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DIARY
Book 419
July 8 - 10,1941
A-
Appointments and Resignations
Rogers, Lindsay:
HMJr asks that FDR consider Rogers for Under
Secretaryship of Treasury - 7/8/41
Book Page
419
51
419
450
Resume' of experience by Odegard - 7/11/41:
See Book 420, page 76
Silverman, A. G. (Dr.) Appointed economic
consultant to White in connection with organizing
research and statistical work for Foreign Funds
Control - 7/10/41
-B--
Bank for International Settlements
See War Conditions
C-
China
See War Conditions
Customs, Bureau of
See Federal Bureau of Investigation
-DDefense, National
"The Need for a Fiscal-Defense-Planning Committee" White memorandum - 7/9/41
299,44
-FFederal Bureau of Investigation
Customs employee approached for information without
letting his superior know; discussion at 9:30
meeting - 7/10/41
350
Financing, Government
Old-age pension legislation involving expenditure
of $2- to $3 billion may be recommended by
Downey (Senator, California) - 7/8/41
February 1945 (after Administration has changed)
suggested by HMJr for new issue - 7/9/41
a) Calendar of direct and guaranteed bonds and
notes - Hadley memorandum.
"The Need for a Fiscal-Defense-Planning Committee" White memorandum - 7/9/41
Defense Savings Bonds:
Stevenson, John A. (President, Penn Mutual Life
Insurance Company, Philadelphia) Asked to act
as chairman of State Committee in Pennsylvania 7/8/41
a) Accepts - 7/11/41: Book 420, page 62
161
223,
231
299,441
177
- F - (Continued)
Financing, Government (Continued)
Defense Savings Bonds (Continued):
Conference; discussion of (a) payroll savings plan
and (b) chain-store plan - 7/9/41
a) Retail store activity report
LeHand, Marguerite A. ("Missy"): HMJr to advance
money for her bond purchases - 7/10/41
Book Page
419
244
284
368
France
See War Conditions
-GGasoline
See War Conditions: Japan
Germany
See War Conditions: Foreign Funds Control
Gold
See War Conditions
-JJapan
See War Conditions
-LLeHand, Marguerite A. ("Missy")
See Financing, Government: Defense Savings Bonds
- M- -
Miller, Douglas
He and his book "You Can't Do Business with Hitler"
discussed by 9:30 group - 7/10/41
-NNiemeyer, Sir Otto
See War Conditions: China; United Kingdom
-0Oil
See War Conditions: Japan
Old-Age Pension Legislation
See Financing, Government
355
-PBook Page
Pension (Old-Age) Legislation
See Financing, Government
Phosphate
See War Conditions: Lend-Lease; Shipping
Pleven, Rehe'
See War Conditions: France
Price Control
See War Conditions
Procurement Division
See War Conditions: Lend-Lease
-RRevenue Revision
Status of 1941 bill outlined in Blough memorandum 7/8/41
419
162
Currie tells HMJr FDR is prepared to help 7/9/41
294
a) Possible letter discussed by HMJr, Foley,
Blough, Gaston, and Kuhn - 7/10/41
b) HMJr thanks FDR for proferred help 7/10/41
362
436
1) Rayburn and HMJr discuss possible
message from FDR - 7/10/41
440
"The Need for a Fiscal-Defense-Planning Committee" White memorandum - 7/9/41
299,441
Rogers, Lindsay
See Appointments and Resignations
-SSecret Service
White House cars to be equipped with Life Guard
inner tubes - 7/10/41
Shipping
See War Conditions
Silverman, A. G. (Dr.)
See Appointments and Resignations
Social Security
Old-Age Pension Legislation: See Financing, Government
Stevenson, John A. (President, Penn Mutual Life
Insurance Company, Philadelphia)
See Financing, Government: Defense Savings Bonds
-TTabouis, Genevieve
See War Conditions: France
Taxation
See Revenue Revision
435
UBook
Page
419
431
United Kingdom
See War Conditions: Military Planning: United Kingdom
-WWar Conditions
Airplanes:
Shipments by air and sea - Kamarck report 7/10/41
Bank for International Settlements:
British policy toward Bank for International
Settlements: Niemeyer (Sir Otto) informs
American Embassy, London, concerning - 7/10/41
465
Request to pay dividends from dollar account to
Bank of England, Sveriges Riksbank, Banque
Nationale Suisse, and National Bank of Egypt
discussed in Cochran memorandum - 7/14/41:
Sce Book 420, page 446
China:
Niemeyer (Sir Otto) to be sent by British
Government at request of Chinese Government
for an economic mission; Niemeyer could travel
by way of United States - 7/9/41
308
(See also Book 425, page 121)
Bank of Chine report shows no evidence of any
accumulation of dollars in connection with any
devious plan by Germany to hold dollars in
New York under other names - 7/9/41
Code (private) and use thereof by Currie discussed
by Currie and HMJr - 7/10/41
311
373,379
e) Three messages on immediate Japanese plans
to move against Singapore and Dutch East
Indies before taking on Siberian problem,
etc., transmitted by Soong to HMJr to
FDR - 7/10/41
380,381,382
1) HMJr tells Soong he (HMJr) prefers
not to transmit answer but thinks
Currie will help - 7/11/41:
Book 420, page 17
Exchange market resume - 7/8/41, etc
Foreign Funds Control:
181,303,446
Germany:
Bank of China report shows no evidence of any
accumulation of dollars in connection with
France:
any devious plan by Germany to hold dollars
in New York under other names - 7/9/41
311
Pleven (Rehe) and his passionate desire for
consideration "for the Frenchmen who are fighting
democracy's battle" discussed by HMJr and
Frankfurter - 7/8/41
a) Hopkins asked by HMJr to see Pleven - 7/8/41
1) Pleven tells HMJr of talk
11
53
193
b) HMJr asks FDR to see Pleven but FDR declines 7/9/41
c) Pleven's conversation with HMJr reported to
9:30 group
198,199
200
- W - (Continued)
Book Page
War Conditions (Continued)
France (Continued):
Tabouis, Genevieve: HMJr writes Rockefeller (Nelson)
he wants proposed Latin American lecture tour
to materialize - 7/8/41
a) Rockefeller's answer - 7/15/41:
419
180
See Book 421, page 235
Gold:
Post-War Planning: Use of gold to buy up munitions
plants (then to be destroyed) plus plan for
various countries to use United States gold
with American assistance to buy food, to start
up international trade, and for reconstruction
purposes - HMJr's idea - discussed by HMJr,
Keynes, and Salter - 7/8/41
150
Japan:
Oil and gasoline shipments from New Orleans, etc.,
reported to FDR, State, War, Navy, and
Interior - 7/8/41
65
Lend-Lease:
Conference in Bell's office; present: Phillips,
Archer, Brown, Childs, Keyes, Keynes, Bewley,
Thompson, Bell, Cochran, Kades, and White 7/8/41
a) Agenda
77
147
b) Procedure (suggested) for bringing
miscellaneous manufactured goods under
Lease-Lend procedure
Procurement Division: Delay in overseas shipments
caused by slowness of Procurement in buying
supplies suspected by Keynes and Salter but
incredible to HMJr - 7/8/41
148
150
a) Meeting with British in HMJr's office
to discuss - 7/10/41
Phosphate shipments from Florida discussed in
Salter-HMJr correspondence - 7/9/41
(See also Book 420, pages 461, 463, and
383,384
305
464; Book 422, page 32)
Conference in HMJr's office; present: Keynes,
Phillips, Bewley, Childs, Archer, Brown, HMJr,
Bell, Graves, Foley, Young, Cox, and Mack 7/10/41
a) Agenda
384
425
b) Metal purchases discussed
c) Purchases for Southern Route project
419
d) Agents or brokers for British discussed
e) Sterling area balance of trade -
424
discussed
supplementary note on by Phillips
Military Planning:
Reports from London transmitted by Halifax 7/9/41, etc.
War Department bulletin:
German recreational system in theatre of
operations - 7/9/41
421
426
320,325,473,476
328
- W - (Continued)
War Conditions (Continued)
Book Page
Price Control:
Meeting of Committee - O'Connell memorandum 7/8/41
a) Discussion of
1) Shipping situation and impending
419
72
oil shortage on Atlantic Coast
2) Rubber situation
(satisfactory at the moment)
United Kingdom:
British policy toward Bank for International
Settlements: Niemeyer (Sir Otto) informs
American Embassy, London, concerning 7/10/41
465
1
TREASURY DEPARTMENT
Washington
Press Service
No. 26-34
FOR RELEASE, MORNING NEWSPAPERS,
Tuesday, July 8, 1941.
7/7/41
The Secretary of the Treasury announced last evening
that the tenders for $100,000,000, or thereabouts, of
91-day Treasury bills, to be dated July 9 and to mature
October 8, 1941, which were offered on July 4, were opened
at the Federal Reserve Banks on July 7.
The details of this issue are as follows:
Total applied for - $281,732,000
Total accepted - 100,046,000
Range of accepted bids:
High
Low
- 99.990 Equivalent rate approximately 0.040
- 99.972
"
Average
Price - 99.976
"
0.111
0.097
(64 percent of the amount bid for at the low price
was accepted)
- 000 -
2
July 8, 1941
8:40 a.m.
HMJr:
Okay. Hello.
Felix
Frankfurter:
Henry?
HMJr:
In person, in the flesh.
F:
Felix.
HMJr:
Hello.
F:
Hello.
HMJr:
Yes, Felix.
F:
Where are you?
HMJr:
I'm at the Treasury, twenty minutes of
nine.
F:
(Laughs) Don't reprimand me, even though
you do it gently, because I just got up.
HMJr:
Wonderful. Lucky man.
F:
Don't reprimand.
HMJr:
No, I'm jealous.
F:
Even though I - even though you do it
gently. Henry?
HMJr:
Yes.
F:
I had a chance to have a talk with himself
on Sunday in regard to Lloyd - Lloyd Garrison.
HMJr:
Oh yes.
F:
As I suspected, his whole - his whole
judgment - his whole view, was based on
what somebody told him was in the paper.
HMJr:
F:
Yeah.
I then explained to him that I had read the
speech - that as a conclusion Lloyd is as
different from Wheeler and Company as night
is from day.
3
-2HMJr:
Yeah.
F:
That he might have said something in that
speech that is foolish - I mean - when I
told him what it was, he said, "It'e one
of those bright ideas. " He said, "One of
those bright ideas."
HMJr:
You mean Lloyd Garrison said.
F:
Yes, that what he said, you know, to ask
Hitler whether he means this and if he
doesn't, then have us join the British
Fleet.
HMJr:
F:
Yeah.
But it's the very opposite of appeasement
and - anti, you see?
HMJr:
Yeah.
F:
And he said he was very glad to hear - he
said, "I tell you all this" - I didn't mention
you at all - he said, "I tell you all this
because," he says, "I'm just on the point
of appointing him for an important job."
HMJr:
The President said.
F:
Yes.
HMJr:
Well, I'll be damned.
F:
"And then I heard this - and, of course, I
couldn't.' Harry was there, and the three
of us were lunching. He said, "Well now,
what did he say?" And I said what he said.
"Well," he said, "suppose Hitler would accept
it." "Well," I said, "I'm saying it's a
foolish thing, but that's a very different
thing about the reliability of the man and
the heart of the man and the convictions of
the man," you know?
HMJr:
Yeah.
F:
-3I said to Harry, I started out with saying,
'This ie a foolish thing 1f you believe it not so much foolish as doctrinaire. If
HMJr:
F:
HMJr:
F:
Yeah.
But I can see what he had in mind to satisfy
the people, particularly in the middle West
where we don't live, to prove that this fellow
really 18 a shunk and a ecoundrel.
Yeah.
And I celled you un because I thought you
ought to know the President said, "I'm awfully
glad to hear this because I like Lloyd and this
came as a surprise." And
HMJr:
Well, what has - what was he in mind for?
F:
What's that?
HMJr:
What has he got him in mind for?
F:
Well, I think he referred to your job.
HMJr:
What?
F:
He referred to your job.
HMJr:
Oh, he did?
F:
He referred to the job that you named Jim
for, and I would - I know what's happened
since. Speaking of skunk, I could use that
for somebody else.
HMJr:
Well, much worse than that.
F:
Yeah. But, I just wanted you to know that
HMJr:
Are you in Washington?
F:
I'm right here in Washington.
Oh, I didn't know that.
HMJr:
F:
Yes, I was with him on Sunday.
HMJr:
Yeah.
4
-4F:
And I'm going down to - will you be at the
office
at 11 o'clock to see Jimmie Byrnes
sworn in?
HMJr:
No, nobody asked me to come.
F:
What?
HMJr:
No.
F:
Are you a great friend of Jimmie?
HMJr:
Oh, so-so, 80-80.
F:
Well, that will happen in the President's
office at 11 o'clock, 1f you didn't know.
HMJr:
Well, I got no message.
Yeah. Well
F:
HMJr:
Well, now I
F:
But I thought - Henry, that such - you
remember you and I talked about this up
at the Park.
HMJr:
Yeah.
F:
And I got a very good chance and I took
it, and I thought you ought to know that
he acted on no evidence, but on what
somebody, a friend, had told him. I
said it was a distortion, it was something
taken out of the context, and we haven't
got too many Lloyd Gerrisone around in this
country for you to just to throw them away
on unsubstantial and unwarranted evidence.
HMJr:
Well, let me ask you this: have you had
any conversation with Lloyd Garrison
since he made that speech?
F:
No, I had a letter - I telked with Dykstra
at the Harvard Commencement. I happened ...
HMJr:
Yeah.
5
-5F:
I happened to be sitting next to Dykstra
and I referred to this subject, and he said,
"Well, that's dreadful." I said, "I'm greatly
disturbed." He said, "You needn't be, they've
completely misrepresented Lloyd. " "Well," I said,
"I didn't have any doubt about it. But I then
knew of what had been happening down here, you see,
but I didn't tell. it. So he - I then had a note
from Lloyd sending me his speech and saying, "I'm
told you are disturbed about this,' (somebody wasn't Dykstre, somebody else, who told him second -
third hend) "and while you might not like what I
said, it's certainly a very different thing from
what the papers made me out as saying."
HMJr:
Have you got this speech?
F:
I haven't got it here, Henry. May I make a
suggestion to you?
HMJr:
Yes.
F:
You know he 1s the straight forwardest
fellow in the world.
HMJr:
Yes.
F:
You know there isn't a purer character.
HMJr:
That's right.
Nov, if you are at all interested, what I
would do if I were you is to get him down
here and have a talk.
HMJr:
Well, I'll - I'll get R word to the President
first to see whether it's all right with him.
F:
Well, you don't have to commit yourself.
Well, I mean I wouldn't went to have him come
HMJr:
down without first checking it with the
President.
F:
No, no, I don't mean that, but I don't think you don't have to take the decision of saying
that you yourself would be for him if you took -
if he came down, but have a talk - a consultative
talk, see?
6
7
-6HMJr:
That's right.
F:
And he would tell you with the frankness
HMJr:
F:
of little Oliver, what he thinks.
I think it's an excellent suggestion.
Because I only say to you what I said
to the President. There aren't too
many Lloyd Garrisons around just to
throw them on the scrap heap on meager-
on inadequate evidence.
HMJr:
F:
Well, I need desperately somebody.
What's that?
HMJr:
I desperately need somebody.
F:
Well, all I say is before he is rejected
on a speech, those responsible better
read the speech.
HMJr:
Right.
F:
Better find out what's in his head.
HMJr:
I appreciate very much your calling me.
Let me ask you about another man who
has been suggested. President Graham
of North Carolina.
F:
Henry, I know him very, very well.
HMJr:
You do?
F:
Very well. He is a darling.
HMJr:
Yeah.
F:
HMJr:
He's one of the most spiritual men in
the world. Hoga - when I've said that,
I've told his greatness and his weakness.
He's a perfect darling, but he's kind of
a child.
I see.
-7 F:
He's got enormous influence because he's
a kind of a child. But for a very different
reason from what I talked to you about Jim,
it really seems almost funny to have him do
the kind of job you have in mind.
HMJr:
I see.
F:
He's a noble fellow, you know?
HMJr:
But not for this?
F:
A beautiful character and great deel of force
through personal moral appeal.
HMJr:
Yeah.
F:
You see? But he gets into hot water all
the time because he's so naive. But let me
give you an instance of what I mean; it's a
concrete illustration that always gives you
the evidence.
HMJr:
Hello.
F:
Hello.
HMJr:
Yes.
F:
Got a minute?
I've got all the time that you have.
F:
Yeah. Well, I was down - I spent a week
with him a few years amo because I lectured
at his University, and
HMJr:
Yes.
F:
He consulted with me very confidentially
since he's been on this panel.
HMJr:
On the what?
F:
On the Labor Board.
HMJr:
Oh yes.
F:
On the Mediation Board.
8
9
-8F:
We have a lousy connection.
Hello.
HMJr:
Yes.
F:
Can you hear?
HMJr:
Yes.
F:
He is one of the public panels, you
HMJr:
know on the Labor Mediation Board.
HMJr:
Yes.
F:
And he has done some good work on that
because of the kind of moral grip
that he can get on men.
HMJr:
Yes.
F:
But I'll show you the kind of fellow
he 18. A few years ago - he comes of
a well known and old North Carolina
family and his grandfather founded the
University or something like that, that's
why he's president.
HMJr:
F:
Yes.
But a few years ago he actually - he
discovered - he actually discovered that
alumni induce men to come to Universities
who'11 make good football players..
HMJr:
I see.
F:
And they pay their way.
HMJr:
Yeah.
F:
He actually discovered that a few years
ago, Henry, and when he discovered it he
thought he ought to raise hell about it.
HMJr:
I see.
F:
Get me?
HMJr:
I see.
10
9F:
And his alumni said, "For God sakes, we've all
known this, just don't raise a rumpus."
HMJr:
F:
HMJr:
F:
HMJr:
F:
I see.
"Why," he said, "I never knew that. I never knew
that a football player is induced to come to
Cornell or Harvard or even North Carolina."
I see.
But he's a darling, he's a
But not for this?
Well, Henry, I - Henry, he isn't tough
minded, get me?
HMJr:
He's not what?
F:
Tough minded.
HMJr:
Okay, enough said.
F:
Have you ever met him?
HMJr:
No.
Well, you end your Elinor would feel about
him - and your boys and your Joan, you know -
he's one of the loveliest people they ever
knew, but not for this.
HMJr:
I see.
F:
You know. He's zot no guile, and he's got
no toughness.
HMJr:
Okay, that's enough. I'm ever so much
obliged and I'll get - I'11 try to find
out today from the President if he's
F:
willing to let me talk to Garrison.
Well, just - you know - all I say 18
before you throw something that might
be very good out, you should find out
about it.
HMJr:
That's right. There are not many around.
- 10 F:
HMJr:
F:
HMJr:
No. And for character and dependability,
you know, you could and leave your house and
turn it over to him and never lock R jewel box.
Now, do you want to get in on a nice fight?
(Leughs) What's the fight about?
One like Well, there's A very able, charming
Frenchman here by the name of Pleven.
Oh yeah.
HMJr:
Have you met him?
F:
No, but he wants you to recognize deGaulle?
No, all he says 18, "I want BF much treatment
or consideration for the Frenchmen who are
HMJr:
fighting democracy's battle as you give to the
traitors who sold out to the Germans."
F:
Who - what answer do you make to him?
HMJr:
Well, I tell him he's right.
F:
(Leughs)
So, he said, "I am here to fight the State
il
Department.
Are they against that?
HMJr:
He can't get to first bese. They turned
him over to Rav Atherton. Ray Atherton
leaves town and just doesn't give him any
consideration.
F:
Henry
HMJr:
He - ves.
F:
Go on.
HMJr:
Well, I'm - I'm - I've written a letter to
the President today urging him to see him, not
on these grounds, putting it on the grounds that
he knows more about Daker than anybody else. Now,
what this man has done is A fairy tele.
11
12
- 11 F:
I heard about him through two people,
both of whose judgement on such matters
I have very high regard for.
HMJr:
Yeah.
F:
One of them is a very old friend of
his, end, that's my friend, Monnet.
HMJr:
Yeah, Gene.
F:
Who thinks very, very, very highly of
him.
HMJr:
Yeah.
F:
And the other person is Gene Myer, who
spent hours with him, and Gene, you know,
isn't easily impressed.
HMJr:
No.
F:
And Gene was greatly impressed, and he
said that he's the kind of fellow who -
in whom you - in whose facts, you have
confidence.
HMJr:
Well, you see, I knew him when he was
second in commend of the French Purchasing
Mission.
F:
Oh.
HMJr:
And I knew him intimately.
F:
Well, you share Mornet opinion of him.
HMJr:
Oh, he's - I mean, it's like a breath of
fresh air to telk to that kind of e
Frenchnan.
F:
But Henry, the reason I said what I said
about he wents deGaulle recognized, you
see, because that's the kind of thing they're
saying about him, which is all wrong.
- 12 HMJr:
No, that - he doesn't - he doesn't he said, "All I want 1s" he says - he
tells the things that they can do, the
things that they have done and they've
got one of the finest harbors there in
the world - 33, 35 feet complete but
with no derricks on it. I said, "Supposing
your ships want to come in there, how are
you going to get in there?" He said that
there's nothing to unload them.
F:
Well, he - on all those things he made
a great impression on Gene.
HMJr:
And if - it just - and go un against the
man like Ray Atherton, and he can't even
see Ray Atherton.
F:
Henry, if you promise not to tell on
me, I'd like to tell you something.
HMJr:
Yes.
F:
This wouldn't be the first time that
the State Department is wrong.
HMJr:
F:
HMJr:
No.
That's very confidential.
Oh, really now, I ask you? I think that
that exaggeration isn't becoming to you.
F:
HMJr:
F:
(Laughs) Well, I know, I'm told I'm
indiscreet and I don't want to be.
Well, I'm telling you I've taken up his
fight. I'm going to bat with him.
Good for you, because I don't see that
there's an answer to that proposition.
HMJr:
Well, I'm arrange - I'm calling up Hopkins
as soon as I'm through
F:
Has Harry seen him?
HMJr:
No, but I'm going to try to get him to
see him.
13
14
-13 F:
Well, you'll do a very great service.
HMJr:
No, I'm going to bat with him because
F:
And what could it amount to in dollars?
HMJr:
Well, it's a - well, it's just to get
it's - it's just ludicrous.
these people in this little clique over
there.
F:
Yeah.
HMJr:
Well, any way
F:
I - I wish you Godspeed on that because
HMJr:
Well, I'm going to town on it. I'm very
F:
Well, I know. You can't fight on too
you're absolutely and completely right.
choosey about my fights these days.
many fronts and there be apt to choose
the right one.
HMJr:
No.
F:
Henry?
HMJr:
Yeah.
F:
This thing yesterday WAB good, wasn't it?
HMJr:
Oh, I had the thrill of my life. I was
with the President when it happened at
lunch. I was never so excited in my
life or was he. Oh, it was the thrill
F:
HMJr:
of my life.
He's very happy about it, isn't he?
Oh, that doesn't - happy isn't the word.
We had a drink on it and everything.
Oh, he's just thrilled. It's great stuff.
F:
Oh, yes.
HMJr:
Great stuff.
-14 F:
Tell me, any repercussions yet?
HMJr:
No, everything's good.
F:
Everything's good.
HMJr:
Yeah.
F:
And the British got the point.
Their radio talk last night was
very good.
HMJr:
I didn't hear that.
F:
Raymond Swinz said that they were
exalted.
HMJr:
Good.
F:
This is absolutely right.
HWJr:
Yeah.
F:
Absolutely.
HMJr:
It's all - it's wonderful.
F:
Your great buddy in the Cabinet has been
grand about this.
HMJr:
Who's that?
F:
The other Henry.
HMJr:
Oh, has he?
F:
Well, you know, he's been right on
almost everything any way.
HMJr:
Yeah.
F:
What?
HMJr:
That's right.
F:
I'll bet he'll be right on this other
HMJr:
fight of yours.
Well, he's seeing - he's going to see
Stimson.
15
- 15 F:
He 187
HMJr:
Pleven is a great friend of McCloy.
F:
Oh, yeah.
HMJr:
And McCloy is arranging it.
F:
Well, that's fine.
HMJr:
He knows McCloy from his old days.
F:
Oh,
HMJr:
Thank you.
F:
Goodbye.
good.
Well, good luck to you.
16
17
July 8, 1941
9:30 a.m.
GROUP MEETING
Present:
Mr. Bell
Mr. Cochran
Mr. Haas
Mr. Thompson
Mr. Gaston
Mr. Blough
Mr. Odegard
Mr. Foley
Mr. White
Mr. Schwarz
Mr. Kuhn
Mr. Graves
Mrs. Klotz
H.M.Jr:
Herbert?
Gaston:
We are about to recommend to you the discontinuance of Grand Rapids as a port of
entry. We have already talked it over
with Vandenberg and he makes just a mild
protest as a matter of form. There is
every reason why it should be discontinued.
H.M.Jr:
Sold.
Gaston:
Three transports commanded by Coast Guard
officers returned yesterday to New York.
They have been just out on a practice cruise,
and they are scheduled to sail again on
Saturday or Sunday with the information that
it is to be a practice cruise, but I don't
18
-2know what the destination may be. That is
all I have.
H.M.Jr:
Edward Foley?
Foley:
McGoldrick, the Comptroller of the City of
New York, wants to come in and see you today
about investing twenty million dollars of
trust funds of the City of New York in
Defense Bonds.
The "F" and "G" Series are limited to fifty
thousand dollars for any one holder. We
amended the regulations of January, 1940,
to limit the holdings of Savings Bonds by
trust funds to the trustee. Before that,
they were regulated by the number of beneficiaries of the trust.
I don't see how without changing the regulations we can go along with what Mr. McGoldrick
wants, but it is a matter of regulations,
not a matter of law. Here is a memorandum
on it.
H.M.Jr:
How long is it?
Foley:
One page.
H.M.Jr:
Let me just ask a question. If we did this,
is this money in the banks, do you suppose,
on deposit?
Bell:
It probably is.
Foley:
He didn't - if he didn't buy Defense Bonds
with it, he would buy some public securities
of one of the public corporations in the
State of New York, I assume.
H.M.Jr:
Well, is this, Dan, do you think, the kind
of money we want to get in?
19
-3Bell:
It is the kind of money you probably want
to get in, but I don't think you ought to
do It. I suppose we have got a couple of
drawers full of correspondence with various
cities over the country on Savings Bonds.
There are water funds and all that busi ness.
I think we ought to confine them to the
limit.
H.M.Jr:
Supposing it is for pensions. That is what
Bell:
Yes. Well, they have got pension funds,
the water funds, the sinking funds, they
have got all kinds of funds. We let them
this is, isn't it?
invest each fund to the limit. What they
want to do is separate their funds down into
small units, just as small as they can, and
invest each unit. You have got the same
problem with the banks and corporations of
all kinds, charitable institutions.
Graves:
Trade unions.
Bell:
I think we are getting into something we
may not want to get into.
Let me just argue with you. Supposing you
took a trade union or a union that had its
members. I mean, I don't want the water
fund, but where it is the funds which are
being held - pension funds, retirement funds,
H.M.Jr:
why shouldn't they be invested here?
Bell:
You mean take more than the limit?
H.M.Jr:
Yes.
Bell:
Well, it is making an exception.
H.M.Jr:
Well, I mean - well no, we would write it
into the regulations.
20
-4Bell:
Well, that makes it an exception in that
case. That is what we had in the old series
and all of these pension funds came in and
we considered each individual as a separate
entity and he could invest ten thousand
dollars for account of each individual and
we got about forty-five or forty-eight million
dollars in the course of a month.
Then we amended the regulations to call those
pension funds an entity rather than the
individual an entity. It is easily done,
but I just question whether we ought to do
it at this time.
H.M.Jr:
Well, the discussion is open. Does anybody
want to get in on it either way?
Haas:
Mr. Secretary, if you do it in this case
you would have to do it for insurance companies,
because their funds represent accumulations
of interest.
Foley:
You could limit it to public money.
Haas:
Well, that is public money. Well, pensions
for some people are kept by insurance companies.
They buy annuities and so on, too.
Foley:
We are talking about public funds. I mean,
teachers' retirement funds and employees'
retirement funds and you could limit it in
the regulations. You don't have to open
it all the way up.
Haas:
This isn't opening it up to insurance companies,
but there is the same type of money in insurance
companies. I think the difficulty, if there
is any, Mr. Secretary, on that, is that there
would probably be sales of other securities
to buy these bonds, and that wouldn't get us
anywhere. If you limit just the new savings
21
-5 companies, O.K., but if they sell out what
they have got to buy these, it is no good.
Blough:
Won't these funds, on the whole, buy about
as many Federal Bonds of other types as they
would of these? They are pretty well limited
and what they can put their money into, they
can put it into state and local and Federal
and that is about all, and I have some doubts
as to whether you would get a great deal more
in Savings Bonds than you would in the regular.
Haas:
You cripple your open market. You leave it
to the banks entirely.
Foley:
But if you want to show popular sales of
your defense bonds, this is a way of lifting
your curtailment.
Blough:
It has that function, of course.
H.M.Jr:
How would it be to keep this as a card up
our sleeve against a rainy day? We don't
need it now.
Incidentally, Harold Graves told me this
morning at the house at eight that the figures
of the twenty-five dollar denomination bonds
as compared with U. S. Savings Bonds - have
you got those figures?
Haas:
We gave them to Harold.
Graves:
I gave a copy to Peter yesterday.
Haas:
I don't have those here, but I have that
other job you asked me for.
Graves:
I can get that table in just a minute if
you would like me to.
22
-6H.M.Jr:
I would like somebody to get it.
Graves:
I will get it.
H.M.Jr:
well, I will tell you, you be here at tenthirty and then I will shake hands with
him and I will turn him over to you (Bell)
but I think we will keep this against a
rainy day. The day may come when we would
like to have this kind of money, and we don't
need it now.
Bell:
You may want to do a lot of things. You may
want to sell special obligations to insurance
companies. I don't think you ought to do it
now.
H.M.Jr:
Let's keep it against a rainy day. I love
what LaGuardia said. I talked to him on
the phone. He said, "You can do this quietly
or with publicity. If it is with publicity,
Schwarz:
I will handle it personally." (Laughter)
That sounds like the Little Flower.
H.M.Jr:
There is nothing in it for me.
Foley:
You sent around an article from the New York
Times about --
H.M.Jr:
Yes, what did you do about that?
Foley:
Well, once the Maritime Commission requisitions
these ships that we have our guards on, then
they take over.
H.M.Jr:
Yes, but you told me just as I was leaving
the other day that between the time I signed
the thing and the time that - that they had
lost their case on this thing, taking over
the boats. This is nothing --
23
-7Foley:
Nothing to do with that.
H.M.Jr:
We haven't stepped aside?
Foley:
No, we haven't stepped aside.
H.M.Jr:
O.K.
Foley:
That announcement is a little premature,
because they don't - they haven't taken
over any boats which they haven't requisitioned, which the Maritime Commission
has not requisitioned.
H.M.Jr:
What else, Ed?
Foley:
Here is that amendment of the law to permit
the Secretary of the Treasury to buy obli-
gations of the United States and that is
the change that will have to be put in.
H.M.Jr:
What did you slip that on?
Foley:
Here is the way the statute reads now, and
that is what you would drop out, in here.
H.M.Jr:
Now, how could we get that done? Could
What-is-his-name --
Foley:
Sure, let Bernard talk to Barkley and to
John McCormack and ask them how they would
like to handle it.
H.M.Jr:
But also the Republicans?
Foley:
And talk to Charlie McNary and Joe Martin
and see if they would have any objection.
If there is no objection, it could go in
as a bill and go right through.
H.M.Jr:
Would you do it that way or as an amendment?
24
-8Bell:
Why not attach it to the Federal Reserve
Bill? They have a bill up there which is
now on the floor of the Senate or House,
I don't know which, which extends the time
to --
Foley:
I think that is better.
All right.
Bell:
To put up Government securities as collateral.
H.M.Jr:
Foley:
I don't want it as a separate bill.
All right.
H.M.Jr:
I only want it done if it will go through
H.M.Jr:
a hundred percent sure.
Foley:
All right. Well, I will have Larry talk to
them and see if they have any objection; and
if they have no objection, then we will pick
H.M.Jr:
out a bill that we can put it on and -Well, I don't want it as a separate bill.
It is ridiculous that I can't buy United
States Government Bonds.
I am signing a letter here to permit guide
dogs to go in Government elevators.
Foley:
This is a memorandum on that press notice
that defense articles may be admitted free
of duty.
H.M.Jr:
Yes. Well, what about it?
Foley:
Well, the War Department is in favor of it.
H.M.Jr:
How about us?
25
-9Foley:
Well, we are going to say that it can be
done without administrative difficulty.
Gaston:
I think we collaborated with the Army and
Navy in the preparation of that.
H.M.Jr:
Come on, you are doing fine.
Next?
Foley:
Here is a memorandum on that contract.
They aren't participating in the strike
anyway.
H.M.Jr:
But Mrs. Klotz made a very good point,
why wait? Why suddenly wake up in early
morning to see whether they have struck?
Foley:
I think it might be a little embarrassing
for you, because you have an exclusive
marketing agreement with them; and if they
agreed not to sell their milk because they
think by going into the strike they can
get a better price, that the court would
say that they were using their best efforts
to market the milk under those circumstances
and you would have to participate.
H.M.Jr:
Even as a Federal officer?
Foley:
Even as a Federal officer.
H.M.Jr:
Are you sure of that?
Foley:
Well, you are participating as a private
citizen and your contract requires you to
do it. Otherwise, you would have to keep
the milk and use it yourself or dispose of
it, but you couldn't sell it.
H.M.Jr:
But there is nothing as a Federal officer?
Foley:
No.
26
- 10 H.M.Jr:
Just stick by my contract?
Foley:
You have to.
H.M.Jr:
All right. We were going to make butter
of it and come down and sell it to the
nine-thirty group.
Foley:
You could make butter out of it and give
it away. I don't know whether you could
sell it or not.
H.M.Jr:
Our butter we could sell.
Foley:
I could use that fellow here, but I don't
H.M.Jr:
Would you write to Henry direct in your
letter?
Foley:
Yes.
have anything in Cleveland, Mr. Secretary.
We haven't seen you yet on the arrange-
ments in so far as investigations for
Foreign Funds are concerned, and now that
Herbert is back, John Pehle and Herbert
and I would like to talk to you some time
today.
H.M.Jr:
Are you in agreement?
Foley:
Yes, sir.
Gaston:
Oh yes.
Foley:
I have the memorandum. They are all in
agreement.
27
- 11 H.M.Jr:
Who did I say I wanted to see after ten
o'clock this morning?
Bell:
Foley, White, Cochran, and myself at eleven-
thirty.
That is the only thing I know of.
Graves:
You had my group down, but you postponed
H.M.Jr:
What are we going to - when are we going
it until tomorrow.
to talk about financing?
Bell:
Well, we ought to do that this morning.
I have had a report on the first twenty
minutes of the market.
H.M.Jr:
Well, we can talk about it then.
Look, I am seeing Gaston, Wiley, and
Johnson at a quarter of twelve, and that
won't run more than about five minutes;
and as soon as that is over - who else
sits in on it?
Foley:
We ought to have Pehle.
H.M.Jr:
Well, have Pehle in your office at a
quarter of twelve.
And don't let me forget that they are
waiting there, will you, Herbert?
28
- 12 Gaston:
Yes. I don't think there is likely to be any
development on that other thing today, but we
will find out.
H.M.Jr:
Well, they will be standing by from a quarter
Foley:
All right.
of twelve on.
I thought, as a matter of interest you would
like to know that Herbert Feis called up
yesterday and said that they wanted to get
that eleven million of Yugoslavian gold back
in the United States but the Central Bank of
Brazil wanted to be held not responsible,
and he couldn't figure out any way and nobody
in the State Department had been able to
figure out any way, but he was sure that
Treasury might make some suggestion as to
how it could be handled.
H.M.Jr:
I don't know what it is.
Foley:
Remember the Yugoslavian gold that was trans-
ferred down there. There was twenty-two million and eleven of it went down. The other
eleven was kept in New York. Now they are
anxious to bring it back.
H.M.Jr:
Oh! Well, Ed--
Foley:
We are working on it.
H.M.Jr:
Can you work on it without me?
Foley:
Yes.
H.M.Jr:
Wonderful.
Is your docket clear?
Foley:
Yes, sir.
29
- 13 Cochran:
Here is a statement for June. We are not
buying much gold now. The profits are down.
We got one little bit of gold in at San
Francisco last week. The British brought it
in. We think it came by warship. I am checking up. They didn't have it invoiced.
H.M.Jr:
Well, until further notice, until I can do it,
I want Harry White to service Fox in the Far
East. If there is something that you can't
handle, Harry, speak to me about it, but it
is your responsibility from now on. Somebody
has got to take care of those cables that
are coming in, and it is your responsibility,
Harry.
White:
All right.
H.M.Jr:
Thanks for the memo.
Kuhn:
The round table of labor and industry that
you suggested has been fixed for July 22 at
nine fifteen p.m., and I hope the interlocutor
is going to be free for that evening.
H.M.Jr:
Have you got them all?
Kuhn:
Apparently they have got them without any
trouble. I haven't heard about that. I know
that the time has been fixed.
H.M.Jr:
Does everybody know about it? Are you ready
for a shock? Have you heard about it, Herbert?
Gaston:
No.
H.M.Jr:
William Green, Murray, the head of the Railroad Brotherhoods, the president of the United
States Chamber of Commerce, the president of
the National Association of Manufacturers,
and H.M.Jr. are going to sit around a table
and discuss defense bonds.
- 14 Gaston:
30
As long as you keep them on defense bonds,
that will be swell. (Laughter)
Kuhn:
Well, I will have to check on the acceptances,
but the date has been fixed, and they weren't
expecting any trouble. Are you free on that
night?
H.M.Jr:
I am now.
Kuhn:
Good.
White:
I will venture to say that is the first time in
history they have ever sat around the same
table.
Kuhn:
July 22, nine fifteen p.m. to nine forty-five.
H.M.Jr:
Is the table here?
Kuhn:
It can be here, if you want. It might be a
good idea.
H.M.Jr:
I think it is good stuff to do it from the
Treasury.
White:
I think so.
Schwarz:
It is ideal.
White:
It adds to the dignity and prestige of it,
rather than the radio station.
H.M.Jr:
Listen, how long have you worked for me?
Never use the word dignity, please.
White:
I was thinking of the labor leaders. (Laughter)
H.M.Jr:
The first thing, you are going to talk about
my-- (indicating stuffed shirt).
Kuhn:
Our radio people would like to ask Senator
31
- 15 Norris a week from Sunday. They have got
somebody they like better than Senator
Norris for this Sunday.
H.M.Jr:
Who is that?
Kuhn:
Mr. Gaston. They think it is very important
to have a Treasury man open this series, and
Herbert would do it well, and Herbert is
willing.
H.M.Jr:
Fine, swell.
Kuhn:
They will ask Norris a week from Sunday.
H.M.Jr:
Good.
Gaston:
That means Ferdie will write a good speech.
Kuhn:
You were asking about the IrvingBerlin sheet
music. It will be ready Friday.
H.M.Jr:
Cheap music?
Kuhn:
Sheet music.
H.M.Jr:
I think I can tell that story about Mrs.
Berlin, don't you think so? Sure, it is good
for all of them.
Klotz:
Well, I don't know. I mean, it is--
H.M.Jr:
Well, it is a good story.
Mrs. Irving Berlin was down at Arthurdale I should preface my remark in the first place,
being married to Irving Berlin, she is very
pro-Jewish and very sensitive about any
criticism. So somebody - a man down there
that met her came up and said, "You know,
Mrs. Berlin, I much prefer 'Any Bonds for Sale'
32
- 16 to 'God Bless America', because I think
'God Bless America' is nothing but a steal.
Whereupon she looked at him and said, "You
are nothing but an anti-Semite.
The man felt so upset he sent her some
flowers and she threw them out of the window.
He wrote her & letter. She tore it up and
went up to her room and had hysterics.
He is a perfectly nice man, and nobody could
do anything about it. I think it is a wonderful story. Don't you think it is a wonderful
story?
Gaston:
Yes.
H.M.Jr:
Where were we?
Kuhn:
That is all.
H.M.Jr:
I think it is a marvelous story.
Blough:
When I bring in this report on the Ways and
Means tomorrow, I would like to have copies
for all the members of the group.
H.M.Jr:
I think it would be fine.
Blough:
I will have some detail and a little short
statement on top.
H.M.Jr:
And may I say, my dear Professor Blough,
that where you and Sullivan are falling down,
and you can come back at me one hundred per-
cent, you don't let this group know what is
going on.
Now, the purpose of this thing tomorrow is to
let them know what is going on in the tax bill,
but this is the kind of thing I want you to do.
33
- 17 Blough:
May I come back, Mr. Secretary.
H.M.Jr:
Yes.
Blough:
I think when I came into the conference first,
you said I might report on anything except
what happened on the Hill, but you had that
taken care of otherwise.
H.M.Jr:
Well, all right. And having waited for
"Otherwise" and she not having produced,
I now refer to you. "Otherwise" is falling
down on the job.
All right? Do you want to come back on that?
Blough:
Not at all.
H.M.Jr:
O.K. Anyway, somebody from that section
connected with the Treasury should let these
people know, you see.
Blough:
I will be very happy to do it every day.
H.M.Jr:
No, tomorrow.
I will report this morning, if you wish.
Incidentally, are you all right now?
Blough:
Yes, thank you.
H.M.Jr:
You are all over that--
Blough:
All over it and feeling fine, thanks.
H.M.Jr:
George?
Haas:
You asked for the number of people that are
buying these bonds.
H.M.Jr:
Yes. Now tell it out loud. Everybody wants
to know.
34
- 18 Haas:
You asked for the number of people who are
buying defense bonds and our estimate, which
I think is on the conservative side, for the
E Bonds in May, it was four hundred seventy-
five
thousand. In June, four hundred fiftysix thousand.
H.M.Jr:
Is that more in June?
Haas:
No, it is somewhat less.
And the F Series is five thousand in May and
four thousand in June, and the G Series,
thirty-nine thousand in May and twenty-five
thousand in June, and the total of the two
months for the E Series is nine hundred
thirty-two thousand. Total for the two
months for the F Series is nine thousand.
Total for the two months for the G Series
is sixty-four thousand. Add them all together and it is a million. Each series is
taken separately, so there may be some
duplications when you add the three series
together.
H.M.Jr:
Now, have you got the one on the number of
twenty-five dollar bonds?
Foley:
What is the dollar amount?
Haas:
Oh, the dollar amount--
H.M.Jr:
Seven hundred million.
Want to give us something on that subject,
Harold?
Graves:
Yes.
This compares sales in May and June '41 of the
E Bond with sales in May and June last year of
the D bond. In May, total dollar sales in May
35
- 19 -
1940 were fifty-five million. In May of this
year, one hundred fourteen million. It is
just about double.
Now, on the twenty-five dollar bond, sales a
year ago in May were ninety-six thousand and
this May, three hundred seventy-eight thousand.
As I said to you this morning, it is four
times as many twenty-five dollar bonds sold
in May.
The fifty dollar bonds, fifty-five thousand
a year ago in May and one hundred eighty-two
thousand in May of this year.
The hundred dollar bond, a hundred thousand
in May a year ago, two hundred and ninety-four
thousand this year.
In June a year ago, the sales of the D Bond,
eighty-six thousand twenty-five dollar denomination. Four hundred seventeen thousand in
June of this year.
The fifty dollar bond a year ago, June, sixty
thousand; this year one hundred eighty-five
thousand.
The hundred dollar bond a year ago, ninetytwo thousand, issued two hundred eighty-five
thousand.
So that the sales of the small denomination
bonds in terms of the number of units sold are
from three to four times greater this year.
H.M.Jr:
That is the best news I have had yet.
Graves:
Whereas the dollar volume in total is just
about double.
36
- 20 H.M.Jr:
Now, Chick, have that for me Thursday morning
and have a dozen copies for the boys, will
you? That is good stuff.
Anything else, George?
Haas:
I have nothing.
H.M.Jr:
George, you know I asked for the list of the
manufacturers of the State of Michigan, didn't
I; and we were going to check off those who
had put in the plan?
Graves:
You asked me for that.
H.M.Jr:
Who is running that?
Graves:
I a.m.
We had that set up in our office in Detroit.
We can get that here in twenty-four hours, if
you care to have it.
H.M.Jr:
Don't you want George to run that for you?
Graves:
Well, I think it would be much easier for us
to run it in the field.
You see, that is the Social Security Title
8 List which we had anyway in the field.
H.M.Jr:
Could I get a little report for our meeting
for tomorrow on it?
Graves:
Yes.
H.M.Jr:
If that is too difficult, then next week, and
then each week thereafter.
Graves:
I will try tomorrow, and in any case we will
have it a week from tomorrow.
37
- 21 H.M.Jr:
Are you all right, Peter?
Odegard:
Yes.
H.M.Jr:
Are you and Ferdie going to read the script
for tomorrow night? And incidentally, I will
be here at eight tomorrow night to listen to
the broadcast. You and your wives or husbands
are invited to join me, or sisters, and then
at nine o'clock, if you (Klotz) will tell
Sammy Klaus, we are going to show that German
picture on the Western Front. It is the
war on the Western Front.
Caston:
The Victory of the West, it is sometimes called.
H.M.Jr:
It is purely one of these things, come or not,
just as you please. I mean, don't feel it is I mean, it is for your entertainment, and only
come if you feel like it.
How many have seen that picture besides Gaston?
(Mr. Kuhn and Mr. Odegard raised their hands.)
Have you seen it?
Odegard:
Yes.
H.M.Jr:
Is it very exciting?
Odegard:
Yes, I think so.
H.M.Jr:
Is it in English, the script?
Gaston:
No, all German.
H.M.Jr:
But it is all pictures?
Gaston:
Yes, it is German with a running commentary,
and there is sometimes the incidental local
sound of gunfire and so on.
38
- 22 H.M.Jr:
I would like to see it.
Schwarz:
It is exciting because of the realization it
Kuhn:
Some of it, Chick. The impression they give
H.M.Jr:
Well, I am going to be here at eight, and
is actual warfare.
is that it is actual warfare, but some of it
isn't.
anybody that would like to come is welcome,
and then we will see the picture afterward;
but, as I say, only come if it amuses you.
Schwarz:
There is an interesting list of this Citizens'
Emergency Committee on non-defense expendi-
tures. Some of the members of the group
might like to look at it.
H.M.Jr:
Let Harry White. There will be a lot of Harry's
friends on there. Give it to Harry. Don't
give it to me.
Schwarz:
It mentions your statement on savings.
H.M.Jr:
I saw it.
Anything else, Chick?
Schwarz:
That is all.
H.M.Jr:
Harry?
White:
The chief is a friend of mine, Wristin, Presi-
dent of Brown.
39
- 23 Bell:
He has just written a new book.
White:
He specializes in getting in on the band wagons.
Keynes sent me a note that I think would interest you. He said that he is much interested
in your new Defense Anticipation - Tax Anticipation Bonds. He thinks they would like to
do something like that in England and he
wanted as much information as we had. I
am just getting press releases together and
I am going to suggest that he talk to Dan
about it.
H.M.Jr:
Dan is the man. While on that, Dan, would you
have ready for me Thursday or Friday morning
at the latest an outline of how we are going
to proceed on this, the publicity and the
money and everything, with Friday the dead-
line, please.
Bell:
Yes. Do you want something for release or
just want to tell the press?
H.M.Jr:
No, no, I want it for my education and edification and criticism and suggestions. I will
give you a time now. 10:30. And then you
invite who you want to have come in with you.
Bell:
10:30 Wednesday?
H.M.Jr:
Friday. That will give you plenty of time.
And you bring the people that you want.
I want a complete program on how we are going
to take this to the country.
Bell:
All right. We are sending out today or tomorrow the mimeographed statement that went out
plus a schedule of the prices on these different denominations to the Collectors of Internal Revenue, so they can begin to familiarize
40
- 24 themselves, with the suggestion that they
might raise any questions that come to their
minds, so that we can put it in this question
and answer booklet we are writing.
H.M.Jr:
Well, will you give me a complete sales program please?
Bell:
O.K.
H.M.Jr:
Anything else, Harry? Harry, is anybody
going to Keynes' tonight for supper? I am.
He said he is leaving - he is returning short-
ly to Europe. It is sort of a farewell.
Is nobody going?
White:
I am having lunch with him today.
H.M.Jr:
Anything else, Harry?
White:
The - Mr. Coyne of the - the Canadian delegate,
I think, is back. Is it your suggestion that
he not be included in further meetings?
H.M.Jr:
Yes.
White:
All right, that is all.
H.M.Jr:
And the English brought a couple of fellows
I wasn't counting on the other day, too.
White:
I transmitted your message but they rather
insisted and they didn't even ask permission.
H.M.Jr:
Tell it to them again, will you please? Purvis
will be back. I will tell it to Purvis. He
is back.
Bell:
Those men handle different --
White:
They know about it and the others don't.
41
- 25 Bell:
Whenever you ask questions concerning those
H.M.Jr:
Well, they bring too many people.
White
You have a meeting at 3 o'clock, and there
matters, they usually turn to those men.
is a meeting at two in Dan's office to
prepare preliminary agenda to go over the
matters that we have been going over during
the week. I am having some various committee
meetings which are meeting in between the
meetings, and I contacted Henderson's group
with respect to prices of wool and cocoa and
sisal, and I am also going to get in touch with
the Maritime Commission to find out what they
can do about shipping on cocoa and so forth,
all tentatively, without making any commit-
ments or final requests. I take it that that
is satisfactory.
H.M.Jr:
Entirely. Anything else?
White:
That is all.
H.M.Jr:
Harold?
Graves:
This is the letter to Stephenson at Philadel-
phia.
H.M.Jr:
Where was it? Chauncey said she didn't have
Graves:
Well, she brought it to me.
H.M.Jr:
Send it out airmail, Mrs. Klotz.
H.M.Jr:
Have you got Dick Jennings fixed up?
Graves:
Yes, we have. We put him yesterday in our
it.
Field Division across the street and he is
going to be useful to us, and he will also
42
- 26 learn about this thing so that when he goes
out to Arizona he will really be an asset
to them out there.
H.M.Jr:
Fine. Anything else?
Graves:
Nothing.
H.M.Jr:
Bell?
Bell:
The market went off about three thirty-seconds
last night on the long-term bonds after that
announcement about Iceland, but this morning
it has recovered and it is firm and quiet.
H.M.Jr:
Well, if you - I am ready to go - sit down
with you right after this meeting.
Bell:
All right.
H.M.Jr:
Right after this meeting.
Bell:
Everybody up there thinks that you ought to
go ahead and it would be reassuring if you
did go ahead. There is only one question
raised, as to whether the reaction from Germany
might be stronger than you expected.
H.M.Jr:
Well, I was planning to do it Thursday.
Bell:
Thursday, and not tomorrow?
H.M.Jr:
No, that will give Germany a chance to speak.
Bell:
It is all right.
H.M.Jr:
That is my guess. I would do it Thursday.
Bell:
But you would still send it out tomorrow
afternoon?
43
- 27 H.M.Jr:
Oh, yes.
Bell:
Then you don't have to do anything on it
today; you can do it tomorrow.
H.M.Jr:
All
right. Are you still thinking of January
'45?
Bell:
Yes.
Haas:
Yes.
Bell:
It is a very good place. One and an eighth.
H.M.Jr:
All right.My hunch is to do the January.
Thompson:
I have nothing.
H.M.Jr:
The President always says a little robin in
the grass outside twitted in my ear. He said
that you have not got space for Pehle and his
crowd.
Thompson:
No, we are working on that. We are trying to
get the Raleigh Hotel, but the RFC apparently
are unwilling to buy it. They don't think it
is a good proposition.
H.M.Jr:
All right, what is the alternative?
Thompson:
An apartment building on Park Road off Sixteenth Street.
H.M.Jr:
Step on it, will you, Norman?
Thompson:
I ought to hear from it today.
H.M.Jr:
Is there a penthouse on it there? I am losing
my house this fall. Maybe you could fix me up
a penthouse on top there.
44
- 28 Thompson:
Pehle and Foley would like to get the Raleigh
Hotel, but it looks as though It is impossible. I don't know whether you want to speak
to Jesse Jones or not.
H.M.Jr:
No, I don't.
Thompson:
We will go right after that.
H.M.Jr:
All right
July 8, 1941
10:31 a.m.
Frank
Knox:
Hello, Henry.
HMJr:
Yes, Frank.
K:
How are you?
HMJr:
I'm alive.
K:
Well, you ought to be more cheerful
HMJr:
I'm very cheerful.
than that.
HMJr:
Things are breaking a bit our way.
You bet your life.
K:
Say, Henry, what about having - coming down
K:
to the Sequoia tonight, and then help me
eat up a beautiful salmon that Arthur Purvis
sent me?
HMJr:
Well, I had one of his salmon last night.
K:
Oh, you did?
HMJr:
And I'm dining tonight with Mr. and
Mrs. Maynard KEOGNES.
0
K:
Oh, yes.
HMJr:
They're leaving shortly.
K:
Well
HMJr:
Otherwise I'd love to.
K:
Well, we'll try it again some time.
HMJr:
Will you try me again?
K:
Yeah.
HMJr:
I'd love to, but I'm going to the Kings'
tonight.
45
46
-2K:
HMJr:
I see. Well, I'll call you again then
Henry. What else do you know?
Nothing except I had the great privilege pleasure of being with the President at
lunch when the thing broke.
K:
Yeah.
HMJr:
And I got the thrill of my life watching
K:
Yeah, uh huh.
HMJr:
It was wonderful.
K:
HMJr:
him get the thrill of his life.
Yeah, it was. I had seen him just before
he had lunch.
Oh, he was all - just riding on the
waves.
K:
Yeah, well, of course what he got and what
I'm awfully glad he got was the demonstra-
tion of how far the people will follow
his leadership
HMJr:
Yeah.
K:
If he'11 exert his leadership.
HMJr
Yeah.
K:
Because this thing has received a lot
of qualm.
HMJr:
K:
Yeah.
And it just shows that if the President
says that it's necessary, the people
are going to believe him.
HMJr:
K:
HMJr:
That's right.
And he mustn't be 80 careful that these
damn isolationists are going to grab the
ball, they can't grab anything.
That's right.
47
-3K:
What?
HMJr:
You're right.
K:
HMJr:
I'm sure I'm right.
Well, I'm ever so much obliged for
your invitation. Give me a rain
check.
K:
I'll do that, Henry.
HMJr:
Thank you.
July S, 1941
10:38 a.m.
HMJr:
And I didn't have any chance to do any of
Grace
Tully:
Iceland sort of interfered.
HMJr:
Yeah, kind of froze me out.
T:
(Laughs)
HMJr:
How's that? Now, in the case of Jim Landis -
T:
Yes.
HMJr:
I went up to see Senator Walsh -
T:
Yes.
HMJr:
- of Massachusetts -
T:
Uh-huh.
HMJr:
my own business.
- and he said that under no circumstances
would he let him be confirmed and he would
fight it to the last ditch.
T:
Oh, stupid!
HMJr:
And he said I could name any other person
in the United States and he'd say yes, but
this man was obnoxious, so forth and so on,
because he'd opposed him for his fight.
T:
Opposed him when he ran for the Senate last?
HMJr:
Yeah.
T:
Well, that was good. A lot more people should
have opposed him HMJr:
I know but -
T:
But can't he get by any way if -
HMJr:
No. Well, look what happened to the President
on that judge that he put into an appointment
in Virginia?
T:
That's right, yeah.
HMJr:
And then Glass said, "He's obnoxious to me."
T:
That's right, and we had that awful fight.
Yeah. And what's the use of tying ourselves
HMJr:
48
-2up for three months T:
HMJr:
T:
HMJr:
Yeah.
and get this fellow Walsh even more down on
us -
Uh-huh.
So I talked to Jim and he and I agreed that
we'd drop it.
Yes.
HMJr:
T:
I mean - if Walsh said, "I'll take it on the
floor of the Senate" and he said, "I'll fight
it to the last ditch".
Well, is there any cuestion of a man being
helpful in these times that it might be
necessary to forget personal petty things?
HMJr:
No.
T:
Could you out it on that basis? Patriotism?
HMJr:
No.
T:
Wouldn't get anywhere with that thick head,
I guess.
HMJr:
No. And this is for you. Knowing that we were
going to have a hard time, before I went up
there Monsignor Ready had lunch with Walsh -
T:
Yes.
HMJr:
- and told him how much the church WAS indebted
to the Treasury for what we'd done.
T:
Yes.
HMJr:
And he didn't say anything and when Walsh
came up he said, "I never heard anybody talk
so beautifully about you". And so forth and
so on.
T:
HMJr:
Well, maybe you could work from that angle.
Well he had that and he said - let me see now -
he nut it this way, "Don't put too much pressure
on me. If
T:
He said?
HMJr:
Yeah.
49
-3T:
50
But did he feel that with a little pressure
he could do it? (Laughs)
HMJr:
No. So I've given it up.
T:
'Cause I know Ready well enough 80 I could -
HMJr:
Oh, Ready was swell.
T:
I mean he could work on Walsh.
HMJr:
No.
T:
But you think it wouldn't do any good.
HMJr:
Absolutely no good.
T:
Uh-huh.
HMJr:
Now, here's the thing. I got two other names.
Yes, sir.
T:
HMJr:
Felix Frankfurter called me up. I mean I believe
in going into a fight if you' ve got a fifty-one
percent chance of winning.
T:
Yes.
HMJr:
But you haven't got one chance in five on this.
T:
No.
HMJr:
Because, after all, look what they did to the
President.
T:
Yes. Who is the other Massachusetts Senator?
HMJr:
Lodge.
T:
No. You wouldn't get any help there either.
No. Now, Felix Frankfurter called me up this
morning and said at lunch Sunday with the
President he brought up the question again of
HMJr:
Lloyd Garrison.
T:
Yes.
HMJr:
And, according to Felix, the President seemed
to think - well, it would be all right for me
to talk to him.
-4T:
I see.
HMJr:
Now, I don't know. But I'd like -
T:
HMJr:
T:
HMJr:
T:
HMJr:
51
He did turn him down once but he may have
changed his -
Well, Frankfurter Baw him Sunday -
I know he did. I was there.
- and - did you hear it?
No, I didn't hear that conversation but I was
there on Sunday. I know that he had a chance
to talk with him.
Well, anyway, would you mind bringing it up
once more? Now, I'm no more anxious to get
somebody that isn't a hundred percent for the
cause.
T:
HMJr:
Uh-huh.
But would the President, after listening to
Frankfurter, was he sufficiently sold to let
me talk to Garrison?
T:
Yes.
HMJr:
And the other man is somebody that the
President knows intimately and that's
Lindsey Rogers of Columbia.
T:
Yes.
HMJr:
who 18 a hundred percent on everything as far
8.8 England goes.
T:
You haven't brought him up before, have you?
HMJr:
I've never mentioned Lindsey Rogers but -
T:
I see.
HMJr:
You know Lindsey?
T:
Yes, indeed. Uh-huh.
HMJr:
And, of course, his record as far as what he's
done -
T:
Yes.
HMJr:
- his record - it seems to me he would fit
my work better than Gerrison.
52
-5 T:
Yes.
HMJr:
See?
Yes.
HMJr:
HMJr:
So I'd put - I think I'd even out
Lindsey Rogers ehead of Carrison.
Put him number one and then, if he says
anything about that, go back to Carrison.
That's the idea.
I will do a thorough HMJr:
You know Lindsey Rorers.
Yes, yes indeed.
T:
Isn't he an easy man to pet along with?
Huh? I would think so.
HMJr:
Masn't he sort of put out? Didn't Moley
HMJr:
T:
sort of crowd him out?
Well, yes. And I suppose - P little
jealousy there. I think that was probably
nothing serious.
HMJr:
Well, will you have a chance during the day?
T:
I will, sir. I probably will see the President
sometime between now and luncheon.
HMJr:
That will be wonderful.
And when I do, I'll esk him about it, end call
you back end let you know.
HMJr:
Thank you.
All right, Mr. Secretary. Goodbye.
53
July 8, 1941
10:45 a.m.
Harry
Hooking:
HMJr:
I'm pretty good, Henry.
I'm glad to talk to you after you've
had a bath.
(Laughs) Good.
H:
MJr:
I heard the sleep you got wes punk.
That's right.
MJr:
Herry, two things, if you've got nothing
better to do tomorrow I'd love to have
you for lunch.
Fine. Now, weit a minute, Henry. (Talks
aside.
Wednesday.
HMJr:
Yes, I em free. I'd love to come over
for lunch, 1 o'clock.
Well, that's that. Now the other thing;
I asked Plevin for supper last night.
Who?
P-1-e-v-i-n.
Yeah, I've heard about him.
HMJr:
Well, now you ought to see him. He's
over here for General deGaulle.
I'll do it today.
Mrr
And I knew him when he was second in
commend of the French Purchasing Mission.
Yeah.
HMJr:
And he's a swell guy, and what they're
doing to him over at the State Department
is just terrible.
54
-2H:
Well, now how about this afternoon,
Henry?
HMJr:
You fix the time. If you want me to
H:
Now, let's see, I've got to see some
of the British at 5 - how would 4 o'clock
call him, I'll call him.
be?
HMJr:
Well, he'll drop everything to come to
see you.
H:
HMJr:
H:
HMJr:
H:
I'd love to see him. And will see him
at 4 o'clock.
And he wants my office to tell him.
Well, I wish you would arrange it.
I'11 arrange it and I went all through
the thing and at - this is what he says,
all I'm asking for is to get equal
treatment with that traitor, R. E. A.
Yeah. Well, I tell you, I'll talk to
him, you see, and then at lunch tomorrow
we can plan some devilment perhaps.
HMJr:
Wonderful. You'll like him, he's a
straight shooter.
H:
All right.
HMJr:
And incidentally
H:
Who's dealing with him over at the
Department?
HMJr:
They turned him over to that great
liberal democrat, Ray Atherton.
H:
Uh huh.
HMJr:
Who won't even see him.
H:
He hasn't even seen.
HMJr:
Well, he saw him and then he left town
and left this poor fellow high and dry.
55
-3H:
I'll see him without fail.
HMJr:
4 o' clock?
H:
Yeah, if that's not convenient to
HMJr:
him, we'll do it tomorrow morning.
He'll be there.
H:
All right.
HMJr:
Thank you.
H:
Goodbye, Henry.
56
July S, 1941
10:47 a.m.
HMJr:
Hello.
Operator:
Mr. Plevin.
HMJr:
Hello.
Plevin:
My respects, Mr. Secretary.
HMJr:
Hello. Good morning. Mr. Plevin?
P:
Yes.
HMJr:
Mr. Hopkins will be delighted to see
you at 4 o'clock this afternoon at
the White House.
P:
Oh, I'm seeing at 3:30, Secretary Knox.
HMJr:
What's that?
P:
I am seeing Mr. - Colonel Knox at 3:30.
HMJr:
Oh.
P:
I don't know whether I can make the
two together.
HMJr:
P:
No.
Or perhaps I could ring up the secretary
of Colonel Knox and find out
HMJr:
Why don't you see whether they couldn't
P:
Yes, because I know how busy is
adjust it, you see
Mr. Hopkins.
HMJr:
Yes.
P:
I will try to do it like that, you see.
HMJr:
And leave word with my Lieutenant Stevens
what you do.
P:
Very good.
57
-2HMJr:
But maybe Colonel Knox could see you
HMJr:
earlier or later, you see?
Yes. I'm most grateful, Mr. Secretary.
Now, I've also written a letter to the
P:
Thank you very much.
P:
HMJr:
President asking that he see you.
But whether that will happen, I don't
know but I urged him very strongly to
see you.
P:
HMJr:
Thank you very much, Mr. Secretary.
And - but Mr. Hopkins at 4, and you
leave word with Lieutenant Stevens.
P:
Yes, I will do my best to manage it.
HMJr:
Right.
P:
Thank you very much.
HMJr:
Goodbye.
P:
Goodbye.
58
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
PERSONAL AND STRICTLY CONFIDENTIAL
TO
Secretary Morgenthau
FROM
John C. Wiley
DATE
July 8. 1941
Edgar Mowrer knows Rene Pleven very well. He spent four
hours with him last Sunday, and has already written one rather
lengthy article which I have clipped from the Chicago Daily
News of July 3. It is attached and I think you will be interested in looking it over.
Mowrer is putting Pleven in touch with various people in
Washington, including Captain Kirk of ONI. He is going to see
Pleven again and explore the possibility of further publicity.
Indeed, Mowrer seems most eager to be as helpful as possible.
59
De Gaulle Strong in Africa.
It was thanks to the influence of
Free-Prenchmp: that the besitant
Belgian government of the Congo
decided to continue fighting on the
side of Britain rather than to follow their King into submission to
the Germans. Were the Germans
to start southward upon the conquest of the Dark Continent, very
conceivably the Free Frenchmen in
the Sahara, around Lake Chad,
-
THE CHICAGO DAILY NEWS
JULY 3. 1941
FREE FRENCH'
ASK WASHINGTON
would put up the toughest
resistance.
In contrast with this will to win
FOR RECOGNITION
But State Department Is
Cool to De Gaullists,
Prefer Vichy Ties.
BY EDGAR ANSEL MOWRER.
Special Dispatch from a Staff Correspondent
Copyright 1941, The Chicago Daily News. Inc
"Vashington, July 3.-Representes of the Free French government of Gen. Charles de Gaulle are
now in this country trying to obtain
from the American administration
full moral support and the permission to establish here a Free French
delegation through which matters
that affect the Free French can be
transacted.
Undeterred by lack of success in
the past, the Free French represent-
atives continue to hope that one
day the Americans will accept their
contention that while Vichy-France
and North African-France are the
"creatures" of the Germans, De
Gaullists are the nucleus from
which a new and democratic France
will
some day act accordingly.
Although the Free French move-
ment counts but a few tens of
thousands who are actually fighting,
the De Gaulle people point out that
their contribution to the war has
not been insignificant. Not only are
Free Frenchmen fighting with the
British on land, in the air and at
sea, but it is thanks to them that
the United States and Great Britain are able to utilize French Equa-
torial Africa for the rapid trans-
portation of airplanes across the
"waist" of Africa to Egypt without
going clear around the Cape of
rain Hope
for the democracies, the Vichy au-
thorities are preparing the world
tion. It thinks that even at the
present Time the stern, upbraiding
finger of Secretary of State Cordell
Hull (as he showed it to Vichy
Ambassador Gaston Henry-Haye) is
a brake upon Vice-Premier Darlan's
ideas of taking France into the
Axis as a full partner, replacing
if possible, Mussolini's Italy
Appeasers' in Government.
The State Department lends
credulous ear to Gen. Maxime Wey.
gand, upon whom it is counting for
support to Britai, at some future
with the following spectacle:
Young Frenchmen who volunteer
to fight beside the Germans against
date. If-as American observers on
the spot attest- Gen. Weygand has
not permitted the Germans to take
while young Frenchmen who flee
their country in order to fight be-
nor even to come in any large num-
the Bolsheviks receive Chief of
State Marshal Petain's blessing,
side the British against the Germans
are tried and condemned and deprived of their property and often
of their nationality as well,
Urge Break with Vichy.
The Free French simply cannot
believe that the American government should, despite the way the
Vichy French are fighting against
the British in Syria, break diplomatic relations with Marshal Petain.
But they feel that the Americans
ought to be willing to help them
directly and publicly-an that "all
aid to Britain short of war" ought
to mean that the Americans would
be proud to help arm those Frenchmen who have refused to submit to
Adolf Hitler. If Vichy en-under
German pressure-chose to break
relations with the United States it
would be little loss to the United
States.
So far as can be learned, the
American State Department does
not see the matter exactly in this
light. The State Department officials have never thought any too
highly of the De Gaulle movement
or attributed much attention to it.
At the moment of the French col-
lapse they adopted a policy of
friendship to Vichy and they see no
adequate reason to change it. For
the State Department people are
proud of their "successes. If this
be appeasement then appeasement,
as these officials see it. is working.
The State Department takes full
credit for having prevented Vichy
from having gone much further in
embracing Germany. It thirks it
has delayed the process of co-opera-
his African territories away from
him, nor allowed the Germans to
utilize them against Great Britain,
bers into North Africa, nor to get
into touch with the various native
tribal leaders, the State Department
takes credit,
For this reason American policy,
tc the great chagrin of the British
is still committed to sending oil and
other supplies to French North
Africa, just as it did to Mussolini
until he went into the war, just as
is is still doing to the Spain of Gen.
Francisco Franco.
From this policy to the public
support of Gen. Charles De Gaulle
is a long way. Yet the Free French
emissaries do not at all despair.
They are convinced that Vichy will
ultimately-in order to please Germany-come into full hostility with
the British. The are expecting
Vichy France soon to make a serious military effort to reconquer
French Equatorial Africa from Free
France and Britain together.
Therefore, they believe that the
present American policy will, like
all the appeasement policies that
have preceded or still accompany it,
be revealed as a fallacy and that on
that day solidarity between the
United States and all that remains
of French democracy will inevitably be re-established.
60
July 8, 1941
10:55 a.m.
HMJr:
Operator:
MrJr:
Henry
Hello.
Stimson. Go ahead.
Hello.
Stimson:
Frank a - I mean.
MMJr:
Henry.
S:
Frank is here.
Hello, stranger.
I was going to say.
S:
HMJr:
S:
I say, hello stranger.
I haven't talked with you for so long
that I forgot your name.
HMJr:
Well, you know, you fellows get all head
up and going strong and then you forget
about your
S:
Old friends.
HMJr:
Yeah, yeah.
S:
(Laughs) Like hell, like hell we do.
Year.
S:
Well, here's something that reminds you
of original friendship.
Please.
S:
I want to say a word to you again about
this embargo. Have you any objections to
it?
HMJr:
Oh no, no, we are with you on it. You
S:
No, I mean against Japan.
HMJr:
You mean, am I for or against it?
mean on this - materials coming in.
-2S:
Yes.
HMJr:
Well, I'm like Coolidge, I'm against sin.
You mean, do I want to keep oil from
going to Japan?
Exactly.
S:
HMJr:
S:
HMJr:
S:
Well, I've been - I - I'm of the
You're still virtuous.
As far as that goes.
I know you've been virtuous for 11
months.
HMJr:
Not only that but I - I got some stuff
that just came in about - they're going
to load 60,000 barrels of lubricating
oil in New Orleans and I was just dropping
a line to Harold Ickes about it.
S:
Have you got the figures?
HMJr:
You mean on the weekly
S:
On the whole thing and what they've
been doing.
HMJr:
Oh yes. I' ve got it right up to the
S:
Well, I think we're - both Frank and
minute.
I think that we ought to take it up
with the - on the military side with
the President at once.
HMJr:
Well, I think it's just - it's the
height of asininity that we've let
them stock up the way we have.
S:
So do I.
HMJr:
And you could count on me 100% for
S:
Well, how
HMJr:
You want the latest figures?
anything on that.
61
-3S:
The present set-up has mixed me up
HMJr:
the exports for the last year or so.
Well, I can give you
S:
so that I don't know what in God's
country you've been doing - not
what you've been doing, but what this
country has been doing in regard to
I mean that the State Department has
80 muddled the damn thing, I don't
know what they do.
HMJr:
S:
Well, look, Harry, I could get over
into your hands in 15 or 20 minutes
the latest information.
So that I can understand it even in
my head.
HMJr:
So that you can understand it and can
explain it to Frank Knox.
S:
All right.
HMJr:
What?
S:
Do it.
HMJr:
I'll do it.
S:
Thank you.
HMJr:
Now, - hello?
S:
Yeah.
HMJr:
While I've got you, I know there's
this man Rene Plevin, who's in town -
the Frenchman
S:
I hear he's a good man.
HMJr:
Oh, he's wonderful, and he had supper
with me last night. I hope you'll see
him.
S:
HMJr:
S:
All right, I want to see him very much.
will you put it on your pad?
Yeah, I've got in my memory even more
than my pad just at present. How do
62
63
-4you spell his name?
HMJr:
P-1-e-v-i-n.
Yeah.
HMJr:
I knew him, you see, when he was here
with the French Purchasing Mission and
he's a very fine gentleman and a very
brave one.
Yeah.
HMJr:
S:
HMJr:
And he knows all - this whole business
about Dakar and everything else.
Has he got ideas about North Africa
and Casablanca?
He knows how to - he knows the only
way - how to take Dakar.
Yes.
HMJr:
He knows how to do it and he's got
the making.
S:
Is he a Casablanca man?
HMJr:
No. No, he's
As a means of Dakar?
HMJr:
No. He wants to come un from the South.
Oh.
HMJr:
With his troops.
Yeah.
HMJr
Some of the
The trouble is - he's proposing just the
opposite.
HMJr:
Well, he's just come from there and he
wants to come uo from French Equatorial
Africa and do it that way.
S:
Yeah.
64
-5HMJr:
And they' ve got the troops down there.
S:
Yeah.
HMJr:
French troops.
S:
Yeah.
HMJr:
S:
HMJr:
si
So, he tells quite a story.
Well, all right. Will you get those
figures over?
A
Because we're thinking of making an
onslaught today. of course, we are
going to meet with hell from the State
Department as usual.
S:
HMJr:
S:
Well, you can count on me 101%.
Well, there's been some wonderful
information coming in about what
the Japanese and the Germans are doing
to each other.
Yeah, well, that I don't know much
about. Nobody tells me anything.
Well, I'll get you the stuff on Japan.
All right. Thank you very much.
HMJr:
Always glad to hear from you.
S:
Well, fine. Glad to hear you .
HMJr:
Goodbye.
S:
Goodbye.
.
HMJr:
65
July 8, 1941
My dear Mr. President:
I am enclosing herewith the latest information
from our Customs Agent in New Orleans, which indicates
that four Japanese vessels are in the process of load-
ing considerable quantities of lubricating oil for
Japan.
I have passed this information along to the Secretaries of State, War, Navy and Interior.
Yours sincerely,
H
The President,
The White House.
66
ReferencesNew
Letter
of July 3 from Acting Customs Agent in Charge at
Orleans.
"The SS KIRIGINA MAJU of the Kokueai Line is scheduled to leave
Boston, Nass. today (July 3. 1941). This vessel was originally echeduled to proceed to New Orleans, Louisiana via the port of Tampa,
Florida. This itinerary was later cancelled and the boat will now
proceed direct to New Origans and is expected to arrive here on July
3. 1941. The vessel will take on a cargo consisting of 7,000 bbie.
lubricating oil, and 1,500 tone bulk lubricating oil. According to
the agents the itinerary will then be Tokehama, Kobe. and Osaka,
Japan via Los Angeles, California.
"The 88 ANAGISAN MARU of the Hitsui Line is also scheduled to
arrive at this port on July 9. 1941. This vessel will take on a
cargo of 15,000 barrels lubriesting oil, and 1,000 tons bulk lubrieating oil. Originally the vessel was scheduled to clear for Japan
vin the port of San Fedro to take on bunicare, hovever today the agents
received an air mail letter from New York cancelling the sailing for
San Pedro and instead will lade bunkers at New Orleans and then preceed direct to Karateu, Japan.
"The SS TOKAI MARU of the Osaka Shonen Kaiehi Line is scheduled
to arrive at this port on July 6. 1941, to take on a eargo consisting
of 23,500 barrele lubricating oil, and 1,000 tons bulk lubricating oil.
"The $5 AZUMA MARIS of the Hippon Kaisya Line is new at the port
of New Orleans, and is expected to sail sometime this afternoon for
Yokohama, Osaka, and Kobe, Japan via Les Angeles, California. The
vensal took on a cargo consisting of 4.000 wooden barrels lubricating
oil destined for Kobe, Japans 7,000 unlined vooden bble. motor lubricating oil N-60-A destined for Tekehans, Japans and one case personal
effects destined for Telcohama. Japan."
Totale 49,500 barrels lubricating oil.
7,000 barrels peter lubricating oil
3,500 tons bulk lubrienting oil.
Host of this oil coming from Cities Service, Phillips Petroleum and
Gulf 011.
67
July 8, 1941
My dear Summer:
I am sending you herewith, for
your information, a copy of my letter
to the President.
Yours sincerely,
Hon. Summer Welles,
Acting Secretary of State.
68
July 8, 1941
Dear Harold:
I am sending you herewith con-
fidential information about proposed
shipment of lubricating oil from New
Orleans to Japan.
Yours sincerely,
Hon. Harold L. Ickes,
Secretary of the Interior.
69
July 8, 1941
My dear Henry:
In compliance with your telephone conversation,
I am happy to send you the following information.
From July 26, 1940 to May 31. 1941, inclusive,
the United States exported almost 4,000,000 barrels
of high octane gasoline.
During the same period we shipped 1,437,000
barrels of lubricating oil.
For the same period we shipped 10,076,000 bar-
rels of crude oil, approximately half of which was of
high octane content.
I am enclosing herewith a confidential memorandum
which we have just received from our Customs Agent in
New Orleans, giving the latest information as to proposed shipment of lubricating oil on four different
Japanese vessels. The figures are of sufficient size
that I should think the Army and Navy would view them
with a larm.
Yours sincerely,
Honorable Henry L. Stimson,
Secretary of War.
(Copy to Secretary of the Navy)
Treasury Department
70
vision of Monetary Research
Date Jame 26,
To:
Mr. White
Mr. Ullmann
Export Control - Shipments to Japan
Week ending June 22
Casolines 211,000 barrals - - all high ostane.
Crude oil: 70,000 barrels - - all high octone.
Labricating oils 2,000 barrels.
Fuel and gas oils none.
6/24 - Or. to Mr. White.
MR. COE
Branch 2061 - 210
19 41
ail
71
Exports of petroleum products to Japan in the
first ten months they were under export control
(July 26, 1940 - May 31, 1941), compared to the
whole year 1939
Confidential
10
9 months: export
control
12 months.
1939
Casoline
High octane (licensed)
Unlicensed
Lubricating 011 - Total
3,778,000 bble
681,000
y
1/
4,459,000 bble
1,200,000 bble
1,437,000 bbls
480,000 bbls
Crude 011
High Ostane (licensed)
5,516,000 bbls
Unlicensed
4,560,000
Total Grude
10,076,000 bble
V
1/
16,000,000 bbla
y Breakdown not available
Source: Report by the Office of Merchant Ship Control, U. S. Treasury
Department.
WLU/DEA
6/5/43
72
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
Secretary Morgenthau
July 8, 1941.
FROM J. J. O'Connell, Jr.
For your information
The regular weekly meeting of the Price Administration
Committee was held in the conference room at the Federal
Trade Commission this morning at 11 o'clock. All agencies
which are members of the Committee were represented.
Mr. Henderson reported that for the first week in a
long period of time the forward movement of prices has been
halted, according to practically all of the available
statistics on the subject. He stated that he felt the work
of his organization had been at least in part responsible
for this, but also stated that he feared the check may only
be temporary.
He pointed out that recent developments have made it
more and more apparent that in the absence of price legislation
his job will become an increasingly difficult one. He
expects to see the President within the next few days on the
subject. It is his hope that the President will recommend
such legislation, and that it will be done within the next
week or so.
A substantial portion of the discussion revolved around
the shipping situation in general and the impending oil shortage
on the Atlantic Coast in particular. Sumner Pike suggested
that it is not realistic to measure the prospective shortage
in terms of the deficiency which will result from our turning
50 tankers over to the British, in view of the fact that in all
probability we will be called upon to turn over another 150
or more tankers to them within the next few months. It is
his view that we should not only do a number of things which
will help to correct the situation but should also realize
that whatever we do will not be enough to prevent the shortage
from causing a real pinch. Among the things that can be
done are the construction of additional pipe lines (not nearly
73
Secretary Morgenthau,
2.
enough new ones are projected as yet); encouragement of the
conservation of gas and oil; and the rationing of gas and
oil for civilian use. All three projects are being worked
on, but it seems reasonably clear that the combination of
all the things that can be done will not be sufficient to
prevent e real shortage of gas and oil this Fall.
Mr. Clayton, of the Federal Loan Agency, reported on
the efforts of that agency to build up a stock-pile of
various strategic materials such as copper, tungsten,
chrome, zinc, lead, etc. He pointed out that in the most
important of these materials it will be literally impossible
to build up any reserve supply at all unless there is a
very substantial curtailment of the existing civilian demand.
He pointed out that in the case of copper the existing demand
here exceeds the total amount being produced in the entire
western hemisphere. Obviously, then, it will not be
possible to build up any stock-pile of copper without drastic
reduction in civilian demand. In the case of chrome ore,
the problem is one of transportation rather than of any
absolute shortage of the material desired. So far they
have been unable to import enough chrome to take care of
existing defense and other needs, and in the absence of
drastic priorities being imposed it is just physically
impossible to acquire a reserve supply.
In rubber the situation is much more satisfactory,
because in that case a substantial supply is available in
the Far East, shipping is bringing it in at the rate of
100,000 tons a month and the use of rubber is being curtailed
to such an extent that now or shortly the total amount being
used will not exceed 50,000 tons a month. In this situation
it can be seen that so long as the shipping remains available
we can build up a stock-pile in rubber at the rate of about
50,000 tons a month, which is very good, particularly in
view of the fact that we have a pretty good supply on hand
in this country at the present time.
74
Mr. Morgenthau,
3.
Mr. Henderson and his aides discussed in detail many
of their day to day problems. One of the most serious
situations confronting them in their program for the
allocation of civilian supplies of materials as to which
a shortage exists is that OPM is unable to tell them how
much of the existing supply is available for civilian
allocation. To put it another way, OPM and the service
organizations together have apparently been unable 80
far to determine what the defense needs are for any
important commodity for any given period of time.
The meeting adjourned at 12.30.
July 8, 1941
11:39 a.m.
HMJr:
Hello.
Operator:
Mr. Cox. Go ahead.
HMJr:
Hello.
Oscar
Cox:
HMJr:
C:
Yes, Mr. Secretary.
Yea, Professor.
I want to bother you on two thumb
nail sketchee; one, on that flight
delivery through the South Atlentic
to Takoradi, I think we figured out
a way by which we can use Lend-Lease
dollars instead of British dollars.
HMJr:
C:
Wonderful.
Secondly, at the meeting this afternoon
they are going to raise a point which
you might want to stew about just a little
bit.
HMJr:
Yeah.
C:
In the new budget for Lend-Lease which is
probably going up the end of the week, the
British put in a figure of 450 million to
take out contracts placed prior to March
11, and Harry said that he wasn't going
to do anything about it or present it in
the budget unless you were willing to take
it up and present the thing to Congress
because he didn' know anything about the
financial effect.
HMJr:
C:
HMJr:
C:
Well, my horseback opinion 1s, I'm not
going to do that.
Well, I think you're right.
I'm not going to do that.
Well, I thought I'd put it up to you
because they are going to raise
75
-2HMJr:
C:
HMJr:
C:
No, I don't expect to testify. I mean,
and then dig up all that stuff.
No, I think you're right.
No.
Well, I thought I'd pass it on to you
for your information.
HMJr:
That's good.
0:
And the meeting is at 3, I gather?
That's right.
C:
Right.
HMJr:
Thank you very much.
C:
Thank you. Goodbye.
76
77
July 8, 1941
2:00 p.m.
RE AID TO BRITAIN
(Conference held in Mr. Bell's office.)
Present:
Sir Frederick Phillips
Mr. Co chran
Mr. Thompson
Mr. Archer
Mr. Brown
Mr. Kades
Mr. Childs
Mr. Keyes
Mr. White
Mr. Keynes
Mr. Bewley
Bell:
Well, what have we got to discuss? I
understand the Secretary's conference was
canceled.
Childs:
Bell:
So I just heard.
Yes, so that we can have - do whatever we
can here.
Childs:
Have you got a signed list for Mr. Bell?
Keyes:
Yes.
Bell:
The first item is modification of the seven
hundred fifty Brewster Bermudas, eight million
seven hundred thousand. Oh, that is resubmitted.
78
-2Brown:
Unfortunately, we went into that a little
bit more carefully and discovered there is
a definite commitment for that whole job
and it had been made before the eleventh
of March.
Bell:
You will have to turn that down.
Brown:
Yes.
Childs:
I don't want to argue the point here, but
the question about its being a definite
commitment, of course, is a thing which is
going to run through a whole lot of our
situations on modifications because nothing
is really signed on this yet and --
Brown:
That is right. The final mock-up from which
the article was built - they said, "Here is
what we want, go ahead and do it. That
happened in January. I mean, when they went
ahead and took the job is the date that
counts.
Now, there is a practical consideration when
the company came down and got hold of Mr. Buckley
over in our office and told him about it, and
he checked with Mr. Boddis who apparently
agreed and told the Brewster representatives
that the model was out of Lend-Lease, so as
a practical matter it has gone beyond call.
Phillips:
Well, as a practical matter, what is the
answer to this amendment proposition?
Childs:
I am wondering about that, because this becomes a principle of very wide application.
The thing was never thought of until after
March 11.
Brown:
No, I think when you are proceeding with your
79
-3negotiations and you still haven't come to
a final conclusion as to what is to be done,
nobody has been instructed to go ahead and
do the
job finally determined on, that you
are
not committed.
Phillips:
Childs:
But I am thinking about the money point. How
much does this leave out of that list of
modifications, I put it?
I think about thirty all together, and I
imagine most of it would be in this category.
Bell:
You mean where the negotiations were started
prior to March 11?
Childs:
Yes, because that same sort of principle would
apply there.
Brown:
I talked that over with Robinson yesterday,
and he seemed to feel that the principle that
we go on is that somebody in authority has
said that a particular piece of work is to
be done, so that you are committed to pay for
it when it is done, and apparently that is a
commitment.
If you are dickering with the fellow and
saying that maybe we can put this modification
in and maybe put that one in and you don't
get the thing passed by your Supply Council
and signed up until afterward, this is a
commitment which can be under Lend-Lease.
Bell:
Is that the most liberal interpretation you
can put on that?
Brown:
That is the most liberal we can put on it.
This particular one, the language of the
sheet that came in here was --
(Mr. Keynes and Mr. Bewley entered the
conference.)
80
-4Brown:
The language of the requisition as it came
through to our administrative side indicated
a pretty definite commitment in January,
and Mr. Keyes and I didn't have a chance to
get at this thing on the paper before it
came to the committee and went through. I
think we might have been able to work something out.
Bell:
You mean it had come to you originally?
Brown:
Being the first item of wool, we haven't
got our machinery set up for it; but right now
this particular contract - I am afraid there
is nothing we can do about it. The company
has been told that it won't be Lend-Leased
and they have all gone home.
Bell:
How many of the other items have you been
over that - of a similar character, prior
to March 11?
Brown:
None of - well, Keyes and I have been over
all these things now since that first meeting
before they are presented to the committee,
and when there is any question we check up on
it and frankly, put the requisition in the
most favorable light.
(Mr. White entered the conference.)
Bell:
I just wondered, are there any items prior
to March 11 that now can come in under the
Lend-Lease?
Brown:
Oh yes, there are a lot of contracts where
the negotiations were started long before
March 11, but which --
Bell:
I didn't get that.
81
-5Brown:
There are a lot of contracts where the
negotiations started prior to March 11,
but it never formulated into a definite
article or a definite commitment to have
the work done.
Bell:
Have they been passed upon by you and determined that they can come in under Lend-
Lease or are they yet to be submitted?
Keyes:
Brown:
Well,
we have submitted a whole list of
contracts.
And we have told them to go ahead and put
in requisitions.
Bell:
You have?
Brown:
Yes.
Bell:
That amounts to a substantial sum?
Keyes:
Twenty million dollars.
Brown:
Over that. That is that group one in the
large list, Sir Frederick.
Phillips:
Oh, the list of contracts, yes. This is
amendments, isn't it?
Childs:
Yes, these are the ones that were not in the
list of categories of commitments of any nature.
Now it turns out that -Bell:
Does this represent a large group?
Childs:
I don't know. I should think so.
Keyes:
I should think it would.
Childs:
It just means for the purpose of consideration
here, number one, we will have to take that
82
-6March 11 list, twenty odd millions. I rather
hope that none of those are in the same
category. And then any modifications of
the same kind which are put up hereafter,
we will have to examine their history to
see at what stage we reached an agreement
as to the nature of the specification, mock-
up and that sort of thing. That is all it
means.
Brown:
That is the machinery that is being followed
now.
Childs:
Yes. These are the only two ready today,
aren't they?
Archer:
There were three others on the first sheet.
Brown:
Yes, there were two Lockheeds, weren't there,
which we put through and they are all right.
Archer:
They are all right, two Lockheeds, and then
there is a General Motors one.
Phillips:
Were they modifications?
Archer:
Yes.
Childs:
The Lockheed was. The modification of General
Motors, I think --
Bell:
How do they differ from these two?
Brown:
Well, they differ in that the decision as
to just what was to be done and the instructions
to go ahead and do it weren't given until
after March 11.
Bell:
I see. It is just a question of the date of
those instructions?
83
-7Brown:
Yes.
Kades:
When you speak of instructions, do you
speak of a letter of command or intent
or verbal instructions?
Childs:
Simply oral from our man in the field.
Brown:
Whatever you consider an authority to go
ahead and do it.
Childs:
You see, the man in the field would be out
here in the Brewster plant and say, "Sure,
that is what we want, get on with the job."
Brown:
Isn't the test, could Brewster sue you for
it?
Childs:
I frankly doubt if they could, because this
man in the field has no authority to commit
us to any money obligation, and Brewster is
really taking the risk in spending the money,
but that is not unusual. They often take a
risk of spending money in getting on with
some work. They have gone through a formal
and binding commitment.
Keyes:
Certainly Brewster cannot sue us on a contract
price list.
Brown:
Oh no.
Bell:
But you don't want to discourage them from
doing just what they are doing.
Childs:
That is exactly right. We don't want to
discourage them. As a matter of fact, they
have been very liberal. All of the aircraft
companies have been very liberal that way.
But a field man quite obviously has no authority
for that at all. He is a technician on the
job.
84
-8Brown:
We don't know - I mean, I don't know who
told Brewster to go ahead, but I do know
that the requisition came in and said the
whole thing was agreed on and there was a
final mock-up conference in January and
instructions to proceed with the work were
given.
When that comes in in the form of a requisition, our people down the line said,
"Well, what the devil do you let us get a
requisition like this for?" It is obviously
prior to March 11.
Childs:
Yes.
Bell:
Maybe
they shouldn't be so frank on the requisition form.
Childs:
Maybe we could be more accurate.
Bell:
Well anyway --
Brown:
But the machinery has been established for
combing that kind of stuff out and putting
it in proper form.
Childs:
Well, I raise this, are we going to dispose
of these two items definitely. today or is
there any chance of reexamination?
Brown:
I think you would have a very difficult time
getting number one through our people; and
number two, they raised the question about
number two, also.
Bell:
In the same category?
Brown:
Yes.
Phillips:
Who was that?
85
-9Brown:
Mr. Buckley.
Phillips:
Is he in the War Department?
Brown:
No, he is in our Lend-Lease.
Cochran:
Who was the second man? Did you mention
two?
Brown:
No, sir.
Now, he also asked about Lockheed and I
Bell:
satisfied him that Lockheed was all right,
so that is going through.
That isn't on here.
Brown:
No, but that is another one of the same type
which was previously passed on by this committee.
Bell:
Do you put Consolidated in the same class
as Brewster on this statement, disapproved
so far as Lend-Lease is concerned?
Brown:
Yes.
Bell:
You do? I feel discouraged when I start out
with the two big ones and have them disapproved.
Childs:
Well, are we taking these as dollars, is
that it?
Bell:
I guess we will have to. That is the decision.
Is there any appeal from the decision of the
Lease-Lend?
White:
Well, there is when they don't seem to be
reasonable. We appeal to their better natures.
Brown:
That has been very successful so far, sir,
hasn't it?
86
- 10 Bell:
Those are two nice sums.
White:
Yes, we are willing to swap you about ten
small ones for those big ones.
Brown:
Well, I have taken that up with Mr. Cox,
and we tried to - I am afraid we can't see
anything else for it.
Bell:
O.K., let's go on.
Springs for quick detachable gun mounts.
That is a small item. Does that represent
a series or group of those things, or is that
just one?
Keyes:
We have requested cash on that.
Bell:
Dollars?
Keyes:
Yes.
Bell:
Dredging of the Demorara River.
Brown:
That is also prior to March 11.
Bell:
And can't be approved?
Brown:
No.
Bell:
Transport and packing of propellers.
White:
Well, may I stop a moment? Why was it in-
cluded here if it was prior to March 11?
Childs:
The payment money is coming up now. Wasn't
the agreement between you, Alec, and Win,
that you wanted things of this sort put up
here?
Brown:
They thought it would be more convenient for
87
- 11 you if you had all of these items that come
in to you on these sheets, so they are all
gathered together in a central place, and
we didn't feel that we needed to bother the
committee. If we clearly say no, we say no;
and it doesn't take up any of your time.
White:
Then there is no thought on your part that
that might be susceptible of being taken
over?
Childs:
No.
Bell:
Transport and packing of propellers for
Curtiss-Wright.
Keyes:
That is dollars.
White:
Because of the urgency?
Keyes:
Yes.
Bell:
The British Purchasing Commission, recon-
ditioning, painting, et cetera., of rifle
and cannon powder containers.
Brown:
That is all right for Lend-Lease.
Bell:
We have found one. Next one, cost of inspection and test of ten thousand Mossberg
42 m. rifles.
Brown:
The War Department says they don't see how
the contract could be amended to increase
the price of the rifles sixty-five cents
each.
Now, I can't see why the Ordnance Department
feels that way. On its face it seems unreasonable.
White:
You mean their position?
88
- 12 Brown:
Yes. The guns in question were got under
Lend-Lease originally, and this is to pay
for a much stricter inspection and the cost
is sixty-five cents a gun to do it.
Now, we can't see any earthly reason why
that can't be taken care of under Lend-Lease
and why the contract couldn't be amended.
Bell:
As far as you are concerned, it is approved
Phillips:
What about the urgency?
Childs:
The only suggestion on urgency was that we
just undertake to guarantee to the company
for Lend-Lease?
that they get the money in case it didn't
come through Lend-Lease, wasn't that it?
Keyes:
Yes.
Childs:
Which I take it would be O.K.
Keyes:
Yes.
Bell:
Seven hundred and five thousand ignitors,
number seven.
Brown:
That could all be done under Lend-Lease.
Bell:
Approved for Lend-Lease.
Thompson:
With adequate urgency.
Brown:
When I say it can be approved for Lend-Lease,
I mean that there is no legal objection to
its being done that way. It is really for
you gentlemen to decide whether the practical
procurement problem involved will tie you
up.
Thompson:
Because we may have to ask in some of these
89
- 13 -
cases for the committee's help in getting
them pressed through if the decision for
Lend-Lease is given. The urgency may still
be such -Brown:
If you tell us that you have got a requisition
coming over that is in a terrible hurry, we
will get right on its tail and chase it.
Thompson:
Yes.
White:
I thought they had given you that assurance
Brown:
Yes.
White:
That wherever you had anything that was urgent,
if it was under Lend-Lease they would give
before.
it priority.
Thompson:
Brown:
Yes, it is not a committee matter, it is a
matter for the Lease-Lend.
If we know that the particular requisitions
are very urgent, we can give them a push.
We can't do it with a whole volume of them.
If you will just let us know.
Thompson:
Yes.
Bell:
All right. Thirty thousand bags, empty,
for exploder shells.
Brown:
I can't understand why this came up anyway,
because that is under a thousand dollars.
Bell:
Sixteen fifty.
Brown:
Oh, I beg your pardon.
Thompson:
Dollars are recommended.
90
- 14 Bell:
Dollars?
Childs:
Yes.
Brown:
The next one is all right for Lend-Lease.
Bell:
Packing crates.
Childs:
Lend-Lease.
Bell:
The next one, gauges for propeller shaft,
Brown:
That again is Lend-Leasable if you want to
do it that way.
Thompson:
We recommend that if the Lend-Lease can get
twelve torpedos. It is a small amount.
it through quick enough, we shall take ad-
vantage of that. Otherwise, it will have
to be dollars.
Bell:
That is up to you to decide?
Thompson:
Yes.
White:
Why don't you try them on some of these urgent
things and see what success you have?
Thompson:
It is with that object that we are releasing
Bell:
Tooling equipment, thirteen billing, automatic.
Brown:
That again is properly subject to Lend-Lease
this for Lend-Lease.
if your urgency is not too great.
Keyes:
We asked for Lend-Lease on that.
Brown:
All right.
Bell:
Recording device, measuring machine, and
mounting motors and controls, and four gear
shapers.
91
- 15 Keyes:
We asked for dollars.
White:
Because of urgency?
Keyes:
Yes.
Bell:
Automatic chucks for ninety-eight lathes.
Brown:
Well, here is seventy-one out of the ninety-
eight chucks which have already been shipped.
Thompson:
And the other shipments are proceeding.
Keyes:
We requested dollars.
Bell:
You requested dollars?
Keyes:
Yes, since the shipments are in progress
Brown:
Let me say that legally just because it has
been shipped it wouldn't stop you, but it
right now.
presents an awful problem to go around to
the Army and say, "We want you to negotiate
a contract for certain articles which have
already been delivered." The next one is
all right.
Bell:
Single station --
Childs:
Is that Lend-Lease?
Bell:
Surface hardening machines is O.K.?
Brown:
Except that the Ministry of Supply may --
Thompson:
London has asked particularly that cash
should be applied in this case, owing to
the extreme urgency.
Bell:
All right. Next one is spark plugs.
92
- 16 Brown:
That has got a five-day delivery schedule,
and they want dollars.
Keyes:
Yes.
Bell:
Spare parts for motor boat engines.
Brown:
The same.
Bell:
Same thing?
Keyes:
Yes.
Bell:
For Australia, four short-wall coal cutters.
Brown:
This is the first requisition from a Dominion
for a non-armament article, and we see no
legal objection to its being handled by
Lend-Lease. There may be a policy question
which can only be raised by having this come
in, and we will be glad to have it come as
quickly as possible.
Bell:
You haven't discussed the policy question,
I take it, with Hopkins?
Brown:
We thought we hadn't better do it without
the specific requisition.
Childs:
Lend-Lease.
Keynes:
What is the answer?
Keyes:
Lend-Lease.
Bell:
Approved for requisition.
Cochran:
It is really a test case on the policy.
Childs:
As a matter of interest, since we are getting
into what is going to be a large policy area,
there will be no policy decisions on these
things?
93
- 17 -
Brown:
We will have to get Mr. Hopkins to review it.
White:
You haven't had your first requisition on
Brown:
No, this is the first one, and we welcome it,
that?
because we want to take the matter up with
him right away and legally it is O.K.
White:
Maybe you can take that a little ahead of
the others so they will know what is ahead
in the future.
Brown:
Now that we have got the - I mean, now that
Bell:
It is coming. Cleveland single spindle
Brown:
Again, this will probably be all shipped
before our Procurement people could get
started on it.
Phillips:
You say the order has been placed?
Childs:
No, I say there will be an order placed by
we know it is in the works.
automatic, stock number 7122.
today.
Keynes:
Dollars?
Bell:
It can't be Lend-Lease --
Brown:
It can.
Thompson:
But that means it must be Lend-Leased from
the outset. I mean, they can't place an
order and then be bailed out on their order
under Lend-Lease.
Brown:
They can, surely.
White:
Well, they can and that relates to something
94
- 18 -
that we are going to talk about later,
which is a whole class of that type.
Thompson:
There
there. is a very interesting type of facility
Bell:
Why not approve it for Lend-Lease? They
Archer:
You have to have the dollars as well, don't
can put a requisition in and get it in time.
you?
Thompson:
Yes, but they want to be bailed out of it
White:
Oh, they want to pay for it first and then
Thompson:
Yes.
White:
I take it it would either fit under the
later.
be bailed out?
kind of transactions which we may be con-
sidering later in the meeting. I don't
think there has been anything of that char-
acter considered under the Lend-Lease arrangements to my knowledge, has there been, Mr. Brown?
Brown:
Well, we have taken a number of contracts which
have - existing contracts and said that requisitions could be put in to have them handled
under Lend-Lease.
Now, I would see no difference in principle.
White:
Here dollars will have been already paid.
Thompson:
It is not absolutely certain, but it may be
necessary if they want to ship the things.
Brown:
Well, on these existing contracts which
were subsequent to March 11 which it is
proposed to take over under Lend-Lease,
95
- 19 there may have been advance payments made,
some of which would be returned.
White:
Brown:
Yes, that is true. This would be in the nature
of an advance payment. You would treat it
similarly, wouldn't you?
I can see that - I don't know that the Procurement will have such an easy time.
White:
You are speaking of Treasury Procurement?
Brown:
Yes, when the whole thing is already shipped
and delivered.
White:
Well, let's --
Brown:
There is no objection in legal principle.
White:
Let's postpone that particular one and raise
it with them, if you have doubts about it.
Brown:
I have no doubts about the legality of doing
White:
Well then, go ahead and submit it.
Bell:
Why don't we approve it subject to whatever
it under Lend-Lease.
administrative difficulty it runs into in
the machinery.
Two sets of first-class warship moorings.
Brown:
What is the hitch on that, Tom, is it that
the appropriation --
Childs:
No appropriation, as I understand it. They
have been trying to get these for a long time.
Brown:
Well now --
96
- 20 Bell:
You can make an allotment for that, can't
you?
Brown:
What
do these consist of, anchors and things
like that?
Childs:
I don't know what they are. I take it the
Brown:
Why couldn't that be called an industrial
chain and the whole works.
or other commodity which - and therefore put
it into a category in which there is still
some money left.
Childs:
I understood there were some talks about
that one time or ano ther with Mr. Smith.
Sure, you can get anything under that category.
Is there anything wrong with that? Have you
had talks on that?
Phillips:
No.
White:
Which category was that?
Childs:
The general category, agriculture, food and
other commodities.
Brown:
This says industrial and other commodities.
Archer:
All you have got to do is to route the requi-
Brown:
Can you buy anchors?
White:
I should think we could buy anchors just as
easily as we could buy a lot of other things
that they buy.
Bell:
We have anchors in the Coast Guard.
sition down to the Treasury Procurement.
97
- 21 Childs:
You don't have to send it to Treasury Procurement just because it happens to be a
different appropriation. You can send it
to the Navy just as well as not.
Bell:
Oh yes. You can make an allotment out of
Brown:
The only hitch, as I understand it, on this
previous requisition is that the particular
that.
category, naval vessels, water craft and so
forth, has been exhausted.
Childs:
That is right.
White:
But you can regard those moorings as not a
part of the ship but as a part of the dock,
in which case it would --
Thompson:
They are.
White:
Oh, they are part of the dock.
Bell:
Approved?
Brown:
Yes.
Thompson:
The principle again arises on that one, they
ask that they may place the contracts as soon
possible in order to avoid further delay,
of the be
be taken over the
Department on as the understanding by United appropriate that States the contracts Procurement should it will
decided that Lend-Lease funds will be made
available. It is the same thing again.
White:
Well, it bears some resemblance to that. I
am not sure that it is identical in principle,
but in any case I take it Mr. Brown thinks
that it is all right to submit a requisition
on it.
98
- 22 Thompson:
Yes, but of course, he is simply saying
this is all right for Lease-Lend. He is
not ruling at all on the principle of whether
the Australians may place an order, saying
this will be settled either by us or by
Lease-Lend, which is what they are doing.
They say, "We will give you a guarantee that
this will be paid, but we don't say who will
pay it."
White:
Who could object to that, the producers?
Thompson:
No, because it might be thought that the
Lease-Lend ability on those terms would be
affected.
Brown:
Thompson:
No, it wouldn't, because we have already ruled
that any contract which is placed subsequent
to March 11 could be taken over with LeaseLend funds. We don't say that the supplier
will get the same price.
Yes. That is to say, in effect we are
guaranteeing when we place an order like
that that payment will be made of a certain
sum. It may be that later you will bail us
out of the whole of that sum or part of it,
in which case if it is only part, we have
to make good the difference.
Brown:
That is right.
Thompson:
That is a very interesting principle.
White:
That is, it may not be a bailing out process
in the sense that they will pay for it after
you have paid, but a bailing out process in
the sense that before you pay they will take
over either whole or part of the liability.
Thompson:
Yes.
99
- 23 White:
There is no objection, is there, Mr. Brown,
to the liability being greater than that
which you are willing to take over?
Brown:
No --
White:
And letting the British pay in dollars for
Brown:
No, because all we are concerned with is that
the Lend-Lease funds are not spent at too
high prices.
White:
In other words, then, under your investigation,
if you feel that the same commodity could have
been purchased at ten percent less, then that
ten percent differential comes out of the
pockets of the British Treasury in dollars?
Thompson:
Yes.
White:
All right. I think that answers your question.
Yes. I think it is a very interesting principle
to establish for this purpose.
Thompson:
Brown:
the remainder?
All of these things are subject to there
being enough money in different categories,
of course.
White:
Yes, and if the Treasury Procurement buys
it, there are certain other conditions that
would have to be met, if you are placing the
order with a particular concern. The various
conditions which they set forth with relation
to the purchases on private account which would
apply to this too, the labor legislation and
so on.
Kades:
Such as the Walsh-Healey Act, for example.
100
- 24 Brown:
Oh surely. Incidentally, that brings up suppose this article, anchors, could be
procured at = much less price from some
other concern. Wouldn't Treasury have to
get it?
White:
No, I understand - oh, you mean where they
would actually have to make the purchase,
coming back to your original statement that
all you are concerned with is to see that
Lend-Lease monies are not employed in ways
which are contrary to the standards which
you have adopted, so that I think that could
be taken care of, but I am troubled by another
thought.
Supposing the order has been placed with a
corporation in which the conditions of the
sale, the conditions of the production, do
not meet the other conditions. Then there
is no longer a question of price. They may
not be able to reimburse them at all if
they buy from that concern. I don't know
whether the conditions are such that you
would meet with that frequently, but there
may be some such conditions.
Bell:
In other words, you are afraid they couldn't
meet even part of the contract because of
those conditions?
Brown:
That is right, they might be a concern that
wasn't complying with those terms.
Childs:
The safest way to meet that is to have the
person who was going to procure for Australia
check with Procurement that the firm is all
right to begin with.
White:
They would do that, and I think the Treasury
Procurement Division could probably give you
101
- 25 -
quick service on that in special cases of
emergency.
Kades:
If we have other orders with a concern,
there wouldn't be any difficulty at all.
All we have to see is whether we have to
have another order.
Childs:
Undoubtedly a person building moorings for
the Navy would have been approved by this
Navy, anyway. I think the most interesting
fact is that you may be able to throw this
into the agricultural and other group.
Brown:
We have rendered an opinion to our department
that an article such as, for example, drop
forgings, which could probably be classified
as an industrial commodity, could be paid for
out of funds allocated from 2A7, even though
it was ultimately destined to be incorporated
in an aircraft engine or in a tank. The
ultimate article comes within 2A3 -White:
In other words, there is no difference between
buying a part which is incorporated as a part
in an airplane and buying a part of a machine
which is used to produce the part which goes
into an airplane, because eventually the use
of that machine is equivalent to a part,
is that the position you take?
Brown:
It is just the reverse, isn't it? If you
buy a part which if standing alone came in
one category, the fact that it might ulti-
mately be incorporated into something which
belonged to a different category would not
prevent it from being charged to the first
category.
White:
I see. What is the legal force of "other"?
Does that mean anything, or does it have to
bear some similarity to what preceded the
102
- 26 -
other?
Is it further descriptive or is it
a basket clause?
Brown:
Well, do you feel generous, Mr. Kades?
Kades:
That is an "iffy" question.
Bell:
I take it it is subject to a further con-
White:
That is the lawyers' playground.
Bewley:
The principle is accepted, is it, that the
sideration.
Procurement Division would place an order
for the particular firm and not by tender?
I mean you can be sure of placing the order
with the particular firm?
White:
That, too, depends on some things I think
we will discuss later. That raises a question
as to whether you can place orders without
getting bids.
Kades:
Oh.
Bell:
Supposing the British did place an order with
a firm and then the Procurement Division found
that they could get that same article cheaper
from some other firm? Can you give the British
reimbursement for the --
Brown:
For the difference?
Bell:
No, for the amount that the Procurement would
have spent with the other firm, let them pay
the difference to the firm with which the
order was placed.
Brown:
Well, I think the way it would work would be
the firm with which the British had placed
the order in the first instance would sell
103
- 27 to the Procurement at the Procurement's
price and then the British would have to
make up the difference.
Bell:
I see. But it can be done?
Brown:
Given the fact that that firm did not violate
other standards which Treasury was bound by.
Archer:
Would you have to have the contract to sign,
presuming the British were not ready?
Childs:
It would be a brand-new contract. We would
cancel out and just not collect all we pay,
that is all. We have done that already, as
a matter of fact, in four contracts that I
know of.
You may run into a producer who is a little
bit recalcitrant about undertaking that
additional trouble, in which case the Pro-
White:
curement can be of some assistance if they
are a firm from which they buy other things.
Bell:
Let's go on to the next one.
Electric cable. What is the matter with
that one?
It raises the same principle, but it is such
a small sum that it is hardly worth cluttering
Thompson:
the channels by which we are going to get the
larger sums.
Bell:
Any orders to follow which might set the
precedent?
Bell:
.
Thompson:
Not in here.
Dollars then, is it?
Twelve hundred fifty radio transmitter parts.
104
- 28 Thompson:
Bell:
Dollars recommended.
Seven hundred ninety-two thousand hooks and
seven hundred five thousand eyes; uniforms,
thirty-six hundred dollars.
White:
Hooks and eyes?
Bell:
Yes, soldiers' uniforms, collars.
White:
Are they that expensive? I thought they
gave them away.
Bell:
My God, you have got a million and a half
White:
Oh yes. (Laughter)
Brown:
Yes, but I should think that could properly
Thompson:
We should like to treat it on this new
principle.
White:
Have the contract awarded and --
Thompson:
Yes. It is a New Zealand thing, and it will
of them.
be considered a --
please them if we can get it through and the
same principle as suggested before. It is
the largest of these three New Zealand orders.
Bell:
It is O.K., is it, Brown?
Brown:
Yes, sir.
Bell:
All right.
I don't know whether you knew that the three
o'clock conference is called off.
105
- 29 White:
Yes, the Secretary asked me to explain
to Sir Frederick that it wasn't at his
request that it was called off, but rather
that Mr. Cox couldn't possibly be there.
They have got something to get ready at
the Hill, and therefore there would be no
point in having a meeting since Cox might
have to be there to decide something im-
portant, so he said he is ready if it is
convenient with you folks to have a meeting
Thursday at the same time, three.
Phillips:
Well, we have some rather urgent business
this afternoon, mainly in connection with
what I have described as schemes of Mr. Cox'
for taking over some of our old contracts.
White:
Well, some progress on that has been made,
and when we come to that I will discuss it
and then after the meeting if you want to -
I mean after we get to that point, if you
want to raise further questions -Bell:
Yes, surely.
106
-30-
Phillips:
On this list, just before we pass away from
these lists, I should like to mention one
case where Mr. Brown might give us the Lend-
Lease view. This is a case where the Australian Government, not the British, the Australian
Government, is seeking to procure Canada procure aluminum from Canada for munitions
purposes and the amount of the order is approxWhite:
imately seven billion dollars, I think.
Seven billion dollars?
Phillips:
Seven million dollars. The point is, I am
not making a serious proposition at the
moment, is it a feasible course for the United
States Departments to buy that aluminum from
Canada and Lease-Lend it to Australia?
White:
Well, there has been some discussion of that
from the point of view of policy, partly as
a means, possibly, of aiding Canadians in
their dollar position.
Phillips:
But only in connection with goods which were
going to the U.K.
White:
That is right, and this is a question of
going to the Dominions. I don't think the
matter has been discussed from that angle,
and there is a further consideration that
it is aluminum, which we very badly need,
and there would have to be probably some
question as to the relative urgency if it
is going to come out of Lend-Lease funds.
They might take the position that if this
aluminum is available for American dollars,
that they would want to measure the Australian need as against the American need, and
they may end up with the Australian need,
so I think there are two points to be considered and I think that there are points that
107
-31-
might well be brought up before the Secretary
which relate to a large area, possibly, of
transactions.
Bell:
I take it there is no objection from a legal
Brown:
As far as the terms of the statute are
White:
I will put that on the agenda.
Cochran:
Is this for military purposes?
Phillips:
I am told it is exclusively for munitions
standpoint, Brown.
concerned, it could be done.
purposes.
White:
A purchase --
Bell:
For what purpose?
Phillips:
Exclusively munitions.
White:
A purchase by Australia in Canada of a -
Phillips:
It is manufactured stuff, extrusions.
White:
I see. Manufactured aluminum for the purpose
of manufacturing munitions.
Phillips:
Well, armaments.
White:
And the question is whether that might come
of seven million dollars' worth of aluminum --
under the Lend-Lease.
Phillips:
As indeed it might have done if it had been
U.K. stuff.
White:
Or as it might have been done if it was Aus-
tralia purchasing it in the United States.
108
-32-
Brown:
That can be done legally. The statute would
specifically cover a situation of that
kind as a matter of law. If there is a
matter of policy, that is another matter.
White:
The second one, Dan, is something that was
sent to the Secretary a little while ago
and he asked to have it brought up at the
meeting.
Bell:
This is from Arthur Salter. Shall I read it?
"We have a very considerable program of
shipments of pebble phosphate from Port
Tampa, Florida, during the month of July.
I have during the past few days received
several messages from the operating staff
of the British Ministry of War Transport
in New York expressing anxiety lest there
should be no phosphate there to load as
the ships come in, the difficulty being
the transition between direct purchase and
Lend-Lease. We have already run into difficulty over a ship called the Tesbank, which
had to load with triple superphosphate in
the absence of any pebble phosphate, and
even so, was unable to secure a full cargo.
Another ship is due the middle of this
week, and already sixteen more have been
allocated for July loading. Purchase
of pebble phosphate under Lend-Lease is
being handled by the Treasury Procurement
Department. I understand that contracts
have now been placed, but should be most
grateful if you could reassure me that
cargos will actually be forthcoming as the
ships come in during the month. You will,
I know, appreciate as much as I do the
extreme desirability of avoiding all possible
delay in turn around in these stringent days."
Was this entirely a Treasury Procurement
matter?
109
-33-
White:
Yes, and I was going to contact them before
the meeting to see what they might have to
say about it. Unless somebody has some
additional information on it here, we can
just pass.
Archer:
Well, I heard about this on Saturday or
Sunday and I immediately got in touch with
Mr. Mack yesterday morning and found that
the contracts have not been placed. Possibly
there is some administrative difficulty.
I spoke to him and explained the shipping
position and they got busy yesterday and
I was assured yesterday afternoon that
everything would be all right and that they
were making satisfactory arrangements to
meet these ships.
White:
And this letter was sent before you had
that information?
Archer:
I don't know about the letter.
Bell:
That was the 7th.
Archer:
That was yesterday. It was yesterday afternoon when I had heard about it. I didn't
know that Sir Arthur Salter had taken any
action. But I would be glad if you would
check up with Mr. Mack on your side.
White:
All right, I will do that.
Archer:
If I might explain what the difficulty has
been, it is this: Up to the present our
purchases of this rock have been made through
an export association, and the Treasury
Procurement find some difficulty in dealing
with them, and are going to the individual
producers to make their contracts, and this
switch over from buying through one central
110
-34-
organization which has been used to allocating
the orders amongst all the firms, arranging
all the shipments in close contact with the
avenues of shipping, all that has gone, you
see, now, and the new organization has got
to be set up. It is rather a pity that
they have been doing it for twenty years
and know the ropes.
White:
Well, I presume they do that because either
they can save money or it doesn't violate
some condition which they have established.
I take it that that shift is in their opinion,
justified either by buying the material
at lower cost or because it doesn't violate
some principle which they have -Archer:
They seem to have an impression they can buy
at lower cost that way, but I very much
doubt it because they will have to pay for
all the services which these people give
them.
White:
I take it they would take that into consideration in their evaluation of the net price,
not that they may not be mistaken, but isn't
it your thought, Chuck, that they --
Kades:
Our experience in dealing with those export
associations has been quite different from
yours. We have always had great difficulty
with them in price and service both.
Archer:
We found excellent service and very good
prices from them. Of course, they are only
really associations of manufacturers. It
is the export house of a number of manufacturers.
White:
Did you already have a price for that
particular contract of material?
111
-35Archer:
We had been paying a price before.
White:
Was there any reason to believe that the
price on the next shipment would be any
different?
Archer:
I don't know what the price would be.
White:
No, I don't mean in the transaction in which
the Procurement Division is negotiating,
but in a continuation of your own purchases
from the same concern, would they have been
at the same price?
Archer:
Oh, yes.
White:
Therefore, there is a basis for comparison?
Archer:
Oh, yes, but there would have to be the
comparison with the addition of the costs
of moving the stuff down to the docks.
White:
I mean, we might be interested independent
of this particular transaction, in the comparison.
Kades:
When you speak to Mr. Mack, you ought to
bring that up.
White:
Yes.
Archer:
I mention it merely from the point of view
of the administrative machinery which is
there for these people to ease up the work
of the Treasury Procurement.
White:
Well, it would be of interest and a little bit
surprising if a change were made unless there
are adequate reasons for it.
112
-36-
Bell:
They like to deal with the individual companies
and get competition in bidding instead of
going to one concern which is virtually a
monopoly.
Kades:
That is the purpose of the association, is
Archer:
They are perfectly legal associations.
White:
That is right, but that doesn't necessarily
mean that they give a better price for
to fix the price.
export than might be obtained from the individual corporations.
Archer:
Quite.
White:
Because if that were true, they probably wouldn't
set up an export corporation.
Bell:
Do you want to go over all these items?
White:
Yes.
Bell:
Is this intended for the 3 o'clock meeting?
White:
Well, both. I think some of these might well
be threshed out here if you have the time,
three particularly.
Bell:
Procurement on handling administratively
difficult purchases.
White:
You remember there were some hundred and
fifty million dollars a year of administratively
difficult purchases by individual concerns
from individual concerns here. There have
been a couple of meetings which the Procure-
ment Division has held with the Legal Division
with a view to ascertaining whether some procedure could be developed. I think they
113
-37-
have something tentatively. It isn't definitive, but I think it should be raised now to
see whether it fits in with the views of the
other folks around the table, so Chuck will
describe what their typical procedure is,
which they have tentatively evolved.
Kades:
I have a short memorandum here. I think
probably the quickest way to handle it would
simply be to read it. It is a suggested pro-
cedure for bringing miscellaneous manufactured
goods under Lend-Lease procedure.
Brown:
May I make a suggestion?
White:
What is that?
Brown:
Would it possibly save the committee's time
if Mr. Kades and Mr. Thompson and Mr. Archer
should get together on that, because Thompson
and Archer are familiar with the practical
problems that are confronting the British,
and perhaps if the three of them could work
-
could go over this together it might save
Sir Frederick's time, and Mr. Bell's and Mr.
Keynes'.
White:
Yes, that might well be, particularly since
the Secretary's meeting is postponed, so that
we don't have to bring it there. However,
there are certain matters raised there which
I think call for either some discussion or
comment or certainly are of interest to everybody else.
Kades:
I have a few copies of this, if you want me
to distribute them.
Bell:
How long is it?
Kades:
One page.
114
-38-
Bell:
Read it, it isn't very long.
Kades:
I just have a few copies.
White:
I am generally in favor of that procedure, Mr.
Brown, but in this particular case --
Brown:
I didn't realize those were all copies of
Kades:
One. The British importers - a certain
the same sheet.
commodity from an American firm, giving
specifications, price delivery terms, etc.
Simultaneously a duplicate original of this
order is furnished the Procurement Division.
Two. The Procurement Division examines the
order with a view to determining
A. That Section 3709 of the Revised Statutes
does not apply. That is the section of the
law which requires public bidding except in
cases of public exigency.
B. -White:
Wouldn't you want to pause at each point
to make it clear that that question of
public exigency might be satisfied on the
grounds of urgency, that where any purchase
that you make under this category is regarded
as urgent, it would satisfy the requirement
that no public bidding need be necessary.
Archer:
With the priority system, public bidding
becomes absurd, doesn't it?
White:
Well, the point is that so far as priorities
are concerned and export control, that is
something that you take care of in your
purchase.
115
-39-
Kades:
B. That the order conforms to rules and
regulations which will have been established
by the Procurement Division governing such
purchases. Mr. Mack is working now on such
rules. As an example of what those rules
might be, I might mention the Walsh-Healey
Act requiring certain hours of labor and
wages to be paid, possibly that dealings
would not be through brokers unless the price
were the same or less than dealings directly
with
the source of supply, and similar provisions.
White:
None of the provisions there would seem to
constitute an obstacle from your purchasing,
for most of the articles.
Archer:
This A applies to transactions in the United
States?
White:
I hadn't thought - it would apply to purchases
outside the United States?
Archer:
We might want to use our merchants and brokers
on the other side.
Kades:
Oh, no, that applies simply within the United
States and would go simply within the price.
I mentioned that because that happened to
be discussed in Dr. White's office the other
day. I don't recall who was present at that
meeting.
C. That the United Kingdom has granted permission to import the goods -Phillips:
When does the ILD issue a license, before
or after?
Thompson:
Normally, a man makes sure that he gets his
license before he places his order.
116
-40Kades:
And D. The British Purchasing Commission
certifies that the goods ordered by the
British importer are for the Government
of the United Kingdom.
Brown:
Why do you --
White:
Well, there is some further consideration
there --
Brown:
Wouldn't a Section Four consent --
Kades:
Surely.
Brown:
Obviate the necessity of that?
Kades:
That is right.
Brown:
For example, if the British should certify
that it was for distribution to a firm within
the United Kingdom which had been selected
and approved by the British Government, I
think that --
Childs:
I think all Mr. Kades wants to do is to
prove in the first place that the British
Government gets it. The second thing then
follows because obviously the British Govern-
ment has to get it or it couldn't come
under Lend-Lease, and then the distribution
begins.
Brown:
Not necessarily.
Childs:
How could you supply to anybody but the
Government under the Lend-Lease Act?
White:
I gather there is an exception. If the
President is willing to except that
condition.
117
-41-
Childs:
Kades:
Brown:
You mean to say you would supply from the
U.S. Government directly to an individual
or a firm?
If it is for the use of the British Govern-
ment, I understand that we can.
The British Government has undertaken that
it will not transfer any of these goods --
Childs:
But the British Government must acquire
Thompson:
We in discussing this at the other end
suggested that if this purchase could be
in the first place --
brought under Lease-Lend, it would be very
easy for us to arrange the Import Licensing
Department, appoint as the importer for
this transaction an agent of the British
Government.
Kades:
Then there would be no question at all.
Thompson:
But that doesn't prejudice the future
distribution which might go through many
channels not Government.
White:
I gather that they don't go behind the British
Government's assertion that it is being
sold to the British Government or its designated agent.
Keynes:
The kind of words that Mr. Brown is suggesting would help us a good deal, I should
think. They are much better than these words.
Brown:
I think we would have to have them anyway
because if the British Government is taking
title to these articles with a view to
distributing them to somebody else, you would
have to get a Section Four consent, which
would be easy enough. For example, if the
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- 42 -
requisition said that goods were to be distributed by the British Government to certain
manufacturers or distributors within the
United Kingdom which are selected for uses
deemed essential to the - deemed essential,
I am sure that it --
White:
Deemed essential, because it might be for
export. Period.
Brown:
I am sure that the consent could be obtained.
In fact, the approval of the requisition would
in itself constitute such consent.
White:
How are you handling the cotton that the
British Government is contemplating buying
or has bought?
Brown:
That I don't know.
White:
Could you tell us, Sir Frederick? Is that
cotton coming under the Lend-Lease?
Phillips:
Oh, surely.
Archer:
A requisition has just gone in for cotton.
White:
Well, now, what happens to that cotton?
That cotton is no different, I gather, than any
one of the other items. It is cotton to be
used in textile mills as well as other mills,
right? It goes into the making of textiles.
Some of those textiles may take the form of
uniforms or canvas for ships or soldiers.
Other portions of those textile S might be used
domestically in clothing. Another portion
might go into export markets. Well, if it is
possible, then, to purchase cotton under the
Lend-Lease, I can't see any difference in
principle between any one of the other items
which might find its way into this miscellaneous group.
119
-43Brown:
I don't see any difficulty either. It is just
a question of getting the right form of words.
White:
And it would be handled, I take it, the same
way. There must have been some guarantee
or some statement by the British Government
to meet the requirements which you are setting
up on cotton.
Archer:
Yes. The cotton is distributed by central
control, all the cotton going to the United
Kingdom being bought by one organization and
then distributed.
White:
It is sold by the British Government?
Archer:
That is right.
Keynes:
Didn't you have something to the effect that
the title of the goods will be - you see,
these goods would be sold by the British Govern-
ment for sterling, and until that sterling is
paid over by the importer, the title will be
in the British Government's hands and therefore
it can be honestly certified that the title
at one point is in the hands of the British
Government.
Childs:
Do you need that certification? Won't we have
a requisition in for this stuff? It will be
just like any other stuff. We will simply
hand in a requisition for the U.K. and indi-
cate how it will be distributed. We have done
that in many cases.
Brown:
There is no problem.
Kades:
This wasn't intended to be as rigid as that.
I didn't think the British Government was going
to take title to all these goods and that the
title might go directly to the importer.
120
-44-
The Act states that we might manufacture
or procure commodities for the Government.
Now, I don't think that it all turns on
the question of where title is. However,
if title is going to be in he British
Government, it eliminates that difficulty.
Childs:
I think it will be found to be to the
Government. There is no problem on Mr.
Kades' language.
121
- 45 -
Kades:
I have no objection to changing the language.
This is purely tentative, but I didn't understand either that this was always going to be
covered by a requisition.
Keynes:
The I.L.D. will be the requisition. That is
all there will be.
Kades:
But not a requisition in the ordinary sense
Brown:
There must be some paper coming in to us
in which it has been used.
so we can allocate funds for the purchases.
Kades:
You already allocated funds to the Procurement
Division?
Brown:
No, we allocate them as each requisition comes
in.
White:
Couldn't you allocate a given amount, let us
say, ten millions a month, to handle goods of
a certain description?
Brown:
I should rather think not, offhand.
White:
Well, that may not be necessary if it can be
worked without it. I don't know whether it is
an essential part of the mechanism, but the
intent here is not to interfere with the flow
of, or the ordering of these minor items, of
these large variety of miscellaneous items,
and if that flow can remain uninterrupted,
then I don't think any one is concerned with
what kind of arrangements you want to make
on that.
Brown:
Kades:
Well, I didn't see any difficulty from our
point of view with this item two.
Well, where do you put - I am not clear, I am
122
- 46 -
simply asking the question. Where would you
have the requisition come in in the course of
this procedure?
Brown:
The British would put in a requisition for a
whole list of orders.
White:
You mean along with the duplicate order there
would
is thatbe
it?a requisition automatically filed,
Bewley:
The order wouldn't be sent by the English
importer to the Procurement Division. It
would be sent to the Supply Council, and they
would send it in with an O.K.
White:
Then the duplicate order would be accompanied
by a requisi tion?
Brown:
Let's put it this way. The British Supply
Council knows what is being bought.
White:
By receiving the duplicate invoice.
Brown:
Correct, and therefore all they have to do
is transcribe that onto a requisition and
whip it in to us and we approve it and allocate the funds.
White:
Without interfering with the progress of the
original order going to the American producer.
Thompson:
This is the invoice, after we have placed
White:
No, this is the order.
Thompson:
With the specification, really.
White:
The order.
the contract?
I take it when you give an order it is either
123
- 47 accompanied by a contract or by specifications.
The other step that you speak of, he hasn't
yet come to.
Brown:
Let's go on to number three.
Kades:
Is it your opinion that you could not have--
Brown:
A blanket requisition?
Kades:
Won basic requisition for all miscellaneous
manufactured goods in accordance with this
procedure?
Brown:
Yes, I don't think we could, offhand. We
would have to consider it some more.
Archer:
But isn't it the same as doing it, where you
get a blanket requisition and then we specify
the particular items against it?
Brown:
The same what?
Archer:
You get a blanket requisition of spare parts
for airplanes. Then you specify against that
particular parts, week by week or day by day.
Is there any great difference of principle
between that and this? The general heading
would be machinery or it could break up into
a number of groups, machinery and textile
goods or whatever they may be. Then specify
against that so many individual items that
they have.
White:
Except that might not be necessary. If they
are willing to do the other, they may not
even have to go that far since it will not
interfere with the placing of the order
and the filling of the order, that their
work of presenting the requisition and the
Procurement's work of checking up on it
would be concomitant with the filling of the
124
- 48 order.
Kades:
What would you check on the requisition?
What would be the basis of your approval?
Brown:
We would just get a list that you want so
many bits of machinery for distribution to
such and such people and then we would, just
like any other requisition - and then we
would allocate the funds and send it on-Kades:
Brown:
Where would - I am not - the reason I am
confused now is because I don't understand
at which point the Procurement Division would
begin to function, when we got the requisition approved from you.
This is precisely the reason I made the suggestion that you sit down and talk out the
thing beforehand, because I didn't see any
reason for taking up the time of a number
of these gentlemen and discuss questions
such as this that are raised. I think we
could-Kades:
You don't see any difficulty in our working
it out?
Brown:
I see no difficulty in it at all.
White:
Well, the extent of our interest is that
there is no difficulty in this procedure.
From that point, you will have to - it is
taken for granted that you will have to whip
something in--
Brown:
Which pieces of paper we sign don't bother
or concern you.
White:
No, or what details you find necessary to
work out, it doesn't matter, provided the
main objective is not obstructed, namely,
125
- 49 -
the flow of goods from private individuals
to individuals abroad of a miscellaneous
character, taken under the Lend-Lease. If
that can be taken care of-Brown:
Our position right along has been that if the
Procurement Division could be satisfied to
accept an order which has already been ne-
gotiated by the British importer, that the
scheme was perfectly workable.
White:
Well, then, I agree with you there is no
need to take up the time of this committee
any more beyond stating that it looks very
hopeful.
Kades:
Now this has been - I might say this, that
this has been submitted only tentatively to
Mr. Mack, the Director of Procurement, and
he is satisfied with it excepting that he
has certain misgivings about the way he
would administer a purchase by the Procurement Division of goods that were actually in
transit.
Thompson:
There is a very interesting sentence lower
down.
Kades:
That is right.
Thompson:
Well, I am at your disposal any time to discuss it.
Kades:
Well, I am - I am also ready at any time.
White:
Then we can pass on that and then Mr. Kades
will get in touch with Mr. Brown and with
your organization and with Procurement possibly at a meeting tomorrow.
Kades:
After this meeting, if you want to.
126
- 50 White:
I don't know whether you will have time, but
you will have a meeting before tomorrow
night?
Kades:
That is right.
Bell:
Before the one Thursday.
White:
That is right.
Bell:
"4. Discussion of British memorandum on
cash expenditures for modifications and
urgent purchases."
White:
Yes. That may not need much comment. I
imagine there is an agreement with respect
to the type of transactions that should be
excluded from Lend-Lease. Do you want to
state that briefly, Sir Frederick?
Phillips:
Well, let me have a copy of the last one.
Childs:
Here is a copy.
Phillips:
Well, we will start off with certain articles
which are required by the British Air Com-
mission under circumstances which point to
extreme urgency. The airplanes are grounded
and we want to buy some spark plugs or some-
thing to start them going. We can't wait
to put that through Lend-Lease. Our recom-
mendations on that are, in regard to the Air
Commission, that the British Air Commission
should have the power to deal with really
urgent cases where they fall below a limit
of five thousand dollars individually and in
order that the thing shouldn't become too
big and represent too large a volume of
dollar expenditure kept outside the purview
of this thing, we have made a weekly limit
of fifty thousand dollars for the British
Air Commission. Then there is the case of
127
- 51 -
the really tiny orders, something under five
hundred dollars, which we propose as not
worth even putting in except for cash. Then
under the Air Commission still, there are
very important cases of modification of
designs. Where the modification is not really
a modification of design so much as ordering
something new such as a new type of wireless
apparatus. That new type of apparatus is a
separate commodity bought under Lease-Lend
already and the proposal is that it should
continue to be bought under Lend-Lease. But
suppose the case is one of an alteration to
a wing design or something of that kind.
Then we propose certain rules to deal with
those.
In the first place, all these cases are difficult and troublesome, and we think that
the first thing to do is to shut out the
small ones so only the important matters
come before this committee, and the limit we
propose there is ten thousand dollars. Where
it is a modification which costs less than
ten thousand dollars, the British Air Commission would have authority to deal with
that themselves subject to being reported
in arrears to this committee.
Now, in the bigger cases, I should say where
the modification is more than ten thousand
dollars, it must be reported to this committee,
and we think that every effort should be made
to put it under Lease-Lend.
Now, there are two methods for bringing it
under Lease-Lend which we have discussed in
the previous meetings. The first was a
modification contract and the second was the
device by which you reduced the volume of
your contract to provide the money necessary
to pay for the modification. I needn't go
128
- 52 -
into that. We hope that when we do bring
these cases up, the committee will give us
all the assistance they can to get the cases
dealt with under one or the other of those
procedures.
There is still a further matter, namely, that
we do want help with the actual U. S. Departments handling these matters, and therefore
we suggest that wherever the committee is
concerned, the size of the case is suitable
to make it applicable under Lease-Lend, some
sort of instruction might be issued to the
appropriate branch of the War Department
or the Navy Department asking them to cooperate
with us in making the contractor comply. That
is all on the Air Commission.
On the other British purchases, we propose
substantially the same set of rules, but
there is one tiny variation. They aren't
quite so important. But we do propose to
restrict cases of urgency. In cases of
urgency, we would authorize them to pass
expenditures up to a thousand dollars, or
fifty thousand dollars weekly totals. I
think that is all it comes to.
Thompson:
There are two very small points, sir. One
was that this five hundred dollar cash expenditure, we were asked not to make that exclusive of all, because in some cases it is much
easier to put in some things which are under
that for Lease-Lend which might be suitable,
that it shall not be taken that nothing under
five hundred dollars should be Lease-Lend.
It might be possible on some cases.
The other was the wording is slightly altered,
the aim should be to keep this within fifty
thousand dollars a week, so that if it does
go slightly above it, we will simply report
129
- 53 -
it to you so as not to come up to Friday
night and find we are short fifty thousand
dollars
thousand.or that it is much over fifty
Bell:
Approximately fifty thousand.
Thompson:
We
are anxious to say the aim so as to keep
a wide range.
Bell:
That seems to me a good program. Do you see
any objection to that, Brown?
Brown:
No, sir.
Bell:
O.K.
White:
The next item is possibly just a word - just
a word need be said about that unless there
is something you want to bring up, Sir
Frederick. The possibility of the Army
taking over large contracts totaling about
three hundred fifty million.
Can we just report some progress on that.
It looks a little more hopeful, and Mr. Cox
is going ahead with that last-Bell:
Brown:
With those pre-Lend-Lease contracts, some of
those we talked about today.
That was - you see, those contracts were go-
ing to come within that billion three limitation. As I understand it, a very substantial part of that billion three has already
been allocated to aircraft or - and to the
British Supply Council; and, as a matter of
fact, there isn't three hundred fifty millions left in there.
White:
No, but I understand there may be a couple of
130
- 54 -
hundred million left.
Phillips:
Brown:
Therefore, you are proposing to extend the-We can't do that.
Well, yes, I am thinking of the existing
statute. The new Lend-Lease appropriations
bill is in the fire right now.
White:
So a definitive decision can't be made right
now, but the fact that the money isn't
available under the past allocation, doesn't
preclude the possibility.
Phillips:
That limits the amount of goods which can be
handed over by U. S. Government departments
to the British.
Brown:
As I understand it also, there is about eleven
hundred million that has already been allocated
to be handed over to you.
Keynes:
What is our final estimate?
Phillips:
That figure was ten, three, I think.
Keynes:
I think the difference between those two
figures is that Sir Henry Self's figure will
be pared down in practice a bit.
Phillips:
Keynes:
Then there is another point I shall have to
mention to you about further schemes.
How difficult would it be to make that thirteen
hundred to fifteen hundred?
Brown:
It would be impossible. We would have to get
a new statute.
Keynes:
Yes, how difficult is that?
131
- 55 Brown:
Well, I don't think there is any question
but what the large appropriation will be made.
I am not familiar with that.
Keynes:
It would mean altering the Lend-Lease Act
Cochran:
Has the Lend-Lease figured on a percentage?
Kades:
A billion three is in the Lend-Lease Act itself.
Bell:
That is right, it is in the basic loan.
Keynes:
Now, you would have to alter that.
Bell:
I expect it would take another act to do it.
itself, quite apart from the new appropriation.
That is the way it was.
The Appropriation Committee probably would
object to amending that provision of the
basic law of the appropriation act anyhow.
That is something for you fellows to consider.
I understand progress has been made. The
one billion three is allocated to other pur-
poses, probably. Where is the progress being
made if the money is all gone?
White:
I didn't know the money is all gone.
Brown:
Neither did I until yesterday.
Bell:
There is still two hundred sixty-five million.
Phillips:
The difficulty is this one. The limit is one
billion three. To the best of my knowledge,
everything that has presently been decided
which could be charged against that sum is
one billion thirty-five, leaving about two
sixty-five, but I have heard later there
were other projects which might involve some
further charge on that one billion three,
and I am not sure that they wouldn't require
an amendment, even if this question of taking
132
- 56 over contracts was considered.
Bell:
So there might be a hundred and fifty to
two hundred million there for the moment.
Phillips:
For the moment there ought to be two hundred
seventy millions.
Bell:
Well, there is a balance of two sixty-five,
but you said you understood there were a few
other items that could be charged against
it.
White:
Well, Mr. Cox was going to take this up with
McCloy, I gather, tomorrow.
Phillips:
I think we had better try and get in touch
with Mr. Cox this evening.
White:
Well, you will do that?
Phillips:
I will. But Mr. Brown hasn't told us anything
about the one I am very interested in, the
National Maritime Commission, this ninetyseven million.
Brown:
As I understand the situation there, there is
no - nothing left in the Maritime Commission's
appropriation which they could use to do that.
Phillips:
Well, can't you give them more?
Brown:
We are trying to. They are asking for quite
a substantial sum.
Keynes:
That is the news we have been looking for.
Phillips:
But you are giving them an extra billion.
Brown:
That is what they are asking for.
Phillips:
Can you arrange that out of this extra billion,
133
- 57 -
ninety-six
or ninety-seven million go for
this purpose?
Brown:
I would think so.
Phillips:
Hasn't this all got to be settled before--
Brown:
Yes, I know Cox is waiting on that.
Cochran:
How
tion? far along is it? Is it a new appropria-
Brown:
It is a new appropriation; but Maritime Commission, I understand, likes to spend their
money before they get it on lots of things,
so that we put in a caveat on that ninety-
six million so that they will leave room for
it in allocating the billion if they get it,
so they have been warned that this item is
coming up.
Kades:
Who is actually drafting the appropriation
language? Are you working on that, because
with a few choice phrases you could take
care of this question of 3709, too?
Bell:
Subject to a point of order. But they could
get a rule and put it through.
Kades:
When they get it through the House, they
usually get a rule.
Bell:
The Senate doesn't raise points of order, but
in the House it is very often raised, but you
could get a rule, I take it, and put it through
as a combination legislative and appropriation
bill. There is always a rule on the relief
bill, because it is both appropriation and
legislation.
White:
Well, this could be used for other purposes.
134
- 58 Kades:
Sure.
Keynes:
It would be a great comfort to raise that one
three to one five or some other figure
White:
Well, you can check up on that point, too,
with
Mr. it.
Cox and make sure that he isn't forgetting
Bell:
All right.
White:
The next item, the - again Mr. Cox reported,
and he will doubtless report in detail, that
he
they can take care of all of that,
thatthinks
next item.
Phillips:
I see.
Cochran:
They haven't a copy of this.
Bell:
The expenditures of South African ferrying.
Keynes:
That was the eleven million, wasn't it?
Bell:
As I recall it, it was eleven or fifteen
million.
White:
But that isn't a definitive statement. He
will report himself.
Bell:
Well, that is pretty good news.
White:
Now, seven, do you have anything--
Bell:
"Overall picture of British armament production
and purchases."
Brown:
That is what the Secretary asked for at the
last meeting.
Phillips:
Well, how that stands is that we found out
135
- 59 -
after the Secretary put a question to it that
tables of this kind were, in fact, in preparation. I don't know that they are quite the
tables you want. His tables might be in
quantities in some cases, and we might perhaps have to put the values on them; but,
anyhow, this table is being done on the basis
White:
of this thing.
I am inclined to think that the tables that
the Secretary wanted were a little more
specific and comprehensive.
Phillips:
I should like to know exactly on what points.
White:
Well, I take it that the one the Secretary
asked for was the total production at home
and the purchases in the United States and in
Canada.
Phillips:
Yes.
White:
Now, I didn't gather that Mr. Stimson's
request related to purchases in Canada, but
I may be wrong.
Phillips:
The latest version did.
White:
I didn't see that.
Childs:
U. K., Canada, and U. S.
Phillips:
He also set out the Navy.
Childs:
As I see it, it covers all armaments.
White:
Then it is your feeling that that report would
cover everything the Secretary wanted, and so
all you would need to do would be to duplicate it?
Phillips:
Yes.
136
- 60 Bell:
Did Stimson ask for this same information?
White:
Just
a day later. It is a very curious
coincidence.
Bell:
It is nice that they can cover the same points
and not ask for two different reports.
Phillips:
Any other points you had on Canada?
White:
No, I think that is all.
Childs:
Shipping is in there. Merchant ships and
many raw materials.
Archer:
Principal raw materials.
Childs:
They are in there too, aren't they, the principal ones?
Archer:
Yes.
White:
When do you think that will be ready?
Childs:
I have no idea.
Phillips:
Wasn't it some date like the fifteenth of July?
Childs:
Oh, I had it on the fifteenth, that is right.
White:
So that it will be ready sometime within the
week?
Phillips:
Oh, yes.
Childs:
Is that this week?
Bell:
No, that is next week. Tuesday is the fifteenth.
Eight is proposal for the Army to take care of
the cost of the Civilian Technical Corps.
137
- 61 Childs:
That is item thirty-three in our list,
Civilian Technical Corps which we passed
over.
Bell:
Yes, that was on the list, that is right.
We called it training.
Keynes:
That is a very large sum.
White:
Would you take it in the form of a requisition?
Keyes:
It is in here, yes.
Keynes:
The decision last time was that it wasn't
known how it was to be handled, but it was
going to be reconsidered. I think it was prima facie you couldn't.
White:
We were going to take it up with the Secretary.
This was merely for his--
Keynes:
It is very similar, of course, to item six.
Brown:
Wasn't it something that could not be done by
Lend-Lease, but might be done by some other
department?
Bell:
By the Army and the Navy.
Brown:
If they felt the desirability.
Keynes:
That you might regard this as a course of
White:
training for technicians.
I don't think that that aspect of it was
brought to the Secretary's attention. Am I
correct? It was something that we had discussed, and I thought that I would put it
down here in order to suggest that possibility
to the Secretary.
Bell:
We said that we would take it up with the
138
- 62 -
Secretary of War if the Secretary approved.
White:
That is right.
Bell:
That was our decision last time.
White:
And
this is to bring it to the Secretary's
attention.
Bell:
All
right, we will put it on the next agenda,
too.
Phillips:
Might I ask, can anyone tell me anything about
Brown:
I remember that item, sir, and I wondered if
it might not be something that could be re-
the status of Iceland? I am getting cases
where something is being lease-lent, for
instance, and they are asking me to provide
dollars for labor.
submitted in view of recent developments.
Phillips:
That is rather my feelings.
Childs:
We have a two million dollar item on that first
Bell:
Was it turned down, disapproved?
Brown:
Yes.
Bell:
Then it should be resubmitted.
Brown:
On a question of policy rather than law.
Bell:
But it should be resubmitted in view of the
list.
last few days' development.
Brown:
It is certainly worth doing.
Bell:
All right, number nine.
139
- 63 White:
We did succeed in getting the exports from
the United States to South Africa. We had
some compilations made, and we have them
here. We obtained them both from the Maritime Commission and from the Department of
Commerce. The Maritime Commission gave us
the data, the monthly data, and the Depart-
ment of Commerce gave us the annual data.
Supposing we just let you have that.
Bell:
Relating to the cargo of the torpedoed
White:
Weren't there any tanks in there?
Childs:
Isn't that extraordinary? All of them
different items.
Bell:
Ladies hosiery.
White:
That is a dangerous item.
Bell:
Handbags, accessories, animals, Post Toasties,
rubber goods, door closers, cardboard contain-
ship Robin Moor.
ers, automobiles, dresses, letter - shotguns.
That is for the wedding. Laces, commercial
sound equipment, electric washing machines,
soup in tins, spaghetti. That was probably
going to the Italians.
White:
Imagine the work in deciding to order this,
ordering it, filling the order, shipping the
goods, loading it.
Bell:
Imagine the New York Times printing it, four
columns.
Childs:
And it all went to the bottom of the sea.
Phillips:
Well, there is a certain amount of luxury
goods going across.
140
- 64 Bell:
Where was that headed for?
Childs:
South Africa
White:
This list is probably more comprehensive than
Keynes:
Are you thinking of handing this in to the
the one we have.
Procurement Division for replacement under
Lend-Lease?
Childs:
We will just write up a requisition on it.
Bell:
All right, Number Ten, any additional information
with respect to cocoa and wool?
White:
Oh, I should like to report on the develop-
ments with respect to cocoa; the price committee feels
that the price of cocoa is possibly a little
higher than might be and they are interested
in seeing either that it may go down or that
it doesn't go any higher. They haven't decided
which. They are going over the price situation.
There is an interdepartmental cocoa committee
here --
Bell:
Cuckoo.
White:
That would be plural. And they are going to
take up the matter with a view to seeing whether
they can make a good case to bring to the atten-
tion of the Maritime Commission to encourage
them to make shipping available in order to
attain two objectives, one, to provide dollars
and two, to prevent the cost of living, as far
as cocoa was concerned, from rising. Now,
whether that will involve some further negotiations with the British Government with respect
to the price at which that cocoa will be
offered on the market, I don't know, but
that is now being considered. With respect
to wool, it appears that the price of wool is
141
- 65 -
not, in the opinion of the price group, unduly
high. Therefore, there is a reluctance to
add to the market supply on the grounds that
it is necessary to prevent the price from
getting higher. So that there isn't that
argument in favor of releasing the wool
at the moment. But the matter is not closed.
That was the first step which was taken.
Thompson:
White:
That is releasing it to the market?
Yes. that still leaves open the possibility
of either loans on it or sales or other things,
but we had first thought that there might be
some justification for altering the policy
with respect to holding it in the bonded
warehouses on the grounds that price of wool
was rising unduly.
Bell:
Is this the Australian wool?
White:
Yes.
Bell:
Is the question still open as to whether
we buy it as a stock pile?
White:
Yes, but the first step, our approach would
be on the basis of price because if we could
make a good case on the grounds that the price
considerations demanded an increase in the
supply of wool, I think our task would have
been easier, but that being closed, apparently,
we will have to move on the other possibilities.
Phillips:
Have you been in touch with the State Department or has the State Department been in touch
with you?
White:
On wool?
Phillips: Yes.
142
- 66 White:
No, because the first question we wanted to
consider was merely one of price, and then we
were going to approach the other Departments.
Phillips:
I think the following things have happened.
In the first place, they have announced their
intention of buying the Argentine wool, which
may increase somewhat the supply of wool to
the United States, but probably not very much,
because that purchase has been taken for the
civilian trade, or most of it. That purchase
of the Argentine clipped wool was not an
isolated transaction by itself, but was part
of a rather extensive bargain dealing with
things like economic warfare and exports
and so forth. When they told us that, they sent
us a note in which they said notwithstanding
all this, of course we still have the same
intentions as regards Australian wool, and
if we buy Argentine wool under such and such
circumstances, we will see that Australian wool
is taken care of, but the undertaking is a
little vague in some spots and we thought
it wants clearing up. But when we approached
the State Department yesterday with the object
of getting it cleared up, they gave us to
understand the matter was under consideration
in Treasury.
White:
Well, I don't know where they heard the latter.
It is true that we are represented on the commit-
tee of commercial policy when those matters
were being discussed and where the effort was
being made to do what might be done in order
to facilitate the broad program with the Argentine, and at that time one of the objectives
definitely was not in the picture, namely, to
increase the dollar exchange of the British
Treasury. That has been injected into the picture subsequently and they may have heard of it
through some other channels, but I take it,
143
- 67 the approach on our part would be to get
as many reasons as we can to see whether
it can't be converted into dollars. Now,
one of the important reasons that we
thought might play a role was price. That
is ruled out. Then we will go to the other
considerations, and sometime in the contacting
of the various departments, the State Depart-
ment will be in the picture because it does
raise the question of their Latin-American
relations.
Phillips:
Then I shall send you a copy of the document
White:
I think we just - did we just get a note on
they gave us.
wool? No, I guess we didn't. I didn't
receive one from you.
Phillips:
I will send you a copy. You might kind of
like to look at it.
Bell:
Is there anything further?
White:
That is all there was on this agenda.
Keynes:
What about the position of our right to transfer? Are you still worried about that?
Phillips:
Well, Childs is the expert. It is the question
Keynes:
There have been a good many telegrams from home.
of Section 4 transfers.
They are worried because we haven't got the
formal right of transferring articles to
traders and so forth. This arises particularly
with the dominions, you see, because all these
civilian things will need the right of transfer, first of all from us to the dominions,
and then from the dominions to their civilian
suppliers.
144
- 68 The Government position is that we haven't
the right to transfer to commercial suppliers - the President has given, one,
written consent to the transfer of goods
to another Empire Government in the case of
machine tools to India, but we have no
general approval yet to transfer. We are
proceeding on the assumption that it is coming, but as we haven't received any such
official approval, people at home are worried
about it, and they have got the additional
reason that all this dominion business assumes
it, you see.
Therefore, it is perhaps prudent to raise the
issue and call your attention to the fact that
we haven't got any formal position on that.
Bell:
What is the machinery, Brown, for approving
transfers?
Brown:
The machinery so far is that the President's
consent is gotten in specific cases.
Phillips:
You will find, Mr. Brown, there is a lot of
work behind this. Various people have worked
on the subject. The point Mr. Keynes is making is the pressure on us from the other side
with the dominions coming in, and we are being
urged to try and get it settled.
Brown:
Does our office know already the type of
transfers on which it is desired to get consent?
Phillips:
Oh, surely. There are three types, the transfers from the U. K. Government to the - trans-
fer from the U. K. Government to the governments of the dominions and colonies, and,
thirdly, the transfers from governments of
dominions and colonies to firms and businesses
in those places.
145
- 69 Brown:
I will just have to check up on that and see
what can be done and what is being done what can be done.
Phillips:
As I say, the pressure on us is unpleasant.
Keynes:
We were particularly concerned because in
the case of oil certain special conditions
were attached which we believe on this side
attaches only to oil. On the other side,
they were wondering whether this was a
Bell:
precedent. If it was, it would be a very
great trouble. In the case of oil, we can do
only certain things.
Well, Mr. Brown will look into it.
Is there anything else?
Childs:
Yes, you wanted - I will simply report. The
Secretary asked about this material - a list
of materials for which we had filed requisitions.
White:
Yes.
Childs:
I simply wanted to let you know so that the
Secretary wouldn't be restive on that request,
we are necessarily bound in in getting up
material for that information with General
Burns' office which is going to be revised
three to four weeks before they will all be
made up. Neither office has been set up on
that yet. It is a matter of working out
categories. Unfortunately, that will take
longer than this other list.
The other matter, is it possible to get a
record of these meetings for the purpose of
our people on various points that come up?
We don't have any form of that.
146
- 70 Phillips:
Would you object if we brought some kind
of secretary with us?
Bell:
I don't think there would be any objection
to that. We keep just one copy of the record
for the Secretary's personal files, but I
will be glad to take it up with him.
Phillips:
There are so many things mentioned that we
really ought to have some record.
Childs:
We don't want to bother getting your record,
especially, if we could just have somebody
come along and make notes on it.
Bell:
I should think that will be possible. Let
me ask the Secretary.
White:
We have everything down.
Bell:
There is no harm in asking.
White:
No.
Sir Frederick, the last statement we have of
you on the British dollar position was as of
June 20. Have you anything further on that?
Bewley:
No, the telegrams have just come in.
White:
Will we have them for the meeting?
Phillips:
Yes.
White:
Fine.
147
AGENDA FOR 3:00 MEETING
1. Requisitions examined by Committee at meeting
July 3, 1941.
2. Shortage of phosphate for shipment during transi-
tion period between direct purchases and Lend-Lease.
3. / tratively
Report of difficult
Procurement
on handling of the adminispurchases.
4. / Discussion of British memorandum on cash expendi-
tures for modifications and urgent purchases.
5. Possibility of Army taking over certain large contracts totalling about $350 million.
Report on possibilities of aiding in expenditures
6.
7.
on South African Ferrying Route.
Overall picture of British armament production and
purchases.
8. Proposal for Army to take care of cost of Civilian
Technical Corps -- to be submitted to the Secretary
on Tuesday.
9. U. S. exports to South Africa by important commodity
groups, July 1940 - March 1941.
10. Any additional information with respect to cocoa
and wool.
July 8, 1941.
148
SUGGESTED PROCEDURE FOR BRINGING MISCELLANEOUS
MANUFACTURED GOODS UNDER LEASE-LEND PROCEDURE.
1. The British importer orders a certain commodity from as
American firm giving specifications, price, delivery terms, etc.
Simultaneously a duplicate original of this order is furnished the
Premisment Division.
2. The Presurement Division examines the order, with a view
to determining (a) that section 3709 of the Revised Statutes does
not apply, (b) that the order confirm to raise and regulations
which will have been established w the Pressure Division ing such purchases, (e) that the United Kingdom has greated p
mission to import the goods and (d) the British Purchasing Commission
certifies that the goods entered by the British importer are for
the Government of the United Kinglem
3. If the Present Division is antisties as to (a), (b),
(e) and (d) the President Division will - a definitive
contract with the American firm, or as the contract has already been
emonted, the Present Division will essente a contract with the
British importer for the process of the goods in question.
Time the - Division any enter into its contract for
the purchase of the goods at any point from the negotiation stage
to delivery in England.
The rales and regulations governing 1 purchases will set
forth standards required by law and by governmental presurement
policy. In the event that a British importer is unable or willing
to comply with such regulations, the Presurement Division may vaive
the objectionable provision if circumstances warrant.
149
Y
BRITISH PURCHASING COMMISSION
8th July 1941.
Dear Mr. Bell,
As promised at today's meeting, I now
write to let you know that the figure of our available gold and dollars at the close of business on
June 30th, comparable to the figures given you for
previous months, is $161 millions.
Yours sincerely,
(Signed) F. Phillips
Mr. Daniel W. Bell,
U. S. Treasury,
Washington, D. C.
COPY - dm - 7/8/41
150
July 8, 1941
At dinner tonight with Keynes and Sir Arthur
Salter, they both mentioned the fact that they are worried
that Treasury's Procurement might be holding up their overseas shipments on account of their slowness in buying sup-
plies. I just can't believe that this is so and I want to
see Cliff Mack to talk the matter over with him in the morning without fail.
Last night Keynes was quite positive that the war
has turned the corner and Germany was going to be licked.
He felt that the things which had happened in the last
couple of weeks had definitely turned the tide in favor of
England. He was very optimistic. Sir Arthur Salter was
present and did not share his optimism because, he said, he
could not see on what it could be based.
I told Keynes and Salter of my ideas that after
the war is over we should use our gold to buy up the munitions plants in the world and destroy them and then let the
various countries use our gold under our prescription or
limitations as to what purposes it would be used -- to buy
food, start up international trade and for reconstruction
purposes. I told them I had given the suggestion to the
President the day before. They thought the idea was a very
interesting one and was novel to them. They raised a very
interesting point. They said. "Well, on account of the mu-
nitionsplants being concentrated in Germany and Czechoslovakia,
what will we do, for instance with a country like Denmark
that had no munitions plants. 1 I said, "Well, that was something I had not thought of and which would have to be given
consideration.
But they liked the idea.
Keynes also told me he liked my tax anticipation
bonds but asked Bell to give him the details as he wants to
takeit back
him.with
He said there had been considerable
demand for such kind of certificate in England.
151
July 8, 1941
My dear Sir Arthurs
This will acknowledge, with my thanks,
the receipt of your letter of July 7th containing information on the shipping situation
for July.
Yours sincerely,
(Miguel) E. Borgeathes, and
Sir Arthur Salter,
British Merchant Shipping Mission,
Box 680, Benj. Franklin Station,
Washington, D. C.
152
Box 680
BENJAMIN FRANKLIN STATION
WASHINGTON. D. C.
TELEPHONE REPUBLIC 7860
BRITISH MERCHANT SHIPPING MISSION
7th July, 1941
Dear Mr. Morgenthau,
In accordance with our arrangement,
I am sending you the attached statement
giving particulars for July loading of priority
programme from North America.
Yours sincerely,
Arthur Salter
Honourable Henry Morgenthau, Jr.
Secretary of the Treasury
Washington.
153
No. Ships
Ships required for July loading
190
Ships now allocated for July loading
159
Deficiency
Deficiency of ships in U.S.A. for
General Cargo - nil tons
Deficiency of ships in U.S.A. for
Steel 100,000 tons
Deficiency of ships for Grain, U.S.A.
and Canada - nil tons
Deficiency of ships for General Cargo
in Canada - 115,000 tons
31
Nil
14
Nil
17
31
N.B. - 1 ship 7000 tons.
154
July 8, 1941
MEMORANDUM FOR THE SECRETARY'S FILES:
A meeting relative to the administration of Executive
Order 8389, as amended, was held in Mr. Foley's office at 4:00
p.m., July 8, 1941, attended from time to time by the following:
Messrs. Foley, Gaston, Cochran, Bernstein, Pehle, Coe,
and Aikin for the Treasury, Messrs. Acheson and Luthringer for
State, Messrs. Shea, Rosenwald and Jurenev for Justice, Dr.
Goldenweiser and Mr. Knapp for Federal Reserve.
Mr. Pehle explained several New York Federal Reserve
applications for licenses to debit the account of the B.I.S. and
pay the Bank of England, Sveriges Riksbank, Banque Nationale Suisse
and the National Bank of Egypt various amounts representing divi-
dends on B.I.S. shares. He pointed out that similar payments had
been allowed last year. Mr. Cochran observed that the B.I.S. had
not made any dividend payments to occupied countries. Until a
check has been made to determine what the Swiss franc balances
of the B.I.S. are and consideration given to the payment of these
dividends in Swiss francs, it was decided to take no action on
the pending applications.
There was considerable discussion concerning the Presi-
dential Proclamation of a Black List. Mr. Bernstein stated that
the List would contain the names of those acting for or on behalf
of Italy and Germany, and that the effect under the Freezing Order
of its publication would be that no transaction could be entered
into with anyone whose name appears on the List without first
obtaining a Treasury license. In other words, the List, which
Mr. Acheson pointed out is a Latin-American one but, in effect,
the beginning of a world-wide List, subjects transactions with
anyone appearing on it to the licensing technique. Consideration
was given to some of the practical problems which publication of
the List will raise.
Mr. Acheson mentioned that a confidential List will also
go forward simultaneously with the published one and raised no
objections to the former being given to principal New York banks
as a guide to them in blocking accounts.
155
-2Mr. Pehle outlined an application which had been received from General Motors to pay $300,000 in free funds to
Amadeo Barletta, an undesirable Italian representing that Company in Cuba. The application indicated that General
rid of Motors
was getting Barletta at the request of the State Depart-
ment. Mr. Pehle stated that when the Rockefeller Survey was
made (on the basis of which the State Department had apparently
approached General Motors), there was no Freezing Order. Ac-
cordingly, consideration must be given to this fact in reaching
a decision on the present application. It was agreed that Mr.
Luthringer
would discuss the application further with appropriate
parties at the State Department.
Mr. Pehle outlined an application which had been received from Libby-Owens-Ford relative to the sale for $360,000
of their interest in Deutsche Libbey-Owens Gesellschaft fur
Maschinelle Glasherstellung A. G. Delog, Gelsenkirchen, Germany.
According to the application, payment will be made in free funds.
Following considerable discussion, it was decided that the Company should be asked to state specifically where and in what
name the funds to pay for the German property were being held.
If and when this information is received, further consideration
will be given to the application.
Mr. Pehle stated that a General License for Spain was
about ready to be granted. It is similar to the Swedish General
License because Spain also has a central Foreign Exchange Control.
Mr. Pehle explained that a General License for Portugal
presented many more difficulties. It was agreed that two tentative licenses should be drawn up, more or less along the lines
of the Swiss General License and the proposed Swiss Trade License.
These will be designed to take care of the Portuguese Government
and central bank transactions. It should be suggested to the
Portuguese Minister that a technical expert of the central bank
come to this country to facilitate the functioning of these Gen-
eral Licenses.
Mr. Bernstein stated that applications for licenses
in respect to patents came within two categories: first, those
of a routine nature involving payment of fees by Europeans for
patents registered in this country, and payments by Americans to
European countries for fees in connection with patents registered
-3-
156
abroad; second, those involving individual contracts relating
to patents. The latter, such as the assignment of patents,
present many complex problems. Mr. Bernstein pointed out that
four Government agencies (Treasury Department, Department of
Justice, Export Control, and Patent Office) are presently interested in such cases, and that it is desirable that some coordinated policy be established. He suggested that the best
way to accomplish this would be to set up an Inter-Departmental
Committee. After Justice has had an opportunity to study this
problem
further, the matter will be taken up again for consideration.
The German Charge d'Affaires, according to Mr. Acheson,
has given the State Department a list of all Germans who are
leaving this country, together with a statement of the bank accounts of each. With two or three exceptions, the amounts in-
volved are small, and it was agreed that each should be allowed
to take with him a maximum of $2500. Amounts in excess of $2500
will be turned over to the German Embassy for payment of the
counter value on the other side or, alternatively, application
can be made through the Federal Reserve to purchase Reichsmarks
in this country. It was also agreed that the Germans would not
be permitted to take any securities out of the country. Mr.
Acheson said that the Italians had refused to give the State
Department a list of their officials' holdings and, accordingly,
it had been decided to permit Italian Consuls to take out of the
country a maximum of $1,000, Vice-Consuls and other employees,
$250.
Mr. Pehle read an application submitted by the GermanAmerican Bund which made, under oath, categorical statements
the authenticity of which were seriously questioned. It was
the opinion of the meeting that this application be turned over
to the Department of Justice to study what action might be taken
in view of the assertions made.
157
July 8, 1941
Secretary Morgenthan
Mr. Foley
It is proposed that the President issue a
Proclamation providing that the Secretary of State,
acting in conjunction with the Secretary of the Treasury
and the Administrator of Export Control, prepare a list
of certain blocked nationals, to be filed pursuant to
the provisions of the Federal Register Act.
Such list will contain the names of persons
acting for the benefit of Germany OF Italy and persons
to whom the exportation of articles or materials is
deemed to be detrimental to the interest of national
defense. Additions to and deletions from such list shall
be made from time to time. So long as the name of any
person appears on such list, all the terms and provisions
of the freezing control Order shall be applicable to such
person and to the property interests of such person, and
the exportation to such person from the United States of
articles OF materials covered by the Export Control Act
shall be prohibited except in certain cases of unusual
hardship to American interests.
158
.
A list has already been prepared for publication
and will contain the names of various Latin Mirror
persons and firms. The list will include most of the on the British statutory list as well as many more besides.
Most of the information on which the list is based somes
through our embassies and legations in Latin America
(Initialed) H. F., Jr.
JED:BB:nrd - 7/8/41.
159
July 8, 1941
4:11 p.m.
HMJr:
Hello.
Operator:
Miss Tully.
HMJr;
Hello.
Grace
Tully:
Hello, Mr. Secretary.
HMJr:
In person.
T:
Huh, in person?
HMJr:
Yeah.
T:
Mr. Secretary, the Chief would like
you to get a copy of Garrison's speech.
He said he discussed it as you know
with Felix and Felix said, "Well if
you had read the whole thing, probably
you wouldn't feel that way", I imagine,
not having been there, but I assume that's
what happened and he said for him to get
the whole thing. Can you get that speech?
HMJr:
T:
I can.
Well, if you'll get the entire speech
and send it over, then he'll decide
between the two.
HMJr:
Oh, between
T:
Lindsay Rogers and Lloyd Garrison.
HMJr:
T:
I'll send out for it tonight.
All right, fine. It was about the time
that we - it was about the time you
first spoke to me about that
HMJr:
I'll try to get it to you in the
morning.
T:
All right, fine, Mr. Secretary. Then
he'll let you know after that.
HMJr:
Thank you.
T:
All right, sir. Goodbye.
COPY
160
THE UNDER SECRETARY OF STATE
WASHINGTON
July 8, 1941.
My dear Henry:
I am grateful to you for your kindness in
sending me with your note of July 8 a copy of your
letter to the President of the same date. The information contained in your letter to the President
has been particularly useful to me.
Believe me
Sincerely yours,
(Signed) S. Welles
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury.
original in
Original document fil
A
July 8, 1941
MEMORANDUM FOR THE SECRETARY
From:
Mr. Blough
Subject: Threat of old-age pension legislation.
For your information: Senator Downey of California
introduced a resolution which passed the Senate, setting
up a seven-man Senate Committee to study and report to
the Senate on old-age assistance, old-age and survivors'
insurance, and a minimum pension for aged persons.
The Committee has been set up with Senator Downey
as Chairman and includes also Senators Connally,
La Follette, Green, Brooks, Pepper and Thomas of Idaho.
It is believed probable that the Committee will
recommend a $30 a month flat pension, involving an expen-
diture of $2 to $3 billion. Senator Downey appears to
believe that he has the President's support and that the
Senate will pass the measure at this session.
It is understood that Hearings will begin next
Monday, July 14. Mr. Altneyer of the Social Security
Board (who is now in Canada) has been asked to appear and
a list of questions has been submitted to him.
My informant is Mr. Wilbur Cohen who is Mr. Altmeyer's
personal assistant. He thinks Senator Downey's Committee
should not be taken too lightly and that there is a real
threat of some action by the Senate along this line.
RB
161
162
July 8, 1941
MEMORANDUM FOR THE SECRETARY
From:
Mr. Blough
Subject: Status of the Revenue Bill of 1941.
History
Congressional action on the measure might be said
to have begun with the conference with congressional
leaders in Secretary Morgenthau's office, Thursday,
April 17. The Hearings before the Ways and Means Committee began with a statement by the Secretary on
Thursday, April 24, followed by a more detailed statement by Mr. Sullivan. The Treasury was again heard on
Monday, May 19, when Mr. Sullivan presented the Treasury
recommendations on the excess profits tax. The public
hearings were concluded Wednesday, May 28, and the
executive sessions of the Committee began Monday, June 2.
A tentatively adopted measure was turned over to the bill
drafters on Wednesday, July 2. It is not likely that the
bill will be ready for further action by the Committee
before Monday, July 21.
Summary of bill as tentatively adopted by
Ways and Xeans Committee
The additional revenue from the measure for the
first full year of operation is estimated at $3,502.1
million. Changes are made in individual and corporation
income taxes, excess profits tax, capital stock tax,
estate and gift taxes, and numerous excise and miscellaneous taxes.
Personal income tax
Existing personal exemptions are retained. Compulsory filing of joint returns by husbands and wives
is provided. Surtax rates begin at 5 percent on the
first dollar of income above exemptions and are much
higher than at present. The additional annual yield from
individual income taxes is estimated to be $1,154.5 million.
163
-2Corporation taxes
An additional corporation income tax in the
form of a surtax is imposed at rates of 5 percent
on the first $25,000 of net income and 6 percent on
the balance. The existing plan of excess profits tax
was retained with the following modifications:
The excess profits tax is computed without deducting the income tax and is deducted
in computing the income tax;
The percent on invested capital allowed
as a credit is reduced from 8 percent to
7 percent for invested capital in excess of
$5,000,000. New capital is included in
invested capital at 125 percent;
Rates of tax are increased by 10 percentage points, and a special tax of 10 percent is placed on the amount of current pro-
fits in excess of the average earnings credit
and not exceeding the invested capital credit.
The increased revenue from corporation income and
excess profits taxes is estimated at $1,334.0 million.
Capital stock tax
The rate of the capital stock tax is increased
from $1.10 to $1.25 per $1,000 declared value of
capital stock. The estimated additional revenue is
$12.5 million.
Estate and gift taxes
The existing estate and gift tax exemptions are
retained and the rates increased. The estate tax rates
begin at 3 percent instead of the present 2 percent.
Gift tax rates are correspondingly increased to equal
three-fourths of the estate tax rates. The estimated
additional revenue is $102.6 million from the estate
tax and $11.1 million from the gift tax.
164
- 3- -
Excise and miscellaneous taxes
Excise taxes are increased on numerous items
and imposed for the first time on other items, as
indicated on the attached detailed lists. The additional revenue from such taxes is estimated at
$887.4 million.
Differences of bill from Treasury
recommendations
In its general structure and in a large number
of details the measure in its present form follows the
recommendations of the Treasury Department. However,
it differs from the recommendations of the Treasury
Department in a number of respects, chief of which are
the following:
(1) Additional individual income taxes are lower
than asked for by the Treasury, surtax rates being
lower than in the Treasury proposal on the first $12,000
of income. A married couple without dependents and with
$5,000 net income would pay $506 under the Treasury
proposal and $308 under the schedule adopted by the
Committee.
(2) The Treasury Department made no recommenda-
tion regarding joint returns of husbands and wives.
(3) The Committee rejected the Treasury excess
profits tax plan and voted not to tax excess profits
except when they were greater than the profits received
during the base period. For most of the profits subject
to the tax the rates adopted are much higher than were
recommended by the Treasury. The total increased revenue
from corporations is expected to be substantially greater
than was asked for by the Treasury.
(4) The Treasury opposed increasing the capital
stock tax.
(5) The Treasury proposed lowering the exemptions
under the estate and gift taxes from $40,000 to $25,000
and proposed substantially higher rates 60 that the yield
of those taxes would be increased by approximately
$347.2 million, instead of by the $113.7 million provided
by the Committee.
165
-
(6) The Committee rejected the Treasury proposals to increase the excise taxes on beer, tobacco
and gasoline. It refused to impose the recommended
tax on bank checks. It imposed a $5 annual use tax
on automobiles, yachts and airplanes, which was opposed
by the Treasury. It adopted the original Treasury
proposal to double the excise tax rates on passenger
automobiles, voting not to adopt the revised proposal
to increase the tax to 15 percent. The rates adopted
on soft drinks are one-sixth of those proposed by the
Treasury. The Committee imposed a number of other
excise taxes not recommended by the Treasury, but not
opposed by the Treasury.
RB
166
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
Secretary Morgenthau
FROM
Mr. Foley
JUL 8 1941
The measures to which reference is made in
the attached report are S. 1613 and H.R. 5032. Those
bills provide that no import duty or similar charge shall
be collected or paid on the importation by or on behalf
of a department or agency of the United States if the
articles imported are certified by such department or
agency to be "defense articles".
The bills are supported by the Department of
War, and the Senate Committee on Finance and the House
Committee on Ways and Means have asked for the recommenda-
tions and comments of this Department. The Department
proposes to advise the Committees that the enactment of
the bills would involve no unusual administrative difficulties. That advice would be in accord with the usual
practice of the Department in reporting on measures
affecting the rates of tariff duties.
i.s.General
toleyh
Counsel.
Attachment
JUL
- IMPORT DUTIES
8:10
7
167
-
WASHN - SECRETARY STIMSON IT WAS LEARNED
TODAY HAS URGED CONGRESS TO ENACT LEGISLATION
PERMITTING THE TREASURY TO ELIMINATE IMPORT
DUTIES ON ANY ARTICLE CERTIFIED BY ANY DEPARTMENT OR AGENCY TO BE USEFUL FOR NATIONAL
DEFENSE REPORTS ASSOCIATED PRESS
THE PROPOSAL HAS DRAWN CHARGES FROM OPPONENTS
THAT IT WOULD GIVE THE ADMINISTRATION A FREE
HAND TO ELIMINATE TARIFFS AT WILL - THE MEASURE
PROVIDES THAT DUTIES MAY BE WIPED OUT ON GOODS
IMPORTED -BY OR ON BEHALF OF - GOVERNMENT DEPARTMENTS OR AGENCIES - SOME LEGISLATORS HAVE CONTENDED THAT THIS LANGUAGE IS BROAD ENOUGH TO
GIVE THE TREASURY VIRTUAL CONTROL OVER THE
TARIFF STRUCTURE
ADMINISTRATION OFFICIALS ON THE OTHER HAND
HAVE ARGUED THAT THE MEASURE IS DESIGNED ONLY
TO PERMIT IMPORTATIONS BY VARIOUS GOVERNMENT
AGENCIES - - SUCH AS DEFENSE CORPORATIONS UNDER
THE RECONSTRUCTION FINANCE CORP - - WITHOUT THE
PAYMENT OF DUTIES
STIMSON SUPPORTED THE LEGISLATION IN A
LETTER TO CHAIRMAN REYNOLDS -D NC- OF THE SENATE
MILITARY COMMITTEE
-0-
168
GENERAL COUNSEL
TREASURY DEPARTMENT
WASHINGTON
JUL 8 1941
To:
Secretary Morgenthau
From:
E. H. Foley, Jr.
There is attached hereto a proposed bill
to remove the present statutory restrictions with
respect to the purchase of United States Government
securities by you and Mrs. Morgenthau.
I shall have Bernard talk to both the
Democratic and Republican leaders and ask them
whether the proposed legislation would be agreeable
to them and make certain that there would be no
opposition to the bill if it were introduced.
E.Is. 7 h
169
A BILL
To amend section 243 of the Revised
Statutes so as to permit the Secretary
of the Treasury to purchase securities
of the United States.
Be it enacted by the Senate and House of
Representatives of the United States of America in
Congress assembled, That section 243 of the Revised
Statutes (U.S.C. title 5, sec. 243) is hereby
amended by deleting therefrom the phrase "or of
the United States".
170
Section 243 of the Revised Statutes (U.S.C., title 5,
sec. 243) showing amendment suggested in Mr. Foley's
memorandum of July 8 to the Secretary.
(Omit matter shown in brackets)
"$243. Restrictions upon Secretary of Treasury. No person
appointed to the office of Secretary of the Treasury, or Treasurer,
or Register, shall directly or indirectly be concerned or inter-
public or or of
ested in carrying on the business of trade or commerce, or be
owner in whole or in part of any sea vessel, or purchase by
himself, or another in trust for him, any public lands
property, be concerned in the purchase disposal or other
any public securities of any State, [or of the United States, ]
or take or apply to his own use any emolument or gain for
negotiating or transacting any business in the Treasury Department, other than what shall be allowed by law; and every person
who offends against any of the prohibitions of this section shall
be deemed guilty of a high misdemeanor and forfeit to the United
States the penalty of three thousand dollars, and shall upon
conviction be removed from office, and forever thereafter be
incapable of holding any office under the United States; and
if any other person than a public prosecutor shall give information of any such offense, upon which a prosecution and conviction
shall be had, one-half the aforesaid penalty of three thousand
dollars, when recovered, shall be for the use of the person
giving such information."
171
TO:
See 2nd franagement
on for age 3
L. J. BERNARD
00PY
299
172
March 11, 1938
Mr. Magill
Mr. Oliphant
May the Under Secretary of the Treasury and his wife
lawfully purchase United States Savings Bonds.
The Treasury Department was established pursuant to the Act of
September 2, 1789, 1 Stat. 65. Section 1 of that Act created the following offices: The Secretary of the Treasury, a Comptroller, an Auditor,
a Treasurer, a Register and an Assistant to the Secretary. Section 8 of
the Act provided:
"That no person appointed to any office instituted by
this act, shall directly or indirectly be concerned or
interested in carrying on the business of trade or commerce, or be owner in whole or in part of any sea-vessel,
or purchase by himself, or another in trust for him, any
public lands or other public property, or be concerned
in the purchase or disposal of any public securities of
any State, or of the United States, or take or apply to
his own use, any enolument or gain for negotiating or
transacting any business in the said department, other
than what shall be allowed by law and if any person
shall offend against any of the prohibitions of this
act, he shall be deemed guilty of a high misdemeanor,
and forfeit to the United States the penalty of three
thousand dollars, and shall upon conviction be removed
from office, and forever thereafter incapable of hold(Undering any office under the United States:
scoring supplied.)
Section 2 of the Act authorized the Secretary of the Treasury
[as he] shall find necessary."(*)
to "appoint such clerks
Section 1 of the Act of March 3, 1791, 1 Stat. 215, specified
that the provisions of Section 8 of the Act of September 2, 1789 (quoted
above) should apply to "all and every of the clerks employed in the treassury department, as fully and effectually as if they and every of them
were specifically named therein,
(*) The use of the word "clerks" in this statute indicates that all persons
appointed in the Treasury other than those specifically named in the earlier
Act were designated "elerke" even though their duties were not limited to
the keeping of records, etc.
173
Section 12 of the Act of May 8, 1792, 1 Stat. 281, provided:
"That the restriction on the clerks of the department
of the treasury so far as respects the carrying on of
any trade or business, other than in the funds or debts
of the United States or of any state, or in any kind of
public property, be abolished, and that such restriction,
so for as respects the funds or debts of the United
States, or of any state, or any public property of either,
be extended to the commissioner of the revenue, to the
several commissioners of loans, and to all persons em-
ployed in their respective offices, and to all officers
of the United States concerned in the collection or
disbursement of the revenues thereof,
Sections 243 and 244 of the Revised statutes of 1873 (U.S.C.
title 5, sec. 243) 254) and section 103 of the Criminal Code (U.S.C. title
18, sec. 192) codify the foregoing legislation in the same form as they
now appear in the United States Code.
Section 243, as it appears in the Code, provides in part:
"No person appointed to the office of Secretary of
the Treasury, or Treasurer, or Register, shall directly
or indirectly be concerned or interested in carrying on
the business of trade or commerce, or be owner in whole
or in part of any sea vessel, or purchase by himself,
or another in trust for him, any public lands or other
public property, or be concerned in the purchase or dis-
posal of any public securities of any State, or of the
United States, or take or apply to his own use any emolument or gain for negotiating or transacting any business
in the Treasury Department, other than what shall be
allowed by law; and every person who offends against any
of the prohibitions of this section shall be deemed
guilty of a high misdomeanor and forfeit to the United
States the penalty of three thousand dollars, and shall
upon conviction be removed from office, and forever
thereafter be incapable of holding any office under the
United States; (Underscoring supplied.)
Section 244, as it appears in the Code, provides:
"Every clerk employed in the Treasury Department
who carries on any trade or business in the funds or
debts of the United States, or of any state, or in any
kind of public property, or who takes or applies to his
own use any emolument or gain for netotiating or transacting any business in the department, shall be deemed
guilty of a misdemeanor, and pulished by a fined of 0500
and removal from office. (*) (Underscoring supplied.)
(*) See footnote, following page.
174
-
Section 103 of the Criminal Code provides:
"Whoever, being an officer of the United States concerned in the collection or the disbursement of the revenues thereof, shall carry on any trade or business in the
funds or debts of the United States, or of any State, or
in any public property of either, shall be fined not more
than 3,000 or imprisoned not more than one year, or both,
and be removed from office, and thereafter be incapable of
holding any office under the United States." (*) (Underscoring
supplied.)
It seems clear that section 243 of the Revised Statutes prohibits
the Secretary from purchasing United States bonds, since making a purchase
is obviously being "concerned in" the purchase. Horeover, such an interpretation is warranted by the evident purpose of the restriction, which was
to eliminate the possibility that motives of private interest might influ-
ence the judgment of the Secretary in matters pertaining to the public debt.
The Under Secretary is required by law to "perform such duties in
the office of the Secretary as may be prescribed by the Secretary of the
Treasury or by law." Act of February 17, 1922, 42 Stat. 367, as amended
(U.S.C. title 5, sec. 244). In case of the death, resignation, absence, or
sickness of the Secretary, the Under Secretary is required to "perform the
duties of the Secretary until a successor is appointed or such absence or
sickness shall cease", Act of February 17, 1922, 42 Stat. 367 (U.S.C. title
5, sec. 245); and when the Under Secretary is so acting he is known as "Acting Secretary" and should sign as such ((1858) 19 Op. Atty. Gen. 133). It
seems clear, however, that the Under Secretary is not "appointed to the
office of Secretary of the Treasury" when he acts in the absence or sickness
of the Secretary. In view of this and of the further circumstance that seetion 243 of the Revised Statutes is a highly penal statute which is to be
(*) In this connection it is of interest to note that section 244 of the
Revised Statutes and section 103 of the Criminal Code apparently fail to
carry out the intention of Congress embodied in section 12 of the Ast of
May 8, 1792. Prior to that Act the "clerks" in the Treasury were subject
to exactly the same restrictions as the Secretary of the Treasury as regards
being engaged in the business of trade or commerce and being concerned in
the purchase or disposal of any public securities. The Act of May 8, 1792,
eliminated the restrictions on clerks as respects the carrying on of trade
or business but apparently did not intend to liberalize the restrictions
on the "clerks" insofar as they were "concerned in the purchase or disposal
of any public securities." The limitation on clerks dealing in public securities was at the same time extended to other persons. Section 12, however, was inartistically worded and apparently as a result thereof the revisers merely prohibited "clerks", etc., from carrying on "any trade or
business" in the funds or debts of the United States.
175
strictly construed ((1873) 14 Op. Atty. Gen. 358), it appears that the
restriction with regard to the purchase and sale of Government bonds CODtained in section 243 of the Revised Statutos does not apply to the Under
Secretary. A similar view was taken by William T. Thompson, Solicitor
of the Treasury, who advised John Skelton Williams, Assistant Secretary
of the Treasury, on April 1, 1913, that section 243 did not apply to an
Assistant Secretary so as to proclude his engaging in trade or commerce.
I believe also that section 244 of the Revised Statutes and
section 103 of the Criminal Code do not apply to the contemplated purchase
of Savings Bonds by the Under Secretary for the reason that a purchase of
United States securities for investment does not constitute the carrying
on of e "trade or business in the funds or debts of the United States."
Cf. (1929) 36 Op. Atty. Gen. 12.
Section 161 of the Revised Statutes of 1873 (U.S.C. title 5,
sec. 22) authorizes the head of each Department to prescribe regulations,
not inconsistent with law, for the conduct of the officers and clerks of
his Department. However, I know of no rule or regulation issued by the
Secretary of the Treasury prohibiting officers and clerks or the Treasury
from buying Government bonds.
Entirely apart from the question of the existence or legal restrictions, you will no doubt wish to consider the ethical aspects of the
problem under consideration. The Solicitor of the Treasury in the opinion
mentioned above said:
"But from an ethical standpoint I view the matter
much the same as you do, as indicated in your letter.
You will undoubtedly frequently act as Secretary and, at
least while so doing, if you were not engaged or inter-
ested in any of the things within the restrictions laid
upon the Secretary, no one would have an opportunity for
any possible oritician in that direction."
with regard to this phase of the question, you may wish to give
attention to the history and fundamental purpose of the legislation referred to, as shown above, and to the nature of the duties which have customarily been performed by the Under Secretary. You may also wish to give
some attention to those features of Savings Bonds which distinguish them
from bonds generally issued by the Government; for example, all Savings Bonds
have been issued at the same rate of interest, the amount of such bonds isand in any one calendar year which may be held by one person is limited to
10,000 maturity value, the present issues have not been allotted but are
available to any person, are not transferable, are not subject to redemption by the United States, and may be cashed at the option of the bondholder on a definitely prescribed basis.
176
-5It is clear from the foregoing that there are no legal restrictions which would prevent a purchase of United States Savings Bonds by
the wife of the Under Secretary. However, here too there may be a ques-
tion of ethics to consider, depending in part upon the sourds of the funds
used in making the purchase and the purpose for which the purchase is made.
(Signed) Horman Oliphant
Highwiave
Typed: 3/10/38.
177
JUL 8 1941
my dear Mr. Stevensons
The Treasury is undertaking to being
about the establishment of a voluntary on
ganisation in each State, to promote public
Interest in the Defense Savings program
It would be very gratifying to - if
you could find it possible to accept the
leadership of OUR Pennsylvania organization
in the capacity of Chairman of the State
Committee.
I would appreciate it if you could
arrange to come to Washington within the
next for days to discuss the matter with
me and some of my assistants.
Sincerely,
(Signed) E. Eorgeathes.
Mr. John ho Stevenson,
President, Penn Mutual Life
Insurance Company,
Philadelphia, Pa.
HNG/mff
File to Mr. Thompson
178
GENERAL COUNSEL
TREASURY DEPARTMENT
WASHINGTON
JUL 8 1941
To:
Secretary Morgenthau
From:
E. H. Foley, Jr.
The attached article apparently relates to
an arrangement which has been worked out between
Mr. Helmbold of the United States Maritime Commission
and Admiral Waesche, whereby Coast Guard personnel will
be freed from work of guarding vessels which have been
requisitioned by the United States Maritime Commission.
The announcement in the article, however,
seems to be premature so far as action today is con-
cerned. Admiral Waesche states that, so far as he is
aware, the arrangement has not been set into operation
with respect to any vessel which has not been heretofore
requisitioned by the United States Maritime Commission.
The matter is being checked further by the
Coast Guard.
inth.
MARITIME BOARD MEN
TO GUARD 12 VESSELS
They Replace Coast Guard OR
Italian and Rumanian Ships
Captain Granville Conway, North
Atlantic district manager of the
United States Maritime Commission, announced yesterday that
Coast Guard details on eleven
seized Italian ships and one Rumanian vessel under protective
custody now tied up here and in
Boston, Philadelphia and Chester,
Pa., will be replaced today by men
designated to represent the commission.
The men who will board the
ships are former officers of United
States vessels They will not be
armed and the of placon
lowed ing them merely the because procedure ships the is being craft fol- are
to operate under the commission
when they are placed in service,
Captain Conway said.
Six of the Italian ships are now
in the Port of New York. Two are
nian ship. the Mangalia, a
another being repaired in drydock. in shipyards The Rums- 3,600- and
ton freighter, is moored at Ho-
boken.
The commission plans eventually
to replace Coast Guardamen on all
Axis
not Captain know ships Conway, when in United the said replacements States that he ports did
would be made on vessels outside
of this district.
180
Personal
JUL 8 1941
Dear Mr. Rockefellers
I understand that on June 25 you and Mr. Acheson received
Madame Genevieve Tabouts and that the possibility was discussed
of her making a lecture tour of Latin America beginning next
September.
From her journalistic work in France, Madane Tabouts is
quite well known in Latin America. Before the fall of France
she gained personal and tragic knowledge of German methods of
infiltration. She is an experienced lecturer and I can only
imagine, if the proposed tour can be made to materialize, that
11 would produce helpful results particularly so since certain
elements in the Latin American republice night be more prone to
listen to the truth from a fellow Latin than from one of us.
I should be delighted to learn if this embryonie project
can be perfected.
Yours sincerely,
(Signed) E. w
Mr. Kelson A. Rockefeller,
Coordinator,
Office for Coordination of Commercial
and Cultural Relations Between the
American Republica.
Room 5872. Department of Commerce,
Washington, D. c.
JCK1RJ 7/7/41
File to Mr. Thompase
181
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE July 8, 1941.
TO
Secretary Morgenthau
FROM
Mr. Cochran
CONFIDENTIAL
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
Purchased from commercial concerns
55,000
£13,000
The Federal Reserve Bank of New York sold £15,000 in registered sterling to the American Express Company.
Open market sterling held steady at 4.03-1/2. and there were no reported transactions.
In New York, closing quotations for the foreign currencies listed below
were as follows:
Canadian dollar
11-3/4% discount
Argentine peso (free)
Brazilian milreis (free)
Uruguayan peso (free)
Colombian peso
Mexican peso
.2380
.0505
.4380
.5800
.2070
1-3/16% discount
Cuban peso
Japanese yen
.2358
In Shanghai, the yuan declined 1/32 to 5-3/16 Sterling remained
at 3.90-1/2.
There were no gold transactions consummated by us today.
No new gold engagements were reported.
A price of 23-3/8d was again fixed in London for both 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 made one purchase of silver amounting to 50,000 ounces under the
Silver Purchase Act. This silver consisted of new production from various foreign countries, and was bought for forward delivery.
AMP.
182
RESTRICTED
G-2/2657-220 No. 435
M.I.D., W.D.
12:00 M., July 8, 1941.
SITUATION REPORT
I.
GERMAN-RUSSIAN FIGHT.
Ground: In Finland Germans advance in Salla River region
south of Kandalaksha. Finns gain in Lake Ladoga-Kexholm-area
The situation in Estonia is obscure. In the Baltic regions German columns are attacking in the region of Pskov-Ostrov towards Leningrad. From Polotsk to a point on the Dnieper
eastward of Bobruisk, the front appears stabilized.
To the south of the Pinsk Marshes the German
armies continue their attacks in the Novograd-Volynsk area. In
Galicia, to the east of Stanislawow, a Hungarian army has established bridgeheads on the east bank of the Dniester River. In
Bessarabia a German army has reached the Dniester River to the
west of Mogilev-Podolsk.
Air: No change in the general situation.
II.
GERMAN-BRITISH FIGHT.
Air: German. Light night bombing.
British. Normal daylight offensive over northern
France. Strong night attacks on industrial Germany, particularly
on Munster and Cologne.
III.
MEDITERRANEAN FIGHT.
Ground: The British attack up the Syrian coast toward
Beirut was renewed.
Air: Axis. Noticeable but slight increase in Axis
activity over Cyprus. Harassing raids on Tobruk and on installations in Egypt.
British. Principal activity in Syria, where Beirut was bombed and close support given the coastal attack.
RESTRICTED
183
PARAPHRASE OF TELEGRAM RECEIVED
FROMS American Babassy, Berlin, Germany
DATE: July a, 1941, 10 a.m.
NO.F 2735
Recently, an important development in regard to the
relation between the occupied countries and Germany has
been the progressive introduction of German taxation
principles in those countries, particularly with reference
to the excises and the other imposts which affect the
sale of the commodities which are concerned as well as
the costs of production.
The process referred to is prastically complete
reciprocity. It is understood that plans at the present
call for its early effectuation in Belgium and 11 might
effect other countries as well.
The purpose behind this policy apparently is to
enable merchandise of German origin to compete in those
countries and, in addition, facilitate adoption of their
whole economic structure to the Surepean economic unit
with 18 seems, Germany is trying to impose OR the entire
continent of Europe.
with no regard to whether or not Berlia finally
intends to extend the oustome union (already virtually
in effect with the Netherlands) to other parts of
Europe, 11 is quite evident that authorities of the
German Government are forcing fiscal and other adjustments
in countries that are under their control as BOOR as
circumstances
184
circumstances permit, This is being done in order that
the world may become conscious of the fast that Europe
is inextricably bound in its economic life to the system
of the Germana.
It is requested that the Treasury Department be
informed of the above,
MORRIS
BA:PAK
10 THE
OFFICE OE THE
DVI nor a bW 3 3a
10EV20BA
RECEIVED
185
0
DEPARTMENT OF STATE
0
WASHINGTON
P
Y
July 8, 1941.
reply refer to
860H.51/1044
The Secretary of State presents his compliments to
the Honorable the Secretary of the Treasury and encloses
paraphrases of the Department's telegrams no. 385, dated
June 9. and no. 503, dated July 3. 1941, and of telegram
no. 799. dated July 5. 1941, from the American Embassy
at Rio de Janeiro, regarding funds of the National Bank
of Yugoslav on deposit with the Bank of Brazil.
Enclosures:
Paraphrases.
186
C
0
P
Y
PARAPHRASE OF TELEGRAM SENT
TO: American Embassy, Rio de Janeiro, Brazil
DATE: June 9, 1941
NO. : 385
The former Governor and Vice Governor of the National
Bank of Yugoslavia have now been removed by the Yugoslav
Government, which has appointed Mr. D. Lazarevich as Governor
and Mr. R. Bichanich as Vice Governor. The appropriate
authorities of this Government have received formal notification from the Yugoslav Minister of this change. The
Minister says that the Brazilian Government and the Bank of
Brazil have been given similar notification and that through
its appropriate officials the National Bank of Yugoslavia
has requested that the Bank of Brazil transfer to the Federal
Reserve Bank in New York the sum of $11,250,000. This re-
quest is being supported by the Yugoslav Minister in Rio de
Janeiro, and the Yugoslav Minister at Washington also gives
it his support. You are instructed to try to obtain the
execution of the request of the National Bank of Yugoslavia.
10
18
RA:FL:MMM
Copy:bj:7-9-41
187
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy, Rio de Janeiro, Brazil
DATE: July 5. 1941, 4 p.m.
NO. : 799
Reference is made to telegram no. 503. dated July 3.
5 p.m., from the Department.
This morning I again reviewed with them the matter
of the Yugoslav funds.
If the funds are guaranteed against any ensuing loss
which, for instance, might be the result of an award by
an arbitration tribunal or court of justice, they are
completely disposed to transfer the funds as requested.
It has been pointed out by them that the United States
is in a much better position then Brazil to withstand possibly losing $11,000,000 but, they have stated, the Federal
Reserve Bank refuses to take the risk that the United States
is asking the Bank of Brazil to take.
As outlined in the Embassy's previous telegrams,
their stand is liberal and cooperative but they insist
that they will not go any farther unless we guarantee
them against the risk which we have requested them to
take.
01 10 0 bl I 38
CAFFERY
EA:MMM
188
C
0
P
Y
PARAPHRASE OF TELEGRAM SENT
TO:
American Embassy at Rio de Janeiro, Brazil
DATE:
July 3, 1941, 5 p.m.
NO. : 503
You are requested to renew your inquiries into the
matter treated in the Department's 385 of June 9 and to
urge that action now be taken on the specific instructions
which have been received by the Bank of Brazil from the
President of the National Bank of Yugoslavia.
EA:FL:MM
Copy: bj: 7-9-41
189
CONFIDENTIAL
Paraphrase of Code Cablegram
Received at the War Department
at 13:36, July 8, 1941.
London, filed 18:50, July 8, 1941.
1.
British Air Activity over the Continent.
a.
Night of July 6-7. British bombers dropped upon Brest 131
tons of high explosive bombs, which included 63 armor piercing bombs of 2000
pounds each and 17 high charge bombs of 2000 pounds each; upon Menster were
dropped 36 tons of high explosive bombs and 5700 incendiary bombs, 33 tens
of H. E. and 2000 incondiaries upon Indea and Rotterdan.
b. Day of July 7. Shipping in the area of the Frisian Ielee
vas attacked by 9 Blenheim and shipping off the Eague by 11 Blenhoins.
The chemical works and power station at Cheeques were attached by , Stirling
bombers, the Potes aircraft factory at Monute by 4 Stirlings, and Basebrouch
by 1 Stirling. All of these operations were said to be successful. British
fighters were employed as follows (during the period of twenty-four hours
ending at 6:00 P.M., July 7th): 145 on interceptor patrols, 246 in the
protection of shipping, 452 on offensive operations, and 109 on special patrols.
2.
Night of July 7-8. British bombers were dispatched as follows:
72 to Camabrack, 114 to Cologne, 17 to Freakfart, 5 to Boulogue, 40 to Rheydt,
and 49 to Measter. Leaflets were dropped over Chalons and Paris by four
bombers. The weather was favorable and the majority of the aircraft dis-
patched were able to attack their primary objectives with good results.
2.
German Air Activity over Britain.
a.
Per of July 6. Defensive patrols were maintained by 500
CONFIDENTIAL
COPY
INFORMATION
CONFIDENTIAL
190
fighters. Against Britain, 10 - aircraft and 10 long reage
bembers were employed.
2. Commong dispotated the following: se
stanlaying aircraft, 10 fighters and 25 long reage bembers.
1. Offensive patrels were maintained is the The
do Calais area and - was carried out over the Mast Anglish and
south vesters consta.
1. Principal German operations were in the
area of Southerpton. There was also - activity over Igno Day and the
These Return.
3. Aircraft Lessee
2. Brittah leases. Hime because were unreported from the reide
of the night of July T-S. Three Blenhetas and four Syitfires were lost and
Spitfiree damaged during the day of July 7.
2. Asia lessee. For the day of July 7, these lessee were as
follows: 4 No-109's and , shot down, , No-109's and 1 No-1098
probably destroyed and , No-Zogr's damaged.
4. Asia Air Activity Other Theatern.
2.
missis Basters States. a July 9th the Common sale as -
- attacys to also the Suss Omal.
IN
Distributions
Secretary of Yes
State Department
Assistant Obter of Staff, 6-2
Mar Please Division
office of Naval Inselligence
e. E. e.
Chief of the Away Air Foress
Assistant Chief of Staff, 6-3
Air Garge
Secretary of Treasury
CONFIDENTIAL
INFORMATION COPY
191
July 9, 1941
8:52 a.m.
HMJr:
Hello.
Operator:
Mr. Hopkins.
HMJr:
Hello.
Operator:
He's on, go ahead.
HMJr:
Hello.
Harry
Hopkins:
Hello.
HMJr:
Hello, Harry.
H:
Hello, Henry.
HMJr:
How are you?
H:
All right.
HMJr:
Harry, you remember last week you
asked me to do something on helping
on this ferrying service to Africa.
H:
HMJr:
H:
Yeah.
Well, Clif Mack 18 sitting here now
and he says that he's not yet gotten
the requisition from your organization
to go ahead and do our end of it.
Well, I thought the understanding with
Cox was that he was going ahead and
purchase whenever - whatever the outfit
was told him the names of the items
HMJr:
H:
HMJr:
No, well, he hasn't got it yet.
Well, you mean he doesn't he hasn't
been told anything to buy. Well, my Cox told me that Mack agreed to buy
without a requisition.
Let me ask him. Just let me ask him.
(Talks aside) He says that Cox said
to wait until he had further information.
He's had no green light.
192
-2H:
I mean the - he hasn't been told to buy
HMJr:
That's right.
H:
Well, that's another matter. I - I
HMJr:
I thought maybe when you came over at
anything?
lunch time you'd have the thing because
you made a special point of it. I made
a special point
H:
Well, I - I don't - I assumed the stuff
was all being bought. It's all news to
me, Henry.
HMJr:
H:
HMJr:
Well, I thought you'd like to know it.
Yeah, all right.
And if it's - wherever the situation is
when you come over maybe you can tell me
about it.
H:
All right.
HMJr:
Because we are anxious to go to town.
H:
All right. Goodbye.
HMJr:
Goodbye.
193
July 9, 1941
9:30 a.m.
Rene
Plevin:
Hello.
HMJr:
Mr. Plevin.
P:
HMJr:
P:
HMJr:
Yes.
Good morning.
Good morning, Mr. Secretary. I was just
going to ring you up myself.
You were?
Yes.
HMJr:
What did you have in mind?
P:
Well, I wented to tell you that I have
been for one hour and twenty minutes with
the gentleman and that he was awfully nice
to me.
HMJr:
Good. That's what I was calling un to
find out.
P:
You see, he did not give me any hope
HMJr:
Pardon.
P:
I say that he did not give me any hope
because he said it was a matter of high policy
which would only be decided by highest
possible authority.
HMJr:
P:
Right.
But, you know his manner, he puts you very
penetrating cuestions and I had the feeling that
it WAS not a man who was an antagonist to my
views who was questioning me, you see?
HMJr:
P:
Oh, no.
And he told me they have full respect for the
matter you have, "If you were only asking to
get supplies you want without anybody knowing
194
-2it. That would be my province."
HMJr:
P:
Yeah.
"But I see that you want to get them
so quickly." And I told him, "Well,
precisely, because one fights ? ?
?
and with equipment.
HMJr:
Yeah.
And he said, "And there it is out of
my province." And he sadd, "This 18 a
thing on which I cannot give you an
opinion because it's a matter to be
decided higher un." But I have the
impression that he is going to talk
it over.
HMJr:
Good. Now, Mr. Plevin, 1f you will let
me, I'm trying to adopt your cause.
P:
Well
HMJr:
And Mr. Oscar Cox was here this morning.
Mr.?
HMJR;
Oscar Cox.
P:
Oscar Cox.
HMJr:
Who 18 sort of lawyer for Hopkins.
P:
HMJr:
Oh, I see. Yes?
And he's going to call you and I suggested
that he get in touch with you and invite
you to spend an evening with him.
P:
Very good.
HMJr:
Now, he has great influence over there.
P:
Very good.
10WJr:
And he's very able. He's a Treasury man
that we've loaned to Mr. Hopkins.
195
-3Oh, very good.
P:
HMJr:
He's one of my lawyers that I've loaned
to Mr. Hopkins, but he has - he does all
the legal work on the Lend-Lease.
P:
Very good.
HMJr:
and he's a very important and very able
P:
Very good.
HMJr:
Now...
P:
HMJr:
So, I don't make any move myself, I wait
for him to ring me up.
He'll call you. Now, another thing, would
you think over, which I didn't understand -
I had supper last night with Mr. Maynard Keynes.
Hello?
P:
Yes.
HMJr:
You know who he is?
P:
No, Mr. Secretary.
HMJr:
Maynard Keynes.
P:
HMJr:
P:
HMJr:
Oh, Maynard Keynes. Oh, yes, yes. I had
heard King. Excuse me.
Keynes. And to my surprise, he is of the
school, who believes that General Weygand
should be supported.
Yes, I know that.
And one of the reasons he gives is. he
says that your very good friend, Mr. -
oh, the former French financial attache
in London.
P:
Yes, Monnet.
HMJr:
Monnet.
P:
Monnet.
-4 HMJr:
P:
HMJr:
P:
HMJr:
Is assistant to Weygand.
Yes.
And you know all about it, etc. and so on.
Yes.
Think that over and next time I see you
I want to talk to you about that.
P:
Yes, well I - I will be able to give you.
HMJr:
Because if Maynard Keynes - he's not
P:
friendly - you know that.
I know that.
HMJr:
And I don't - and I'd like to know why.
P:
I know that, you see, and I knew that he
was very strongly of the belief that Weygand
could be carried over.
HMJr:
That's right. And he - and he brings Monnet
P:
Well, you see, I know all about it because
HMJr:
in the picture.
Well, you - you - I just wanted to register
it with you.
P:
Yes.
HMJr:
And the next time we see each other, you
explain it to me.
P:
Very good.
HMJr:
Will you do that?
P:
Yes, I will, Mr. Secretary.
HMJr:
And Mr. Oscar Cox will call you.
P:
Very good.
HMJr:
And he is very anxious to be helpful.
196
- -5 P:
Very good.
HMJr:
Good.
P:
HMJr:
Now, Mr. Secretary, I don't call your
secretary or anything unless you express
the desire that I should do so.
No, what you do is - today is Wednesday get in touch with Mrs. Klotz on Monday
and then we'll get together.
P:
Very good.
HMJr:
You call her Monday.
P:
Thank you very much.
HMJr:
Thank you.
P:
Very good. Goodbye, Mr. Secretary.
HMJr:
Goodbye.
P:
And thank you again.
HMJr:
You're welcome.
197
198
(COPY)
THE WHITE HOUSE
Washington
July 9, 1941
MEMORANDUM FOR
THE SECRETARY OF THE TREASURY
I cannot see Pleven. The
matter has been taken up before.
F.D.R.
Original filed in President's folder)
199
July 8, 1941
My dear Mr. President:
Mr. Rene Pleven, representing General de Gaulle,
is
here in Washington. He dined with me last night.
He has the best knowledge of French Equatorial Africa
of anybody I have ever met. He gained this knowledge
first-hand as General de Gaulle's representative in
Africa and it was he and two other French officers who
took over French Equatorial Africa.
He has some very practical ideas on how Dakar
could be taken and I assure you that if you would see
him and give him half an hour, you would find your time
very well spent.
I know Mr. Pleven intimately from the time when
he was second in command of the French Purchasing Mission
here in Washington. He is a man of excellent character
and real ability.
Yours sincerely,
Rea
The President,
The White House.
200
July 9, 1941
9:30 a.m.
GROUP MEETING
Present:
Mr. Blough
Mr. Cochran
Mr. Thompson
Mr. Graves
Mr. Gaston
Mr. Kuhn
Mr. Foley
Mr. Haas
Mr. Schwarz
Mr. White
Mr. Odegard
Mr. Bell
Mrs. Klotz
H.M.Jr:
I don't think I told you people yesterday,
but it was one of the most interesting
stories I have heard. It was this story
of Pleven, who is second to DeGaulle - he
told it to me.
They got in this little plane and he and
a French colonel, and he said they put two
machine guns inside the plane which had
been smuggled out by a French soldier from
this general who is in charge at Lake Chad,
and I said, "Well, what did you take those
back for, to fight?"
He said, "No, we thought the general had
missed them so if we returned them to him
he would be pleased," so this was sort of
a coming home present to return the two
201
-2machine guns that this soldier had come
out with to show that he meant business.
So he said, "We got there and we talked
to all the people and won them over, but
the French general, the governor, who was
an ex-general, was up country somewhere,
so he said, "we thought we would send word
to him to come on down. So he came down
to the palace, and the next morning he said,
"This colonel and I walked into the governor's
palace and this man being an ex-soldier,
the general, at the age of about seventy-
three," he said, this colonel started to
tell them what he wanted and what he expected
them to do; so he said, "This man being an
ex-general didn't like it, and he hollered
for the palace guard," but he said, "my
friend had a blanket with him," so he said
he wrapped the general up in the blanket,
threw him over his shoulder, walked down
to the river where the governor's own boat
was, stuck him in the boat, and he said,
"We ferried him across the Belgian Congo,
delivered him to the Belgians, said goodbye, and went back and took the whole
Province over." It is amazing. (Laughter)
It is an amazing story. He tells it so.
I mean, he tells it very well.
Well, how are my two scenarists? Do you
call them scenarists?
Kuhn:
Impresarios.
H.M.Jr:
Do we sing "Louise" tonight or don't we?
Kuhn:
I am afraid we do. The ladies insist on
it.
202
-3H.M.Jr:
You are no impresario. You are not even
a French general. (Laughter)
She is going to sing "Louise", is she?
Kuhn:
We will try to put other things in, put
a spiritual in also.
H.M.Jr:
Well, did you get any of your --
Odegard:
Changes on the English songs.
Kuhn:
The English thing is all changed.
H.M.Jr:
Are you going to sing, "There'll Always
Be An England"?
Kuhn:
Yes, sir.
H.M.Jr:
Wonderful. And the English Navy song?
Kuhn:
Yes.
H.M.Jr:
Wonderful. They go well together, with
"Louise", don't they? (Laughter)
All right. And you (Klotz) have arranged
for the movie tonight?
Klotz:
Well, I gave the orders.
H.M.Jr:
That is all right.
Harold, evidently in dictating that thing
I told you about Mrs. Hull, but my memorandum
didn't come off the machine. The disc or
something was wrong.
Graves:
Well, you told me.
H.M.Jr:
Yes, but you would have gotten a memo that
didn't come on the machine. They couldn't
get it.
203
-4Graves:
H.M.Jr:
I tried to get Patterson --
Itoam
not worried. I am just telling it
you now.
Norman?
Thompson:
I have nothing important.
H.M.Jr:
Wonderful. We will skip it then.
Dan, are you and I going to do any financing
today?
Bell:
I hope so.
H.M.Jr:
Right after this meeting?
Bell:
Fine. The Budget has some very large
estimates which they are considering and
which they are getting out piece-meal,
and they are hollering for them on the Hill.
They claim they want to get through up
there by the twenty-third.
H.M.Jr:
Of what?
Bell:
July. Apparently they think they are going
to be through with the tax bill and everything, and while the Senate works on it,
they are going to recess.
These appropriations are quite large, and
I am trying to get the Budget to hold them
up until Monday. Since they don't know
whether they can do it or not - they certainly
will hold them up until tomorrow.
H.M.Jr:
It is all right.
Bell:
Well, I would hate to have them hit the
market.
204
-5H.M.Jr:
Oh, you mean for us to finance tomorrow?
Bell:
Finish today and get it over with. The
refunding certainly will be open tomorrow,
so for that reason I am trying to hold the
estimates up until Monday. They are very
large.
H.M.Jr:
Are they?
Bell:
Eight billion.
H.M.Jr:
How much?
Bell:
Eight billion. That doesn't include
Lend-Lease, which will be another eight,
at least. It is estimated that this
H.M.Jr:
Congress will appropriate sixty billion
dollars before they are through.
I didn't think Harold Smith's statement,
which I read in the paper, was too good.
The statement as I read it was that we
had more money than we were spending and
the implication was we really had more
money than we needed. Did you see it?
Bell:
Yes, I saw the Washington Post. I didn't
interpret it that way. I thought what he
was trying to explain was that the expenditures under national defense were really
closer to their estimates than our figures
indicated, because some of the departments
have national defense money woven in or
integrated with their other funds.
H.M.Jr:
Bell:
Well, by reading it, unless you have gone
to school on it, it didn't make sense.
I think that was the purpose, but I don't
know.
205
-6H.M.Jr:
You think that was the purpose? It was
very successful. (Laughter)
Bell:
No, I mean the purpose was to explain
the discrepancy in the estimates.
H.M.Jr:
Anything else?
Bell:
That is all.
H.M.Jr:
You and I will do it immediately afterward.
Bell:
All right.
Graves:
Does that have any bearing on our meeting
H.M.Jr:
Oh no, Bell works very fast.
Graves:
I have nothing.
H.M.Jr:
We will clean this meeting up right away
and give Bell fifteen minutes.
with you at ten-fifteen?
Harry?
Schwarz:
I have a memor andum for you on tax publicity
after talking with your impresarios.
H.M.Jr:
Tax publicity? Meaning what?
Schwarz:
The general tax program. It is supplementary
to the previous one.
H.M.Jr:
Oh, this is something you want to do,
what?
Schwarz:
I suggested it for the Treasury.
H.M.Jr:
Oh.
Schwarz:
You may want to take it home.
206
-7H.M.Jr:
Now here, "Keynes visits the White House,
held implying consideration of plan for
forced saving."
Now, why wouldn't it be perfectly proper
to say that it is quite the reverse, that
he is very much interested in the plan that
we are putting out and asked us for specifications so that he can take that back
to England?
Schwarz:
Not only proper, but helpful.
H.M.Jr:
That is what he said. He is very much
interested, and he asked the Treasury to
furnish him with details so he can take
the U. S. Treasury plan back to Engl: and
with him.
Schwarz:
The only reason for that story is that
no thing having been given out and being
known as a forced savings exponent --
H.M.Jr:
You tell the boys that.
Anything else?
Schwarz:
That is all.
Bell:
By the way, there is a good cartoon in this
morning's Post on the tax notices.
H.M.Jr:
I saw it. It is out of the Tribune. I
think it is the New York Tribune.
Schwarz:
I didn't put it there.
207
-8H.M.Jr:
Will this be the last one, George?
Haas:
That is the last edition.
H.M.Jr:
When do you get my bomber stuff?
Haas:
I have it.
H.M.Jr:
Have you shown it to --
Haas:
It has been checked by --
H.M.Jr:
Lubin?
Haas:
Yes.
H.M.Jr:
Why only one copy? That has been checked?
Haas:
It has been checked, yes.
H.M.Jr:
Oh, you don't differentiate between the
four and two-engine
Haas:
Yes, sir.
H.M.Jr:
As flying boats?
Haas:
No, what we did on the flying boats, we
took the four and two-engine ones and
assumed that was what you wanted, the
larger ones.
208
-9H.M.Jr:
Just to show you that here in the United
States they still don't know what this war
is about, I don't care how many millions
they appropriate, you see - I mean, from
January 5 to July 5, flying boats - just get
British eighty-seven; and, on order, flying
this - the Navy received one hundred and the
boats, Navy, the huge figure of seven hundred
forty-seven and for the English, seventyfive.
White:
Is any amphibian plane called a flying boat?
H.M.Jr:
Yes, it is a flying boat. That is the thing
I want to send over to the President. You
see, they have just gone haywire on the fourengine bombers and the stuff that we need -
I mean, to do the kind of war that we are
going to fight, they just haven't got the
stuff.
Bell:
H.M.Jr:
Are they putting out the bomber in quantity?
They have gone haywire on the four-engine
bomber.
Bell:
Producing that very fast?
H.M.Jr:
No.
Bell:
Oh, they are not? I thought they were.
H.M.Jr:
No, we don't get into any kind of production
on the four-engine bombers for the rest of the
year to amount to anything.
Bell:
What kind of planes are we producing?
H.M.Jr:
Nothing.
Bell:
From all reports we are putting out a thousand
to twelve hundred a month. Is it pursuit
planes?
209
- 10 H.M.Jr:
Well, in the room here, the Army expects to
take delivery of nine four-engine bombers in
August;
the Navy, none; and the British,
twenty-one.
Two-engine bombers; the Army, seventy-five;
British Empire, two hundred and four. Flying
boats for the Navy; thirty-one; and the
British Empire, three.
Bell:
Well, it is the two-engine bomber that they
are producing then.
H.M.Jr:
Yes, but the thing they are after - well, it
doesn't show up here yet. Evidently they
haven't placed the orders for four-engine
bombers. But all this stuff about Knudsen
and these bombers and all the rest of that
stuff, wherever it is - it is all in the
newspaper clippings. But I mean, I got this
to send over to the President, and we will
hope once more that some day they will get
down to business. Get me another half dozen
copies of this, will you.
Haas:
Yes, sir. Do you want me to right away?
H.M.Jr:
No, but don't anybody breathe these figures,
because they are too discouraging. It is
unbelievable.
How far had I gotten?
Did you show those to Lubin?
Haas:
Yes, sir, he checked those.
H.M.Jr:
You might tell Stephens to get them to you,
because then I will tell you what to do with
them when you get ready to leave here.
Haas:
All right.
210
- 11 H.M.Jr:
Tell Stephens.
How long will it take you to get these?
Haas:
To get the copies?
H.M.Jr:
Yes.
Haas:
Well, I think there are six of them available
right now.
H.M.Jr:
Blough:
Please.
Do you wish to go into the tax bill this
morning.
H.M.Jr:
No. (Laughter) We will go around and we
will come back. We might.
Ferdie?
Kuhn:
Mr. Secretary--
H.M.Jr:
Much rather talk about Louise and bombers and
so on.
Blough:
So would I. (Laughter)
H.M.Jr:
That makes it unanimous. I know I am the
bottleneck on the taxes.
Kuhn:
Would you consider that invitation of the ABA
to go to speak in Chicago on the first of
October?
H.M.Jr:
Yes.
Kuhn:
B. M. Edward thinks it is very important, and
I think there is a lot to what he says.
H.M.Jr:
Yes, I will go.
211
- 12 Fine.
Kuhn:
H.M.Jr:
Now is B. M. Edward going to sit in with
us on our tax certificates for the banks?
Bell:
He hasn't been in on it; no, he has not.
H.M.Jr:
Could you pull him in?
Bell:
We could do it very well.
.
Is he back in town yet?
Graves:
I am not sure. I think perhaps he is not
here.
H.M.Jr:
In our preparation of the plan, could you
pull him in?
Bell:
Fine, I will be glad to.
H.M.Jr:
He is a good man.
Bell:
Yes, very good.
Cochran:
The Viscose transaction came up in the House
of Commons, and Sir Kingsley Wood gave a very
good statement, saying he took full responsi-
bility for the transaction.
Gifford is still selling some securities every
day. There were six hundred thousand for the
week ending July 5.
H.M.Jr:
I would think he would sell some yesterday and
the day before.
Cochran:
They said part of the strength of the market
yesterday came from the knowledge up in New
York that the British were withdrawing from
their offers. Foreign purchasers of securities
out-weighed sales yesterday by about sixty
212
- 13 thousand.
H.M.Jr:
What is that, Swiss?
Cochran:
Part Swiss, part Latin-American.
H.M.Jr:
Ed?
Foley:
H.M.Jr:
Here is a memorandum for you to sign.
Is mine here?
Foley:
I think they took it off.
H.M.Jr:
Then the rest of them won't get to him. This
is getting to be kind of a familiar matter.
Foley:
Yes.
H.M.Jr:
It is very amusing. I told him I didn't
know whether you (Klotz) would think he
would think it was funny, but he did. His
letter was also funny.
What else?
Foley:
There is a proclamation coming over from Welles
this morning in connection with the blacklist.
They are going to initial it first.
H.M.Jr:
What do you do with the blacklist or with the
proclamation?
Foley:
Well, we send out instructions to the banks
to freeze those accounts and--
H.M.Jr:
I am listening.
White:
That is all.
H.M.Jr:
"Lack of Treasury form on foreign accounts."
Is that you or Bell?
213
- 14 Foley:
That is us.
H.M.Jr:
I want an answer.
Foley:
The form isn't ready for filing yet, and we
are going to extend it for forty-five days.
H.M.Jr:
Give it to Chick Schwarz.
Foley:
We announced that at the Federal Reserve meet-
H.M.Jr:
Well, there is the New York Times.
Foley:
I will give Chick a memorandum.
H.M.Jr:
Merle, you might ask the State Department,
ing the other day.
in Istanbul, if they ever heard, "Nazi bankers
begin business in Turkey using funds from
occupied nations to purchase French holdings,"
and so forth. Ask them if they can get a
report on that.
Does that clear you up, Ed?
Foley:
Yes, sir.
H.M.Jr:
Herbert?
Gaston:
The State Department - I think I told you that
the State Department asked us to prevent un-
authorized travel on ships to Iceland.
H.M.Jr:
Yes.
Gaston:
I haven't anything else.
H.M.Jr:
To go back, I don't understand - I mean, is
this the thing that was worked on in your
committee, Ed, about the blacklist?
Foley:
Yes.
214
- 15 H.M.Jr:
Is that cleared with Shea and Acheson?
Foley:
Yes. Well, it is a proclamation for the
President to sign.
H.M.Jr:
And they put them on--
Foley:
And it is some of the British blacklist and
some of the others that are around.
H.M.Jr:
Who talked to me about this recently? Somebody was complaining.
Foley:
Well, I don't know. Dean Acheson has been
carrying the laboring oar on this.
H.M.Jr:
I guess he talked to me about it and wanted me
to help him.
Foley:
He has got it cleared with Maxwell now. He
H.M.Jr:
He wanted me to help, and I said it was up
got Maxwell's initials on it--
to him to carry the ball.
Foley:
That is right.
Well, he got it cleared with Maxwell, and he
wants the administrative work on it to be done
by Maxwell.
H.M.Jr:
He wanted me to get in on it, and I refused to.
Foley:
That is right.
Well, the upshot of it is that he recommends
the administrative end of it be done by Maxwell.
H.M.Jr:
Is that all right?
Foley:
Well, we would rather have it done by ourselves.
215
- 16 but
I don'tit.see as there is very much we can
do about
H.M.Jr:
What does that mean, administrative end?
Foley:
Well, Maxwell has got the force in so far as
H.M.Jr:
It is exports?
Foley:
Yes.
H.M.Jr:
Why not?
Foley:
Yes.
I.M.Jr:
Can you do it in five minutes, Roy?
Blough:
exports are concerned.
What I can do in five minutes is distribute
the literature and let people study it at
their leisure.
H.M.Jr:
Fair enough. (Laughter)
Klotz:
That is marvelous.
Blough:
It is not as formidable as it looks. The
summary is on top.
H.M.Jr:
The class is adjourned for study period. We
will hold an examination tomorrow.
216
July 9, 1941.
MEMORANDUM
TO:
Secretary Morgenthau
FROM:
Mr. Schwarz S
After discussing the subject with Messrs. Odegard
and Kuhn, I have the honor to submit the following
supplement to my memorandum to you of June 24:
of the money they are "forking over" to pay for
their National Defense, the American people consider
that there are two piles:
1. One is money they expect to get back in the
future, with an increment. They expect it will come
back to them personally, or be paid to their heirs.
2. The other is money that, from the point of
view of the taxpayers, has gone "down the drain."
They know rather vaguely that they are actually paying
it out for a commodity they dearly wish to retain--the
American way of life--but it is sometimes difficult
for the busy citizen, daily subjected to all sorts of
"noises" on the radio, stories in the newspapers,
personal and family problems and pressures and appeals
from every direction, to translate his drab income tax
form into battleships and bombers.
-2-
217
For the money that the Government is borrowing
from the people, a great, comprehensive campaign
already is under way.
For the money that is the average citizen's
share of the cost of self-government, very little
educational work of a co-ordinated nature has yet
been undertaken.
There is a definite distinction in the minds of
these average citizens between the two kinds of money.
This fact should constantly be borne in mind in any
program undertaken by the Treasury to take advantage
of the long-wished-for willingness to pay taxes that
finally exists today, even 1f that spirit has been
engendered by forces from overseas rather than from
pre-war unity at home.
David Cushman Coyle approached the subject in
the days of the recovery program in his little book,
"Why Pay Taxes." But there was of course slight
popular response to his salesmanship of Government
services. Even in a fight against depression--or more
probably, because of it--sectionalism and differences
of income were responsible for continued dissatisfaction
-3-
218
with the nation's tax structure, Federal, State and
local.
This year, however, the Secretary of the Treasury
sounded the new keynote when he testified before the
Ways and Means Committee of the House of Representatives
and uttered this declaration of faith:
"The American people, I believe, have
outgrown the old idea that taxes were exactions
forced upon them by their Government. We have
come to understand, especially in recent years,
that taxes are payments for services rendered
Our daily lives would be insupportable 1f it were
not for the necessities and the conveniences
which our taxes have made possible.
"We are now about to pay for the greatest
service of all: the safety and protection of
our country
If we remember always the
services we are receiving as individuals, the
new taxes will seem a small price to pay. The
American people are ready to pay that price." "
But the hearings for an unprecedented 3-billiondollar tax increase, thus broadly inaugurated, soon
assumed their old, familiar pattern. Special interests
-4-
219
were speedily on the job, loudly proclaiming their
readiness to share in the cost of defense, but "please,
Mr. Congressman, keep in mind our very special problems."
The recurring shocks from overseas have kept
the tax authors at their task and, as the American
people have awakened to the realization that that
31 billions and all that has been levied before must
be paid, a demand has arisen for some method of saving
ahead out of the income to be taxed against the tax
bill to be met next spring.
The Treasury's answer has been the announcement
of tax-anticipation notes to be initially issued
next month.
Simple understanding of the mechanics of the tax
system and of the services it pays for will have an
important bearing on the reception accorded these
anticipation notes this year and on the promptness
with which tax returns are filed next year.
To achieve that understanding, I propose that
a motion picture "short" be produced this year to
explain the purposes of the tax-anticipation notes and
how they may be purchased. This "short" should have
blended into it shots of the weapons for defense
-5-
220
the taxes will pay for and shots of the free institutions
we are defending and for which we tax ourselves.
Early next year there ought to be a second
"short" practically drawing a diagram on how to file
a tax return. Further simplification of this process
is an important step on the road toward an improved
popular acceptance of our tax system. This film
could emphasize the "ability to pay" principle,
bringing in a dash of what happens to major evaders
to prove there is no favor to the wealthy and repeating
the tie-in with defense armament and the institutions
we are defending.
Built around these two themes should be radio
programs, individually and in series, and educational
programs through speeches in the schools and before
civic organizations, such as the League of Women
Voters and the General Federation of Women's Clubs.
Evening forums should be arranged as community
activities and luncheon discussions provided for
service clubs.
Keyed to these two themes for their respective
periods should be a steady flow of newspaper publicity,
as little as possible emanating from the Treasury
but coming direct from those who write the nation's
-6-
221
editorial opinions, encouraged and inspired where
necessary by key men of the Division of Public
Relations operating from strategic centers such as
New York, Chicago, New Orleans, San Francisco and
others. The very nature of the tax program demands
regional treatment such as would be afforded under
this proposal. Some phases of the new tax schedules
will have a very different significance in Louisiana
from their meaning to communities of the Pacific Coast
and Middle West. A man in each section would present
the program in the way most suited to his region.
And, of course, information presented in this
way is of much greater interest to newspapers than
that given out in Washington to cover the entire
country. Such a system of presenting material also
leads to a close relationship between the public
relations man and his outlets. Newspaper and radio
men grow to trust the man who supplies them with honest,
intelligent news and they come to rely upon him as
a source of information.
By recruiting such men, I propose that they work
in close harmony with Collectors of Internal Revenue,
-7who also are familiar with local problems, and with the
Supervisors of Accounts and Collections, who have good
regional viewpoints.
-000-
222
223
July 9, 1941
10:00 a.m.
RE FINANCING
Present:
Mr. Bell
Mr. Haas
Mr. Hadley
Mr. Murphy
Bell:
I haven't talked with New York yet this morning.
I just got the note of that meeting. Apparently they are on January 45 at one and
an eighth. The boys are all practically together on the pricing. New York probably is
a little lower, about half a point, and we
are about seventeen or eighteen.
Murphy:
Seventeen.
Bell:
Hadley, nineteen, and Federal Reserve is in
that range too, so there isn't much difference on pricing in that area. This (exhibiting
chart) shows the crowded area in forty-four.
It goes through every month except August,
October, and November. January and February
are both open, April is open, and forty-three
has also got something in July. In fortyfour we have got seven billion nine. This
year we have got five billion nine.
H.M.Jr:
Couldn't we put it into February and get
it out of my administration?
Bell:
You are thinking a long way ahead. Are you
sure?
H.M.Jr:
Yes.
Bell:
You might get a fourth term.
H.M.Jr:
Not for me.
224
-2Hadley:
H.M.Jr:
Bell:
That could be done very easily. It would
make a difference of about a thirty-second.
There will be a change of administration
and everything else in January, forty-five.
It is all right. One month, I don't think,
H.M.Jr:
makes much difference in pricing.
I am serious.
Murphy:
Sure, it is a good point.
H.M.Jr:
I mean, January we change and everything
Murphy:
Yes, sir. A new Secretary would want time
to look around.
H.M.Jr:
Sure.
Bell:
Well, January would be out of the way for
the outgoing Secretary.
H.M.Jr:
No, January 20th.
Bell:
Well, of course, you could turn it over in
else.
December and have a clean slate.
H.M.Jr:
Why not make it February?
Bell:
Can just as easily. No harm.
H.M.Jr:
It seems plenty sweet, doesn't it?
Bell:
On the basis of those figures. The lowest
estimate is sixteen thirty-seconds, which
would bring it down to probably fifteen thirtyseconds.
H.M.Jr:
Will the budget keep out of the way, do you
think?
225
-3Bell:
I think so. Lauch said he would do every-
H.M.Jr:
Where is Harold Smith?
Bell:
He is here now. He got back last --
H.M.Jr:
Why not tell him that I am going to do
this financing?
Bell:
They know it. I have told them. He is going
thing he could.
to call me again tomorrow afternoon. He knows
it won't go up until Friday morning.
H.M.Jr:
Eight billion more?
Bell:
The statement for Lend-Lease is twelve
billion, but they think that the categories
when they get them down will run to about
eight billion. But a memorandum is going
to the White House today on the estimates
and we are going to caution Early not to
give out anything on the memorandum. They
will try to hold the letters until Monday morning.
H.M.Jr:
We have got nothing in February. I don't
see why we can't do it.
Bell:
No, it is all right.
H.M.Jr:
I think I will make everything from now on
in forty-five. My decks are in pretty good
shape.
Bell:
Either that or prior to November, forty-four.
H.M.Jr:
No, I mean afterward. We can announce
this tomorrow morning.
Bell:
Yes.
H.M.Jr:
I think I will make Jones go out longer, too.
226
-4I don't want any of this short stuff back.
It is silly, doing this short stuff. We
ought to get it out further. I am just not
going to do any more stuff in this period.
We will get out as far as we can.
I think from now on we will crowd it out.
Bell:
That includes everything, you see, Federal
H.M.Jr:
How is that last RFC note selling?
Hadley:
It is selling at par, twenty and twenty-two.
It has held steadily for about ten days.
Land Banks and all.
(Telephone conversation with Mr. Rouse follows).
July 9, 1941
10:12 a.m.
HMJr:
Hello.
Operator:
Mr. Rouse.
HMJr:
Hello.
Robert
Rouse:
Good morning, sir.
HMJr:
How are you?
HMJr:
First rate, I hope you are.
I'm fine.
R:
Good.
HMJr:
We are sitting here talking about this
R:
financing - what do you people recommend
down there.
R:
We recommend a 31 year, 1 and 1/8.
HMJr:
Let's see - that's January.
R:
January.
HMJr:
How would you feel 1f we made it into
the next administration - made it February?
R:
I think that would be all right.
HMJr:
Yeah.
R:
HMJr:
Yes, sir.
I want to give the next Secretary of the
Treasury a chance to turn around.
R:
(Laughs) Well, the - you'd have a chance
to finish it up yourself though.
HMJr:
R:
I might, but January - I'm serious, February
is all right, isn't it?
Yes, I think so. We figure that - and
fairly conservatively I think, that 1 and 1/8
is worth between - around 17 to 19/32 premium.
227
228
-2HMJr:
One month longer would make
R:
One month longer would make about 1/32
difference. It doesn't - wouldn't
effect it at all, I don't believe.
HMJr:
R:
HMJr:
Well, that month is blank with us February.
Uh
huh. with
I'd - that
well,and
I'd feel entirely
satisfied
Is the market ready for it?
R:
The market is entirely ready for it
and it's waiting and expects it and
be disappointed if you didn't do it.
Is this particular - I mean, this money,
3, 31 year money is a lot of it around?
You mean a lot of similar maturities
HMJr:
No, you know, is the demand there?
R:
Yes, it's bank money. There is some
R:
HMJr:
failing as - of that biggest interest
in short money now is either quite short
or in the 1947 or 18, 146 or 1 7 category,
but in this type of thing the banks want
it and would like it.
HMJr:
Good.
R:
And this is the common recommendation, it
just seems to naturally fall there. People
like the dentral Hanover and the City Bank
and Chase, Guaranty, all came to the same
conclusion. Everybody that went into it
carefully and examined it came out with the
same answer. So I think it's right down
the alley.
HMJr:
R:
HMJr:
Good.
Wouldn't have any hesitation about it at
all.
Good. Now, just hold on a minute please.
(Talks aside) Everybody in the room is happy.
-3R:
Good.
HMJr:
So, they'11 get to work.
R:
All right, fine.
HMJr:
Thank you.
R:
Thank you very much.
HMJr:
Goodbye.
229
230
-5H.M.Jr:
Now,
justgot
hold
ondoubts?
a minute, please. George,
have you
any
Haas:
None at all.
H.M.Jr:
Henry?
Murphy:
None at all.
H.M.Jr:
You?
Hadley:
Perfect setup.
Bell:
No, sir. No doubts.
H.M.Jr:
You are satisfied?
Bell:
Perfect.
H.M.Jr:
Everybody in the room is happy, etc. etc.