).
1. The Secretary, the Bank and Argentina agree that the
date "June 30, 1942 is hereby substituted for the date "June 30,
1941" in paragraph 10 of the Agreement dated as of January 1,
1941, entered into between the Secretary, the Bank and Argentina,
and that all of the provisions of the Agreement dated as of
January 1, 1941, shall continue in full force and effect in
accordance with their terms.
2. This Agreement and the Agreement dated as of January 1,
1941 shall come into operation and effect as between the parties
hereto when Argentine shall file with the State Department of
the United States appropriate documents satisfactorily evidence-
ing retification and confirmation of the authority of Argentina
under its constitution and laws to enter into this Agreement and
the Agreement dated as of January 1, 1941. Argentina and the
Bank each for itself represents and agrees that upon the delivery
of the aforementioned documents of ratification and confirmation,
the execution and delivery of this Agreement shall in all
respects have been duly authorised, and that all acts, conditions
396
-2and legal formalities which should have been completed prior to
this Agreement becoming effective shall have been completed as
required by the constitution, laws, statutes, docrees and regulations of Argentina and the Bank, respectively, and in conformity
therewith.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement in duplicate.
SECRETARY OF THE TREASURY OF THE UNITED STATES
BANCO CENTRAL DE LA REPUBLICA ARGENTINA
By
GOVERNMENT OF THE ARGENTINE REPUBLIC
By
AMBASSADOR EXTRAORDINARY AND PLENIPOTENTIARY
AGREEMENT dated as of the 30th day of June, 1941, at the City
of Washington, District of Columbia, between the National Government
of the Republic of China (hereinafter called China), the Central
Bank of China (hereinefter called the Bank), and the Secretary of
the Treasury of the United States (hereinafter called the Secretary).
1. China, the Bank, and the Secretary agree that the date
"June 30, 1942" is hereby substituted for the date "June 30, 1941"
in paragraph 9 of the Agreement dated as of April 1, 1941 entered
into between China, the Bank, and the Secretary, and that all of
the provisions of the Agreement dated as of April 1, 1941 shall
continue in full force and effect in accordance with their terms.
2. China and the Bank, and the officers signing this Agreement
on behalf of China and the Bank, each for itself or themselves,
represent and agree that the execution and delivery of this
Agreement by such officers on behalf of China and the Bank have in
all respects been duly authorized, and that all acts, conditions,
and legal formalities which should have been performed and COD-
pleted prior to the making of this Agreement, or in order to make
this Agreement and the Agreement dated as of April 1, 1941, as
extended by this Agreement, binding and effective upon China and
the Bank, have been performed and completed as required by, and
in conformity with, the laws, decrees, statutes, and regulations
affecting China and the Bank.
-2-
This Agreement shall be governed by the laws of the District
of Columbia, United States.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement in triplicate.
Secretary of the Treasury of the United States
National Government of the Republic of China
By
Central Bank of China
By
Man the
C
14789
0
P
399
Y
GRAY & PLAIN
MP
Buenos Aires
Dated June 30, 1941
Rec'd. 9:19 a.m., July 1
Secretary of State,
Washington
RUSH
650, June 30. 9 p.m.
14788
(GRAY) Embassy's telegram 645. June 29. 9 a.m.
Information contained in Embassy's telegram referred to was
confirmed by official decree released tonight by the Ministry of
Hacienda, except for paragraph beginning "parity etc" which cannot
be verified without detailed comparative study. (END GRAY).
However quotas on products of principal interest to the United
States include sulphur, with the United States share equivalent to
10 per cent of imports thereof, from all countries during 1940,
radio tubes with United States share equal to 100 per cent of
imports thereof, from United States during 1940 certain earthenware
articles with United States share equal to 150 per cent of 1940
imports, from all countries other than United Kingdom, Japan, and
neighboring countries (quota for Japan allotted in accordance with
provision of Exchange Control circulars No's 656, of December 24,
1940. and 682 of March 28, 1941) certain cotton textiles (Argentine
tariff items 2992, 2993. and 2996 to 99 inclusive) with United States
share equal to 100 per cent of imports, from United States during
1940, cardboard (items 3828 and 3829) with United States share
400
-2equal to 100 per cent of importe from United States during first
half of 1940 and certain toys with United States share equal to
100 per cent of imports from United States during 1940, Japanese
quotas for aforementioned articles with few exceptions allotted in
accord with provisions of Exchange Control circulars cited above,
booklet containing new regulations will be forwarded by airmail.
TUCK
HTM
EH:copy
7-8-41
401
PARAPHRASE OF TELEGRAN RECEIVED
FROMS American Berlin
DATE: June so, 1941, 8 p.m.
no.: 2002
Reference is made to my 2588 of June 27. 2 p.m.,
last paragraph
I was teld today by on official of the Foreign
office that a telegram from the German Charge d'Affaires
at Washington had reported that the American Government
had given permission for German consular officers and
employees to sell their personal effects (including
antonobiles) and to use the proceeds to purchase any
articles they desire. The Washington Enbassy's telegran
added that the Chargé had reason to believe the German
officials would receive permission to take funds out of
the United States. The Chargé expected to report further
- this point,
These two questions are of most urgent concern to
our departing censular force. If the correctness of
the Gernan Babascy's report can be immediately confirmed,
I would be enabled to press for a reciprecal basis on
both these questions,
The Babasay has supplied all our consular officers
with survency dollars (which the Disbursing officer of
the Babasay has received through the pouch) for their
personal
402
personal travel needs. The special permit which will be
requisite to take this currency out may not be greated
unless a similar facility has been greated to the German
consuls and unless I as in a position to show this. In
respect of the sale of personal property, the Department
in reply to this telegram should indicate in what manner
this has been permitted, 1.0., whether a blanket order
has been issued excepting the consular employees OF
whether by special application and, if so, how quickly
acted upon by the American authorities. If a blanket
order has been issued exampling the consular employees,
I would in all probability be able to obtain the ismediate rescission of the prehibition against sale of any
personal property by American consular officers.
MORRIS
10 THE
OFFICE
THE
OF
blv
/
RECEIVED
IS
55
403
PARAPERASE OF TELEGRAM RECEIVED
FROM: American Tabasay, Berlia
DATE: June so, 1941, 8 P.M.
NO.: 2630
Reference is made to the Embassy's telegram of June 20,
1941, 6 p.m., No. 2612.
A conversation was held by two officials of this Subancy
with a competent official of the Foreign Office this morning.
They were told that the German Chargé d'Affaires had called
at the State Department about June 25, at which time he had
requested the issuance of a special license to him which
would allow him to precure funds of an official Bature.
The report is that the Department informed him that
the Department of Treasury was overloaded with applications
similar to his. He was informed that as soon as it was
possible to de mas application would be aoted upon.
According to the official of the Foreign office here,
the German Government resents the delayed action which did
not permit the prompt issuance of the special license that
the German Charge vished to have. Furthermore, the Foreign
Office official stated that the American officials in Germany
would not receive "one sent" until the German Embassy in
Washington had received all of the necessary funds for the
transaction of its official business.
The situation (as foreseen in my previous telegram) in
regard to the consular officers and the Embassy has become
desperate for lack of local currency, especially since
American officials are expected to leave German territory
within 15 days. Today I authorized the Disbursing
officer,
in order
404
-30
in order that the German Employees of the Enbassy night not
be entirely without funds, to alvance then token payments
against their salaries for the month of June from any
Reichanank deposits in his possession, including personal
trust funds and foreign government funds. By this action,
we were able to advance to each employee the sum of two
hundred and twenty-five reichamarks. It was felt that,
pending an adjustment of this impasse, this amount would
tide them OTOP temporarily.
Monthly bills of the officers and
of the Endassy have remained unsettled because they have
not been able to obtain any reishamarks to pay such accounts.
It is the Subasay's beliefe that the Department will
perecive that all immediate solution to this situation is
needed.
MORRIS
EMPAR
10
/
RECEIVED
405
KD
GRAY
Bnagkok via N. R.
Dated June 30, 1941
Rec'd. 10:37 a. m.
Secretary of State,
Washington.
323, June 30, 10 a. m.
My telegram 208, April 10, 5 p. m.
The manager of the Bangkok branch of the Banque
de l'Indochine has again requested the cooperation
of the Legation in connection with the unblocking of
its credits in the United States and has given another
undertaking to the British Legation which has been con-
firmed to ME in a letter dated June 27 from the British
Minister who states he would welcome any action which
may be taken with a view to procuring the unblocking
of these funds since he has been informed by the British
Foreign Office that the branch is not (repeat not) being
treated as an EnEmy institution or under Enemy control
and further that it will place no obstacle in the way
provided the manager of the branch undertakes to advise
from time to time the London branch of the bank of his
drawings upon his dollar account. The manager has made
"The control
the following statement to the Legation:
is strengthened
406
-2- #323, June 30, 10 a.m., from Bangkok.
is strengthened by the fact that copies of statement
forwarded of its accounts in the United States are sent
to London for checking purposes. In EVERY particular
the accounts in the United States of this branch are
treated like the blocked accounts of the branches in
China of this bank and not like the free accounts of
the branches of this bank which are under British control
as for instances its Singapore branch. The Banque de 1'
Indochine Bangkok branch thinks that its case is very
similar to the one of Singapore and would be grateful
to benefit by the same treatment for its accounts in the
United States."
An Early reply by telegraph is requested.
STCOR
GRANT.
NPL
407
GRAY
LISTON
Dated June so, 1941
Ree'd 7:45 p.m.
Secretary of State,
Washington.
RUNN.
528, June 30, , p.m.
My 318, June 25, 5 p.m.
Since situation with regard to exchange of dollars
in Portugal is beeening more asute daily X should greatly
appreciate the Department's immediate instructions in
order that Legation and Consulate may inform American
citisms.
FIRM
LECHNICYP 10 1 HE
CSB
OFFICE receiving
/ bM IS 53
RECEIAED
408
BRITISH EMBASSY,
WASHINGTON, D.C.
Personal and Secret.
June 30th 1941.
Dear Mr. Secretary,
I enclose herein for your
personal and secret information a
copy of the latest report received from
London on the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
Halifax
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D.C.
TELEGRAM FROM LONDON DATED JUNE 28th 1941.
409
After a very quiet period in the North
Atlantic U. Boats torpedoed three ships out of
homeward Halifex convey on 24th. On the night of
26th/27th four more ships of this convoy torpedoed
but of these only two sunk. These losses not
left unavenged. on 27th we lost one M/S trawler and
night of 27th/26th another bombed, sunk, both off the
East Coast. British submarine sank southbound
merchant ship 2800 tons P.M. /22nd 50 miles from
north west Lampedusa. Swordfish aircraft claim
3 hits with torpedoes and Maryland one hit with
500 pounds bomb on two merchant vessels in convoy
in Mediterranean on 26th. Off Dunkirk on 27th Royal
Air Force aircraft hit and probably sank merchant
vessel estimated 3000 tons.
2.
over France 27th, 8 enemy fighters destroyed
certainly, 3 probable, and 8 damaged. We lost 9
Spitfires, one pilot safe; night of 27th/28th 158
bombers despatched to Bremen and shipyards at Vegesack
near Bremen. Small numbers to other objectives
including sea mining. 12 Bombers missing. Benghazi
harbour again bombed 26th/27th by five Wellingtons,
also Tripoli harbour by five Swordfish and four
Wellingtons. In Syria on 26th our fighters destroyed
eight enemy aircraft on the ground and damaged others
durie attack on 3 aerodromes.
3.
Russia.
German armoured formations making headway
towards/
410
towards Minsk. Heavy fighting in progress line
Kaunas-Liban from Pribag Marshes to the Bleck
Sea. Russiane offering strong resistance.
4.
Finland.
Reported that Russians have bombed at least
8 places. Some fifty German aircraft from Norway
reported arrived at Helsingfore airport.
5.
byssinie.
To 7 hours 25th June. Lekemti area, we
have crossed river Dedesse. Patriots have entered
Bedelle and are advancing towards Gore. Patriots
operating from Dessye along Asseb road have
collected 185 deserters.
6,
Syria.
To 17.45 hours 26th June. Free French
have established troops 3 miles south of Nebek
and have occupied Seidnaye. Coastal (some words
undeoppherable) we have reached position 4 miles
south Damour 12 miles south of Beyrouth.
411
BRITISH EMBASSY,
WASHINGTON, D.C.
PERSONAL AND
SECRET
June 30th, 1941
Dear Mr. Secretary,
I enclose herein for your
personal and secret information a
copy of the latest report received
from London on the military situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
Halfax
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D.C.
412
Telegram received from London
dated June 27th, 1941
NAVAL.
M/S trawler bombed and disabled off
Cromor Dello June 26th.
TU KEY.
Refah was torpedoed 40 miles north east
2.
of Cyprus 2230 June 23rd. She carried Turkish
submarine crows to Egypt for onward passage to
the United Kingdom.
Total enemy merchant ship losses to June
3.
17th - captured or soised 102; 469,000 tons,
souttled or sunk 198, 1,060,000 tons: unidentified ships estimated 345, 1,725,000 tons: total
645, 3,254,000 tons, also 47 ships 84,000 tons
under enemy control or allies of the enomy sunk
and 33 of 320,000 tons arrested in United States
or South American ports.
4.
Military. Libya.
Egypt. June 25th we advanced 500 yards
front of 2000 yards thus strengthening our position
Medawar salient Tobruk. Long distance patrol re-
ports Vekili occupied by Italians, little activity.
5.
Syria,
Evening June 24th, local Vichy counter
attack on Jessin met slight success. Morning June
26th situation in Palmyre improving. Hostile
aircraft bombed Damasous. Free French occupied
Maaraba before Quastal 25 miles north east of
Damasous. Our troops held up by artillery fire
twelve miles north of the city on Beirut road,
Herjayoun/
413
Marjayoun area, our cavalry patrols in touch
with Vichy French. One hundred and twenty
Circassions have surrendered.
6.
Royal Air Force. June 26th.
Northern France bombers unable to
Locate target owing to weather; fighters shot
down nine certain, four probable eight damaged.
We lost three Spitfires.
7.
Even before Russian hostilities began
German propaganda commenced complaints that
Luftwaffe were fighting against superior odds
possibly to explain increase of losses, which
were uncomfortable.
8.
Night of June 26th/27th.
143 bombers attacked Cologne, Dusseldorf,
Kiel. Four bombers missing.
9.
Libya. June 26th.
Royal Air Force successfully raided Gazala
destroying five and damaging other enemy aircraft
on the ground, Our fighters for loss of 3 shot
down 6 certain, 2 probable.
10.
Syria. In Palmyre Sector our aircraft
destroyed four Potes 63 bombing our troops.
414
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
MILITARY INTELLIGENCE DIVISION
WAR DEPARTMENT
TENTATIVE LESSONS BULLETIN
Washington, June 30, 1941
No. 127
G-2/2657-235
NOTICE
The information contained in this series of bulletins
will be restricted to items from official sources which are
reasonably confirmed. The lessons necessarily are tentative
and in no sense mature studies.
This document is being given an approved distribution,
and no additional copies are available in the Military Intelligence Division. For provisions governing its reproduction,
see Letter TAG 350.05 (9-19-40) M-B-M.
AT THE MEUSE, 1940
SOURCE
This bulletin is based upon the translation of an account
published during November, 1940, in Militarwissenschaftliche Rundschau,
an authoritative German Military journal.
Intended propagandistic effects should not be overlooked.
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
--
415
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
AT THE MEUSE, 1940
The Meuse is no longer a river, but a solid sheet of flames;
the hills on both banks are fountains of fire.
The terrain is ideally suited to defense; all natural cover
has been exploited, and where nature has failed, technique has come
to its assistance. Machine gun nests are located in front of the
boulders, in the crevices, and deep in the cliffs. Tiny vaults,
walled with brick and concrete, are hewn far into the rock, and above
them 150 feet of solid stone forms a roof.
Concrete bunkers, seemingly spread over the terrain at
random, but in reality placed with a purpose, are in concealed posi-
tions, conforming in color to the green of the river bank or the
brown of the stone wall behind it.
Lone houses stand along both banks of the river. Their
appearance is harmless; yet they are miniature fortresses with con-
crete walls several feet thick.
From all of these bunkers and embrasures, from the buildings
and rock caves, come roars and crashes; flames leap, and a hail of
fire from all weapons, including machine guns, infantry cannon, and
150-mm. guns placed behind the rocky hills, falls upon the approaching
lines of German troops.
That is the Meuse on Whitsunday, 1940.
Our mission is to approach the river and cross it.
In this section along the Meuse lies the first line of French
and Belgian fortified positions. Until now the enemy has fought a
delaying action, withdrawing when we arrived, fleeing when we attacked.
It hoped that here, in the valley of the Meuse, the German offensive
would bleed to death.
As far as the eye can reach, the river constitutes a vast
moat with its bridges drawn. Not a single span across it is left
intact, only gigantic ruine, heaps of rock and iron, and long steel
girders reaching into the alcy like bundles of lances.
The tanks come to a halt at a fork in the road. The main
element of the advance guard turns off to the left. Three armored
cars and a platoon of motorcyclists take the road straight ahead
for the small town of Houx, where a large bridge still stands across
the Meuse.
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
-2-
416
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
Swiftly, the tanks roll down the winding road into the
river valley. On they race through two, three small settlements
along the way, the houses are vacant, deserted - not a shot is
fired. The highway gradually levels out; we must be near the
river. We are cautious the last 500 yards, and we take advantage of
every foot of cover. The road is lined on both sides with trees
which offer good concealment. But suddenly the rows of trees end
and before us lies the glittering surface of the river with an undamaged bridge across it.
The tanks race for the bridge at full speed, then the brakes
are applied, and the last few yards are taken slowly. Be careful there may be mines. But no; not even a shot is fired.
The leading armored car is on the bridge; now it has reached
the center. The second armored car follows 30 feet behind, while the
third one remains on the river bank, covering the other two. Just
as the third car is about to move on, a tremendous flame shoots into
the air.
A burst, sounding like a clap of thunder, follows. Bits of
iron and blocks of rock sail high into the air.
Luck is with the crews, who covered by the dark of night,
crawl out of their half-submerged vehicles and reach the bank safely.
But the last bridge is destroyed and all communication with
the other bank is cut off.
The commanding officer of an armored regiment, who also com-
mands our advance guard, accompanied by his staff and the artillery
commander, is behind an earth wall two hundred yards from the bank
of the Meuse. From the opposite side, shells come over without a
break, filling the air with the swelling and ebbing sound of a mighty
organ; and the machine gun bursts, like the cracking of a whip, add
their shrill note to the din.
Here, also under cover of the earth wall, close to the edge
of the deep woods which extend up the slope, are the observation post
and radio equipment of the German batteries. The German plan of attack
for this particular zone is under discussion, and the preparations
for the river crossing are explained in detail.
Dismounted motorcyclists and members of the reconnaissance
detail, hugging the ground, lie beside a path that leads through
the woods and up the slope. Every single movement can be detected
from the other side, but the advance and reconnaissance must go on.
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
-3-
417
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
German patrols approaching the river wind their way stealth-
ily through the terrain, slipping from tree to tree, taking advantage
of every inch of cover, gliding with soft, cat-like movements across
the wide, green, fully exposed river bank. In the midst of hostile
artillery fire, and under a hail of bullets from concealed machine
guns, the men jump from shell hole to shell hole, halt, rush forward, hug the ground, crawl perfectly prone across the last hundred
yards of ground, and finally reach the river bank, where they conceal themselves in soft depressions and behind willow brush along
the water edge.
Near this point, the foot-high stone wall of an old, abandoned
dam leads across the river to the other bank. The waters rush,
gurgling, through the numerous gaps in the ruins, but wanting and
incomplete as the wall may be, in the circumstances it must serve
as a bridge, a crossing, one chance of reaching the far bank. The
rubber boats will have to take care of the rest.
Many German reconnaissance patrols are out during these
hours, and from them is collected the information upon which the
plan of attack is based. Zero hour is set at 5:30 o'clock the next
morning. The mission is clear - cross the Meuse; establish a bridgehead, and defend it.
The Colonel speaks his orders; briefly, yet clearly, he says
what an officer and leader should say in a situation of this kind.
The assault will have to be carried out with practically no artillery
preparation. Speed is essential, for every hour lost gives the
enemy that much additional time to rush up reinforcements.
The hostile guns roar on without pause. On the left, towards
the south, where the fortifications of Dinant are located, the sound
of fire is dull and heavy.
Night has fallen, and motorcyclists and engineers, the first
assault elements, stand ready behind the trees of the dense woods
along the river. Hand grenades are hung around their necks in
bundles and are stuck in their boots, belts, and between the buttons
of their blouses; machine guns and sub-machine guns are slung over
their shoulders. The men are ready.
"Forward." At the command, the assault troops feel their
way out of the woods and in a single dash rush fifty yards forward
from the edge of the trees. Breathing heavily they take temporary
shelter in shell holes, then go on without firing a shot, lest they
give the enemy an opportunity to take better aim. They hope to
cross the open stretch along the river in four or five rushes and
reach their first objective, the river itself.
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
-4-
418
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
Flares shoot into the air. For what seems an eternity, their
light illuminates the ground far and wide with deadly brightness, and
the men crouch motionless, in their holes, behind small ridges, or
wherever they happen to be - gray creatures frozen into complete
lifelessness.
They finally reach the bushes along the water edge; immediately
before them flows the river, their first objective. Now they must
cross it. They slip along the bank, toward the spot which was reconnoitered in the afternoon, where the narrow, brokendown wall of the
old dam stretches squarely across the river to the other side.
Machine guns are in position; echeloned to the right and
left, they act as security elements and furnish supporting fire. The
forward men of the assault troops, one after another, climb onto the
crumbling wall and balance their way across like tightrope walkers.
The first men are across; they climb the steep, walled bank and reach
the first step of the terraced slope; their boots crunch on the
crushed rock of a railroad track. Before crossing the track the men
raise their heads cautiously, ready to stand. Suddenly, withering
fire from hostile machine guns, hidden in the black of the night, showers
down upon them at pointblank range. Every man takes cover on the
ground, listening - a lonely group.
German machine guns on the other bank open up at a terrific
rate of fire. Bullets strike the ballast of the track, and the shrill
sound of ricochets cuts the air. The solitary group of men is now
completely enveloped by hostile and friendly fire; they can expect
no immediate help, but they must get out.
Over to the right, the railroad track leads into a road
which crosses the track. In front of the group and close by, a
hostile machine gun hammers away madly. Its fire, aimed not at the
men along the track, but at the middle of the river and the dam,
explains why the other groups have failed to move up.
Stealthily the men at the track move, crawling along. With
infinite caution, they bring their own machine guns into position,
and then open up with two magazine loads at rapid fire. They change
position, and from a different direction, let go three or four
bursts. The hostile machine gun is silent. Carefully the men crawl
up, fingering the triggers of their machine guns and submachine guns the crew of the enemy machine gun is dead.
More assault troops arrive, racing with death as they balance
their way, one by one, across the narrow ledge of the dan. Only a
few manage to cross the water by rubber boat, for most of the boats
are shot to shreds and sink before reaching the middle of the river.
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
-5-
419
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
Yet those making their way along the wall are increasing in numbers
and are developing into groups and clearing out terrain. They
push forward one hundred, now two hundred yards from the river,
across the railroad track, where they reach the meadows and fields
which cover the gradually sloping ground on the far bank, and take
positions in depressions of the ground, behind ridges, in hastily
dug pits. In front, on the flanks, in rear, and especially from
the inaccessible machine gun nests in the rock where the enemy
still holds out, hostile machine guns blast away constantly. Cut
off behind by the Meuse, this handful of German motorcyclists constitutes the first and only bridgehead that has been advanced. Their
fortifications are the pits, barely knee-deep, which the men have
dug. They have fought for this piece of ground - now they must
defend and hold it until morning, until the German offensive gets
under way with all its driving power at 5:30 A.M., and until reinforcements move un and relieve them.
The hours of the night stretch into an eternity. The French
and Belgian defenders have doubled their efforts, and their ammunition supply seems inexhaustible. The roar of their light and heavy
batteries continues, and the Meuse valley resounds with the echo
of the bursting shells. Snipers are concealed behind every bush,
and machine guns in bunkers and bastions spray the river and its
banks.
Morning dawns and, with it, approaches the hour of attack.
Dense fog rises from the river and the damp meadows as German detach-
ments move out from the hills on the east side of the river. The
fog is both a friend and a foe, for the French and Belgian machine
guns in their concealed positions are even harder to see behind the
milky-gray screen of mist. Withering fire of allhostile guns meets
advancing German troops, and it seems impossible to run against
this wall of steel, to plunge through this tornado of whirling shell
splinters, and to gain the other bank of the river. The advance
and river crossing is bogging down.
Suddenly in the midst of this infernal noise, out of clouds
of fog. the figure of the General, the Commander of the Armored
Division, appears at the bank of the Meuse. Over fences and through
the brush, skipping past the wreckage of houses, jumping and crouching, the General:moves stealthily on to the new footbridge which
the engineers built under cover of darkness to provide a means of
crossing more suitable than the crumbling wall of the dam.
"We can't go on," the engineers report to the General.
"Snipers and machine gunners on the other side pick off our men one
by one."
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
-6-
420
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
The General is not to be deterred, however. The word inpossible does not exist for him. Like the German motorcyclists
beside
him,
he is flat
thedirt.
ground, covered by the hail of bullets,
his head
pressed
intoonthe
Tanks move up under cover of fog. deploy behind the brush
along the river bank, and hammer the far side with their machine
guns and cannon. Their fire rakes the opposite bank from one end
to the other, mowing it with a death-dealing scythe which silences
the hostile machine guns and snipers, and leaves only one concealed
bunker from which enemy fire keeps stabbing at the German flank.
"That bunker must go; find its location," the General rape
out, and the lieutenant at his side jumps up and makes a dash for
the crossing. Bullets whine past him and smash into the wall; the
mortar splashes and the lieutenant wipes blood from his neck. He
is lucky, for the shot has just grazed him.
The fog lifts for a few moments and new bursts of fire dart
from that confounded bunker, whose outline can be seen for a second
or two. It lies far over to the left, deep in the rock behind the
river bank, but its firing slits cannot be discerned.
The lieutenant returns, crawling and jumping, and reports
to the General, who orders him to have one tank open fire on the
bunker - a few minutes later the bunker is out of action. Troops
keep crossing the river, and now heavy weapons can follow the rifle
elements.
Once across the Meuse, the attackers are met by concentrated
fire of all hostile weapons. "Hostile tanks on the right F. The
warning is shouted from man to man, as the heavy French tanks come
plunging, like fire-spewing monsters, towards the German motorcycle
companies which lie widely deployed along the river bank. Motorcycle
elements are armed solely with hand grenades, rifles, sub-machine
guns, and machine guns; weapons which are ineffective against such
monsters.
At this critical moment, the General himself by personal
example rouses his men to action. His command, "Flare pistols," cuts
the air sharply. Each man reaches for every single flare pistol he
carries, and fires, not into the air, as he ordinarily would, but
straight at the hostile tanks. One cartridge after another, streams
of flares, looking like tracer bullets, splash against the tanks,
and the unbelievable comes true; the ruse of war is successful. The
enemy actually believe the fiery, but harmless, bullets that come
whizzing and crackling out of the dense fog to be tracer ammunition
of a large number of German antitank guns. The tanks halt, turn and
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
-7- -
421
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
withdraw, and a deadly peril for the week German bridgehead has been
averted at the last moment. Were the flares responsible? Not altogether, for it must be borne in mind that the rapid decision to
use them was the cool and daring work of the Nazi commander.
Mere defense does not help to gain ground, however; it holds
what has been won, but only the offense can increase gains. The
General - his armored car is the first vehicle taken across the
river - now stands in the open turret of his car and from there, in
the midst of hostile fire, leads the assault of his tanks. In defiance
of all tactical doctrines, the German attack plunges into a sea of
fire and fog. into unknown terr in, towards an opponent in concealed
and fortified positions. The onset must be made; ground must be
gained; the bridgehead must be driven ahead, far away from the bank
of the Meuse and deep into the rolling terrain. The tanks have the
task of creating elbow room, and where they are, there is the attack.
Constantly advancing, and knowing no obstacle, the tanks
refuse to give up anything their tracks grab. They roll wide paths
across the country and shatter the final resistance of the enemy,
down to the last hostile machine gun. Prisoners stream rearward,
at first in small groups, then gradually in long columns. Their
ashen faces reflect the horror they have witnessed.
The troops move in behind the tanks, and for the first time
in hours the motorcycle troops which have stuck to their lonely
post throughout the night may rise from their pits. They take a
short breathing spell, just long enough to stretch their limbs, and
then they too move on. Spreading out fan-wise, the German attack
proceeds, for the enemy must have no time to gain a new foothold.
French artillery continues to fire without a break. Again
and again, flights of hostile planes drone overhead, dive, and drop
their bombs on the banks of the Meuse, continually forcing engineer
elements at ferries and bridges to take cover. Enemy tanks repeatedly
launch counterattacks which collapse before the fire of German tanks
and antitank guns.
The fog has lifted, and the risen sun is hot. In endless
succession, engineers ferry across the river heavy artillery guns,
tank after tank, and the multitude of special vehicles employed
by a modern army. Despite continuous attacks from the air, construction of ponton bridges forges ahead rapidly. As late as
afternoon, engineer troops time and again are forced to drop their
tools, reach for their arms, and join the infantry machine guns
and the numerous antiaircraft guns that cover the river crossing,
in fighting off hostile air attacks. Five enemy airplanes are brought
down by ground troops in this one zone.
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
-8-
422
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
Meanwhile, additional columns in untold numbers are moving
up on the roads to the rear, all heading for the Meuse. The concentrated force of divisions is an endless line of regiments,
battalions, and batteries which moves towards the sinking sun, ready
to take up the offensive on a broad front.
The French General Staff had estimated that this strongly
fortified line of the Meuse would resist an attack for at least
eight days; yet the first German assault troops crossed the river
less than eight hours after the operation was launched.
The Nazi shock troopers had leaped from the woods, darted
across the plain, hurried across the crumbling ledge of an ancient
dam and over shaky foot bridges, and rushed up the fire-breathing
hills studded with machine gun nests, bunkers, and bastions.
Tremendous enemy superiority in death-dealing materiel had
been opposed by the aggressive spirit of the assault troopers, a
weapon, firmer, harder and more powerful than steel and stone, and
stronger than wall and materiel.
The men were led, not by officers using telephone and written
orders, but by officers who lay beside their troops in the same dirt,
who jumped up ahead of their troops, and who rushed into the hostile
fire with them, officers who were true leaders and not leaders by
privilege and rank alone.
These troops fought to establish the bridgehead and then
defended it. Before them lies the open field, the war of movement
and the offensive, new objectives, victory and life.
NO OBJECTION TO PUBLICATION IN SERVICE JOURNALS
-9-
423
RESTRICTED
0-2/2657-220
No. 430
M.I.D., W.D.
12:00 II., June 30, 1941.
SITUATION REPORT
I. Eastern Theater.
Ground: The zone north of the Pripet marshes continues to
be the scene of heaviest fighting, with large forces locked in combat
around Minsk. Farther to the north the German advance is proceeding;
Dvinsk and Libau have been captured and the Dvina river crossed.
Behind the front in the northern zone the Germans claim to have
isolated and surrounded two Russian armies in the Bialystok-Wolkowyak
area.
South of the Pripet marshes, the German thrust
Lublin-Luck-Kiev appears to have progressed beyond Luck and the 1939
frontier of Russia. The Germans have captured Lemberg (Lwow).
The southern front along the Carpathian mountains
and the Pruth river remains inactive.
Heavy fighting has commenced along the FinnishRussian frontier. A German-Finnish offensive has been launched across
the Karelian Isthmus and a subsidiary attack in the north directed
against Murmansk.
Air: No change in the situation.
II. Western Theater.
Air: German. Extremely limited activity.
British. No offensive operations on the 29th. Last
night an estimated 125 planes were employed against Hamburg and
Bremen. Today daylight attacks were made on Bremen and Oldenburg -
the deepest penetration to date of their current aerial offensive.
III. Middle Eastern Theater.
No important developments.
RESTRICTED
CONFIDENTIAL
424
Paraphrase of Code Gablegram
Received at the Mar Department
at 9:12, June 30, 1941
London. filed 15:05, June 30, 1941.
1.
&
British Air Activity over the Continent.
Day of June 22. Near the Frisian Islands 2 Sterlings that
were mine laying were attacked by 7 No-109's.
1.
e
Day of June 22. No activity.
Eight of June 22. 28 bombers to Manburg, 108 to Brenca. 6
unreported from Brenon, , including 4 Sterlings unreported from Manburg.
2.
Jerman Air Activity over Britain.
& Day of June M. 20 recommissance planes and 10 long range
bembers and 200 fighters over German territory.
1
Right of June 28. 15 mine layers, 25 long range bombers and
five reconnaissance airplanes.
e
Eight of June 22. Activity over Tarmouth district and off
the Norfelk Coast.
3.
Aircraft Lesses Reported.
s
British lesses. One Sterling shot down during the day of
June 28.
Axis lessee. One No-109 destroyed and one damaged day of
June 28.
4.
British Air Activity Other Theaters.
a.
Middle East Theater. Day of June 28. While escorting
bembers in the fransjordan 8 P-40's destroyed 6 Glenn Martins belonging
to Vicky.
CONFIDENTIAL
INFORMATION COPY
425
CONFIDENTIAL
Attacks are being continued on easing consuminations,
shipping and harbers in this area.
LESS
Matribution:
Secretary of Mar
State Department
Secretary of Treasury
Chief of Army Air Force
Assistant Chief of Staff, G-3
Mar Plans Division
office of Naval Intelligence (s)
as
Air Gerpe
CONFIDENTIAL
426
TREASURY DEPARTMENT
FISCAL SERVICE
BUREAU OF ACCOUNTS
WASHINGTON
THE
June 30, 1941.
The Honorable,
The Secretary of the Treasury,
Washington, D. C.
Sir:
In compliance with instructions in your letter of March 26,
1941. the undersigned committee. on your behalf, has made an appraisal
of the assets and liabilities of the Commodity Credit Corporation. for
the purpose of determining its net worth as of March 31, 1941, as required by the Act approved March 8. 1938. (52 Stat. 107).
There is attached hereto a balance sheet (Exhibit A) of the
Commodity Credit Corporation. as of March 31, 1941. showing its assets
and liabilities on the basis of its book values, together with adjustments to reflect the value of assets, in so far as possible, on the
basis of market values as of that date.
Accounting Verification
At the request of the Department arrangements were made with
the Reconstruction Finance Corporation to assign its auditors to make
a special examination of the books and related records of the Commodity
Credit Corporation as of March 31, 1941. A report of this examination
has been furnished the committee. which is of the opinion that the
statements contained therein fairly reflect the financial condition of
the Corporation as of that date.
Valuation of Commodities
General
There is attached hereto a statement of Commodity loans. as of
March 31, 1941 (Exhibit B). and a statement of Commodities Owned, as of
March 31. 1941 (Exhibit c). showing the amounts due the Corporation as
to principal, accrued interest, estimated accrued warehouse and other
charges. the quantities of commodities held as security for such loans,
the value of such commodities on the basis of market prices as of March
31, 1941, and the estimated loss as of that date on the basis of such values.
There are also attached an Operating Statement (Exhibit E).
covering the period October 7. 1933. through March 31, 1941, and a supporting
statement (Exhibit F). showing such operations as applicable to the various
commodity programs of the Corporation. An analysis of payments received
from or paid to the United States Treasury for the appraisal years 1938.
1939. 1940 and 1941. is shown in Exhibit G. also attached.
427
-2An independent verification of all market prices was
made by representatives of the Treasury, and the data in the
attached statements were checked by the Treasury representatives
to the books and records of the Corporation.
In the case of certain commodities no market quotations
were available for the particular classes of commodities held by
the Corporation. In such instances certification of prices applicable to the commodities involved were obtained from specialists of
the Commodity Credit Corporation or the Department of Agriculture,
who are familiar with the marketing of these commodities. The
bases used in these certifications were carefully analysed and
the prices certified were used for the valuation of the respective
commodities.
Cotton
Cotton valuations were based on the weighted average prices
according to grades and staples of cotton, on the ten (10) designated
markets as published in the official schedule issued by the Agricultural Marketing Service of the Department of Agriculture for March
31,
1941, reduced where necessary to reflect an average location
differential.
The quantities of cotton held, the average market prices
and the total market value by crop years are as follows:
Crop Year
Bales
Pounds
Total Market
Average Price
(per pound)
Value
1934-35 1/
(Pool-Owned)
1937-38 1/
(Pool-Owned)
1938-39
(Loans)
1939-40
(Loans)
70,073,163.91
1,348,187
655,502,001
10.69
Cents
4,778,509
2,420,601,519
10.61
Cents
864,546
430,519,337
11.18 t Cents
48,157,159.08 2
19,017
9,486,535
9.81 t Cents
931,266.19 2
103,066
53,959,800
9.41 t Cents
$
256,825,821.17
1940-41
(Loans)
5,081,888.78
7,113,325 3,570,069,192 10.67 t Cents $381,049,299.13
1 The cotton "Pool-Owned" represents cotton taken over from producers
through March 31, 1941, title to which has been acquired by the
Corporation, under the terms of the loan program.
2 The market value of this cotton as of March 31, 1941 is in excess of
of the amount due the Corporation as of that date. Consequently,
for the purpose of this report, the cotton has been allowed on the
basis of the book value of loans thereon, and outstanding on the books
of the Corporation as of March 31, 1941.
2
428
-3
Corn
we value of corn, excepting the pooled-owned corn, was
based on the weighted average local market prices in the Crop Reporting Districts within the States comprising the "Commercial Corn
Area," or by State averages, whichever was available, giving effect,
where possible, to the redemption value of corn, whichever was lower.
The pool-owned corn represents corn taken over from producers through March 31, 1941, title to which has been acquired by
the Corporation under the terms of the loan program. This corn has
been priced at the market prices per bushel for the respective
quantities stored in Steel Bins of various County Agricultural Conservation Associations, Country Elevators, Sub-Terminal Elevators,
and Terminal Elevators.
The quantities of corn held, the average market prices and
the total market values by crop years are as follows:
Crop Year
1937-38
(Loans)
1938-39
(Loans)
1939-40
(Loans)
1938 Crop
1939 Crop
(Resealed)
1938 Crop
1939 Crop
(Pool-Owned)
1940-4]
(Loans)
1
Corn Held
(Bushels)
Total Market
Average Price
(Per Bushel)
Value
6,705
.5466 t
1,583,994
.5466 t
865,906.16
1,167,138
.5414 t
631,895.47 1
200,091,322
.5406 t
108,183,375.06
.5708 t
131,040,062.44
.5421 t
.5566 t
506,857.40
$241,231,761.88
229,546,438
934,937
433,330,534
$
3,665.35
The market value of this corn as of March 31, 1941, is in excess
of the amount due the Corporation as of that date. Consequently,
for the purpose of this report, the corn DAS been allowed on the
basis of the DOOK value 01 loans outstanding on the
books of the Corporation as of arcn 31, 1941.
shear
The value of wheat, excepting the Fool-Orned wheat, as based
on the weighted average local market prices, in relation to Terminal
Market prices, according to estimated classes and sub-grades, giving
effect to the local market price or book value, whichever was lower.
--
429
The pool-owned wheat represents wheat taken over from
producers through March 31, 1941, title to which has been acquired
by the Corporation under the terms of the loan program. This wheat
has been prioed on the basis of the weighted average local market
prices, in relation to the Terminal Market prices, according to
estimated classes and sub-grades of wheat owned by the Corporation.
The quantities of wheat held, the average price per bushel
and the total market value by crop years are as follows:
Wheat Held
(Bushels)
Crop Year
Average Price
(Per Bushel)
Total Market
Value
1939-40
(Loans - Resealed)
9,755,720
1939-40
(Pool-Owned)
1940-41
(Loans)
1940-41
(Pool-Owned)
.6558 t
$ 6,398,041.77
281,305
.7800
t
219,419.01
55,051,669
.8137
t
44,795,605.33
9,182,259
.7844
t
7,202,931.25
74,270,953
.7892
$ 58,615,997.36
Rye
The value of rye, excepting the pool-owned rye, was based on
the weighted average local market prices, in relation to the Terminal
Market prices, according to estimated classes of rye held under team
by the Corporation, and, where possible, giving effect to the local
market price or book value, whichever was lower.
The pool-owned rye represents rye taken over from producers
through March 31, 1941, title to which has been acquired by the Corporation under the terms of the loan program. This rye has been
priced on the basis of the weighted average local market prices, in
relation to the Terminal Market prices, according to estimated classes
of rye owned by the Corporation.
The quantities of rye held, the average price per bushel
and the total market value by crop years are as follows:
Crop Year
Rye Held
(Bushels)
1939-40
(Loans - Resealed)
1939-40
(Pool-Owned)
1940-41
(Loans)
Average Price
(Per Bushel)
467,281
.3787
t
4,498
.3857
t
.3983
t
.3839
t
169,872
641,651
Total Market
Value
$176,968.66
1,735.10
67,661.72
$246,365.48
-5-
430
Barley
The value of barley was based on the weighted average
local market price, in relation to the Terminal Market prices
according to the estimated classes of barley held under loan by
the Corporation and giving effect to the local market price or
book value, whichever was lower.
The quantities of barley held, the average price per
bushel and the total market value by crop year are as follows:
Barley Held
Crop Year
(Bushels)
1940-41
(Loans)
234.335
Average Price
(Per Bushel)
.3141 t
Total Market
Value
$73,609.31
Grain Sorghum
The value of grain sorghum, was determined in the same
manner as that describing the valuation of rye loans.
The quantities of grain sorghum held, the average price
per bushel and the total market value by crop years are as follows:
Grain Sorg.Held
Crop Year
1940-41
(Loans)
1/
(Bushels)
4,735
Average Price
(Per Bushel)
Total Market
2877 t
$ 1,362.59 1
Value
The market value of this grain sorghum as of March 31, 1941, is
in excess of the amount due the Corporation as of that date.
Consequently, for the purpose of this report, the grain sorghum
has been allowed on the basis of the book value of loans thereon and outstanding on the books of the Corporation as of March 31,
1941.
Tobacco
The value of tobacco was based on information furnished by
the Director, General Crops Division of the Conmodity Credit Corpora-
tion and was arrived at after giving careful consideration to the
inventories, age, current market condition, and trade trends.
The amount of tobacco held, the average prices as recom-
rended by the Director, and the total market value are as follows:
431
-6Quantities Held
Crop Year
(Pounds)
1939 Dark Fired
(Loans)
1940 Dark Fired
(Loans)
1940 Flue Cured
Average Price
4,738,220 G.W.
.0856 t
(Purchased)
1939 Dark Fired
(Purchased)
1940 Dark Fired
31,954,562 D.W.
.1960
6,264,845.00 2
13,378,009 D.W.
.1916
2,563,602.45 2
139,559,878 D.W.
.2512
2,529,640 D.W.
.2037
515,420.83
676,484 G.W.
.1561
105,659.73 1/2
148,725,943 D.W.
356,917,748
.2320
(Purchased)
1940 Flue Cured
(Purchased)
$ 405,828.07
.1078
(Loans)
1939 Flue Cured
Value
15,355,012 D.W.
(Loans)
1940 Burley
Total Market
(Per Pound)
t
1,656,163.93 2
35,066,667.65 1/2/
.2436 t
t
36,242,891.86 & 2
$82,821,079.52
G.W. Indicates - Green Weight
D.W. Indicates - Dry Weight
1
This tobacco is owned by the Corporation and was purchased for its
account by certain exporting firms from funds advanced by the Corporation. The exporting firms have approximately a 10% interest
in the tobacco and have options to purchase the tobaooo from the
Corporation at cost, plus interest and charges.
2
Excepting the 1939 Dark Fired Tobacco under loan, the Director
estimates that the rest of the tobacco could fairly be valued at
the amount paid thereon by the Corporation as of March 31, 1941.
Consequently, these values represent the book values as carried
on the books of the Corporation as of that date.
Turpentine and Rosin
The value of turpentine and rosin was based on the Savannah
Naval Stores quotations for March 31, 1941.
The gallons of turpentine (in bulk) and quantities of rosin
(in wood barrels and steel drums) reduced to pounds and the total
market price are as follows:
Production Year
1938 Rosin
(Loans)
1939 Turpentine
(Loans)
1939 Rosin
(Loans)
1940 Turpentine
(Loans)
Turpentine and
Average
Price
161,618,422 Lbs.
.02074 t
Rosin Held
1,662,353 Gals.
180,114,185 Lbs.
.33500
.02064 t
2,876,118 Gals. .33500
Total Market
Value
$ 3,352,188.13
556,888.25
3,717,951.52
963,499.59
-Turpentine and
Production Year
Rosin Held
Average
Price
Total Market
432
Value
(Continued)
1940 Rosin
(Loans)
245,324,653 Lbs.
.02085 t
$ 5,115,956.21
587,057,260 Lbs.
.02075 t
$12,186,095.86
1,520,387.84
$13,706,483.70
4,538,471 Gals.
.33500
Peanuts
The value of peanuts was based on the amounts loaned by the
Corporation, plus interest and charges, as such loans were made in
cooperation with the Secretary of Agriculture in order to remove this
commodity from the edible trade for the purpose of stabilizing prices.
The peanuts are disposed of only with the approval of the Secretary of
Agriculture by being diverted as much as possible to other than the
edible trade. Under agreements between the Secretary of Agriculture,
the Commodity Credit Corporation and the borrowers, the Corporation
is secured against loss in these transactions. Therefore, for the pur-
pose of this report, the peanuts have been allowed on the basis of the
amounts due on the books of the Corporation as of March 31, 1941.
The quantities of peanuts, the average price and total
market values (Book Value) are as follows:
Quantities Held
Crop Year
(Pounds)
Average Price
(Per Pound)
Total Market
Value
1940-41
49,882,305
(Loans)
1
.03269 t
$1,631,095.77 1
Book Value
Raisins
Loans on raisins were made under marketing agreements with
the borrowers. The loans were made on raisins delivered to the
Proration Program Committee in accordance with the States Marketing
Program for raisins in effect under the California Agricultural
Prorate Act. The committee administers the raiain marketing program for the State.
Under the 1940-41 program only standard quality raisins were
eligible for loans, the growers being required to dispose of substandard raisins outside of trade channels or divert them to byproducts.
Under the 1938-39 program, such sub-standard raisins also
were ineligible for loans. However, the committee pledged such sub-
standard raisins as additional security to the 1938-39 loan acquired
on standard quality raisins.
433
-8-
In liquidating the 1938-39 loan the Corporation disposed
of all raisins, standard and sub-standard, and is holding $229,546.88,
in suspense pending settlement of suit brought by growers against the
committee, questioning its right to pledge sub-standard raisins under
the 1938-39 Loan. As of March 31, 1941, the Corporation is carrying
on its books a balance of 391,843.21 on the 1938-39 Loan, with no
underlying security. The Court has rendered one opinion unfavorable
to the Corporation, and pending settlement of the case, it is believed
prudence requires that this balance of 391,843.21 be considered as
uncollectible.
The value of raisins securing the 1940-41 loan was based on
the market quotations of March 31, 1941, published in the California
Fruit News. These prices indicate that the market value of such raisins
is in excess of the book value of the 1940-41 loans on the books of the
Corporation as of that date, including interest and charges. Consequently,
for the purpose of this report, the collateral has been valued at such
book value.
The quantities under loan, the average price, and total market
value are as follows:
Quantities Held
(Per Ton)
Value
(none)
See above remarks.
89,466
-
1938-39
(Loans)
1940-41
(Loans)
(Tons)
Total Market
$46.18/
-
Crop Year
Average Price
$4,132,369.94 1,
1 Book value - See above remarks.
Hops
These loans were made under marketing agreements with the
borrowers. The market value of hops was based on information furnished by the Director, General Crops Division of the Commodity
Credit Corporation and was arrived at after giving careful consideration to the inventories, domestic and foreign markets and the lack
of demand for this particular class of hops held by the Corporation.
The quantities held, the average price and total market
value are as follows:
Quantities Held
Crop Year
1938-39
(Loans)
(Pounds)
3,970,157
Average Price
(Per Found)
.01
Total Market
Value
$ 39,701.57
434
-9--
Butter
The value of butter was based on prices as of March 31,
1941, for the various grades published by the Dairy Marketing
Service of the Bureau of Economics of the Department of Agriculture, effective in Chicago markets as of that date.
quantities held, the average price, and total market
value areThe
as follows:
Production Year
1940-41
(Loans)
Quantities Held
(Pounds)
65,789
Average Price
(Per Pound)
.3111/
Total Market
Value
$20,498.41 1
1/ The market value of butter as of March 31, 1941, was in excess
of the loan value on the books of the Corporation as of that date.
Consequently,
the purpose of this report, the butter has been
allowed at bookfor
value.
Prunes
Loans on prunes were made under marketing agreements with the
borrowers. The loan program is coordinated with a surplus removal
program of the Surplus Marketing Administration and a marketing program under the Prorate Act of the State of California. Under the prorate program all sub-standard prunes will be kept off the market and
60% of the standard quality prunes will be turned over by growers to
the Prorate Committee which administers the program. It is upon these
standard prunes that the loan was made.
The value of prunes was based on the market quotations of
March 31, 1941, published in the California Fruit News. These prices
indicate that the market value of the prunes is in excess of the book
value as of that date, including interest and charges. Consequently,
for the purpose of this report, the collateral has been allowed on
the basis of such book value.
The quantities under loan, the average price and market
value are as follows:
Quantities Held
Crop Year
1940-41
(Loans)
1
(Pounds)
174,611,123
Book value - See above remarks.
Average Price
(Per Pound)
.03149/
Total Market
Value
$5,499,731.12 1
435
- 10 Peas and Vetch (Seed)
The value of peas and vetch was allowed on the basis
of the balance outstanding on the books of the Corporation as of
March 31, 1941. These commodities are purchased by the Corporation
and sold to the Agricultural Adjustment Administration at total cost,
plus a portion of overhead. The Administration distributes the seed
to producers in lieu of conservation payments.
The quantities held, the average price and total market
price are as follows:
Quantities
Crop Year
(Pounds)
1940-41
Average Price
Total Market
(Per Pound)
Value
.0775 t
$976.70 1
12,600
Purchase price or cost (see above)
1
Eggs
The value of eggs was based on the market quetation
for No. 1 Eggs in New York (wholesale) as published in the
Journal of Commerce for March 31, 1941.
The quantities held, the average price and total market
price are as follows:
Production
Year
1940-41
1
Quantities Held
Average Price
Total Market
(Dosens)
(Per Dozen)
Value
17,820
.2175 1
$3,875.25
Journal of Commerce March 31, 1941.
Loans held by Lending Agencies
As of March 31, 1941, various lending agencies had made
loans on commodities under the terms of Commodity Credit Corporation
contracts to purchase such loans from the lending agencies under
certain conditions. The amount of outstanding loan the estimated
accrued interest and estimated accrued warehouse charges on the under-
lying collateral held by lending agencies, as reported to the Corporation as of March 31, 1941, and which it is committed to purchase under
its contracts, are as follows:
436
- 11 -
Commodity
1940-41 Barley
1939-40 Corn
1940-41 Corn
1938-39 Cotton
1940-41 Cotton
1940-41 Grain
Sorghum
1940-41 Rye
1940-41 Wheat
Face amount of loans
interest and W/H ohgs.
$ 1,751,743.73
8,330.83
54,426,688.76
60,390,659.18
104,666,706.78
Market Value of
Security 1
$ 1,704,845.78
Estimated
loss
8,330.83
48,246,350.83
60,390,659.18
104,666,706.78
16,461.71
1,641,191.39
162,443,079.63
385,344,862.01
46,897.95
$
(None)
$6,180,337.93
(None)
(None)
16,461.71
1,608,929.43
157,508,275.57
374,150,560.11
(None)
32,261.96
4,934,804.06
11,194,301.90
In valuing the above commodities, the same prices were applied as
those used in valuing these same commodities by crop years as
1
appear in the forepart of this report.
Based on the market values of the commodities, listed in
the foregoing table, on which loans had been made by lending agencies
and reported to the Commodity Credit Corporation as of March 1,1941,
an estimated loss of $11,194, 301.90 would be sustained in view of
the Corporation's commitments to purchase such loans from the lend-
ing agencies under certain specified conditions. The details of this
estimated loss are set forth in Exhibit D .
Basis of Appraisal
The Corporation's assets, secured by the various com-
modities, were valued strictly on the basis of the market prices
which were available on such commodities as of March 31, 1941,
adjusted, where necessary, for freight differentials, and giving
effect to such market prices or cost or redemption value, where
possible, whichever was lower. The Corporation's liabilities
were adjusted, where necessary, to reflect the true liability for
the purpose of appraisal.
The Committee is of the opinion that the prices used in
the valuation of the various commodities fairly reflect the appraised values of such commodities as of March 31, 1941, as contemplated under the Act of March 8, 1938, and that the necessary considera-
tion has been given to all related factors, such as accrued interest
and other charges, in arriving at the stated excess of $1,637,445.51
of liabilities over assets as of March 31, 1941.
Restoration of Capital Impairment
On the basis of this appraisal and in accordance with the
provisions of Section I of the lot of March 8, 1938, the
437
- 12 -
contribution due from the Secretary of the Treasury to the
Commodity Credit Corporation to restore the impairment of its
capital stock as of March 31, 1941, amounts to $1,637,445.51, as
follows:
Accumulated deficit through March 31, 1941
$171,766,037.28
LESS: Contributions by the Secretary
of the Treasury to restore impairment
of capital stock as of appraisals
of March 31, 1938
March 31, 1939
$ 94,285,404.73
119,599,918.05
$213,885,322.78
LESS: Surplus payment by the Cor-
poration to the Secretary of the
Treasury for excess contributions
as result of appraisal March 31,1940
43,756,731.01 170,128,591.77
Contribution due from the Secretary
of the Treasury to restore impairment of capital stock as of
March 31, 1941
$ 1,637,445.51
Respectfully submitted,
E. F. Barteit
Treasury Department
Reconstruction Nathaniel Finance Royall Reyall Corporation
Johnson
K. R. Puchs
Department of Agriculture
438
EXPIRIT A
COMNCDITY CREDIT CORPORATION
Balance Sheet
is of March 31. 1941
ASSETS
(Adjusted)
Accruited
Talue
Prices - of
Assets as of
March 31. 1941
March 31. 1942
Values
LIABILITIES
(Adjusted)
Notes Payable
Centre
On deposit with the Treasurer of the United States
On the books of the Chief Disbursing Officer of the
Treasury Department.
Total.
202,097.40 $
546,048.90
2,465,856.95
Total.
55,187.97
63.393.340.3
Commedity Loans (Purchased) - Exhibit
Principal
(none)
63.393.340.52
274,303,354.9
Proceeds of sales 1938-19 held
6,110,663.8
pending settlement of litigation.
35,234,124.04
Total.
March 31. 1941
March 31. 1941
(none)
763,138,465.59
(none)
41,272,932.10
251.775.582.83
(none)
1,154,663.02
(none)
2,307,077.31
162.193.290.5
(none)
362.199.250.56
1.170.072.118.5
(come
6,596,688.69
11,531,671.96
23,145,571.45
41.37.93.10
Suspended Credits:
of sales of commedities not
allocated
.
Accrued interest receivable,
Accrued warehouse, insurance and other charges (contra).
Miscelleneous
919,633.35
229,546.88
5,482.79
1,154,663.00
Total.
.
Commodities Owned
Commodity Loans purchased (contra).
On Commodities Owned (contra)
On Agreements to purchase (contral
63,338,152.55
interest
Total
Liabilities - of
Estimated Accrued Warehouse, Insurance
(none)
hade on deposit with the Reconstruction Finance Corporation
Principal.
Value of
Prices
1,686,485.55
Total
1,717,710.65
245.06.92
$ 761,252,000.00
Principal
Accrued interest
$
- the books of Bookkeeping and Farrants of the Treasury
Department
Appraised
Estimated Loss on
Basis of Market
Book
1
Values
Estimated Loss Basis of Market
$
Book
minetal.
Accrued warehouse, insurance and other
Commodities is warehouses (contra)
Commodities is granaries.
Accounts Pagable:
562,299,948.54
1,339,947.97
Accrued interest receivable
collected from producers
Insurance premiums 00 consolities.
$11,531,671.96
1,303,155.36
18,834,827.32
65,176,098.63
Total.
Committee Lease (Agreements to Purchase) - Rehibit
Principal (contra.
Accrued interest receivable (contra)
Accrued Warehouse, insurance and other charges (contra).
Total.
Commudity acquired under Exchange Agreements:
Number received, inspected and accepted.
357,960,083.
4,239,206.97
23.145.571.46
385,341,862.00
537,296,625.50
not inspected and accepted).
Unexpended advances held by far Department to defray
costs of unloading and storing rubber to be received
Total.
purchased
11,194,301.90
374,150,560.11
Adrances on Steel Grain Storage Sine:
Claims and Other Accounts Receivable:
furniture, Fixtures and Equipment (Net):
Total.
(contra)
Principal on loans not purchased
Accrued interest on loans not purchased.
8,792,854.82
Total.
394,176.14
7,108,054.08
bouseses and producers
Miscellaneous
1,311.62
$ 7,561.76
2.507.0181
Consitments to Banks and Leading Agencies
22,434,198.07
31,621,229.00
1,576,852.83
189,110.04
Due to lending agencies, producers. etc.
representing undisbursed collections
by custodians of notes receivable set
Fire loss claims collections due to rare-
Claim for rubber to be delivered by the United Kingdom
in exchange for cotton (including rubber received but
Administration:
for classification and greding fees
(none)
31,621,229.02
(none)
7,108,054.08
489,068.26
(none)
489,068.26
132,685.80
(none)
132,685.60
Total Liabilities
357.360.063.59
4,239,206.9
100,000,000.00
Capital
100,000,000.00
(none)
Accumulated deficit
Reserve:
through March 31.
Representing contributions by the
Secretary of the Treasury covering
1941. including
loss due to ap-
restoration of capital inpairment as
March 31, 1938 $9,265,404.73
March 31. 1939 $119,599,918.05
213,685,322.78
Less: Amount of
caustal impairment
Less: Surplus payments sode to the
Secretary of the Treasury for
restored by the
excess contributions - of
March 31. 1940.
Less: Accumulated book deficit, 18 of
March 31, 1941.
ornian of
$111,604,534.57 $171,756,037.28
43.756.131.01
170,128,591.77
Secretary of the
Treasury through
March 31. 1940
170,128,591.77
60,161,512.71
109,957,079.05
Amount due from the Secretary of the
Treasury restore the capital
sent March 31, apprelent.
Total Liabilities, Capital and Reserve $1,380,039,527.64
Total
$1,380,039,527.64 111.604.524.5781.268.435.003.07
1,637,445.51
1,266,435,003.07
439
COMMODITY CREDIT CORPORATION
EXHIBIT B
Statement of Commodity Loans
as of March 31, 1941
BOOK VALUES (ADJUSTED)
APPRAISAL OF COLLATERAL
QUANTITIES
Principal
Commodity
Estimated Loss
Accrued
Accrued warehouse
Interest
and other charges
Total
$ 861,683.13
$ 48.137.159.06
Unit
Number
Appraised Value
March 31. 1941
CONNECTIC LOAES:
$ 44,809,010.24
1939 Crop
889.237.38
23,011.81
19,017.00
931,266.19
1940 Crop.
4,953,647.95
34,644.02
93,596.81
5,081,888.78
$ 50,651,895.57
$2,524,121.54
$ 974,296.94
$ 54,150,314.05
Total
$2,466,465.71
430.519.337
(Founds
9,486,535
(Pounds
19,017
(Sales
$ 48,137,159.08
931,265.19
(Bales
5,081,888.78
53,959,800 (Pounds
103,066 (Sales
$ 54,150,314.05
$
1938 Crop
$
Cotton:
Corn:
$ $19,105,152.12
, 125,681.81
90,049.20
$ 1,623,438.94
7,656.83
$ 365,683.82
25,959.39
9,295.80
35,255.19
$ 977,461.26
$ 20,982.51
$ 20.277.49
,
$ 5.467.697.49
$ 32,033.63
$274,303,354.97
$6,110,663.21
220.92
537,153 Tushels
234,335 Bushels
4.735 Bushels
4,738,220 Founds
31,954,562 Founds
$ 1,631,095.77
$ 391,843.21
4,132,369.94
5,419.28
$6,595,688.69
$ 176,968.65
57,561.72
63.427.13
2,391.67
55,808.80
73,609.31
t 1,211.12
1,362.59
405.828.07
6,264,845.00
13,378,009 Founds
161,613,422 Founds (Resin)
$ 1,890,439.45
3,750.00
$ 3,352,198.13
3,252,018.87
556.888.15
1,662,353 Gale. (Tur entine)
3,717,951.52
953,499.59
5,115,956.21
1,975,941.77
$ 13,705,483.70
5,514,399.43
180.114.185 rounds (Rosin)
2,876,118 Gals, (Turpentine)
245,324,653 Founds (Rosin)
49,882,305 rounds
(none)
$ 1,631,095.77
89,466 Tons
$ 1,003,863.05
3,970,157 Founds
4,132,369.94
4,132,359.00
$ 964,161.48
65.789 Founds
$ 20,498.41
$ 5,499,731.12
174,611,123 rounds
$ 5,499,731.12
NUTE: there appraisal value exceeded loan values, the collateral WAS appraised at loan values.
$ 391.8-3.21
$ 39,701.57
$ 20,498.41
$287,009,706.87
386,436.79
I 391,843.21
89,466 Tone
$ 4,524,213.15
73,850.00
1,656,163.93
563,602.45
15,355,012 ounds
19.30.883.13
$
J 4,488,957.96
6,465,894.59
-
4.123.074.14
6,250,731.54
467,281 Bushels
169,872 Fushels
2,636,221.34
$251,775,582.83
,
36,918.84
$
TOTAL COMMODITY LCAKS
26,315.75
$ 5,604,207.00
-
1940 Program
6,402,660.00
$
rrunes:
39,967.36
6,179,957.62
$
1940 Program
22,273.80
30,856.56
$
outler:
$ 59,398.70
-
1938 Crop.
$ 6,522,534.50
.
Total
$ 10.16.014.94
$
1940 program
2,563,602.45
10,964,299.45
-
1938 Program
29,545.19
$ 68,857.05
-
:sins:
1,656,163.93
$ 79,427.46
2,511,613.19
$
1940 Crop.
334.00
-
Total
6,264,845.00
33,951.81
$
1940 From
1.652.005.47
$ 47-688.07
5,026.05
$
1939 Program
6.166.231.93
1,352.59
I
1938 Program
$
Turnentine and Rosin:
$
Total
8,547.67
64,611.26
3,824.46
2,44-.07
$
$
1940 Crop - Burley
466,114.35
11.38
$
$
1,351.21
i 74,820.43
57.02
$
964.79
-
73,798.62
$
$ 5,531.55
$
1940 Crop Dark-rired
833.61
64,538.30
$ 273,435.69
70,043.39
310,439.18
1,350,417.44
$ 51,193,647.10
t
: 240,395.79
4,671.48
30,371.94
1,265,303.90
+4.795.505.33
,
$ 25,100.46
$ 6,398,041.77
:
$ 5.797.94
$25,486,618.66
$
$ 206.897.39
6,682.43
$110,191,699.44
$
$ 53,829,868.44
25,240,249.86
108.193.375.06
506.257.40
,
$5,425,637.26
142,951.11
$
$ 665.955.4
855.906.16
631,895.47
$
$47,737,275.78
$
1940 Crop - Flue-Cured
9,755,720 Bushels
55,051,559 Bushels
459,222.85
40.796.727.26
Tobacco:
1939 Crop - Dark-sired
$ 7,683,845.67
46,146,022.77
Grain Sorghum:
1940 Crop.
934,937 Bushels
890,072.66
Earley:
1940 Crop.
569.539.83
$135,678,318.10
735.25
1
1940 Crop.
Total
200,091,322 ushels
$ 536,564.60
:
1939 Crop
133,463,624.92
-
$
Rye:
$ 206,732.55
1,583,994 Busbels
1,167,138 Busbels
3,665.35
T
1940 Crop.
Total
$ 6,940,548.52
2,647.69
$
1939 Crop Resealed
631,895.47
-
about
$2,611,720.20
1,006,857.27
-
Total
-
1940 Crop
2,609,072.51
130,854,552.41
556,892.14
$133,066,597.90
6.705 Fushels
-
$
1939 Crop.
Resealed
$
1,006,857.27
631,895.47
and Extensions)
1936 Crop and 1939 Crop
$
1938 Crop (Form A. Benerals
$ 4,400.61
-
4,400.61
$
as 1938)
$
1937 Crop (refinanced
$35,234,124.04
440
EXHIBIT C
COMMODITY CREDIT CORPORATION
Statement of Commodities Owned
as of March 31. 1941
APPRAISED TALUE OFCOLLATIRAL
BOOK VALUES - ADJUSTED
Accrued
Accrued
Commodities Owned
Interest
Principal
QUANTITIES
Varehouse and
Other Charges
Total
Number
Estimated
Unit
Appraised
Loss
Value
March 31, 1941
COMMODITY FOOLS:
$162,836,107.37
229,546,438
Bushels
$131,040,062.44
$31,796,044.93
1,313,791.38
$106,929,480.36
655,502,001
1,348,187
Pounds
$ 70,073,163.91
$38,856,316.45
Bales
246,681,478.88
4,545,212.82
251,226,691.70
2,420,601,519
$354,297,167.86
$ 5,859,004.20
$360,156,172.06
405.81
2,575.65
4,498
Dushels
281,305
Bushels
9,182,259
Bushels
Ryet
1939 Pool
1940 Fool
Total
Total Commodity Pools
$ 6,446,232.16
828,423.41
269,720.86
7,274,655.57
$ 6,690,573.68
$ 853,802.75
$ 7,544,376.43
$511,939,649.00
$18,599,582.51
$530,539,231.51
$ 25,379.34
$ 244,341.52
$
Wheats
$
1939 Fool
2,169.84
$
Total
4,778,509
5.599.129.47
256,825,821.17
Pounds
-Sales
$33,257,186.98
$326,898,985.08
1,735.10
840.55
219,419.01
$ 50,301.85
7,202,931.25
71,724.32
$ 7,422,350.26
$ 122,026.17
$465,363,132.88
$65,176,098.63
$
1937-38 Pool
$
$107,615,668.98
$
Cotton:
1934-35 Pool
$11,886,369.75
$150,949,737.62
$
1938 & 1939 Grop Fool.
$
Coral
COMMODITIES PURCHASED:
1940 Crop Flue-Oured
1940 Crop Dark-Fired
Total
GENTRAL COMMODITY PURCHASES
TOTAL COMMODITIES PURCHASED
TOTAL COMMODITIES OWNED
(*) Estimated Profit
498,619.12
35,719,558.27
104,668.33
$70,355,447.29
$ $60,682.56
11,239.28
467,617.17
$ 173,383.52
5,562.43
$582,299,948.84
$ 35,066,667.65
515,420.83
408.96
582.44
36,242,891.86
105,659.73
$1,339,947.97
$ 235,244.81
$ 71,930,640.07
55,716.42
3,875.85
$ 3,875.85
$70,360,299.84
976.70
12,600
Founds
139,559,878
2,529,640
148,725,943
Pounds
Pounds
$ 35,066,667.65
Pounds
36,242,891.86
105,659.73
$1,339,947.97
$1,339,947.97
$ 235,244.81
$ 71,935,492.62
$18,834,827.32
$602,474,724.13
515,420.83
676,484 Pounds
$ 71,930,640.07
17,820
Dosens
$
$
1939 Crop Dark-Fired
$ 34,032,601.57
976.70
$
Tobacco:
1939 Croy Flue-Oured
$
1940 Crop
976.70
$
Peas and Tetah:
3,875.85
$ 71,935,492.62
$537,298,625.50
$65,176,098.63
441
STATEMENT OF LOANS HELD BY LENDING AGENCIES
AND VALUE OF PLEAGED COLLATERAL WITH LOSS
EXHIBIT D
DUE TO APPRAISAL AS OF MARCH 31. 1941
Estimated Ac-
Principal
crued Interest
to 3/31/41
1939 40 Corn
1940-41 Corn
1938-39 Cotton
1940-41 Cotton
1940 Grain Sorghum, Form "A"
1940 Grain Sorghum. Form "B"
1940 Eye
1940 Wheat Form "A"
1940 sheet Form "B"
$ 1,719,275.49
14,309.88
1,763,585.37
$ 13,212.52
109.97
13,322.49
Total
Amount of
to 3/31/41
Obligation
$
1940 Barley, Form "A"
1940 Barley, Form "B"
Handling Cage.
4,835.87
4,835.87
Quantity
Apornised
Loss Due
Value of
to Appraisal 3/31/41
Collateral
$ 1,732,488.01
5.374.707 bu.
19,255.72
1,751,743.73
5,427,374 bu.
1,704,845.78
45,897.95
8,330.83
24,426,688.76
54,435,019.59
15,069 bu.
88,994,062 bu.
89,009,151 bu.
8,330.83
48,246,350.83
$8,654,581.55
6,180,337.93
60,390,559.18
574.786.989)1be.
2,110,815 B/C
1,105,096,085)1bs.
3,231,323 B/C
$
Commodity
crued W/H and
$
Estimated Ac-
52,664 bu.
8,177.93
152.90
54,206,126.37
54,234,304.30
200,562.39
200,715.29
52,657,578.80
101,873,432.29
1,922,251.19
876,390.62
5,810,829.19*
1,916,883.87
104,766,706.78
154,531,011.09
2,798,641.51
7.727.713.06
165,057,365.96
15,479.34
67.43
688.42
3.00
223.52
914.94
2,593 bu.
16,167.76
70.43
223.52
16,461.71
1,519,678.59
10,429.58
111,083.22
1,641,191.39
29,303,226.80
116,622,109.68
145,925,336.48
214,355.14
1,216,419.61
1,001,572.23
1,216,027.37
14,085,296.17
15,301,715.78
30,734,001.55
131.709.078.08
162,443,079.63
$357,960,083.59
$4,239,206.97
$23,145,571.45
$385,344,852.01
(none)
5.180.337.95
1,120,506 B/C
60,390,659.18
104,666,706.78
(none)
(none)
165.057.365.96
(none)
55,853 bu.
16,451.71
(none)
4,039,390 bu.
1,608,929.43
32,261.96
157,508,275.57
4,934,804.06
$374,150,560.11
$11,194,301.90
53,270 bu.
15,546.77
45,052,578 bu.
156,121,650.bu
201,174,239 bu.
These loans are held by Banks and Lending Agencies under contracts to purchase whereby the Commodity Credit Cor oration is obligated to Purchase the notes when presented
prior to saturity dates shown and at the following interest rates,
Commodity
1940 Barley
1939-40 Corn
1940-41 Corn
1938-39 Cotton
1940-41 Cotton
1940 Grain Sorghum
1940 Eye
1940 Abeat. Form "A"
1940 What, Form "B"
Maturity
Date
10 months from date of notes
Interest
Estimated dates
Rate
Computation of Interest
1
August 1. 1940
August 1, 1943
July 31. 1941
146
July 31. 1941
2%
Demand not later than 4/30/41
10 months from date of notes
10 months from date of notes
& months from date of notes, not later than 4/30/41
115
24%
14
146
146
146
146
Includes accrued warehouse charges through July 31. 1940, in the amount of $4,690,321.19 and paid by Banks and Lending Agencies
9/26/40 through 3/31/41 inclusive
1/1/40 through 3/31/41 inclusive
1/1/41 through 3/31/41 inclusive
11/1/38 through 7/31/39 inclusive
8/1/39 through 3/31/41 inclusive
10/25/40 through 3/31/41 inclusive
12/15/40 through 3/31/41 inclusive
10/15/40 through 3/31/41 inclusive
10/4/40 through 3/31/41 inclusive
9/3/40 through 3/31/41 inclusive
442
COMMODITY CREDIT CORPORATION
REMIBIT E
OPERATING STATEMENT
Statement of Income, Expense and Appraisal Lesses from October 17, 1933 to March 31, 1941
(This statement covers items listed in Exhibit )
INCOME
EXPENSE
Interest on Commodity loans
$20,283,300.70
Finance Corporation
Interest on notes not purchased from lending agencies
Interest on grain bins
Proceeds from sale of loose cotton
Overcollection of insurance premiums from producers
Interest on wheat sold to Federal Surplus Commodity
Corporation ...
Overpayments on producers' notes (less than $1.00)
Accrued interest on tobacco purchases
$25,344,015.58
Administrative expenses
Other
Interest on funds on deposit with Reconstruction
Interest
9,546,228.48
$ 1,555,770.02
2,370,025.33
548,652.07
220,503.30
5,454.36
8,957.30
26,399.96
1,373,175.79
$6,108,938.13
$26,392,238.83
Net expenses (carried down)
8,498,005.23
834.690.244.06
$36,890,244.06
Net excense (brought down from above)
Actual losses from October 7, 1933 to larch 31, 1941.
Total
Potential losses based upon appraisal of 31, 1941
Total net loss
$ 8,450,005.23
51,662,507.48
$60,161,512.71
111,004,504.57
$171,766,037.28
443
COMMODITY CERTIFY CORPORATION
EXHIBIT F
SEPTORING STATEMENT OF INCOME. EXPENSE AND APPRAISAL LOSSES FROM
OCTOBER 17. 1933. TO MARCH 31. 1941
DISTRIBUTION
DESCRIPTION
GRAND TOTAL
Turpentine
Grain
Cotton
Corn
Wheat
Barley
Rye
and
Sorghums
Rosin
Peanuts
Raisins
$1,362,646.75
Tobacco
INCOME
Total Income
$ 20,270,608.78
6,121,630.05
$ 8,767,341.77
$ 7,326,129.28
3,181,166.17
848,251.52
493,257.36
$ 26,392,238.83
$11,948,507.94
$ 8,174,380.80
$ 1,570,636.10
$ 25,344,015.58
9,546,228.48
$19,608,982.02
$ 4,034,132.83
7,386,107.90
1,519,473.19
$ 34,890,244.06
$26,995,089.92
of 8,496,005.23
$ 1,077,378.74
$ 1,194.68
$14,057.84
12.80
$ 320,401.21
2,579.53
2.40
1,432,938.05
34,510.76
$206,789.21
3,245.95
$172,203.89
33,589.99
$14,479.28
$ 3,774.21
$ 15.20
$1,753,339.26
$1,397,157.51
$210,035.16
$205,793.88
$ 236,337.12
$ 2,602.43
8 271.26
3.25
$ 625,621.83
89,066.31
954.62
95.46
508,934.52
191,588.27
16,060.19
21,192.63
26,083.89
10,996.31
$ 5,553,606.02
# 325,403.43
3,557.05
: 366.72
$115,046,581.98
& 2,620,774.78
$ 1,245,232.67
$10,922.23
$ 3,407.49
. 51,663,507.48
$23,660,407.54
$18,915,747.11
$ 5,844,154.16
$2,893.85
* 60,161,512.71
$38,706,989.52
$816,294,972.33
of 4,596,921.49
$8,028.38
$ 3,407.49
$111,604,524.57
$33,257,186.98
$63,463,001.52
$7,693,051.57
$98,911.31
848,109.07
$871,766,037.28
$71,964,176.50
$879,757,973.85
$812,291,973.06
$80,882.93
$844,701.58
421.44
$
Interest income on loans
Miscellaneous income
EXPENSE
&
:
-
$2,107,509.20
$1,132,539.86
:
11.95
$81,215,568.15
* 436,005.14
$
-
: 73,000.00
$5,614,399.43
:
11.95
$81,289,428.15
$8,050,404.57
$132,782.34
1,167,113.68
$132,782.34
1,767,113.68
&
: 696,534.72
36,600.20
-
892,021.05
77,252.82
-
: 70.6.2.79
:
#
11.95
: 861,318.21
.
0
-
-
$
DEDUCT: Liquidation Losses
3.25
:
Net Income or Expense (*)
$
Total Expense
235,496.38
:
Interest Expense 1/
Administrative Expense 2/
liet Profit or loss (*), before
Appraisal March 31, 1941
DEDUCT Potential Further Loss
$391,643.21
:
based on Appraisal March 31, 1941
Net Profit or Loss (*), after
Appraisal March 31, 1941
$132,782.34
$224,729.53
DISTRIBUTION (Continued)
Vetch
General
Bool and
DESCRIPTION
Butter
Hope
Nohair
Pecine
Prunes
Dates
Pige
Comodities
and
Purchased
less
Tubber
(e.c.)
INCONE
$25,682.06
9,641.69
$35,323.75
20,978.25
$109,992.56
$1,717.40
$5,557.25
3,117.81
# 4,339.91
8 585.78
21,234.64
1,145.55
1,622.86
190.92
477.31
4,263.36
$ 5,962.77
$ 776.70
$1,711.95
$
34,175.50
74.05
5
90,721.88
$5,483.20
58.72
16,714.89
$104,029.79
# 940.70
$3,845.30
8
$78,248.07
$ 1,658.68
53,800.83
.34
.34
:
, 796,376.06
$ 88,249.95
# 56,191.73
224.97
:
Total Income
20,753.28
$
3,384.07
J
$74,864.00
20,143.21
:
$ 776,232.85
981.08
-
$ 87,268.87
Miscellaneous income
2
Interest income on loans
4,588.24
8,211.37
4,588.24
6,411.57
1,3c7.83
102,468.42
477.31
36,797.69
EXPENSE
.$
1.51
$
$3,845.30
$
$ 940.70
-
$-
:
$-
1.51
of
2,743.10
-
-
$103,854.03
$3,845.30
2,743.10
*$233,314.74
#
$
-
$
$
$
$
-
$
prorated
16,714.89
$ 940.70
$2133,314.74
$
-
been
$
$
has
8
Expense
-
2/
Interest
$42,924.32
$
1/
$ 671,478.68
$
$893,746.17
Appraisal, March 31, 1941
-
Net profit or Loss (a), after
$964,161.48
:
based on Appraisal March 31, 1941
$103,854.03
2,743.10
:
DEDUCT Potential Further Loss
$ 16,714.89
842,924.32
$ 671,478.68
$ 70,415.31
Appraisal March 31, 1941
$ 175.76
1.51
*2
(141,726.11)
4
Net Profit or Loss (*), before
:
$-
DEDUCT Liquidation Losses
$42,924.32
1,845.14
-
671,478.68
:
# 70,415.31
Net Income or Expense (*)
1.85
+
$ 124,897.38
0
$ 17,834.64
:
Total Expense
1.85
.
Administrative Expense
$ 12,966.06
4,868.58
Interest Expense 1/
*2133,314.74
to the various classes of loans (by commodities) on the basis of the average monthly balance outstanding is relation to the aggregate average monthly balance of loans outstanding.
Prorated to the various compodities on the basis of the interest expense distribution.
444
EXHIBIT 0
COMMODITY CREDIT CORPORATION
ANALYSES OF FATHERS RECEIVED now OR PAID TO - UNITED STATES
TREASURY FOR THE APPRAISAL TRAIN 1936, 1939. 1940 - 1942
Analysis of Pay
(column (4)
$ 468,518.52
($ 50,275,616.00)
191654 cotton
193-35 cotton
$ 229,617.51
$
56,375.28
$
$
($ 90.194.732.99)
$
Total cotton progres.
($ 50,275,616.10)
$
$ 285,992.79
46.957.726.571
476,421.46
70,651.48
5.122.705.993
2,889,951.41
2,129,015.79
5,018,967.20
5,018,967.30
$57,075,326.88
229,517.51
56,375.26
285,992.79
Loans
Owned
31.1941
Lending
Agencies
38,856,316.45)
($ $ 36,856,316.45)
5,599,129.47
5,599,129.47
11,365.11
177,942.62
$ 18,816,953.64
($ 83,681,015.00)
rool Locas
463,558.47
17,454,150.05
2,971.61
$57,075,326.88
Appraised March 31. 1941
Commodities
($ 83,395,022.21
$ 64,664,061.39
($ 31,506,874.41
229,617.51
56,375.26
285,992.79
229,617.51
56,375.28
285,992.79
($ 64,578,068.60
$18,816,953.61
($ 31,320,681.52
($33.297.106.98)
($33.257.185.98)
($ 33.257.186.98)
($ 33.257.186.94)
$
2,971.67
($90,480,725.78)
463,558.47
71,104,899.95
71,711.81
$
8,492,464,111
33,786,431.10
1,382,415.56
3,886.79
34,444,966.30
4.950.05)
948.698.11)
( 70.156.441.643
$
11.096.741.46
March 31. 1941
of Aperateal March
Commodity
$
878.26
7,339,471.76)
.. 509.02
#
67,316.00
(16,299,193.26)
(column (6)
$
777.20
74.735.711.54)
(
$ 466,863.04
cotton
cotton
cotton
cotton
cotton
March 31. 1941
(column 55
1
Program
March 31. 1944
$
(column (5)
Deficit
Defiett due to
1
(column (2)
UTITIONAL
deficit
loss by appraisal
Analysis of Additional
of Column
Recorded
$
(column (1)
Appraisal
March 31. 1990
March 31. 1940
Accumulative
Analysis of Page
meat due free
Treasury Appraisal
Loss after
$
March 31. 1939
Accumulative
1
indicate loss)
mest by Commodity
Credit Corporation
to Treasury Apprecial
,
March 31.1938
Analysis of Yes
$
(home is parenthesis
Analysis of Page
meet received from
Treasury Apprecial
$
monts received
from Treasury
Loan Progress
Loan
$
221.74
2,670,019.72
(24,403,078.12)
19-0-41 corn
$ 687,071.21
Total corn progress
($55,245,757.91)
{
1939-90 corn resealed
4,172,490,488
41,410,832.201
24,403,078.123
10,392.11)
47,857.27
3,674,794.01)
153,347.41
9,111,573.517
4,182,851.
201,939.95
201.164.76
45,065,631.30)
23,636,495.82
766,582.30
($14,568,140.45)
78,751.41
4,182,851.46
(
(
5,915,786.75
$4,060,857.01)
corn
(
1,095,562.03
6,069,134.18
78,751.89
(
*
5,249,642.24)
592,695.34
78,751.81
1,707.68
( 16,379.27)
592,655.94
12,421.51
$
corn refinanced
1936-39
1,193.61
$
161.85
1936-37 corn
1937-38 corn
14.02
1
32,923.63
79.723.68
corn
corn
(1 78,738,500.66
#
$ 592,641.32
735.25)
735.26)
142,951.11
1,943,754.04
25,280,369.66
1,240,249.86)
( 31,736,044.93)
62,682.41
($14,775,499.14)
25,486,518.56
($ 31,795,044.93)
1,285,803.90)
1,150,417.441
50,301.85)
Real Loan Program
281,730.89
5,264,966.76K$
281,730.89
101,466.64
1,017,530.50
$4,904,796.13
($ 5.003.235.67X($
7,199,670.68)
($
$
1940 wheat
($ 9,907,992.00
Total wheat program
5,588,432.60
735,799.61
($
($ 5,548,432.60)
$
4,623,025.24
3
($ 9,907,992.00)
500,306.14
1,336,105.75)
478,271.28
4,509,855.18)
12,202,906.75
$
198 wheat
1939 what
7,533,051.57
(1
71,724,123
1.2.026.177
2.516.221.34
If
Jarley Loan progress
44,505.12)
1
4,605.12)
(1
3,502.05
.
$
$
$
$
1940 Marley
48.109.07)
(*
($ 46,897.95)
1.211.12)
($
(1
cala Surgeon Loan Program
11.95
11.95
$
$
$
$
$
$
$
$
$
$
$
$
$
$
#
$
$
94,557.05)
($
$
94,557.05)
($
$
94,557.05)
52,566.01
$
27,863.87
$
$
($ 14,969.49)
$
$
$
$
$
$
$ 101,628.24
$ 101,628.24
105,476.89
105,476.89
($
$
.
$
T
$
$
$
( 4,403,677.93)
155,260.75
($162,219,808.80)
($ 50.615.284.23)
1,792,706.26)
( 9.96.228.46)
9,946,228.46)
($171,766,037.25)
(
$
1,467,179.68)
,
( 1.862.694.41
$
($1.85.112.738.17)
($162,375,969.95)
(8
60.161.512.71
1
$92,422,740.32
CHEM
T
50,753.14
$
46.12)
1.203-972
$4,160,408.94
($119,999,918.05)
101,674.56
T
58,094.00
43,680.56
T
$
1
58,054.00
$
(
Total Loss
52,566.01
$
$
$
MM: Operating Expenses
3,220.41
$
$
Total ALL Programs
3,220.41
$
$
1939 Bool . Mobair
Total Bool Mohair
1.51)
$
$
tool and Mohair Loss Progress
1938 Tool Mohair
705,654.18
($
($ 954,151.48)
1
$
38,472.00
1
Rubber Acquired
1,131.62
391,843.21)
($
$
$
is
24,702.14
$
$
$
$ 4,361.36
Pruce Loans
1,220.41
1.51)
($
(64.151.48)
(+
17,860.44
$
$
Peas and Vetch:
705,654.18
391,843.21)
(1
1
$
1.51)
$
412.25)
($
Other Comundities:
17,860.14
1,131.62
75,283.89
($ 5,614,399.43)
$
706,066.43
688,877.59)
5,514,399.43)
(1
$
$
1,131.62
177,709.99
$
3,357.34
214,133.72
3,252,018.87
975,941.77
366,438.79
975,941.77
386,438.79
1
14,503.10
4,322.61
73.00.00
(1
$
($
$
$ 2,980,689.36
($ 2,234,762.93)
$80,402.91)
$
54)
($
506,474.68X
($
($
$
$
$
Butter Loans:
$ 11,943.75
($
130,666.07
4,322.61
153,974.97
73,150.00)
1,252,018.87
87,723.93
244,316.87)
($
$
$
916.57
($ 520.756.00)
237.45
153,974.97
73,850.00)
(1
759,753.33
318,442.19
:
$
2,959.35
215.59
$
Date Loans
$ 12,281.32
4,065.16
11,997.19
$44,799.29)
$
recen Loane
$ 94,580.82
36,085.25
141,977.78
($ 1,410,236.25)
$
$
hop Loans
1.323-97
$
Halain Loanes
2,389.33
$
371.86
$ 17,309.13
($ 5,858,716.30)
$
ns Loans:
105,247.96
($ 3,412,451.42X$
$
$ 19,420.67
rearet Lease
($ 2,014,997.87)
$
($ 65,046.99
($ 1,332,406.96)
2.466.294.88)
941,658.58
Turbentine-Rosis
Total
298,714.861
($
1,305,626.304
$
715,841.061
979,871.77
($ 1,053,731,777
1,410,236.26)
2,492,255.54
1,657,499.94
298,714.86
265.14)
1,266,639.243
715,641.06)
73,850.00)
724,348.81
1,370.06
2,985.65
-07,921.09
$
1,409,971.121$
($
251,911.20
Jur.entine-Rosis
407,921.09
1,016,064.91
($ 2,069,796.68
131.151.60)
705.111.68)
724,348.81
1,379.06
2,986.65
407,921.09
$
($ 47,223.61
34,706.04
24,405.10)
,
787.101.39
1,379.06
#
62,752.56
577.00)
327.227
1
62,752.58
640.55
(1
IT
1.981./73.51)
,
30,340.55)
($
125,329.51
$8,911.31
$
($1,332,406.96)
125,329.51
$9,928.91
8,981.00
($
$
Loan Progress
Turpentine-Rosis
line-Hosin
3,730.78
135,329.01
267.68
1,981,573.51
(1
1
program
24,145.11)
80,100.95
3,180.78
$ 177.212.62
($ 639,968.44)
($1,607,041.06)
1
itsent
1,957,728.18
(1
8,349.68
,
$
365.772.53
103,609.74
Visconsin
purchase
$
618,617.31
21,351.13)
($
2.157.66)
1
($ 1,604,883.40)
Tobacco
Tooneco
5,637.25
197.80)
$
Special Loan From:
5,637.25
5,637.25
$
$
$
$
Total iye -
5,637.25
$
$
$
1939 age
,
$
Lose irogree
(
11.95
$
190 grain sorgium
($111,604,524.57)
($ 35.234.124.04
($ $65,176,098.63)
($11.604,534.51)
($ 35.29.124.04
65,176,098.631
$1,194,301.90)
$111,194,301.904