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DIARY
Book 492
February 4 and 5, 1942
-ABook
Addresses, Public
Page
See Public Addresses
Appointments and Resignations
Stone, Lawson: HMJr discusses with him possibility
of job - 2/4/42
492
111
a) Declines appointment - 2/24/42:
See Book 500, page 253
B
-
Brazil
See Latin America
Budd, Ralph
See Foreign Funds Control: General Aniline and
Film Corporation
-CCanada
Labor Problems: Miss Kistler's memorandum - 2/5/42
377
Chiang Kai-shek to visit India and Burma - 2/4/42
Stabilization Board: Central Bank's request for loan
discussed in Adler cable - 2/4/42
Loan: Congressional Record excerpt - 2/4/42
197
China
198
203,
Customs, Bureau of
Merchandise and baggage imported on naval aircraft:
Regulations concerning - 2/5/42
Merchandise and baggage imported on military aircraft
Regulations concerning - 2/9/42 See Book 494, page 186
338
D-
Defense, National
Justice, Department of: Establishment of special unit
to examine cases of criminal conduct called to the
attention of division heads by HMJr - 2/4/42
146
Defense Savings Bonds
See Financing, Government
Deferments, Military
Conference; present: HMJr. McReynolds, Hershey,
Stevenson, Thompson, and Patterson - 2/4/42
a) Basis (as worked out by McReynolds) discussed
b) Draft of order from FDR to heads of Departments
82
109
c) Memorandum on procedure to FDR signed by HMJr,
Stimson. Knox, Hershey, and McReynolds - 2/5/42
d) FDR's memorandum to heads of all Departments 2/9/42: Book 494, page 115
327
E
Economic Stabilisation Board
Minutes of meeting - 2/5/42
Exchange Market
Resumes - 2/4-5/42
Exports
Freight Situation - Haas memorandum - 2/4/42
316-B
228,390
221
-
Book
Page
492
334
Financing, Government
Flynn, John T. : Plan of war finance as proposed in
1935 - 2/5/42
Defense Savings Bonds:
Agents' report - 2/4/42
139
Stock of Series E Savings Bonds on hand,
January 20 to date - 2/4/42
Panama desires to buy bonds; clarification of
restrictions requested - 2/4/42
Patterson, Richard C. : HMJr's congratulations on
job well done, and Farley's letter to HMJr
concerning - 2/5/42
Buttons: Rosenman-HMJr conversation concerning 2/5/42
142
237
342,343,345
346
Payroll Savings Plan: Report - 2/5/42
(See also Book 493, page 113 - 2/6/42;
348
Book 494, page 76 - 2/9/42)
Flynn, John T.
Sec Financing, Government
Foreign Funds Control
Latin America: Sending representatives to explain
discussed at 9:30 meeting - 2/4/42
General Aniline and Film Corporation: Conference;
present: HMJr, Swope, Foley, and Bernstein 2/4/42
28
51,116
a) Mack-Williamson meeting with General Aniline
and Film Corporation executives - O'Connell
memorandum
61
b) Mack-Treasury correspondence
c) Memorandum for FDR (not signed)
64,127
72
d) Budd's (Ralph) discussion of situation with
Foley reported
e) Knollenberg (Bernhard) connection with case
reviewed by HMJr
116
118
f) "Difficulties with the Present Management" unsigned memorandum
124
g) Foreign-owned stock (97% of stock now out-
standing) to be vested in Secretary of Treasury -
2/6/42: Book 493, page 156
Freight, Export
See Exports
-GGeneral Aniline and Film Corporation
See Foreign Funds Control
H-
Henderson, Leon
See Steel
Justice, Department of
See Defense, National
Book Page
Knollenberg, Bernhard
See Foreign Funds Control: General Aniline and
Film Corporation
L-
Latin America
See Foreign Funds Control
Opium: Trade from Great Britain discussed at 9:30
meeting - 2/4/42
Brazil: Sympathy with United States on war front
reported - 2/5/42
492
29
233
Panama: See Financing, Government (Defense Savings Bonds)
Lend-Lease
Allocations and obligations for week ending
January 31, 1942
194
British delay in ratifying over-all agreement worries
State Department - 2/4/42
a) HMJr's urgent message to Sir Kingsley Wood
1) Acheson-HMJr conversation
2) Conference with Phillips - 2/5/42
3) HMJr's statement that he did not see copy
of agreement before sending message to
Wood - 2/6/42: See Book 493, page 176
4) Wood's reply - 2/9/42: Book 494, page 193
b) Copy of agreement
211
213
302
314
214
c) Conference of Treasury group, Stettinius,
Douglas, representatives of Army, Navy, and
State - 2/12/42: Book 496, page 36
1) British cash contracts prior to Lend-Lease
and over-all agreement discussed
2) Estimate of cash to be spent by United
States armed forces in foreign territory
during 1942: Book 496, page 63
-MMack, John E.
See Foreign Funds Control: General Aniline and
Film Corporation
Military Reports
Reports from London transmitted by Halifax - 2/4-5/42.
Kamarck summaries - 2/4-5/42.
"The War This Week" February 5-12, 1942 - Coordinator
241,391
247,394
of Information report - 2/5/42
396
others concerning draft status - 2/5/42
317
Morgenthau, Henry, III
Correspondence with Senator Barbour (New Jersey) and
Motion Picture Camera Operators Union
See Revenue Revision
5) Modifications explained - 2/18/42: See Book 498, pages 140 and 141
-NBook Page
Narcotics
Opium:
Latin America-Creat Britain trade discussed at
9:30 meeting - 2/4/42
492
29
Turkish opium exchanged for American wheat:
Anslinger memorandum - 2/5/42.
367
National Defense
See Defense, National
-Opium
See Narcotics
-Panama
See Financing, Government: Defense Savings Bonds
Patterson, Richard C.
See Financing, Government: Defense Savings Bonds
Public Addresses
To be cleared through MacLeish, Office of Facts and
Figures - 2/4/42
197
-R-
Research and Statistics, Division of
Report on projects during October 1941
153
Revenue Revision
Motion Picture Camera Operators Union: Example of
cooperation in publicizing income tax program 2/4/42,
Social Security: American Federation of Labor-Treasury correspondence concerning inclusion of
extended coverage in new Revenue Bill - 2/4/42
137
149
War Production Board: Amortization Committee
abolished and functions transferred to Production
Division of War Production Board - 2/4/42
190
-Social Security
See Revenue Revision
Stabilization Fund
Gold transactions with Central Banks and Governments
of foreign countries, January 1942.
Staff: Change of room space - White memorandum 2/5/42
220
341
- S - (Continued)
Book
Steel
Page
Wage increase discussed by HMJr and Henderson 2/4/42
492
a) Viner memorandum.
38
b) Phillip Murray--MMJr conversation 2/10/42: See Book 495, page 1
1) Henderson (Leon) discussed
Stone, Lawson
See Appointments and Resignations
-T Turkey
See Narcotics
War Production Board
See Revenue Revision
35
1
February 4, 1942
9:30 a.m.
GROUP MEETING
Present: Mr. Foley
Mr. Viner
Mr. Graves
Mr. Schwarz
Mr. Haas
Mr. Swope
Mr. Buffington
Mr. Morris
Miss Chauncey
Mr. Thompson
Mr. Gaston
Mr. Blough
Mr. Kuhn
Mr. Bell
Mr. Sullivan
Mr. White
Mr. Odegard
H.M.JR: Norman?
MR. THOMPSON: I have been trying to get action on
this matter of sirens for the District. I had a telephone
call this morning from Mr. Knowlson's office, and he stated
that the Navy has a priority on sirens which ties up the
plant manufacturing the sirens for the D.C. for about
five months.
H.M.JR: Would you consult with Mr. Swope? Maybe
he can get you a little more help.
MR. THOMPSON: They asked if you would feel free to
2
-2give them a letter stating that the D.C. should have
priorities here over the Navy. I didn't know whether
you wanted to do that or not.
(Mr. Odegard entered the conference).
H.M.JR: Well, I think the thing to do - it is
seven, isn't it?
MR. THOMPSON: Eleven.
H.M.JR: Eleven sirens for the District of Columbia.
I wouldn't want to give it in a letter, but we might ask
somebody in Frank Knox's office whether they wouldn't
be willing to let eleven come to the District.
MR. THOMPSON: They thought they had it settled
by shifting to Westinghouse, but we found out the Westinghouse sirens have to use some parts of the other sirens.
H.M.JR: See whether Mr. Swope can't help you on
that. It is very important, eleven sirens for the
District.
MR. THOMPSON: That is all I have.
H.M.JR: All right. I wouldn't write a letter.
MR. THOMPSON: No, I didn't think you would want
to write a-letter.
H.M.JR: Dan?
MR. BELL: Marriner Eccles called me late last
night on 13 (b). He said that he had talked to Jesse
and Jesse said that he would not go along on it, he
was supposed to it, the legislation that Marriner proposed.
on.
H.M.JR: Well, I am not going to take that fight
MR. BELL: And he said that he did not mention at
all the Treasury.
3
-3Marriner didn't mention us to Jesse, so that you
are not involved there. He has sent the legislation
to the Budget, and the Budget no doubt will ask us
for a report on it.
H.M.JR: Well, I saw Jesse some place a week or two
ago and I mentioned it to him.
MR. BELL: Did you?
H.M.JR: And Jesse said, "I am opposed to it."
He said, "The Federal Reserve will never make the
loans.
MR. BELL: That is what they say about Jesse.
H.M.JR: I know. But for your guidance, I don't want
to get in on the fight between Jones and - following my
policy - I like to pick my fights. I don't want to pick
this one.
MR. BELL: Now, when we are asked for a report from
the Budget, do you want to say we have no objections to
it or - we have got to say something in the reply. You
could simply say that we have no objections in the
Treasury.
H.M.JR: That is all right. I would tell Marriner,
I just don't want to get in on that fight.
MR. BELL: We have already told him. I told him that
you wanted it taken up with Jesse first. He did, and
got nowhere.
H.M.JR: Harold comes in at eleven.
MR. GRAVES: Eleven. I spoke to Ferdie and Chick
about the thing that you asked me to take up with them,
and perhaps you would like me to have them with me at
eleven.
H.M.JR: Couldn't the three of you stay behind a
minute?
4
-4MR. GRAVES: Fine.
H.M.JR: I don't think it is important enough to
inch in on your fifteen minutes.
MR. GRAVES: I agree.
H.M.JR: So let those men stay behind.
MR. GRAVES: I would like to have Peter stay behind
too, because he was a party to this crime.
H.M.JR: He was?
MR. GRAVES: He was.
H.M.JR: Have you got a copy of my Hearst telegram?
MR..GRAVES: Yes.
H.M.JR: You have got one?
MR. GRAVES: I have, and the letter that you wrote
to Hearst.
H.M.JR: Now, out of curiosity, these telegrams
that go out, do we have those in our files?
MISS CHAUNCEY: I think we keep a copy in the files,
not in the diary, but in the regular files.
H.M.JR: Just show Miss Chauncey that telegram. It
brings up that same old question of telegrams going out.
MR. KUHN: They were O.K.'d by two out of three
of your committee.
H.M.JR: Well, I may have to dissolve the committee
(laughter). I may have to dissolve the committee.
Anyway, we will do that afterward.
MR. GRAVES: Fine. We will stay behind. You
mean after this meeting?
5
-5H.M.JR: It is just a question of this campaign
that started in the Post today.
MR. BELL: Is that approved by the Treasury too?
H.M.JR: In Washington?
MR. BELL: Yes. Is that approved by the Treasury?
H.M.JR: Evidently.
MR. GRAVES: Yes, it was.
H.M.JR: Do you want to get in on that?
MR. BELL: I think it is bad.
H.M.JR: Then you stay afterward, because I think
it is bad. I need a little support. You stay afterward.
MR. BELL: That is my report. You don't need any
support.
MR. GRAVES: You are going to have quite a company
here if you get everybody that thinks it is bad.
H.M.JR: Well, everybody who thinks it is bad
is invited to stay on my side, and Mr. Graves can invite
his people (laughter). Let's do it now. Come on, there
are so many people interested. Come on, Harold.
MR. GRAVES: Well, I will state the history of this,
if I may.
H.M.JR: Evidently there are a lot of people interested.
Go ahead.
MR. GRAVES: The Hearst papers throughout the country
had started a campaign quite on their own account to
take up cash collections, subscriptions, in what they
referred to as a "Buy a Bomber" campaign, and our people
6
-6approached the - those campaigns in the Hearst papers
were not doing well. The amounts contributed were small
and the progress made in those campaigns was very slow,
and our people approached the Hearst people and suggested
that they combine their "Buy a Bomber campaign with the
Defense Bond program, and instead of asking people to
subscribe in cash toward the purchase of bombers, that
they should buy Defense Bonds and Stamps for that same
purpose. I might say that prior to the Hearst papers
embarking on that campaign, we ourselves encouraged
a project at Buffalo whereby the people of Buffalo
were encouraged to buy Defense Savings Stamps for
the purchase of two bombers. That we all thought
was a very successful promotion effort. It certainly
did wake the people of Buffalo up to our program.
This was prior to Pearl Harbor, by the way, and gave
our project a fine start in Buffalo. That was broadcast.
I think, Mr. Morgenthau, that you heard that broadcast.
That is my present recollection.
The Army people participated in that. he
representatives of the City of Buffalo made a presentati on
of the bombers to the Army. hey were accepted on behal f
of the Army.
H.M.JR: I have no recollection of it, but that
doesn't mean anything.
MR. KUHN: It was in the Treasury Hour.
H.M.JR: I have no recollection. If Harold says
I heard it, I will take his word.
MR. GRAVES: I wouldn't be sure that you did. My
present recollection is that it was something that you
heard, and that you knew about.
H.M.JR: It might be.
MR. GRAVES: Now when it came to this matter of
converting the Hearst project into a combination of
their own project and a promotion plan for Defense
Savings Bonds, a telegram was sent to Hearst. You
7
-7were out of town and I was out of town. It was approved
by Mr. Odegard and Mr. Kuhn, endorsing that project.
That telegram was printed in the Baltimore American,
the launching of the campaign by that paper. Subsequently,
when the other programs by the other Hearst papers got
under way, you signed a letter to Mr. Hearst, again
endorsing that program, and while I don't know, I assume
that letter was probably reproduced in all the Hearst
papers throughout the country.
H.M.JR: Is that a letter I signed a day or two
ago?
MR. GRAVES: It was dated January 30.
H.M.JR: Oh.
MR. GRAVES: Now, there were some objections that
we made to the way the Hearst people were promoting
this campaign, particularly in Chicago, and I think
probably elsewhere too. They were undertaking to take
credit for all Stamp sales in the community as being
derived from their project, and that was objected
to by other papers. The representative of the Chicago
Times came in to see you and complained about that, and
that part of their promotion publicity was eliminated.
H.M.JR: Well, I made the flat statement, and Chick
stood beside me two days ago, a week ago, that we didn't
authorize anybody to sell Defense Bonds in order to
pay for a bomber.
MR. SCHWARZ: For earmarking purposes.
H.M.JR: Yes.
MR. KUHN: Mr. Secretary, we never have told any
of these people that the money they raise would be
earmarked, but we have said that a bomber costs so
much and if you people --
H.M.JR: Yes, but that isn't what Mr. Eugene
Meyers paper says today.
8
8-
MR. BELL: It gives a bad impression. It gives
the impression to the public that this money is earmarked
specifically for a bomber.
H.M.JR: Oh, definitely.
MR. BELL: That is what I think we have got to avoid.
MR. GRAVES: Well, I think this about the Washington
Post campaign. It may be off in some matter of emphasis,
but
tionmy
-- own opinion is that there is no important decep-
H.M.JR: Can I see the telegram I sent to Hearst?
MR. SCHWARZ: The story is in the clippings, Mr.
Secretary.
MR. GRAVES: Here is the letter you wrote also.
H.M.JR: This is what I sent. "Delighted to hear
that your newspapers are urging their readers to buy
bombers with Defense Stamps. Every little purchase will
help if it is repeated every payday. Every stamp we
can sell will strike a blow for freedom."
Well, of course it isn't true. They just can't
do it. It is impossible. It isn't true. I mean, my
telegram is a false statement.
MR. GRAVES: I don't think it is essentially false.
It is maybe technically false, but it certainly is
no more false, in my judgment, than this transaction,
which as I suppose, goes on right along. We accept
money at the Treasury from people who think that their
money is being received and expended for defense
purposes. Well, as a matter of fact, of literal
fact, it is not. It is credited to miscellaneous
receipts, and is not expended --
H.M.JR: I will make a test, Harold. Would you let
me send a telegram to P.M. and say, "Every Defense Stamp
-9-
9
that you buy helps to give an unemployed man a job"?
MR. GRAVES: Why, I don't see the connection.
H.M.JR: Well, the two things are just as true
or false, because this money goes into the general fund
of the Treasury, and so much of the money, or so much
of this money goes to WPA.
MR. VINER: I think there is another objection to
it that seems to me weightier.
H.M.JR: A certain amount of it goes to WPA.
MR. VINER: It suggests that if they didn't buy these
Savings Stamps we would buy less bombers, which isn't
true.
H.M.JR: Aside from everything else, a bomber
for MacArthur, you can't get a bomber -MR. GASTON: The point that struck me was that if
they are not doing it, it carries the implication either
that they are not doing what they can to help MacArthur
or -H.M.JR: Here is the thing, Herbert, under the
picture, "A bomber for MacArthur. This is a Martin
B-26, dubbed by the British a "Marauder". A war plane
of this type will be sent to General MacArthur's men
in the Phi llippines. It costs two hundred thousand
dollars. You can join the fight by becoming a member
of the 'Bomber for MacArthur' campaign beginning today,"
and so forth. It says here, "A war plane of this type
will be sent to General MacArthur's men in the Phillip-
pines." It is a lie.
MR. GASTON: It is terribly unsettling to morale,
because it creates the impression the Army and Navy are
not doing what they can now to relieve MacArthur.
MR. BELL: In other words, if we can get this one
over there, why don't we get a lot over there?
10
- 10 -
MR. FOLEY: That is different, though, than this
thing Harold has just stated, and I think it is just as
fair to send the telegram about the Dei 3 Stamps as
it is to say, "Pay your taxes to beat the Axis, " or
"When you pay your taxes, you buy bombers and you buy
anti-aircraft guns," and all. It is poetic license, and
it is a general statement.
MR. GRAVES: It is exactly like that.
MR. WHITE: It may be poetic license, but I think
it places the tone and the level of Government activity
in taxpaying on a low plane, which I certainly think is
far beneath the dignity of the Federal Government.
MR. GRAVES: You are speaking about Donald Duck?
MR. WHITE: No, I am speaking of that whole attempt
to indicate to the taxpayer that by the purchase of -
or to the bond buyer that by the purchase of bonds, he
is enabling more and more planes and more and more
guns to --
MR. FOLEY: Well, you have got to popularize the
effort.
MR. GRAVES: That is literally true. He is.
MR. ODEGARD: Mr. Secretary, is this any different
from the aluminum campaign?
H.M.JR: Thank you. What did I tell Harold this
morning? What were the two - what did I say? (Laughter).
What did I say this morning?
MR. GRAVES: You said this was the same kind of
deception that we had in the aluminum campaign.
MR. ODEGARD: I don't think it is deception.
H.M.JR: And what was the other case? And Harold
Ickes on his gasoline.
11
- 11 -
MR. GRAVES: That is right. (Laughter). My friend,
Peter.
H.M.JR: I am not going to get down to that level.
MR. KUHN: Mr. Secretary, ever since the first of May,
though, in your speeches and all the Defense Bond
literature you have said we must do this to buy the
guns and tanks and planes.
MR. GRAVES: That is right.
H.M.JR: Ferdie, look, - I forgot Miss Chauncey
is here (laughter). You go so far, see. If you say
to me, this campaign is to help buy the - and so forth
and so on, then you give somebody an inch, and they run
with the ball, and they have made this thing cheap and
they have just cheapened the whole thing, see. I mean,
you get to a point where they take a man like MacArthur,
who is doing a magnificent job under the greatest handi-
caps, and they capitalize on him, and try to make the
readers believe that by buying two hundred thousand
dollars' worth of Defense Bonds you can send - you will
send a bomber.
MR. KUHN: But that is not what you ever wrote to
Mr. Hearst.
at.
H.M.JR: True, but this is what the thing has arrived
MR. KUHN: Well --
H.M.JR: I mean, it has gotten lower and lower until
we are on the level of aluminum scrap, where they said
you give your aluminum pots, and that will build bombers,
which was a falsehood. It was just a straight falsehood.
MR. KUHN: Mr. Secretary, there was no falsehood
in your letter to Mr. Hearst.
MR. ODEGARD: Mr. Secretary, I wasn't suggesting
that this was on the same level as the aluminum campaign.
I don't think it is.
12
- 12 -
H.M.JR: It is worse (laughter). Because you are
capitalizing on a hero, and we don't have to stoop to
that level in order to raise money, and gentlemen,
I don't care what anybody is going to say, I told
Harold Graves I am not asking for advice this morning.
I am not going to do it, and I am going to stop it. I
am not asking anybody's advice. This is one of the rare
occasions. It has only happened once before that I can
remember. And this once before - this is the second
time. I am not asking. I am just going to stop it.
I have said that. I am perfectly willing to call up
I mean, this is the second time in the nine years that
Eugene Meyers and ask him to stop it, and we will just
have to, Harold - I don't know whatever - whatever there
is that is necessary, I would please like to - whatever
telegrams are necessary, I will send whatever talegrams
are necessary to stop it, or anything which will lead
up to anything like this to whoever it is, Mr. Hearst
or whoever it is.
Whoever is doing this thing I would like to send a
telegram today, but I am not going to sink to that level.
I would rather stop the whole defense program. That
is the way I feel. I would rather stop the whole program.
So if you find out, Harold, please, whatever is necessary, and prepare immediate telegrams to whoever --
MR. GRAVES: I should think it would have to go to
Mr. Hearst.
H.M.JR: Well, wherever it is necessary, please could you have them by - well, whenever it is ready,
bring them in, will you?
MR. GRAVES: Yes.
H.M.JR: And I will call up Eugene Meyers and
I will also call up Secretary Stimson and tell him
what I am doing, but I can't be on this level. I
mean, I am sorry, but this is one time I am going
to do it my way.
13
- 13 MR. GASTON: The only thing that struck me as bad
was the MacArthur angle of it. I thought that was
very bad.
H.M.JR: but you see what happened, Herbert, we
go from this thing where you say - this is to Hearst.
"The regular purchase of Defense Bonds by every Amer-
ican" - I don't see where it is. Oh. "
has provided
funds for military equipment by the purchase of Defense
Bonds and Stamps. Now, in this telegram I would say
this. There is legislation pending which will make it
possible to set up separate funds.
MR. GRAVES: That wouldn't affect this, Mr. Morgen-
thau. As I understand that legislation, it has to do
with donations only. Is that right, Ed?
MR. FOLEY: Yes.
MR. GRAVES: You wouldn't be earmarking the proceeds
of the sale of Government securities.
H.M.JR: Then let's stop the whole thing. Let's
stop it in all the literature. I feel very strongly
about it.
MR. WHITE: Isn't there something, Mr. Secretary,
that also applies not only to this, but some of the
other aspects of the plan? The assumption that the
limiting factor in the production of planes and guns
and tanks is financial is, I think, a definitely erroneous conception, just as erroneous as this is, and the
general emphasis which has been placed on it I think
is subject to reconsideration the same way that this is.
The reason we can't produce more tanks and planes and
guns is not because people aren't buying more Defense
Bonds.
H.M.JR: You are right.
MR. GASTON: There is another aspect of it though,
Harry. Isn't it correct that if - in so far as the pur-
chases come out of current savings, that would otherwise
14
- 14 be expended in current production, you are increasing
our capacity, you are adding to the capacity to produce,
so that in that sense the savings and investment of
Bonds does contribute to the war production?
true.
MR. WHITE: You could argue even that that isn't
MR. VINER: We oughtn't to rely on that.
MR. GRAVES: Well, does that affect what is behind
that picture (Donald Duck) there, are you going to kill
that picture because it says that your taxes are for
guns and tanks and planes? Are you to kill that?
MR. WHITE: It depends. I haven't seen the picture, but it depends on how it is presented.
H.M.JR: Anyway, would you do that please?
MR. GRAVES: Yes. There is one other point apropos of
what Harry has just said. If he is right then our whole
program is just dishonest, because we gall these Defense
Bonds. Our literature says "For Defense buy United States
Savings Bonds." Well now, literally --
MR. WHITE: No, there is a difference.
MR. GRAVES: Excuse me. The proceeds of the sale of
these securities come into the general fund to the Government.
They are not earmarked for defense. The proceeds of the
sale of these securities are for all purposes of the
Government. Technically, then, you could throw out our
whole campaign, even to the name of our security, on his
argument, because the proceeds of the sale of these bonds
are not in any sense earmarked for defense.
H.M.JR: Well, Harold, just so there will be no mis-
understanding, no one has talked to me about this, and I
have talked to nobody. I don't want you to think that
somebody in the room has been talking to me.
MR. GRAVES: I understand that.
H.M.JR: When I read it in the Post this morning --
- 15 -
15
MR. GRAVES: You sent for me immediately.
H.M.JR: All of these things are matters of degree
and you see what has happened, they have gone this way
until you get this kind of complete deception and they
could argue about the aluminum. The argument that they
gave about the aluminum was that when you took the scrap
aluminum, by accumulating that you released an additional
virgin aluminum which is necessary to go into the planes,
so, therefore, the campaign was all right, and the scrap
aluminum could be made into bucket seats in a tank, and
you needn't use virgin aluminum for bucket seats, so
there was more virgin aluminum to make a plane. But
the kick-back was terrible. The kick-back on Harold
Ickes - he hasn't got over it yet. He came out and
said there was a shortage of gasoline and so forth and
so on. And all I am trying to do is, in my own sensibilities on this thing, all I can go on is, for defense.
I think you can go that far.
Mr. Hearst goes a little bit further, and, believe
it or not, Mr. Eugene Myer goes a little bit further
than Mr. Hearst, and then you get down to this place
where it is a complete falsehood, and from the Army's
standpoint - I mean, immediately it raises the question,
"If the Washington Post can get a bomber for MacArthur,
why do we have to wait for the Washington Post to do
it and only send one? Why don't we send a thousand?"
MR. KUHN: Mr. Secretary, the MacArthur-H.M.JR: "Why don't we send a thousand bombers?
Does the Washington Post have to raise two hundred
thousand dollars to send one bomber to MacArthur?"
MR. KUHN: The MacArthur thing never emanated
from here in any way, Mr. Secretary.
H.M.JR: But they are using me. They are using
my Defense Bonds to raise the money.
MR. KUHN: But they should be stopped from that,
from the MacArthur part of it.
- 16 -
16
H.M.JR: That is all I am talking about. I want
to kill this program in the Post this morning. Harold
Graves says you can't do it - you mustn't do it, is
what he said. They I want to reexamine the whole thing
back to the original point.
You remember I took that folder on taxes to the
Cabinet which said a gun costs so much, this costs so
much, and the whole Cabinet jumped on me--
MR. KUHN: For a different reason, Mr. Secretary,
because it was taxes. It was a thing that you had no
choice about, but we have a folder on bonds which says
the same story.
H.M.JR: Look, I can't think of a good example. I
can think of one but - do you (Miss Chauncey) mind just
leaving the room for one minute? I am handicapped. When
I buzz twice, you come back.
(Miss Chauncey left the conference temporarily.)
(Discussion off the record.)
H.M.JR: Well, anyway, Harold, let's kill this
this morning and we will kill the Hearst thing, and then
let's reexamine the whole thing, see.
MR. GRAVES: I understood you to just say that the
thing that you objected to was the MacArthur slant on
this.
MR. VINER: The earmarking.
H.M.JR: No, the earmarking. I don't want any ear-
marking.
MR. VINER: Also, they shouldn't say, "It will buy."
They may say, "It will pay for," but there is a difference.
H.M.JR: Well, they have gone too far.
MR. BELL: "Will be available for."
- 17 -
17
H.M.JR: You bring in the Hearst and the other thing.
MR. VINER: "Will be available for."
H.M.JR: If you want to bring in Kuhn and Odegard
at eleven, it is all right with me.
Harry?
MR. WHITE: I have here a memorandum on the status
of the Ecuadorian stabilization negotiations which we
ought to proceed with at once. I can either give you the
gist of it now or leave this with you or suggest that
we go forward with it.
H.M.JR: No, I won't look at it or touch it. The
next thing that comes is Lend-Lease in reverse.
MR. WHITE: Whenever you are ready for that - that
is the small part of the larger British problem. Whenever you are ready for that, we will go into it.
H.M.JR: When are you ready?
MR. WHITE: This afternoon?
H.M.JR: No, I am tied up this afternoon.
MR. WHITE: Tomorrow?
H.M.JR: Yes, I can do it tomorrow.
MR. WHITE: Tomorrow.
H.M.JR: I will start in at eleven o'clock.
MR. WHITE: Eleven o'clock, yes.
H.M.JR: But I would like Mr. Bell in on it and
Mr. Viner.
MR. WHITE: They will be.
H.M.JR: And I would like them prepared.
- 18 MR. WHITE: They will be.
18
H.M.JR: So I think, Bell, if you could have a
preliminary meeting.
MR. BELL: All right.
H.M.JR: With the group, 'so that - supposing you
have a preliminary meeting with them in the morning and
sort of get together, will you?
MR. BELL: Yes.
H.M.JR: And be ready for me at eleven.
MR. WHITE: The - we have received information--
H.M.JR: That has to do with the buying, isn't it?
MR. WHITE: The--
MR. BELL: Our buying.
MR. WHITE: The reverse Lend-Lease arrangements, I
think you will find, are a small part of the whole issue,
but let's raise the whole issue at eleven o'clock.
H.M.JR: Well, I would like Mr. Swope in on that,
please.
MR. WHITE: We have received cabled information that
arrangements are being made, in a commercial airplane, to
take twenty million dollars of gold a week out of Dakar
back into Belgium, probably for Germany. It could be
stopped. I am merely informing you about it. If you
are interested in going any further with it, we can take
it up with the Economic Warfare Board.
H.M.JR: A letter to the President, Vice President,
State, War, and Navy on it.
MR. WHITE: We now receive a montly report which I
imagine you would be interested in getting of the break-
down of where the Lend-Lease exports are going.
- 19 -
19
H.M.JR: Yes. Who gives us that?
MR. WHITE: We asked for it from the Lend-Lease
people.
H.M.JR: O.K.
MR. WHITE: Venezeula has bought about eight million
dollars more of gold. Gold on earmark is increasing.
It is about two billion two. I think you know, I am
not sure, that the Minister of Finance of Brazil is
coming up.
H.M.JR: Oh, only through the papers. Nobody has
told me.
MR. WHITE: Well, here is a cable.
H.M.JR: That Souza Costa was coming?
MR. WHITE: Yes.
MR. SCHWARZ: I told the State Department yesterday
that you hadn't received any word.
MR. WHITE: Well, we got it on the twenty-eighth.
H.M.JR: But did it - have you got the cable there?
MR. WHITE: I have got the letter here.
H.M.JR: And it said Souza Costa?
MR. WHITE: Souza Costa. He spoke to me down there
and told me some of the things he is coming up about.
He doubtless will want to see you, but his main reason
for coming, I think, is Lend-Lease.
H.M.JR: Well, I want to do so-called - the English
financial situation next. After all, I may have to
testify before the Senate on China, but I promised Sir
Frederick Phillips that he would come next.
- 20 -
20
MR. WHITE: Yes. We received a copy of a report
by the Economic Warfare Board, drawn up in London. We
received it from Cassidy. We also received information
that there are a large number of those reports, the
titles of which would seem to indicate a good many of
them are very useful to us. They have all gone to the
State Department. Unless you have some reason - disapproval, we would like to get those that deal with the
economic situation.
MR. VINER: I have seen a couple of them, and they
are very useful.
H.M.JR: By Cassidy?
MR. WHITE: Cassidy sent us one. He wanted to send
the rest, but the Ambassador said that they had already
sent a copy to the State Department and didn't understand why we couldn't get it from the State Department.
H.M.JR: Are you going to try to get them?
MR. WHITE: Yes.
H.M.JR: If you need any help, let me know.
MR. WHITE: All right, sir. That is all I have
except that the silver matter is stirring up a good deal
of opposition in quarters that you would have expected.
H.M.JR: You know they came, Ed, within two votes
of killing it yesterday in the House.
MR. BELL: Yes, fifty-one to fifty-three.
H.M.JR: They put a bill through and only missed it
by two votes.
MR. WHITE: To kill the silver purchase?
H.M.JR: To kill the silver purchase. What was it,
fifty?
- 21 -
21
MR. KUHN: Fifty-five to fifty-three.
MR. BELL: Yes, something like that. Somebody
offered an amendment to the Treasury appropriation and
Post Office appropriation.
MR. WHITE: Ed told you about yesterday's report.
H.M.JR: O,K., Harry?
MR. WHITE: That is all.
H.M.JR: Chick?
MR. SCHWARZ: Two young lady editors of the Vassar
paper want to interview you on Saturday. Will you be
here?
H.M.JR: Oh, I won't make any appointments for
Saturday.
MR. SCHWARZ: They may stay over Monday and maybe
I can bring them in to the press conference.
H.M.JR: I won't make any appointments. I expect
to be here, but I don't want to make any appointments.
Last Saturday I made no appointments, and it was the
worst day I had had in a week. I want to talk with you
and Ferdie and Gaston for a minute afterward on this
particular editorial in Time. I would like to get your
advice. There is a certain way I would like to handle
it. You men may disagree.
George?
(Mr. Haas handed reports to the Secretary.)
Would you give copies of that to Mr. Swope, because
he is interested in that. How many
cars back up in
New York. Is it bad?
MR. HAAS: They have about two thirds of the space
- 22 -
22
filled and the movement there is increasing. There is
a sharp increase both in to New York and out of New
York.
H.M.JR: Well, he is watching that in connection
with Procurement for me.
MR. HAAS: All right.
H.M.JR: Give him a copy, please. How is Dave
doing?
MR. HAAS: Pretty good.
H.M.JR: How is he coming? Where are corporations?
MR. HAAS: The corporations are there.
MR. MORRIS: I think this is the breakdown of the
corporations.
H.M.JR: Right. Thank you.
MR. BELL: In that connection, Mr. Secretary, Rouse
called me and said that a Mr. Wolfe of the Farmers City
National Bank, vice president, is suggesting that we
might use the churches in this campaign, that the
preachers have really put across a good story.
H.M.JR: For what?
MR. BELL: For the campaign on Defense Savings.
H.M.JR: Well, you had better talk with Harold
about that. (Laughter)
MR. BELL: I don't know whether you have heard of
it or not, but he has given quite a lot of study to it.
H.M.JR: Who, Harold?
MR. BELL: No, Mr. Wolfe.
- 23 -
23
H.M.JR: I would let Harold digest that.
Peter?
MR. ODEGARD: I haven't anything.
H.M.JR: Jack? Roy? Ferdie? Dave?
MR. MORRIS: No.
MR. BUFFINGTON: I wrote - telephoned Mr. Berkshire
about that Calvert advertisement. He has written to
the Calvert Distilling Company telling them to stop it
and stop the literature they already have out. I would
like to go to New York on Friday to meet with the
Publicity Committee of the War Activities Committee, if
I may.
H.M.JR: You saw the full page in PM last night?
MR. BUFFINGTON: Yes, sir.
H.M.JR: How did that get in?
MR. BUFFINGTON: Through Miss Spitzer of the Disney
organization.
You asked me to check with the motion picture
operators' organizations. I did that.
H.M.JR: Good.
MR. BUFFINGTON: I was sorry about that signature of
yours which will be corrected next week in the next issue.
MR. SULLIVAN: You remember at one of the press
conferences the question of what would happen to these
workers in Detroit who had been put out of employment
by the conversion, how they would meet their taxes? We
have a mimeograph to go out to collectors which I
spoke about early last week, and you said to bring it
up later. I have that any time you want to go over it,
- 24 -
24
or I can give you the substance of it new.
H.M.JR: I would rather have it - I mean, I have got
only half way through with you yesterday.
MR. SULLIVAN: That is right.
H.M.JR: Where is Paul?
MR. SULLIVAN: I don't know.
MR. BELL: He is sick, someone said.
MR. SULLIVAN: He was ill over the weekend and
Monday and yesterday he seemed to be better, but he said
he wished he had time to stay out another day or so and
I suppose it came back on him.
H.M.JR: We will get together today.
MR. SULLIVAN: And there is the Green letter, too.
H.M.JR: Well, I will give you now eleven-fifteen.
MR. SULLIVAN: Thank you, sir.
H.M.JR: Thank you.
Edward?
MR. FOLEY: Here is the copy of that committee
report.
Here is a reply to the Attorney General to his
letter saying that he has set up a crime section to
handle frauds perpetrated on the Government through the
defense program. (Reply dated February 4, 1942)
H.M.JR: What do we say?
MR. FOLEY: We thank him for bringing it to our
attention and tell him we will cooperate and there is
- 25 -
25
a memorandum for you to sign to the Bureau chiefs call-
ing his letter to their attention.
MR. WHITE: While you are on that, Mr. Secretary,
do you have any ideas as to whether you want the same
statement before the Senate Committee or would you want
a different one.
H.M.JR: Same is good enough.
MR. VINER: Well, Mr. Bloom used, I gather from
the newspaper report, large chunks of yours so that you
will be repeating him rather than yourself. (Laughter)
MR. FOLEY: We didn't use much. You can see there
we only used a couple of paragraphs, and used a couple
of paragraphs from Hull's and the rest we dictated.
MR. WHITE: We can change those.
H.M.JR: What I would do in that case, Jack, is
simply say, "Gentlemen, I have got the same statement
that I gave before the House. Would you like me to read
it or have you seen it?" In most cases they say, "We
haven't seen it, you read it." But I make that state-
ment. There is no reason to change it.
MR. VINER: Even though the Committee--
MR. FOLEY: There was no record taken down yesterday.
MR. VINER: But if the Committee has used any paragraphs, you won't repeat those paragraphs?
MR. FOLEY: In the report? Sure.
H.M.JR: There won't be any record before the
Senate either.
MR. WHITE: But his point is that Bloom's report
contains a few sentences, about four sentences--
- 26 -
26
MR. VINER: Those are the ones the newspaper
quoted.
MR. FOLEY: That is all right.
MR. WHITE: It is all right. They are good.
from.
MR. FOLEY: They will now know where they came
H.M.JR: Well, anyway, Jack has made a suggestion.
Take it under advisement.
MR. FOLEY: I am ready on General Aniline and Film.
I have the letter to John E. Mack.
H.M.JR: I am ready, too.
MR. FOLEY: All right. Let's fix a time.
H.M.JR: Mr. Sullivan, fifteen minutes, do you think?
MR. SULLIVAN: Yes, sir.
H.M.JR: That would bring Mr. Foley down to eleven-
thirty.
MR. FOLEY: At eleven-thirty I will be here.
H.M.JR: And has Swope been brought up to date on it?
MR. FOLEY: I will bring him up to date?
H.M.JR: Would you bring him up to date? I would
like to have him here.
MR. FOLEY: Sure. That is all.
MR. GASTON: I wrote you a memorandum. I don't
know whether you have had a chance to see it yet. Miss
Chauncey says no. Donovan would like to have commercial
attaches restored to the neutral countries of Europe.
27
- 27 That is Spain and Portugal and Sweden and Switzerland.
He would much prefer to have Treasury attaches, and he
has cleared it with the State Department and with other
agencies interested. The purpose of having those
attaches would be to report information which is
generally available, not undercover stuff. They would
have an open status and it would be general information
that could be picked up from general sources. They
would not do undercover work, and they would do some
work for the Treasury Department.
H.M.JR: Would it be above-board?
MR. GASTON: Entirely above-board. They would have
status as Treasury attaches. Their main function, as
far as Donovan is concerned, he would be willing to pay
their salaries. I don't think that is necessary, but
their function, as far as he was concerned, would be
commercial information.
MR. FOLEY: I think it would be very helpful if
we could have some people in these missions that under-
stood freezing control and could give us reports on
things that are going on in those countries in relation
to freezing control, and I think you ought to make very
sure that Donovan has it really cleared with the State
Department and that they are willing to do it, because
they have never been willing to do it so far and that
is how he got in trouble with the State Department.
MR. GASTON: I suggested in my memorandum to the
Secretary that we would, of course, clear it with the
State Department before we did anything. Would you
like me to talk it over with Harry White and Ed and-H.M.JR: Yes.
MR. GASTON: And perhaps we will get John Wiley.
I understand he is the man who is pushing it. We will
get him in and get him to tell us everything that is
in his mind on this thing.
MR. FOLEY: If we could have somebody in Portugal,
28
- 28 Sweden, Switzerland, and South America, it would help
us a great deal.
H.M.JR: Whatever you agree on, go ahead. You
don't have to bring it back to me.
MR. WHITE: That was your idea, Mr. Secretary,
six months ago, if you will remember. (Laughter)
MR. GASTON: There is another question that is in
my mind and that is that South American thing. Should
we explore that question of putting people in South
America.
H.M.JR: Yes.
MR. GASTON: I think it is worth while.
H.M.JR: Yes.
MR. WHITE: That is pertinent to another point, Mr.
Secretary. While I was down there, the question arose
of the inadequacy of the information that is present at
all the South American countries on the commercial
attaches' staff and the State Department staff with
respect to freezing control. We talked it over in
Brazil and the suggestion arose there that it might be
possible either to send somebody down to the key
countries who would travel in a certain area, break it
up into about five areas, or to have them send their
men up here and run a school up here for about three or
four weeks, so the problem is much to the information.
H.M.JR: Anyway, if you three gentlemen want to
take it on, whatever you decide, Bell and I will be
satisfied.
MR. BELL: I will.
H.M.JR: You don't have to bring it back. Just
tell me what you do.
MR. GASTON: Yes. You might be interested to know.
29
- 29 -
I think I told you about a proposal that came
from Turkey to trade opium for wheat. We put it up to
the Board of Economic Warfare, and it was turned down,
because they did not want wheat to go to turkey. Harry
has learned that the British made the deal and sent,
they said, corn to Turkey. I don't know whether corn
means maize or wheat. At any rate they made the deal.
MR. VINER: Wheat.
H.M.JR: We turned it down?
MR. GASTON: We turned it down and the British
made the deal.
H.M.JR: What did they do with the opium?
MR. GASTON: Apparently they sell it to South
They
America and then get opium from us. (Laughter)
don't get it, as a matter of fact, but they did come to
Harry within the last few days and ask for some opium
supplies for - to be sent to Britain under Lend-Lease,
and he told them, "How about the opium that you are
selling to South America?"
H.M.JR: I would like a little memo on this.
that.
MR. GASTON: I will be glad to give you a memo on
They are now limiting their purchases to surettes.
That is this new one-shot treatment that doesn't require
a separate syringefor war purposes.
H.M.JR: Are you implying that they are selling
drugs to addicts?
MR. GASTON: No, I am merely stating that the fact
is that they have long supplied the South American
market for opium.
H.M.JR: Legitimate trade?
- 30 -
30
MR. GASTON: Legitimate trade from Great Britain.
They want to continue to do that and keep up their trade
with South America and because of a shortage of opium
would like to get opium from us, that is, opium products
from us so that they can continue to sell to South
America.
H.M.JR: I would like-MR. WHITE: Because they get them from us under
Lend-Lease.
MR. GASTON: That is right. I will give you a
memo on it.
H.M.JR: Anything else?
MR. GASTON: That is all.
H.M.JR: Mr. Swope?
MR. SWOPE: Nothing.
H.M.JR: Thank you all. I did want to see Gaston
and the others.
31
February 4, 1942
Dear Mr. Meyer:
This morning's Washington Post has given prominent
display to a new campaign to "Buy a Bomber for MacArthur"
through the purchase of Defense Bonds and Stamps. This
campaign was prompted by the Treasury Department, and the
Post was in no way responsible for it.
On careful reconsideration, however, I feel that the
continuance of this campaign in its present form would tend
to give the American people a false and misleading impression.
It might suggest that the mere purchase of Defense Bonds and
Stamps would, by itself, send one or more bombers to General
MacArthur. This impression would not be true, and I should
not like to be responsible in any way for spreading a false
impression among the American people.
I should appreciate it, therefore, if the Post could
change the character of this campaign so as to delete any
reference to General MacArthur. After all, our object is
to encourage the American people to pay for the war effort
generally, and for the planes, tanks, ships and guns which
are needed to defeat our enemies. I feel sure that you can
work out some way of doing this without the emphasis which
you used this morning and which I feel was unfortunate.
Sincerely,
(Signed) a. Morgenthas. is.
Mr. Eugene Meyer,
Editor, Washington Post,
Washington, D. C.
PK/egk
n.m.c
copies Thompson
32
The Washington Post
FEB 4 1942
R. S. V.P.
'Bomber for MacArthur' Drive
Started Via Defense Bonds
is your chance to help Gen. Douglas MacArthur and
HERE
his valiant men.
A "Bomber for MacArthur" campaign to send a $200,000 war-
plane from Washington to the gallant defenders of the Philippines is begun today by The Washington Post, Radio Station
WJSV and the Junior Board of Commerce. The campaign has
the approval of the Army Air Forces.
The bomber will be christened "The City of Washington."
It will go to the Pacific theater of war, there to aid MacArthur's
forces in the fight for our way of life.
You may do your part by buying
United States Defense Savings Bonds
on a special "Bomber for MacArthur"
form
ON
how you do it:
HERE'S
Go to one of the following places
and ask for a "Bomber for MacArthur"
form-the front counter of The Post,
1337 E Street Northwest; the WJSVJunior Board of Commerce booth at the
corner of Thirteenth and E Streets
Northwest, or to any bank or building
and loan association.
GEN. MacARTHUR
This form is similar to the regular
Defense Bond except for a picture of a plane and the words
"Bomber for MacArthur" surprinted across it.
Fill it out for a bond of your choosing. Most popular are
the Series E bonds, whose denominations of $25, $50, $100.
$500 and $1000 sell respectively for $18.75. $37.50, $75, $375
and $750 and mature in ten years.
The "Bomber for MacArthur" bonds you buy will go toward
the purchase of a $200,000 Martin B-26. This is the deadly
medium bomber the British have dubbed "The Marauder." It
is the fastest bomber of its class in the world.
ON
I'
you can't buy bonds to help purchase the plane, you can
buy stamps.
If you buy them at The Post's counter or at the WJSV-Junior
Board of Commerce booth, the total purchase will go to help
pay for the bomber.
32
The Washington Post
FEB 4 1942
R.S. V. P.
'Bomber for MacArthur' Drive
Started Via Defense Bonds
is your chance to help Gen. Douglas MacArthur and
HERE
his valiant men.
A "Bomber for MacArthur" campaign to send a $200,000 war-
plane from Washington to the gallant defenders of the Philippines is begun today by The Washington Post, Radio Station
WJSV and the Junior Board of Commerce. The campaign has
the approval of the Army Air Forces.
The bomber will be christened "The City of Washington."
It will go to the Pacific theater of war, there to aid MacArthur's
forces in the fight for our way of life.
You may do your part by buying
United States Defense Savings Bonds
on a special "Bomber for MacArthur"
form.
on
how you do it:
HERE'S
Go to one of the following places
and ask for a "Bomber for MacArthur"
form-the front counter of The Post,
1337 E Street Northwest; the WJSVJunior Board of Commerce booth at the
corner of Thirteenth and E Streets
Northwest, or to any bank or building
and loan association.
GEN. MacARTHUR
This form is similar to the regular
Defense Bond except for a picture of a plane and the words
"Bomber for MacArthur" surprinted across it.
Fill it out for a bond of your choosing. Most popular are
the Series E bonds, whose denominations of $25, $50, $100.
$500 and $1000 sell respectively for $18.75, $37.50, $75, $375
and $750 and mature in ten years.
The "Bomber for MacArthur" bonds you buy will go toward
the purchase of a $200,000 Martin B-26. This is the deadly
medium bomber the British have dubbed "The Marauder." It
is the fastest bomber of its class in the world.
on
can't buy bonds to help purchase the plane, you can
I' buyyoustamps.
If you buy them at The Post's counter or at the WJSV-Junior
Board of Commerce booth, the total purchase will go to help
pay for the bomber.
33
The Washington Post
FEB 4 1942
Stamps bought at the bank and building and loan associations will go to the purchase of the bomber in the proportion
LF54 L46158 36 GOVI=G WASHINGTON DC 3 653P
WASHINGTON POST
1337 E ST NE WASHINGTON DC*
PR 258 STOP ON BEHALF OF THE ARMY AIR FORCES I WISH TO
COMME ND MOST HIGHLY QUOTE BOWBER FOR MACARTHUR UNQUOTE
CAMPAIGN NOW BEING CONDUCTED BY YOUR NEWSPAPER COMMA RADIO
STATION WJSV AND JUNIOR CHAMBER OF COMMERCE END
ARNOLD.
Commendatory Telegram from Lieut. Gen. Henry H. Arnold,
chief of Army Air Corps, sent last night to The Post
that the amount of "Bomber for MacArthur" bonds bought at
these places bears to the total amount of bonds purchased at
them. Thus if 50 per cent of the bonds sold at a bank are
"Bomber for MacArthur" bonds, 50 per cent of the stamps sold
at that bank will go toward buying the plane.
WJSV will have its opening official program in the campaign
at 7:30 o'clock tonight. Officials of the Defense Savings Staff
and Air Corps and representatives of the radio station and The
Post will take part in the program.
ON
EMBERS of the Junior Board of Commerce will appear on
a preliminary program in connection with Bob Pace's
variety show at 4 p. m. today over the station. Minute-men
speakers from the board are scheduled thrice daily until enough
M
money for the bomber comes in.
MacAthur is doing much for us. A bomber to aid him is one
of the best ways of saying "Thanks" in capital letters.
The Washington Post
34
Send Your Regards for Japs in a Bomber
"A BOMBER FOR MacARTHUR"-This is a Martin B-26 bomber, dubbed by the British as
"The Marauder." A warplane of this type will be sent to Gen. Douglas MacArthur's men in
the Philippines. It costs $200,000. You can join the fight by becoming a member of the
"Bomber for MacArthur" campaign begun today by The Post, Radio Station WJSV and the
Junior Board of Commerce. (Story on Page 1)
Copies to: Mr.
Bell
Dr. White
Dr. Viner
35
February 4, 1942
10:15 a.m.
HMJr:
Leon
Hello.
Henderson:
This is Leon, Henry.
HMJr:
Good morning.
H:
Say, this wage increase business in the steel
HMJr:
Yes.
industry
affects both of us very, very much.
H:
HMJr:
Right.
H:
Now I talked to Harry on Monday
HMJr:
Yeah.
and told him that I thought the boss ought
H:
to call you and me
HMJr:
Harry Hopkins?
H:
Yeah.
HMJr:
Yeah.
H:
You probably know that I couldn't get to see
the boss.
HMJr:
That's right.
H:
A good reason.
HMJr:
That's right.
H:
Well, I talked to Harry, because tomorrow morning
they re going to have a little meeting with this
joint CIO Committee.
HMJr:
Yeah.
36
2
Now we've looked into it, and 18's just about
set up this way. If there's a substantial wage
increase, the steel price gets increased.
Yes.
y could pay it - and I take
Well, even if
the position that that money belongs to you
HMJr:
Yeah.
on taxes
HMJr:
Right.
.....and we've got a reasonable stability here.
Now I mean, I just talked to Harry on the fly,
and was waiting to hear about it. I told him
I wanted to make the 03.80 as to why we should
have an administration labor policy.
Yeah.
Now, I suggested first we - I wanted to get in
on the inflationary aspects of it with you before
anybody else got in, but Wayne Coy's running around
with good intent - the same kind of intent
HMJr:
H:
HHJr:
Yeah.
and Lub has been thinking about it. He and
Miss Perkins are very much worried
Yeah.
and I saw Lub at the WPB meeting yesterday,
and told him that two things ought to be done.
HIGH
H:
Yeah.
One, that they ought to ask the bose not to make
any commitments tomorrow about any wage increases.
HWr
Yeah.
And two, that he ought to have in mind that if
-3. -
37
any conference was called on labor policy,
that you and I ought to be there.
HMJr:
I see.
H:
I wonder whether you wanted that - you can
probably get to the boss easier than I can.
HMJr:
Well, it's a little - I'm afraid, Leon, if
I called him up, he'd say, "Well, Henry, aren't
H:
HMJr:
H:
you kind of straying from your back yard?"
Well, then I'11 write him a note.
See?
I'11 write him a note and tell him that - do you
mind if I tell him that both you and I are
worried about it?
HMJr:
Well, that's all right. I'm glad to have you
H:
Because it's
HMJr:
include me.
But I think you ought to lead, and I'm perfectly
willing to follow along. But I'm afraid he
might, with a certain amount of justification,
say, "Well, how the hell do you get in on that?"
H:
Yeah. All right. Well, I'll do that.
HMJr:
But you can include me.
H:
All right.
HMJr:
How's that?
H:
I'11 let you know how it comes out.
HMJr:
And let me know how it comes out.
H:
All right. Fine.
HMJr:
Thank you.
TREASURY DEPARTMENT
38
INTER OFFICE COMMUNICATION
DATE February 4, 1942.
TO
FROM
Secretary Morgenthan
Jacob Viner
Conversation With Leon Henderson Re Steel Industry Vages
I think the Treasury has a vital interest in this field and that
Henderson was right in bringing you into the problem. Corporate profits are
an important source of Treasury tax revenue.
(1) If with government approval wages are allowed to rise
to the point where they absorb most of these profits,
the Treasury will lose much more revenue from corporate
income and high bracket personal incomes than it will
gain from personal income and indirect taxes on wage
incomes.
(2) If steel prices are permitted to rise to cover the rise
in wages, then the inflationary spiral - higher wageshigher prices-higher wages - will be well under way.
It is my impression that steel industry wages, even on a real-wage
basis, are higher than they have ever been before. In addition the steel
workers have the advantage of absolutely full employment, so that the ratio
of present annual real-earnings to previous levels is even higher than the
ratio of present real-wages to previous levels.
In 1941 steel workers worked an average of only some 38 hours a week,
primarily not because of unemployment but because of the restriction of the
working week to 40 hours and the impracticability of overtime work in a
continuous-process industry. If it should be desired to increase the earnings
of steel workers beyond their present level, it seems to me the way to do it
would be to increase the working week to say 44 hours. If this involves
displacing any steel labor, there should be no difficulty in absorbing it in
other essential industries.
gr
39
February 4, 1942
10:40 a.m.
John J.
McCloy:
Hello, Mr. Secretary.
HMJr:
Hello. How are you?
Mc:
Fine.
HMJr:
You haven't got a Washington Post before you
by any chance, have you?
Mc:
Yes, I can get one. Just a second.
HMJr:
Would you?
Mc:
Yee. Hold the wire.
HMJr:
Sure.
Mc:
Hello.
HMJr:
Hello.
Mc:
I've got one.
HMJr:
I tried an hour ago to get what I'm saying
through to Stimson, but they said they've been
unable to interrupt him and I want your help.
Mc:
Yes.
HMJr:
You see the story, "Bomber for MacArthur Drive"?
Mc:
Yes.
HMJr:
Well, now, you see the telegram from Arnold?
Mc:
Telegram from Arnold?
HMJr:
In that - half way down.
Mc:
Oh,me
yes.
Yes,
let
read
it. I see a telegram. Wait a minute,
HMJr:
Read the telegram.
-2Mo:
40
"Stop on behalf of the Army Air Forces I
wish to commend most highly 'Bomber for
MacArthur! campaign now being conducted by
your newspaper, Radio Station WJSV, and
Junior Chamber of Commerce. End. Arnold"
Yes.
HMJr:
Well, now the crux of the point is there's a
statement in the thing there, "The 'Bomber for
MacArthur' bonds you buy will go toward the
purchase of a $200,000 Martin bomber. IN
Mc:
Yeah.
HMJr:
Well, it isn't true.
Mc:
Yes.
HMJr:
Now, what I'm - it isn't true. Then on page
three where there's a picture of the bomber,
you see.
Mc:
Yes.
HMJr:
It says, if you turn to page three
Mc:
Wait a minute.
HMJr:
Hello.
Mc:
Yes. I see a picture of the bomber.
HMJr:
And under the picture, it says, "A warplane of
this type will be sent to General MacArthur's
men in the Philippines." Well, from your stand-
point I think it's terrible.
Mo:
I do, too.
HMJr:
Because you have to buy two hundred thousand
dollars worth of bonds to send one bomber to
MacArthur. Well, in the first place you can't
send a bomber to MagArthur
Mc:
That's right.
-3HMJr:
and in the second place, if you can send
one, why don' you send a hundred?
Mc:
That's right.
HMJr:
I think it's - and the repercussione on you
Mc:
41
will be much worse than they are on me.
Yes. Yes.
Mc:
I think it stinks.
I do, too; I do, too.
HMJr:
Now, what I'm proposing to do, if I can get your
HMJr:
backing is
Mo:
Yes.
HMJr:
.....I'm going to call up Eugene Meyer
Mc:
Yes.
HMJr:
.....and tell him that I'm awfully sorry, but
he cannot go through with this program and use
Defense Bonds in this manner.
Mc:
Yes. Yes.
HMJr:
And that he will hear from the War Department someone will call him from the War Department
to express their own views.
Mc:
Right. Right.
Is that right?
Well, now, let me get my bearings on it. Let me
HMJr:
Mc:
see if the Secretary knew anything about this
before I say go ahead, because I don't want to
cross any wires. Let me talk to Arnold right
away.
HMJr:
Yes.
Mo:
I don't know what the Secretary is doing now that
he can't be interrupted. Maybe he's in with the
42
Chief of Staff, or something.
HMJr:
That's what they said.
Mo:
BUT let me call you back. I'11 get on 10 ones
HMJr:
But from your standpoint, it's much worse than
Mc:
minute.
ours.
Well, I think so. I mean I think this gives
the implication that if a fellow puts up some
money, why one of these bombers will be sent
out to relieve MacArthur.
HMJr:
And the only reason that you're not sending them
is because you haven't got the money.
Mc:
That's right. That's right.
HMJr:
What?
Mo:
That's right.
HMJr:
I think it's terrible.
Mc:
I do,too.
HMJr:
Well, I tell you
Mo:
Well, now, let me get after 1t right away.
HMJr:
Mc:
I'll sit tight, but don't take too long.
All right. I'll go on it right away.
HMJr:
Because I've been sitting here for one hour now.
Mc:
All right.
All right. Thank you.
HMJr:
43
February 4, 1942
11:08 a.m.
HMJr:
John J.
Hello.
McCloy:
I've gotten, I think, to the bottom of this.
HMJr:
Yes.
Mc:
Arnold saye that yesterday he was asked - I
think it was yesterday, day before possibly on behalf of the Treasury - to approve such a
program. He said he didn't think it was any
good, he didn't like the idea, but it was put
up to him on the basis that the Treasury wanted
it and he said, "All right, I will go ahead."
The man that - the telegram was dictated to
two men, one from the Public Relations of the
Air Corps and a man sent over here by the
Treasury.
HMJr:
Yes.
Mc:
His name was Moran.
HMJr:
Yes.
Mc:
I don't know who he 18.
And they dictated together this form of telegram,
it was taken in to Arnold - who was very reluctant
to sign it - but said that the Treasury wanted it
and said,"I guess I'd better do it."
HMJr:
Yeah.
Mc:
And it was signed and sent off. He doesn't like
it. I don't like it. The Secretary of War
doesn't like it.
HMJr:
I see.
Mc:
And we're ready to say anything to anybody, but
there's been some mix-up apparently, because we
did it only because we thought it was in accordance
with some approved Treasury program.
44
2HMJr:
Well, it's one of those things that start at
the bottom and I never saw it until I read it
in the paper.
Mc:
Yes.
HMJr:
And I'll take - under those - from what you
tell me, I'll take full responsibility and
call up Eugene Meyer
Mc:
HMJr:
Mc:
Well.....
.....and tell him I'm sorry.
Well, we'd be very glad to do it also. If you
want us to, we'll call up Eugene Meyer, too.
HMJr:
Mc:
I think it would be helpful.
All right. And I'11 leave a little time go by,
and then call him up 80 that you have a chance
to call him in the meantime.
HMJr:
Mc:
I'll call him right away.
All right.
HMJr:
And I didn't know about this, but
Mc:
It was a man named Moran.
HMJr:
Yes.
Mc:
He's apparently in Mr. Duffus' office.
HMJr:
Yes. Well, you know more about it than I do.
Mc:
Yeah.
HMJr:
But I know I don't like it, and I know it isn't
good for the country as a whole.
Mc:
I'm sure it ian't. And I talked - I had a chance
to speak to the Secretary about it, and he thought
it was very poor taste.
HMJr:
Well, I'm sorry that our man ever approached you.
45
-3Mc:
Well,
all fifteen
right. And
I'll call up Eugene Meyer
in about
minutes.
HMJr:
Wonderful.
Mc:
Good. All right.
HMJr:
Thank you.
Mc:
Good-bye.
46
February 4, 1942
11:25 a.m
HMJr:
Eugene
Hello.
Meyer:
Good morning, Henry.
HMJr:
How are you, Eugene?
M:
Okay.
HMJr:
Eugene, I'm calling you up on this "Bomber
for MacArthur Drive".
M:
Yes.
HMJr:
Now I understand that our people somewhere
M:
down the line approved it.
Yes, of course. I asked the first thing when
they talked to me, "Has this got the Treasury's
support?"
HMJr:
Yes.
M:
"And cooperation."
HMJr:
Yeah. Well, now, frankly, I don't know how it
hit you, but I'm awfully shocked over it; and
I've talked with Jack McCloy
M:
HMJr:
Uh huh.
and they feel the same way. The way they
feel, he's going to call you, he can talk for
himself. If we can send one bomber, why can't
we send a hundred? And do you have to get two
hundred thousand dollars in order to send one
bomber to help out MacArthur.
M:
Yeah. Well, I - the way they told me here, the
talk - and I assume it came from your department was that they expected to spread it out around
the country.
HMJr:
Well, the point is - number one, we have no way
of earmarking any money that comes in.
47
2Well, of course. That's obvious.
M:
HMJr:
Now - and the thing definitely says this money Defense Bond - will buy a bomber, and the bomber
will
go to
MacArthur. Well, all along the line
it isn't
true.
Yeah.
M:
HMJr:
See? And now, I don't care how you do it, you
can put it on me or any way you want to
Yes.
M:
HMJr:
.....but I've got to ask you to stop it.
M:
Uh huh.
HMJr:
And you can place it right on my shoulders.
M:
Yeah.
HMJr:
Because it's ten times worse than that aluminum
campaign.
M:
Yeah.
HMJr:
Ten times worse.
M:
Yes.
HMJr:
And..
M:
Well, who was it in your department that asked
us to do this? This is done by request, not by
our suggestion.
HMJr:
A man by the name of Duffus.
M:
Duffus?
HMJr:
Yes.
M:
Who in the hell is he?
HMJr:
Well, he's way down the line; and he had no right
48
-3-
or authority to do this thing, and the first
I saw it was when I picked up the paper this
morning. And I sent for Harold Graves to come
to the house at once, who's in charge of the
drive.
M:
Yes.
HMJr:
And I know it's very unfortunate, but I
HMJr:
It's very embarrassing.
but I think it would be ten times worse
M:
Yes.
M:
HMJr:
M:
to go through with it.
And I'm perfectly willing to take full blame
publicly for whatever you can say. If you want
me to write you a letter, or anything, I'm
Well, I think you ought to write us a letter
that the Treasury has reconsidered or something.
HMJr:
I'll.....
M:
What?
HMJr:
I'11 do that.
M:
HMJr:
M:
HMJr:
M:
HMJr:
M:
Because otherwise - I mean, it's unexplainable.
You've got to have an explanation.
I will write you
We couldn't put - you wouldn't want us to put
ourselves in the position of having proceeded
without Treasury direction
I'm not asking
because that would be too stupid and
It would be unfair to you.
Why, yes. And it wouldn't be good for anybody.
I mean, I'd be - I'm willing to sacrifice myself
49
4
if it's for a good purpose, but it wouldn't
have a good purpose.
HMJr:
Now, I'll
M:
I think - you know, you're rather well known for
being sort of frank and maybe we made a mistake
and so forth.
HMJr:
I tell you what I'11 do. I'11 have a draft, see?
M:
Yes.
HMJr:
I'11 send it over to you before I sign it.
M:
Good.
HMJr:
And you tell me whether it's all right, and you
M:
Okay.
HMJr:
Is that fair?
make any changes in the draft that you d like.
HMJr:
It's a hundred per cent.
And I'm awfully sorry. We never should have
approached you; and of course, from the War
Department standpoint, it's ten times worse.
M:
Yes.
HMJr:
Because it immediately raised the question, "Well,
M:
1f you can send one bomber, why don't you send
a thousand."
M:
Yes. Yes.
HMJr:
What?
M:
HMJr:
M:
of course. Well, I
I'11 get the letter to you
The first thing I did was to ask, "Is the
Treasury _" well, I only - it didn't appeal
to me at all from - just because you say you
50
-5had no - it was obvious you had no way of
earmarking, and I thought it was a sales
stimulation device; so, of course, I asked,
"Does the Treasury want it?" He said, "Yes",
Jones did, and so I said, "Well, we ao what
the Treasury asks us to these days."
HMJr:
Well, I'll
M:
I mean it didn't - I didn't even question it.
HMJr:
M:
Thank you, Henry. You send over the letter
that you think
That'11 be over to you between now and one
o'clock.
Okay, Henry. I'm sorry about it; and I think
the easiest way to clear up a mistake is the
prompt and full admission of the mistake and
expression of regret, and that's all there is
to it, and forget it.
HMJr:
It'11 be done that way.
M:
Okay.
HMJr:
Thank you.
M:
Thanks.
51
February 4, 1942
11:55 a.m.
GENERAL ANILINE AND FILM
Present: Mr. Swope
Mr. Foley
Mr. Bernstein
H.M.JR: Let me ask you as I go along. You say,
the present management were fully cooperative. Such
has not been the case.
MR. FOLEY: That is right.
H.M.JR: Have you got specific instances where
they are not cooperative?
MR. FOLEY: Well, I have got a memorandum here
from Joe this morning in regard to a conference that
John E. Mack had yesterday with personnel people in
the plant. According to Mr. Block, Judge Mack implied
several times during yesterday's conferences that some
of the suspended executives would be back. For instance,
when certain research questions were discussed and one
of the men stated that a certain type of work had been
handled by Dr. Aickelin, Judge Mack said, 'Well, he
may not be away forever,' and similar statements. Judge
Mack instructed the men to inform Treasury and FBI men
of well-founded suspicious that they may have in regard
to certain individuals and even to hire detectives themselves if the Treasury men did not take any action.
Apart from this action against individuals, however,
Judge Mack instructed the men not to form any management
committees or make similar arrangements because by the
end of this month, the Treasury would be out and Mr.
Crowley would be in charge of the entire affairs and
52
-2it would then be much easier to negotiate with him as
an individual and as a man who has understanding for
business. Judge Mack added that, of course, he might
be wrong, but that he had it from the highest authority
in Washington that things would develop in such a way.
"Mr. Block who had attended the meeting said that
the general reaction among the men to these statements
of Judge Mack unmistakably was that of great relief."
H.M.JR: Well, I would n't say that was non-
cooperation. Would you?
MR. SWOPE: Well, he evidently hopes for a different kind of management. There isn't anything specific
in regard to their activities. We were speaking of
that. In regard to output, which is the real thing
that we are after.
H.M.JR: I don't like that paragraph.
MR. FOLEY: All right.
H.M.JR: This part on not assuming initiative is
all right.
MR. FOLEY: They haven't done a thing.
H.M.JR: That is all right. Those in charge of it
do nothing. That is all right.
MR. FOLEY: "Our original program assumed that the
present management would cooperate fully with us and would
assume the initiative in cleaning house. Such has not been
the case." That is the part about non-cooperation.
H.M.JR: On the American Woolen case, Bullitt
mentioned that. That is, our interference, you see.
MR. FOLEY: Well, we spoke of that. We didn't
cause the situation, Mr. Secretary, that resulted in
our going in there to find out actually what the personnel
and the controls were inside the company. That is
53
-3something that the company created itself. All we did was
to focus attention on that and the sales manager for
American Woolen called O'Connell a few days ago and
said. "We have been suspicious of the German background
of this company for some time, and we don't want to have
anything to do with this company unless you can assure us
that it is Americanized, and it is perfectly all right
for us to deal with them.' Joe said, "Well, we were still
conducting our investigations and he couldn't make any
such statement," and the man said, "All right, then, we
are going to restrict our dealings with the company to
those things that we can't obtain anywhere else. We are
not going to do"-MR. SWOPE: I raised the same question, Mr. Secretary,
with Mr. Foley. I said that was unimportant because it was
really our initiative that caused the suspicions of American
Woolen. It would make a stronger paragraph if we made
a statement that the Army and Navy were afraid to give them
business, and we weren't using their plant to full capacity.
H.M.JR: I will tell you. I know you have pored over
this thing. My over-all impression, if you don't mind my
saying it, it could be better, but if you say how -MR. SWOPE: We agree on that. That is one place
that we could strengthen it.
H.M.JR: If I were going to do this, and this is just
a suggestion, I would simply say, "My dear Mr. President:
We have been into this situation now for about seven weeks
and during this time" - would you say the present management or would you name him, John E. Mack?
MR. SWOPE: May I interrupt a moment? I didn't
bring this up at the meeting before. You have seen his
long letter. That is what I started to ask you (Foley).
From John E. Mack?
H.M.JR: I have not read it.
MR. SWOPE: Don't you think it would be better to have
a conference? Mr. Foley hasn't seen the letter and Mr.
54
-4Bernstein has.
MR. FOLEY: No, it is O'Connell. Neither one of us.
MR. BERNSTEIN: Williamson saw it.
MR. FOLEY: That is right.
MR. SWOPE: Why wouldn't it be better to have a faceto-face conversation with John Mack? Let's assume that
what he says in this letter, he is just as much in earnest
as you are in having his company do the right thing.
MR. FOLEY: Well, what I would do, Mr. Secretary,
as a matter of tactics, and I merely make the suggestion,
is to get an agreement from the President on vesting the
shares and then call in John E. Mack and have a talk with
him, because at the present time he is very -MR. SWOPE: That is dangerous because then if
John Mack -- if we could go to the President and say
John Mack agrees with us because we know the relations of
John Mack with the President, it would be much stronger,
wouldn't it?
MR. FOLEY: Yes, if you could do that. But I doubt
if you ever could do that.
MR. SWOPE: Well, you may be right. I don't know,
but if we tried we could tell the President we have tried
to do this with John Mack and he won't. Then we have
got a strong point too.
H.M.JR: I haven't read this letter. Let me read this
letter, but my own feeling is this, offhand, before I do
this thing, that we might ask Mack and Bullitt to come
in and sit down with us, and then simply say this. Now,
in view of this letter, nobody else - just Bullitt and
Mack - I mean, I would have no lawyers or anything else.
MR. SWOPE: How about Foley?
55
-5H.M.JR: Well, he is Treasury. I ould simply
say, "Now, look, taking what you said, John, that you
want to help and Bill Bullitt, that you want to help,
here is a Treasury program. This is what we want done.
Now, will you put this into effect for us?" and give them
the Treasury program.
MR. SWOPE: Well, but Mr. Secretary, I don't think they
are in a position to do that, as Mr. Foley can tell you
more clearly than I can, because Williamson represents
the ninety-seven per cent of the stockholders.
MR. FOLEY: Williamson is the fellow that hired
Mack.
MR. SWOPE: He isthe lawyer man.
H.M.JR: All right. Then if he says, "Well, we can't
do that,' then I say, "Well, can you do it if we vest
the stock?"
MR. SWOPE: That is right. But just discuss it
with him.
H.M.JR: No, I say this is the Treasury program.
This is what we want. Now, if you can't do it - in other
words, assume that Bullitt and Mack want to help.
MR. SWOPE: Yes, that is what I would do.
MR. FOLEY: Well, what I would say, if we brought them
in, is this. Now, our people - the presence of our
people in this company has focused public attention on the
German background of the company, and in these times that
isn't conducive to business, to the business of the company
or to the welfare of the company. What we propose to do
is to vest stock of the company in the Secretary of the
Treasury and then say to the rest of the Government, "Now
the Government is in such control of the situation that
it is perfectly safe for the Government and for commercial
interests to do business with this company." Would you
have any objection to our vesting the stock?
56
-6-
H.M.JR I am sorry. I wouldn't do it that way
because they would - my own feeling - I say I want to
this meeting.
talk about it again. That is the
T would say, "This is what we would like to do. We want
the company to be run and we want to get your orders,"
and so forth, and have a program. If you vest the stock
you have got to have a program of what you are going to do.
MR. FOLEY: Oh, yes. We would put in a responsible
management.
H.M.JR: Then I would like Mack and Bullitt to say to
me, "We can't do that.' "Why can't you?" "We don't
vote the stock." "All right, how would you feel then if
we get the stock? Can you do it?" And they would say,
"Yes." That would be the way I would like to approach
it. Just think it over. We can have another talk. But
get them to say - then we can say to the President that
Mr. Mack and Mr. Bullitt have no objection. In fact, they
think it would be helpful.
MR. SWOPE: Yes, that is what I would do. I would
surely see them first.
H.M.JR: I think so. Now, nothing is settled, Ed.
Think it over and if my - either after this meeting with
the draft board this afternoon - they are coming in from
three to four - if there is anything left of me, or else
the first thing tomorrow morning we will do it again.
I will try to do it this afternoon.
MR. FOLEY: Mack says, "It is my thought that the
Alien Property Custodian would ultimately be appointed
and that the stock in question would be taken over by
the United States or if there were difficulty growing
out of the claimed ownership by the Dutch, some alternative method might be found by which this stock
could be disposed of to American purchasers," SC it
isn't going to come as any great surprise to him that
we think that they should take the stock.
H.M.JR: Perfectly frankly, I am not going to sit
57
-7-
at the meeting - I don't want to get in on it. I haven't
got the time. The day isn't long enough.
MR. SWOPE: We can do it. You see, Mack hasn't met
with any responsible officials of the Treasury, except
Mr. O'Connell.
H.M.JR: Well, I think Mr. Foley and O'Connell
and any lawyers Foley needs and yourself would take
this on for me, but I simply cannot do this.
MR. SWOPE: Put I think you ought to read that letter.
It will only take five minutes.
H.M.JR: I will read it before I see you again, but
some time after --
MR. SWOPE: Because he has --
H.M.JR: Four o'clock I would like to see you again.
I will tell Stephens right now.
MR. SWOPE: Because he makes statements in there
that you ought to know of, of his attitude.
H.M.JR: I would like to, but my feeling is now but Ed, you can have a chance for rebuttal. Bernie can
have a chance for rebuttal. My own inclination is to have
them and Bullitt. Have you heard from Bullitt this week?
Bullitt told me Saturday that by God he was going to clean
this up in one week, and I said, "Wonderful. And you
haven't heard from him?
MR. FOLEY: No. He is going to be out there tonight,
to that dinner. We might get a chance to talk. He
hasn't called me up.
H.M.JR: No, because - well, I went all through the
thing. Bullitt is very emotional on this thing. He was
going to go to town. I thought he was just going to
rip this thing wide open, and here it is - what is it,
Wednesday?
58
-8MR. FOLEY: Yes.
H.M.JR: And he hasn't interested himself. I will
try to do this very hard today, so that you people could
call a meeting, say. for Friday. That gives Mack a chance
to get down here. What?
MR. FOLEY: All right.
H.M.JR: For Friday morning. And then I would like
you to sit in here and then we are not losing any time,
because we can't get at the President anyway today. I
don't know whether he could be gotten at tomorrow, so
no time is being lost.
MR. SWOPE: There are some other things we can do in
the meanwhile.
H.M.JR: Do you think that I have got to sit in at
those meetings?
MR. SWOPE: Well, I don't know. You are a better
judge of that. Anyhow, let us do it first to save your
time.
H.M.JR: I will tell you how I feel. I would like
you people to know. I just haven't got time.
MR. SWOPE: All right, let us try it.
H.M.JR: To be Alien Property Custodian personally,
which that would mean, if I am going to have to sit in
these meetings. I haven't got the time.
MR. SWOPE: Oh, you wouldn't have to do it after the
thing is vested.
H.M.JR: Well, I can't do it. I am overwhelmed
right now.
MR. FOLEY: Of course you are.
59
-9-
H.M.JR: I can't - if + have got to be Alien Property
Custodian, I don't want it.
MR. FOLEY: No reason why you should.
MR. SWOPE: We will see Mr. Mack and then if we think
that the atmosphere is such that you ought to see him, we
will tell you.
H.M.JR: Well, I hope I don't. I mean, I have known
Mack all my life, and all that, and it is very hard - I
mean, he is very clever. He will sit down here for half
an hour and tell all these little local Duchess County
stories that have nothing to do - I mean, that is his
technique. He will spend maybe an hour telling you stories
before he will get down to business. I just don't want
to be Alien Property Custodian myself.
MR. FOLEY: There isn't any reason why you should be.
in.
H.M.JR: And if I had him here, I would have Crowley
MR. FOLEY: All right.
H.M.JR: I would have Crowley.
MR. FOLEY: I think that is a good idea. Crowley
said he would like to sit in on any meetings we had.
H.M.JR: That is right.
MR. SWOPE: What is Crowley's interest in this?
MR. FOLEY: Well, Mack says that Crowley is going
to take this thing away from us.
H.M.JR: I want to explain. Excuse me, Ed. Crowley,
after all, has been appointed Alien Property Custodian, but
no authority.
MR. SWOPE: I didn't even know that.
60
- 10 H.M.J JR: He was appointed about two months ago,
but the President has never signed an executive order.
MR. FOLEY: Well, the President never appointed him.
Francis Biddle said he wanted him to head up a bureau over
in the Justice Department -MR. SWOPE: I saw that in the paper.
to do work of the kind that was done
MR. FOLEY:
by the Alien Property Custodian, but the President has
never designated him, and the President hasn't given
by executive order any of the Alien Property Custodian
powers to him.
(Discussion off the record).
H.M.JR: Now where were we?
MR. SWOPE: John Mack.
H.M.JR: Oh, I tried to explain Crowley, but you had
better have him there because he did say to me, "Anything
can do - I don't want any title, I don't want any
position, but if I can help" - I think you ought to explain
I
that Crowley situation to Mr. Swope, Foley. As long as he
takes that angle, why not bring him in?
MR. FOLEY: All right.
H.M.JR: Now, I will very definitely read this and
then --
MR. SWOPE: Sorry that you have to. It is five pages.
61
February 3, 1942
J. J. O'Connell
O. W. Brodanits
Subject: Meeting Hold by Judge Mack and Mr. Williamson with
GAF Executives.
A confernace was held yesterday called by Judge Mack
and Mr. Williamson to discuss with a number of plant and reserach
executives steps to be taken in the immediate future.
My source for the following information is Mr. E. A.
Block who has been talking to no quite a fow times reporting
that Judge Mack in several conferences told Block that the five
suspended executives would be back. Mr. Blook is taking the
position that the Company should, on its own initiative, dismiss
a those mon who were refused naturalization papers by our
Government. To make sure that I understood Mr. Block correctly,
I had another talk with him this morning and with a fow tricks
without making him suspicious, made him repoat the story he had
told me yesterday.
According to Mr. Block, Judge Mack implied several times
during yesterday's conference that some of the suspended executives
would be back. For instance, when certain resepach quest ons were
discussed and one of the mon 3 tated that a certain type of work
62
2
had been handled by Mr. Aickelin, Judge Mack said, "Well, he may
not be away forever," and similar statements. Judge Back
instructed the non to inform Treasury and FBI men of well-founded
suspicions that they may have in regard to certain individuals
and even to hire detectives themselves, if the Treasury men did
not take any action. Apart from this action gainst individuals,
however, Judge Mack instructed the men not to form any management
committees or make similar arrangements because by the end of
this month, the Treasury would be out and Mr. Crowley would be
in charge of the entire affairs and it would then be much easier
to negotiate with him as an individual and as a man who has
understanding for business. Judge Mack added that, of course,
he might be wrong, but that he had it from the highest authority
in Washington that things would develop in such a way.
Mr. Blook who had attended the meeting said that the
general reaction among the mon to these statements of Judge
Mack unmistakably was that of great relief.
63
FEB 4 1942
Dear Judge Mack:
I am in receipt of your letter of
January 29, 1942, and the two documents
enclosed.
I agree that our objectives are, or
ought to be identical. In consequence, I
assume that you are in accord with the changes
made by order of this Department on January
13, 1942. We were unfortunately unable to
reach you prior to the issuance of the order
but I can assure you that the decision was
made only after a thorough examination of the
facts.
I have asked Mr. O'Connell and the
other Treasury representatives in New York who
are supervising the operations of General
Aniline and Film Corporation to consult with
and cooperate closely with you or any of your
officers or directors in pursuing our common
objective.
I hope this exchange of views presages
an improvement in the situation.
Sincerely yours,
(Signed) H. Alorgenthau, Jr.
Secretary of the Treasury.
Honorable John E. Mack
President
General Aniline and Film Corporation
230 Park Avenue
York. New York,
JJL:JJOTC:EHF/mp 2/3/42
64
AWILINE & FILM CORPORATION
P
I
230 Park Avenue
telephone
Jurray Hill 4-1300
New York, New york.
January 29, 1942
Hnorable Henry Morgenthan, Jr.
Secretary of the Treasury
Washington, D. C.
Dear Mr. Secretary:
As of course you are aware, I became president
of General Aniline & Film Corporation on November 1, 1941.
For many months prior to my appointment, there had been
going on within the company en effort upon the part of the
American directors to free the concern of the foreign influence existing by virtue of the claimed ownership of a
majority of the stock of the company by I. G. Chemie, a
Swiss corporation, alleged by the Department of Justice
to be under the domination of I. G. Farben of Germany.
The American directors were not only seeking to Americanise the company, but to secure the sale of the foreignowned stock to a noncompetitive industrial group of undoubted American standing.
This internal struggle is fully revealed in the
minutes of the meetings of the directors; and, as a corollary
thereto, there were proceedings in the Chancery Court of
Delaware brought for the purpose of forcing a stockholders'
meeting in order that the Chemie stock could be voted by
its purported owners in an effort to oust the then existing officers and directors who were seeking to Americanise
the company. As you undoubtedly know, a hearing upon the
proceedings in Delaware has been postponed from time to
time at the request of the Attorney General of the United
States.
I WIS made aware of so such of this history as
had already transpired, and other details which I have not
time to enumerate, when I agreed to become president of the
company. It was represented to me and I fully believed,
and still believe, that by accepting the presidency of the
company I would be in 6 position to aid in important
matters of national defense, which incidentally, have
become more and more important as time has gone on.
65
-2
Honorable Henry Morgenthau, Jr.
January 29, 1942
Upon accepting the presidency of the corporation,
I issued a public statement, E copy of which is atteached
hereto. Since that time, I have consistently labored for
the purposes therein outlined. It WAG my thought that ultimately an Alien Pro orty Custodian would be appointed
and that the stock in usstion would be taken over by the
United States Government, or, if there were difficultion
growing out of the claimed ownership by the Dutch, some
alternative method might be found by which this stock
could be disposed of to American purchasers. It WILD ay
belief that my duty was primarily to conserve the interests
of the company 08 a going concern essential to the wer purposes of our Government and to preserve the status until
such time as the Government saw fit to act through an Alien
Property Custodian. I recognised from the beginning that
my tenure of office might be temporary and in any event was
uncertain. It was for this reason, smongst others, that
my salary as president of the company uss made payable upon
a monthly basis. You will do ne the credit of believing,
I MR purs, that the personal monstary considerations in-
volved were of secondary consequence. 1 was, however,
pleased to have this opportunity to render a public service.
Incidentally, I may any that my salary was fixed by the
Board of Directors at precisely the amount paid sy
predecessor.
The chang # that have been srought in the official
actup of the company are well illustrated by a additional
neaorandum which I attach hereto. You will note that
Ambasaddr William C. Bullitt is Chairmen of the Board of
Directors. I was very much gretified when he found, after
full consideration and discussion of the problems involved,
that he was in . position to become a member of the Board.
I then issued another public statement, a copy of which is
also appended hereto. Prior to Mr. Bullitt's departure from
the country on a special mission for the President, he left
a written statement outlining the circumstances mind. under which
he and appointed and the purposes he had in
For many months prior to ay appointment, the
Department of Justice, through the Antitmust Division, was
conducting a sweeping investigation into the affairs of
the company, its business affiliates and the status of
I. G. Chemie as related thereto. Indeed, there were two
grand jury investigations unier way and one group of in-
dietmonts has already been handed down. These proceedings
Regorable Meary Morgenthau, Jr.
January 29, 1942
66
3.
are still active. As you will readily see, there was such
to require the constant attention of the officers of the
company and their counsel, both prior to and subsequent to
my election as president. Moreover, the demands upon the
time of the directors have been very heavy. The officers
and the Board of Directors are acting in complete harmony
and are fully conscious of the grave responsibility that
rests upon them.
In addition to these matters, I have been concerned with problems of personnel and have sought help in
this respect wherever I could secure it. This is especially
important in view of the history of the company, its antecedents and the specialized work in which it is engaged.
of course, you could not possibly be more interested than
I as in purging General Aniline & Film Corporation of sub-
versive factors, in freeing it completely of foreign domi-
nation and in making it in every sense of the work an
effective, loyal American enterprise. Your attention,
however, is drawn to the fact that recent communications
received through your representative, Mr. Joseph J. O'Connell,
Jr., amount to orders issued by you with reference to the
internal affairs of the company and its personnel without
any previous consultation with me and, indeed, without any
subsequent explanation.
You will realise that the corporation is large,
with wide flung interests and thousands of employees, many
of whom are working upon matters important to the Nation's
war effort. It would seem to me that before issuing orders
in the nature of unexplained commands, well calculated to
shake the morale of the company and to impair its useful-
ness, it would be desirable for your representative to
consult with me as to the wisdom and propriety of any particular move. The timing and method of an action otherwise
appropriate may be fully as important as the action itself.
Your order of January 13, 1942 (of which I had no
previous notice), directing the simultaneous and immediate
suspension of five individuals and barring them from the
company premises was, I as free to say, particularly illtimed. I also note that this order, signed by Joseph J.
O'Connoll, Jr., "Treasury Representative", contains the
following language:
"All the company officers and employees
are to be advised immediately that they
Honorable Henry Morgenthau, Jr.
67
4.
January 29, 1942
are not to communicate with any of these
individuals, directly or indirectly,
without my prior written approval."
I cannot help but believe that this portion of the order,
at least, was inadvertent for I am frank to say that I cannot
find for it any warrant in law or in fundamental justice.
So far as I am personally concerned, that portion of the
order I cannot be expected to honor. Nevertheless, you
will note that in all other respects the order has been
fully complied with, although the individuals concerned
were afforded no opportunity to know what accusations, if
any, were made against them and have had no opportunity
to be heard. Compliance with your order was based upon
the settled purpose of the management to cooperate as fully
as may humanly be possible with any branch of the Government having any authority in the matter whatsoever.
Frankness compels me to say that the method
adopted in ordering the foregoing suspensions could have
only an adverse effect upon the practical operation of the
affairs of the company. Furthermore, I regret to say that
certain sources, which I an not presently prepared to identify, have sought to shake the confidence the company enjoys
with the various Government agencies with which it does
business.
A little more restraint and a little less disposition to condemn upon the basis of ex parte statements
would seem to be indicated. In my judgment this company
cannot be successfully operated by remote control. There
should be an intimate and frank cooperation between the
company management and your Department. That frankness
and cooperation I not only would welcome but most earnestly
solicit. It lies well within your power to achieve this
result. I stand ready, and so do the officers and directors
of the company, to consult at any time with regard to any
feature of the business of the company. If this course
does not appeal to you, I shall have to assume that your
Department desires to manage the enterprise in every detail
without reference to the wishes, the advice or the exper-
ience of the officers and directors. I cannot believe that
you would wish to assume such a heavy burden or so great a
responsibility. Moreover, it would place me in an embarrassing position and render the task I have assumed increasingly
difficult. In view of the fact that our objectives are, as
68
Honorable Henry Morgenthan, Jr.
5.
January 29, 1942
I hope, identical, I would appreciate an authoritative
word from you which would tend to clarify the present
confused situation and prevent unnecessary friction.
Respectfully yours,
/s/ JOHN E. MACK
JOHN E. MACK
President.
69
December 5, 1941
The following statement was issued by Judge John
E. Mack, President of the General Aniline & Film Corporation, this morning:
When I accepted the Presidency of General
Aniline & Film Corporation, I made an announcement of the policies which would guide me and
which were fully approved by the Board of
Directors. These policies in brief are to
improve the status of the Company, bring its
affairs into harmony with the purposes and
policies of the Government, and to establish
this important enterprise, so essential to
national defense, SS unmistakably an American
organization. It is, therefore, with great
satisfaction that I am able to announce today
that Ambassador William C. Bullitt, who is
thoroughly in accord with the policies as set
forth, will today become a member of the
Board of Directors of our Company.
70
STATEMENT ISSUED BY JUDGE JOHN B. MACK
FOLLOWING HIS APPOINTMENT AS PRESIDENT
AND DIRECTOR OF GENERAL ANILINE & FILM
CORPORATION, NOVEMBER 1, 1941
I have accepted a place on the board of directors as
well as the presidincy of the company after acquainting
myself with recent developments in the management indicat-
ing a determination upon the part of a majority of that
board to bring the affairs of the company into harmony
with the purposes and policies of the government and to
establish this important industry, which is now so essential to national defense, as unmistakably an American
organisation.
I have expressed to the directors my views and they
are thoroughly in accord with the policy I intend to pursue. It seemed to me that there was here offered an
opportunity not only to develop fully and completely an
institution that thas nurtured and grown on American
economic soil, but to make certain that it was truly
American in every sense of the word and completely free
from foreign influence or domination. I conceived this
to be a public service which I had no right to forego.
71
GENERAL ANILINE & FILM CORPORATION
Old Setup
New Setup
Officers
President - Schmitz
Secretary - Vom Rath
Treasurer - Williamson
Chairman of Board - Bosch
Mack
Gibbons
Williamson
Bullitt
Directors
Iselin
Schwartz
Schmitz
Breed
Hutz
Ford
Aichelin
Bennett
Williamson
Weiss
Vom Rath
Vacancy
Copied - al 2/2/42
Mack
Bullitt
Schmitz
Breed
Hutz
Budd
Stevens
Bennett
Williamson
Talbott
Baragwanath
Charles L. McCann
72
MRMORANDUM FOR THE PRESIDENT:
When the Treasury Department undertook the supervision
of the General Aniline and film Corporation it was our purpose,
first, that an intensive investigation would be made to ascertain the facts concerning German domination of the company
through personnel, patents, contracts or any other device;
second, that nothing would be done to impede the current
operations of the company; and, third, that decisions of management would not be interfered with except by way of vetoing any
proposed action which we felt might be in the interest of our
enemies.
After over seven weeks of operating along these lines,
we have come to the conclusion that the Department must take
more positive steps if the company is to continue to operate,
and to operate in a manner consistent with the national
interest.
Our original program assumed that the present manage-
ment would cooperate fully with us and would assume the initiative in cleaning house. Such has not been the case and, in
fact, those presently in control of the affairs of the company
have consistently followed a "do-nothing" policy. *he present
situation is becoming intolerable and can only be corrected by
the assumption by us of a degree of control over the affairs
of the company commensurate with our responsibility.
It was hoped that our recent action in ousting five
top executives of the company, all I.G. Farben men, would be
followed by action on the part of the remaining management
which would indicate their earnest desire thoroughly to
"Americanize" the company. Unfortunately, our expectations
have not been fulfilled. It has become increasingly clear
that the management proposes substantially to maintain
the status quo so far as possible. For instance, within
the past few days Hugh Williamson, +merican-born vicepresident of the company, and formerly a member of the
73
-2-
law firm of Breed,Abbott and Morgan, general counsel for
company, presented us with a proposal for the creation of the plant
management committees composed almost entirely of I. G. Farben men.
Another factor of paramount importance is that the facilities of the company are not being utilized to full advantage for
the war effort With practically all of the stock still owned
controlled by German nationals, and with the Government exercising or
only the present degree of negative control, agencies of this
Government and of Great Britain are disinclined to deal with the
company, as are its commercial customers. For example, under
instructions from London the British Air Commission has broken
off negotiations for the purchase of large quantities of film and
other commodities produced by the company, and one of its largest
customers, American Wollen Mills, has indicated an unwillingness,
under existing circumstances, to purchase anything from the
company which can be procured elsewhere.
I do not see how we can hope for full utilization of the
productive resources of the company unless we are in position to
state with assurance that the company is being controlled by truly
American management acting on behalf of American ownership and fully
alert to its special obligation to eradicate German interests.
I am convinced that no program for the Americanization of
this company can be carried out effectively without vesting the
German stock in the United States Government to be held pending a
determination as to its ultimate disposition. If you approve,
steps will be taken immediately to vest the stock in me as Secretary
of the Treasury. I shall then proceed to secure the services of
some first-class operating people who will cooperate with us.
Gerard Swope, who is now with the Treasury, is advising me as to
personnel. I shall ask William Bullitt to remain as chairman of
the board to assist us in our efforts to rehabilitate and American-
ize the company. I also think John E. Mack would be useful as
general counsel, leaving the active operation of the company to a
qualified business executive.
Secretary of the Treasury.
Approved:
February
, 1942.
74
February 4, 1942
12:14 p.m.
HMJr:
Eugene
Hello.
Meyer:
Hello.
HMJr:
Eugene?
X:
Yeah.
HMJr:
This is Henry.
Henry, this is what occurred to me in thinking
about this thing. If, instead of pulling it
out altogether
HMJr:
Yeah.
and I'm not talking from the point of
M:
view of the Post but from your end, the Govern-
ment end
HMJr:
Yeah.
M:
there's a little danger, you see, that
calling it off would be equivalent to announcing
that we can't and won't and don't intend to and
won't be able to send aid to MacArthur.
HMJr:
M:
Yeah.
Now, can't we turn it into something else.
Columbia Broadcasting as, you know, was in
on this and sat in with your people and so
forth; and I called Heinie, the man down at
Columbia
HMJr:
M:
Yeah.
because I didn't know whether you had
called him and I didn't want to go on the air
HMJr:
No, no, no, no.
M:
What?
HMJr:
I haven't spoken to anybody but you, and to
75
-2McCloy.
M:
Well, I thought I ought to tell him right
away; otherwise he might be going on the air
any minute. Well, they weren't going until
four-thirty anyway, 80 I told him to hold
that up.
HMJr:
M:
HMJr:
M:
Yeah.
Now, what do you think of allowing us to go
ahead with 1 t - I mean, I'm just - one thought
Yeah.
child.
to name a bomber with the name of MacArthur's
HMJr:
No.
M:
What?
HMJr:
Look, Eugene.
M:
Well, think about - you know, I'm not trying to
save the program. I'm trying to save the thing
from being given the military interpretation
that you might - that the General Staff might
rather not have given it.
HMJr:
Well, has McCloy called you?
M:
No.
HMJr:
He said he would.
M:
Well, who is it - McCloy?
HMJr:
Jack McCloy.
M:
Mc
HMJr:
McCloy.
M:
McCloy.
HMJr:
You know McCloy.
-3M:
HMJr:
M:
HMJr:
76
Sure, I know him. Well, should I call him?
Yes.
Okay.
Yeah, he knows about it; and, of course, they
say over there - correctly - that we brought
it to them, and reluctantly they did it.
M:
You mean with General Arnold.
HMJr:
Yeah.
M:
Yes. Well, I
HMJr:
And now - but they say that he went in to see
Mr. Stimson and Mr. Stimson and himself want
to see it stopped.
M:
HMJr:
All right. Now - you know, that's a very rigid
decision, which might be modified if we can find
the answer by diverting it instead of stopping
it.
Well, the only other thing that we possibly
could do is to do as much for you as I ve done
for Willie Hearst.
M:
Yes. What's that?
HMJr:
Well, for Hearst - I sent Hearst the statement
M:
For bombers.
HMJr:
For bombers, just generally.
M:
HMJr:
M:
whereby they're raising money for bombers.
Yes. Well, of course, that would be fine if
we had just started it the other way.
I know. I'll do as much
Now what do you think of this idea of a bomber
to be named for his child? Or something like
that.
77
HMJr:
M:
Well, the trouble 18 you can't get a bomber
to the Philippines.
I know, but we're not sending it to the Philippines.
We get
HMJr:
M:
HMJr:
M:
HMJr:
M:
But that's what the story says.
I know, but we're going to - we drop that.
It says flat-footedly, you know.
I know it, but we drop that. It's out. But
instead of canceling it and contradicting it,
we
divert - we slide over. I'm just trying
to look
You know you're trying to do to me what my
boys have been trying to do to me all morning.
What's that?
HMJr:
The same thing. Just what you're doing.
M:
No, I don't want to do anything to you, Henry.
HMJr:
I'm trying to do something that's helpful. If
it isn't helpful, I don't want to do it.
No, I mean my Defense Bond fellows are trying
to get me to, you know.
M:
Well, I don't want it unless it's a good solution.
HMJr:
Yeah.
M:
HMJr:
You know, I don't - I'll talk to McCloy. And
then if I may, I'll ring you back in case there's
anything worthwhile to talk about.
Well, I've gotten everybody - at least my people
have gotten everybody into this trouble, so I
need your help to
M:
Okay.
HMJr:
.....get me out of it.
78
-5M:
Well,
then, it's in this - it's in that spirit
that I rang you back.
HMJr:
Well, you didn't do it - but as I say, the
M:
Treasury is responsible for this mess.
Well, I appreciate your frankness and honesty
and readiness to go through in any way, and
let's find the best way instead of just the
first way.
HMJr:
Okay.
M:
Okay.
79
February 4, 1942
2:34 p.m.
Operator:
HMJr:
Eugene
Go ahead.
Hello.
Meyer:
Hello.
HMJr:
Eugene.
Yeah.
HMJr:
M:
Have you got a minute and a half. I can read
you my letter.
Yeah. I just - I got McCloy after I spoke to
you, and I called a little meeting and he's
sending a major over and we're just about to
begin; but you read the letter, because then
we can see what the meeting will develop.
HMJr:
Well, this is my letter.
"Dear Mr. Meyer:
"This morning's Washington Post has given prominent display to a new campaign to "Buy a Bomber
for MacArthur" through the purchase of Defense
Bonds and Stamps. This campaign was prompted by
the Treasury Department, and the Post was in no
way responsible for it.'
So far so good? Hello.
M:
Yes. I'd like to explore the possibility of
just moving this thing out from that and naming
this - make it a - let it go on as a campaign
like Hearst is.
HMJr:
Well, that's what we're - what I've got in my
letter.
Oh, good. I see.
HMJr:
I told you I'd treat you as well as Willie Hearst.
(Laughs) All right. Go ahead.
-2HMJr:
80
"On careful reconsideration, however, I feel that
the continuance of this campaign in its present
form would tend to give the American people a
false and misleading impression. It might suggest
that the mere purchase of Defense Bonds and Stamps
would, by itself, send one or more bombers to
General MacArthur. This impression would not be
true, and I should not like to be responsible in
any way for spreading a false impression among the
American people.
"I should appreciate it, therefore, if the Post
could change the character of this campaign so
as to delete any reference to General MacArthur.
After all
M:
Can't we call it Arthur MacArthur, after his boy?
HMJr:
Oh, I'd leave MacArthur out.
M:
All right.
HMJr:
Now if you don't mind
M:
Okay. Okay.
HMJr:
"After all, our object is to encourage the American
people to pay for the war effort generally, and for
the planes, tanks, ships and gune which are needed
to defeat our enemies. I feel sure that you can
work out some way of doing this without the emphasis
which you used this morning and which I feel was
unfortunate. "
Then I just finish up, "Yours sincerely.
M:
HMJr:
Uh huh.
In other words, all I'm asking is that you eliminate
MacArthur or sending "a" bomber to the Philippines
or that you can send one there, you see?
M:
Yeah.
HMJr:
And that leaves you on exactly the same basis
as the rest of the papers.
81
-3M:
HMJr:
M:
Well, isn't Kuhn able to come over right away?
He can come at once.
Tell him to come right away and bring it, will
you?
HMJr:
Well, he
M:
The proposed letter.
HMJr:
Well, it'11 take him - I've changed it - it'11
take him five minutes to - he'11 be there in
ten minutes.
M:
Okay. Okay.
HMJr:
Where's the meeting?
M:
In my office. Third floor. Washington Post.
HMJr:
Well, I'll sign this, in order to save time;
but if you don't like it after you've seen it,
I'll change it.
M:
Okay. Swell.
HMJr:
Thank you.
82
February 4, 1942
3:00 p.m.
DEFERMENTS
Present: Mr. McReynolds
Mr. Hershey
Mr. Stevenson
Mr. Thompson
Mr. Patterson
H.M.JR: I want to ask some questions.
MR. McREYNOLDS: You see the significance in that
"3" of the two years' experience is on the theory that
it takes two years to make a good soldier, and we shouldn't
keep anybody out who doesn't require more time than that.
H.M.JR: I still don't get it.
MR. McREYNOLDS: Well, we are trying to go at the
question of how long it takes to make the kind of a man
you have got. Now, if it takes less time to train a
man for his official duties than it takes to make a
well-trained soldier, then he ought not to be kept on
other duties than a soldier's duties. It was merely an
effort to get at something that was tangible, that you
could measure by.
H.M.JR: Do you mean, for instance, if I got a man
and it takes me one year to break in another man to take
his place?
MR. McREYNOLDS: You could never get more than a
83
-2
six months' extension for him.
H.M.JR: Supposing it takes me - I still don't
get it. I may be very dull today.
MR. McREYNOLDS: It may not be very tangible.
H.M.JR: Is it the basis on how long it takes me to
train a man? Let's take a man who is an engraver of
plates. Let's say it takes three years to teach a man
to be an engraver.
MR. McREYNOLDS: He would be automatically excluded,
provided he is in the class that you could consider a
request for a deferment on anyhow and that is he must
be doing something that is directly related to the war
work.
H.M.JR: I will let somebody else ask. I don't
get it.
MR. HERSHEY: I don't know whether this will
clarify it or not. I think the first test is the thing
he is doing, no matter how long it took to make him
that. Next, does it have to be done. If it doesn't,
there is no question. If it must be done, then is
there
a scarcity of the type of people he is. If there
is-H.M.JR: A scarcity in the Treasury?
MR. HERSHEY: Or any place, in the world. In
other words, is this the type of man that you can't
replace except by training. First, necessary, replacable,
then if that be true, then you get into the question of
how long is it going to take. If it has got to be done
and there is no one else to do it, and you can't train
a man short of two years, obviously you are driven
to the place where you have got to keep him.
H.M.JR: Give me an example.
MR. HERSHEY: Well, this engraver.
84
-3-
H.M.JR: Let's run through it. I still don't get
this thing. This is couched in such unusual language.
MR. McREYNOLDS: Well, the first test, if you had
an engraver and he was subject to draft - obviously you
have got to have engravers. You can't run the Treasury
without getting your stuff out. So your conclusion your first test is whether what he is doing is something
that must be - you must continue to do.
MR. PATTERSON: That comes within 2(a), is that
right?
MR. McREYNOLDS: That is right.
MR. PATTERSON: And also-
MR. McREYNOLDS: Then you would ask for a six
months' extension. At the end of six months, take your
engraver. It takes more than two years to train a
steel plate engraver.
H.M.JR: Let's just say five years it takes.
MR. McREYNOLDS: I know it does. You can't make
them any sooner. We have tried that long enough. Then
you get an extension for six months. You go over the
field and try to find engravers, and you don't find any.
MR. PATTERSON: You mean (a) and (b) are both
satisfied in the engraver's case.
MR. McREYNOLDS: There are no engravers to find.
MR. PATTERSON: The type of position in which it is
difficult to obtain replacement and in which he can not
be replaced except by training of another engraver for
more than six months.
MR. McREYNOLDS: If it takes more than two years
to train them, then you go back with that and request a
definite exemption for him because you have to keep him
85
4
-
on the job, but it must - he must come within that
limitation, according to this, that before you ask for
a further extension than six months, that there is no
way to replace him. He is doing 8 ioh that has to be
done and there is nobody to get to do it without training - and it takes more than two years to train them.
MR. PATTERSON: Let's take the case of a lawyer.
How about that?
MR. McREYNOLDS: The woods are full of them.
MR. PATTERSON: I know, but fit it down under the
program.
H.M.JR: Yes, that would help me. Let's do a
lawyer.
MR. PATTERSON: I agree with you about the condition of the woods.
MR. HERSHEY: The lawyer won't qualify under 2(b).
He would be eliminated there. Now, if he wouldn't--
MR. STEVENSON: You mean because he is not listed?
MR. PATTERSON: Except they will claim quite
frequently he has been thoroughly experienced in his
position and a greenhorn won't serve.
MR. McREYNOLDS: How long will it take to-MR. HERSHEY : How long does it take - we have got
the lawyer, but this lawyer is a particular kind.
MR. PATTERSON: In most cases a couple of months.
MR. McREYNOLDS: And automatically he is eliminated.
I would give the same answer, yes.
MR. HERSHEY: The two years here is being set up,
I think, as a measure of what his expertness is. That is,
86
-5the man that takes more than two years, obviously you
can't train a man in less than two years to take his
place and with the budgetary limitations you are going
to hs treining people for perhaps all of thess
others, you are, for the moment, saying, if it is a
man who has got to be trained more than two years, we
are going to try to leave him.
MR. PATTERSON: Let's follow it on this thing.
Assume a case where the head of the Department feels
that it takes two months to train a successor. Some of
them won't feel that, but some of them will.
H.M.JR: Two months or two years?
MR. PATTERSON: Two months. He is directed by
paragraph three to take immediate steps to train a successor.
Isn't that right?
MR. McREYNOLDS: That is right.
MR. HERSHEY: And he should ask for the two months'
deferment for the man instead of six months.
MR. PATTERSON: That is right.
MR. McREYNOLDS: And in the last paragraph--
MR. PATTERSON: That doesn't touch this case. I
made it a two months' lawyer, because there would be
no request for an extension.
MR. McREYNOLDS: No. In the last paragraph, 5,
it undertakes to put the Departments on notice that
where they have 1-A employees, they should start now -
not wait until they are called but start now to train
replacements.
MR. PATTERSON: The only question that will come
up will be this, I should think, that we will have a
lawyer that they think is a very good lawyer, far better
than the average run-of-the-mill, as many of them are.
87
-6MR. HERSHEY: I know of a case right now where they
claim--
MR. PATTERSON: Thev will claim that man is in-
dispensable--
MR. HERSHEY: I know a chief counsel now that they
are claiming exemption for because he has had twenty
months of particularized contacts. Twenty months of
particularized contacis to invaluable or only replaceable
in long periods. Those are things I don't know.
MR. PATTERSON: Along with his estimate of the
skill of the man.
MR. HERSHEY: It started with the skill. He is up
here this four years or six years or whatever it took
to bring him up here to the lawyer and this twenty months
has been capacity and particularization.
MR. McREYNOLDS: Then of course twenty months is
all he can claim on that because he can't claim basic
training as a lawyer and there are a million of them.
MR. PATTERSON: Oh, yes. Some are better than
others.
H.M.JR: Had you seen this before?
MR. THOMPSON: I saw it this morning.
MR. PATTERSON: I think it is pretty good.
MR. McREYNOLDS: I was trying to get something
tangible. It isn't as tangible as I would like to have
it, but I worked on it and the General worked on it and
his people and mine.
H.M.JR: Mac, there is one thing that you said which
misled me. What is the relationship between how long it
takes to train a man here - you said something about two
years in the Army. I didn't get that relationship.
88
7
MR. McREYNOLDS: The reason for the two-year period
was that we didn't want to recommend the exemption of a
man for military service because of a job he is on who
could be trained for the job he is on in less time than
you can train a competent soldier, and the estimate of
a soldier was two years. That is all there is to it.
MR. PATTERSON: I know thousands of men who fought
throughout 1918 with less than a year's service.
MR. McREYNOLDS: Oh, yes, some of them were less
than six months.
MR. PATTERSON: Ninety days.
MR. McREYNOLDS: But I am banking on Marshall's
talk about how valuable a man is in the Army at the
various stages of training, and he is the one I got that
from, not in connection with this at all but in connection
with other arguments.
H.M.JR: Well, now, let me see if I understand this,
because this, as I say is - I always admit when I don't
understand. I keep admitting it until I do, as you know.
A man comes up to me in the Treasury, or rather he may
or may not ask for exemption, but it is brought to my
attention we are going to lose such and such a person.
I
have got to first decide is his work indispensable.
MR. McREYNOLDS: That is right.
MR. HERSHEY: I would be a little careful of the
word "indispensable," because no one is indispensable.
They will always die.
MR. THOMPSON: The work is indispensable.
MR. MOREYNOLDS: Well, it is a job that you have got
to have done, that is all it is. It isn't a personal
consideration. It isn't a question of whether it is him
doing it. The job has to be done. The job is indispensable.
H.M.JR: Well, all my cases right now are all lawyers,
89
8-
it so happens. All my cases are lawyers. Well, some
of these men have been here five and six years. I don't
think under this - I think under this ruling, as I
understand it, I would immediately begin to train a man
to take the place of Assistant General Counsel.
MR. McREYNOLDS: Yes.
H.M.JR: And I ought to be able to train one in
six months. If, by the end of six months, I can't train
one, I could ask for another six months' extension, but
at the end of the year, certainly I ought to be able to
train a man to be Assistant General Counsel, is that the
idea?
MR. MOREYNOLDS: Yes, that is the idea.
H.M.JR: And I have up to two years to do that.
MR. PATTERSON: Of course the test on that--
H.M.JR: Is that right.
MR. STEVENSON: No, you have only got a six months'
deferment.
MR. McREYNOLDS: You are supposed to ask for what-
ever time is necessary. We are saying that you mustn't
ask for an exemption beyond - unless it takes more than
two years.
H.M.JR: But supposing, Mac, at the end of six
months I find I have been unable to train a man to take
the place of this General Counsel. I could ask for
another six months.
MR. McREYNOLDS: Ask for another six months?
H.M.JR: Is that right?
MR. McREYNOLDS: That is right.
MR. PATTERSON: If you thought you could train him
9-
90
in three months, you would only ask for three the first
time and not six.
MR. HERSHEY: That is right.
MR. PATTERSON: Of course the test of indispensability
is, suppose the man would die. Would the work stop or
could you go on?
MR. McREYNOLDS: Then you are talking about the
individual. You begin with the consideration of the
job he is on. If the job has to be done, is there
another man you can get to do it and if it takes less
than six months to train a man, you don't ask for it.
MR. THOMPSON: I think in the Treasury we wouldn't
have anyone who would get a permanent deferment. They
would get six months and perhaps beyond.
H.M.JR: With the exception of these engravers.
MR. THOMPSON: Yes.
MR. PATTERSON: If it is less than six months,
according to the wording of this under 2(b), you don't
even ask for a deferment.
MR. McREYNOLDS: That is true, less than six months
you don't even ask for a deferment.
MR. STEVENSON: Under 2(b) do practically all these
classifications of employees find a description in the
Civil Service system? I mean, it is related to some
established listings in the Civil Service system. I
just wonder if all of these fellows, if you can find some
standard for these people.
MR. HERSHEY: Well, as I understood it, the Civil
Service--
MR. THOMPSON: We could ask for a six months' defer-
ment in a case where you felt the man could not be
91
- 10 -
replaced in less than six months and, at the end of that
time, you could get another deferment if necessary.
H.M.JR: A further deferment?
MR. THOMPSON: Yes. I think that is as close as
you can come to a uniform policy. The only other way
that I can suggest would be for the heads of Departments
who
didn't want to be burdened with this to designate
a committee to handle them.
H.M.JR: No. Well, let me ask you - I mentioned the
ridiculous case that was brought up in Cabinet, that
Claude Wickard was complaining that he was going to lose
his librarian. Now, supposing - let's say that Claude
Wickard says, just for example, that his librarian is
indispensable and he asks for six months' deferment.
Could he ask for--
MR. McREYNOLDS: He could ask for six months. That
is all he can ask for.
H.M.JR: Well, can he ask for complete-MR. McREYNOLDS: No, he has got to go through the
six months' period. They have got to make a showing of
effort.
H.M.JR: Let's say he asks for six months. At the
end of six months he asks for it permanently.
MR. McREYNOLDS: Suppose he asks for it permanently?
MR. HERSHEY: There isn't any such thing as permanent,
but if he asks for another six months, then I think if
he is coming up as librarian, supposing your local board
says, "You should have replaced this man," If and then he
said, "Well, I couldn't," and they said, "Well, we are
going to put him into 1A." Then of course he would
appeal it to the Appeal Board, and he would have to make
a showing there, and if the Appeal Board rejected him, he
probably would come to me and say, "Here, I want you to
appeal this case to the President," I mean if he felt that--
92
- 11 -
H.M.JR: That is the route it takes?
MR. HERSHEY: That is the way it goes, and we don't
wany any more coming up than NO can avoid, because we
would
but-- like to protect anybody that ought to be protected,
MR. McREYNOLDS: What Wickard would have to show
with his librarian when it came up on appeal was that
the field didn't contain - and they would get that from
the Commission - anybody available with the basic training of librarian that was adequate to teach the
if a man
or woman library training that can now
business of and Agriculture, who has the because you got bright library
be gotten through the schools, he is pretty dumb if he
can't train him to be Agriculture librarian in two
six months' periods.
H.M.JR: Well, I am not very trusting of all of my
fellow Cabinet officers, and I just want to ask a question.
Supposing I ask for something. Oughtn't a copy of any
deferment that I ask for, as long as we have set up this
committee, go to you two gentlemen for review?
MR. HERSHEY: Well, out in the field you will have
agencies rather widely spread, especially the War and
Navy Departments who have got civilian employees pretty
much over the globe.
H.M.JR: Would it be too burdensome, for instance,
if every time I signed this it would go, say, to
McReynolds just to see that the boys lived up to the
rules?
MR. HERSHEY: Which boys, you mean the Cabinet
members?
H.M.JR: Cabinet and heads of independent agencies.
MR. HERSHEY: You are going to have a pretty big
file of papers, in the thousands.
H.M.JR: You believe in the honor system?
- 12 -
93
MR. HERSHEY: No, I don't.
H.M.JR: I don't either.
HERSHEY: The local board - unfortunately these
local MR.
boards--
H.M.JR: I believe they are up to twenty-one.
MR. HERSHEY: The local boards won't always defer
them just because a Cabinet member recommends it.
H.M.JR: I see.
MR. McREYNOLDS: You mean "unfortunately" or "fortunately"?
MR. HERSHEY: I am saying unfortunately here, because
I am in the presence of a Cabinet officer, but the local
boards, especially in this city, they have no-H.M.JR: Well, I just wondered, I mean--
MR. PATTERSON: Of course the practice in Departments
will
vary a great deal according to the rigidity with which
a fellow reads that.
MR. McREYNOLDS: He realizes that. I tried to put
guts into it as best I could. We wrote it over and over
again. We cut out a lot of things that could be left
out. We didn't leave any more generality than we seemed
to be forced into to cover the field.
H.M.JR: Mac, would you trust the heads of each
agency without wanting to see what they do, just let it
go?
MR. McREYNOLDS: They won't be uniform, I know that.
I
am certain of it. But - well, frankly, I would have
proposed some central review except for the fact that I
know by the President's direction there is work being done
on this Manpower Committee which would normally be the
place for that thing to be done, and I didn't want to set
something that would duplicate it.
- 13 -
94
H.M.JR: That is right.
MR. PATTERSON: There is a little confusion, something that misled me for A moment here. Paragranh 2 in
sub-paragraph (b), as I understand it, makes it conditional upon any request for deferment that a working
experience of at least six months is required.
MR. McREYNOLDS: That is right.
MR. PATTERSON: Paragraph 3, however, says the
request
for deferment shall be for a period not to exceed
six months.
MR. McREYNOLDS: That is right.
MR. PATTERSON: That would suggest to me that a
fellow might apply for a three months' deferment on the
ground that the fellow could be replaced in three months,
but when you go up to two, you find that that is not
possible.
MR. McREYNOLDS: Yes, that is true. Well, we have
that without any limitation on the first request. Then
in the discussion yesterday morning, of which we had
about four hours, Mr. Hershey's assistant said the War
Department, if you leave a limited period of requisite
training, will want a deferment for all of their stenographers and file clerks and librarians and what not,
because, after all, they are in the war effort and they
will want an initial deferment for training a replacement. We depended on 5 to make them do their preliminary
training and unless it takes, in their opinion, a period
of six months at least to train a replacement, they are
not eligible. Then they are not permitted to request a
deferment at all. It is pretty hard-boiled, but, after
all, you see what we went - from step to step, trying
to get down to the point where you wouldn't be deluged
with things that are relatively unimportant.
MR. PATTERSON: Take what Henry said a minute ago
about the lack of uniform treatment in Departments. Some
- 14 -
95
of those cases will have a long, long list. They will
go to local boards, when the man's number comes up. We
will assume some of them are inducted just the same.
That will be appealed by the man-MR. HERSHEY: Either the employer or the man.
MR. PATTERSON: Will be appealed. That goes to
what, the Board of Review?
MR. HERSHEY: Appeal Board, yes.
MR. McREYNOLDS: Where is that Appeal Board?
MR. HERSHEY: We have got one in the District.
MR. PATTERSON: We will assume they turn the fellow
down, too, and deny the plea for deferment. What then
happens? It goes to the President?
MR. HERSHEY: It doesn't go any place. There are
two people who can take an appeal on that, that is the
state or national board. The man himself--
MR. PATTERSON: Would you appeal a case like that?
MR. HERSHEY: Well, I have appealed.
MR. McREYNOLDS: Wickard will get on his neck with
his librarian.
MR. HERSHEY: We appeal cases and turn them down, too.
H.M.JR: This special lawyer that you mentioned, it
is his chief who is making the fight for him?
MR. HERSHEY: Yes. His chief still can't appeal it
to the President. Under the present regulations the only
place he can appeal--
MR. McReynolds: He got his assistant delayed,
Thurman Arnold did. That is, his assistant.
- 15 -
96
H.M.JR: That isn't the one we mentioned.
MR. McREYNOLDS: Well, there is such a case, and I
understand they wongled that through for a delay, al-
though - that is, Francis Biddle did. That is the kind
of a case--
MR. PATTERSON: There was a reserve officer went
through over my protest. That was a reserve officer,
however.
MR. STEVENSON: Your second application for defer-
ment is not limited in time.
MR. HERSHEY: Six months is the longest of any
deferment.
MR. McREYNOLDS: They won't accept a request for
any more than six months.
MR. STEVENSON: It doesn't indicate that under 4,
that the second request for deferment-MR. HERSHEY: The regulations provide that you can't
get more than six months. The reason why is, otherwise
they forget them.
MR. STEVENSON: Tell me about the - we have got
say two hundred fifty or three hundred thousand civilian
employees in the Navy working as machinists in the ship-
yards.
MR. McREYNOLDS: A machinist will be deferred on
occupational basis.
MR. HERSHEY: They do unless the Navy is able to,
by beating the drum, get them to enlist in the Navy.
Sometimes they come to us because they enlist them away
from themselves.
H.M.JR: You should have brought an admiral with
you, Stevenson.
- 16 -
97
MR. HERSHEY: And of course the Army recruits them
away from the Navy and the Navy recruits them away from
the Army, and we have got very nice - that is beside this
problem,
MR. STEVENSON: You see, the problem that I am con-
cerned with is the fact that it can be said with respect
to any of these people that they qualify under 2A.
They are working in an essential defense industry, B,
that a successor can be trained, but the successors
aren't available. In other words, there is a shortage
of supply. You can't say under (b) - you couldn't qualify
under (b) that you couldn't train a successor-MR. HERSHEY: Let's say a toolmaker it takes four
years to train. Obviously I don't think by this you
are forced, except under 5, to see what you can do about
it.
MR. STEVENSON: Let's take a fellow you could train
in three months, but you can't get the trainees, the
available supply to replace them.
MR. McREYNOLDS: Well, on that-MR. STEVENSON: You would have no basis under this
set-up to request his initial deferment for six months
because he qualifies under (a) for deferment, but not
under (b) because he could be replaced. He is under
the classification of Civil Service - well, perhaps what
it really amounts to is that we have got to go to the
Civil Service and persuade them to state in their statement in respect to this that replacements are not available for certain classes of skilled workers.
MR. HERSHEY: There is an "or" in (b), that it is
difficult to obtain replacements, regardless if they
didn't have to train them at all.
MR. McREYNOLDS: You see, you are taken care of there
in the first half.
MR. STEVENSON: That is, that the statement of the
- 17 -
98
Selective Service Commission --
MR. McREYNOLDS: If it is the kind of a job where
you
- there aren't people get or you can't
get trainees-MR. STEVENSON: My question really is this, Mr.
McReynolds, is there available for scrutiny now the
statement that the Selective Service is going to issue
under 2(b)?
MR. HERSHEY: The Civil Service undertook to provide
us
with that.
undertake
thatThey
task.sat in on this and said they would
MR. STEVENSON: I just wonder how much they know
about the labor supply problem.
MR. McREYNOLDS: They know a hell of a lot. The
Labor Supply Committee down in OPM is under the chairman-
ship of one of the commissioners.
MR. STEVENSON: Oh, yes, Flemming.
MR. McREYNOLDS: Flemming knows it more in detail.
He knows more about that situation than any other man in
Washington.
MR. HERSHEY: Of course, I don't think you should
go back feeling that everything is very - because even
the Labor Supply Committee, they have their trouble, but
Moran, on that, is a very good man. I have knownhim for
a good many years, but there is quite a little grabbing
going on now around the neighborhood.
MR. PATTERSON: This doesn't touch the reserve
officer situation.
MR. HERSHEY: No.
MR. PATTERSON: I don't think it should.
H.M. JR: I don't think it should either.
99
- 18 MR. McREYNOLDS: We didn't try to do that.
MR. PATTERSON: That is a problem for the War
Department.
H.M.JR: Entirely.
MR. MOREYNOLDS: We didn't try to do that.
H.M.JR: I have got a different grip on that. I
remember Frank Knox brought that up. He was affected by
the reserve officer pool, but this was the thing I
raised, and I think - and the reserve officer is something
that really rests with you.
MR. PATTERSON: We contemplate--
H.M.JR: It rests with you.
MR. PATTERSON: We contemplate on any deferment,
either industrial or governmental, making the man resign
and be either a civilian or a soldier.
MR. STEVENSON: If he is engaged in public work.
MR. PATTERSON: And not use the reserve commission as
a shield from Selective Service, which it is being used
for to some extent today.
MR. McREYNOLDS: Yes. The minute the reserve officer
gets out of that, he is immediately exposed to Selective
Service.
MR. PATTERSON: But some of them try to hold on
to their commissions so that they can continue doing what
they do, and then they are exempt from Selective Service
and exempt from anything.
MR. HERSHEY: Are you familiar with the P-1 electronics
people that the War Department is recruiting now? They
are students in school, and they are going to be given
a P-1 rating in Civil Service, which is two thousand in
100
- 19 -
the professional class. They are going to be right into
our hair the very first thing.
MR. PATTERSON: Are they reserve officers?
MR. HERSHEY: No, they are civilians. The Signal
Corps - they are trying to match our friend over here he has enlisted those people and told them they wouldn't
be mobilized and now the War Department is trying to
recruit them under P-1 which is a Civil Service rating,
and Selective Service in between is just losing all its
hair because the local boards see these follows in their
communities--
MR. PATTERSON: The trouble with that, of course, is
that the Navy has enlisted a fellow and given him a
furlough for six months or something.
MR. HERSHEY: Six months? Three years.
MR. PATTERSON: What the devil is the matter? And
they are exempt from Selective Service, aren't they?
They are the same as in the Navy, but continue in college.
MR. HERSHEY: That is right. In the World War they
were known as yachtsmen. Along the Severn in 1918 they
enlisted and did not mobilize, but were called - even
now some mother says, "Why didn't you take John Smith
instead of my boy? He is in the Navy." Then the local
board would say, Well, he is a yachtsman," It is one
of our trials.
MR. STEVENSON: Well, I am utterly defenseless. I
will have to call three officers.
MR. PATTERSON: They have been advertising that in
magazines, "Get in here and you aren't going to be dis-
turbed. This is a grand life.
MR. STEVENSON: I think I beat you to the draw on
that one.
MR. HERSHEY: You are using up the men who ought
- 20 -
101
to go. It will run out.
MR. PATTERSON: What will?
MR. HERSHEY: You see they have only taken on a
hundred thousand in two months. You can't maintain a
Navy of six or seven or eight hundred thousand on
fifty thousand replacements a month, especially when
this is the best recruiting time we will ever have,
because it always falls off the longer you get away from
war. The next disaster, if we should have one, will not
be the production of recruits.
that?
MR. PATTERSON: How will these fellows fit into
MR. HERSHEY: Well, they don't fit in at all. This
is the recruiting program of the Navy which they an-
nounced yesterday, fifty thousand a month for two months
with the - that includes a lot of these fellows that
haven't been called or won't be for several years.
MR. PATTERSON: What is the advantage in the "V-7".
MR. HERSHEY: No one else can get them.
MR. PATTERSON: What is the advantage to the Navy?
MR. HERSHEY: Then they have them when they want
them. You see, they are setting up their owndeferment
pool.
MR. PATTERSON: I thought they assure these men
they won't be called to duty in--
MR. HERSHEY: In fine print they say, "unless it is
necessary."
MR. PATTERSON: That isn't in the advertisement,
is it?
MR. STEVENSON: You are going to take care of that
- 21 -
102
for me?
to be MR.
here.McREYNOLDS: It ain't fair. Frank Knox ought
H.M.JR: I don't know anything about this.
MR. PATTERSON: It is pretty deep.
H.M.JR: Are you learning something, too?
MR. PATTERSON: No, I saw these ads which are very
attractive ads, very alluring.
MR. STEVENSON: The fact of the matter is, Mr.
Secretary, the Navy is picking up all the most desirable
young men in the country and permitting them to finish
their education, and the Army is antagonistic, and I
don't blame them, but if they were smarter and quicker,
they would have been there first.
MR. PATTERSON: Well, the trouble here is that they
are in nothing for the time being. They continue their-MR. STEVENSON: Well, they are getting educated.
MR. PATTERSON: There is no war as far as they are
concerned.
MR. HERSHEY: May I suggest that two years from
now when this young fellow who is now a sophomore comes
out as a young ensign and tries to board one of these
patrol boats and the old chief petty officer, who is
chief engineer with three years of college education
and two years at sea, looks at this young ensign and
says, "Where have you been for two years? and the
youngster says, "I was in college, sir," and you can
imagine how the petty officer with three years in
college and two years at sea will feel.
MR. STEVENSON: It is my guess that the fine print
will catch up with us.
103
- 22 MR. THOMPSON: In connection with the reserve
officers, we have one case in the Treasury now where a
reserve officer would like to resign his commission
because he feels that he should stay. It is Towson
up in Foreign Funds. He doesn't want to put in his
resignation if it will not be accepted. I was wondering if there was any rule that the resignation wouldn't
be accepted.
MR. PATTERSON: I don't know.
MR. McREYNOLDS: I told Norman in my opinion any
resignation of a reserve officer should carry the same
limitations and necessarily be accompanied by a letter
of recommendation by the head of the Department.
H.M.JR: No.
MR. McREYNOLDS: Because he immediately--
H.M.JR: No.
MR. McReynolds; The minute he resigns as a reserve
officer and it is accepted, he is eligible in this group
and would have to go through the same procedure.
H.M.JR: Well, Mac, that is what I refused to do.
They tried to get me to say, "We will resign our reserve
commissions if you will promise to protect us against the
draft," and I refused to do that.
MR. McREYNOLDS: Of course, but what I was saying
was that in fairness to the War Department, when a
reserve officer resigns because of his occupation and
he works in a Department, the War Department ought to
require the head of his Department to make the same
kind of a recommendation for him in that case that he
would make if it came up under this procedure, and, if
it doesn't line up in that, you would just as well re-
fuse to do it and make him report under his commission
as to go through all this procedure later on.
H.M.JR: I see.
- 23 -
104
MR. PATTERSON: I don't think they have settled on
any policy. My own view would be that it would depend
upon the value of the officer to the Army. If he were
a no was in the forties I would question whether
we would care about his continuing on, and we probably
would take a resignation. On the other hand, if he
were in the twenties, I doubt very much whether we
would. Don't you think so?
MR. HERSHEY: Yes.
MR. THOMPSON: In this case, this man was thirty-
six years old. He was a second lieutenant.
MR. PATTERSON: We have got men who have rather
minor commissions in the reserve corps and have had them
for many years. They have not been at camp. They
really haven't keptup. They are on the inactive list.
A man who is getting along in years obviously wouldn't
be of any great value to the Army in the branch for
which he is commissioned, like Infantry. Don't you
agree?
MR. HERSHEY: Yes, I agree, because when he is up
in his forties and he is a first or second lieutenant-H.M.JR: Let me ask you one thing, and this is just
maybe peculiar to us, but again getting back to the
lawyers - that has got nothing to do with this - a man
says to me, he has got an important position here as a
lawyer and in the course of the discussion he lets it
drop, "Well, I can go over to the Army and Navy and get
a ommission over there.' " I mean, it is not exactly a
threat to me, but he can get a captaincy in the Army or
lieutenant commander or lieutenant over in the Navy. Now,
is it the policy - I mean, for instance, you get a man
who may be an expert at contracts. Now, if he comes over
and simply says, "My number is - I don't know whether
he would be so frank - "My number is coming up, and here
is my experience in the Treasury and experience on taxes
and contracts and so forth and so on-MR. PATTERSON: The Secretary of War has forbidden
- 24 -
105
the issuance of reserve commissions to men within the
draft age except under the most stringent conditions.
Formerly he required every case to receive his personal
attention.
H.M.JR: Is that - but are you still-MR. PATTERSON: And he turned them all down.
H.M.JR: But isn't - aren't they giving commissions
every day?
MR. PATTERSON: Not to men within the draft age.
MR. STEVENSON: For legal services, you mean?
MR. PATTERSON: For any kind. The only people we
have commissioned to any extent at all have been men in
the forties or in the late thirties. The Secretary
has been extremely rigid on commissioning young men. We
have had repeated cases, and it was his rule that when
the draft age was from twenty-one to thirty-five, every
case of a man had to receive his personal O.K.
H.M.JR: He told me about that.
MR. PATTERSON: And he would not O.K. it except
in the most - well, I could name them on the fingers of
my hands, I think - and that was over a year.
Now, the rule is that all cases will go to the
adjutant general and in close cases will then go before
a board headed by General Craig. They will not be
commissioned if they are under induction with the draft
in any event. They will not be commissioned if they are
within the draft age except upon a very strong showing
of special skills such as chemists, electrical engineers,
civil engineers, or something like that. The Secretary
has taken the policy all along of extreme pains in the commissioning of people except those who go through the
schools, the regular Infantry school or the Artillery
school or the Signal Corps school and those men are all
- 25 -
106
taken from Selective Service, from the ranks, after four
months service in the ranks. There is no royal road to
a commission in our shop. The only ones we have really
commissioned now are men well along in years.
MR. STEVENSON: We have a limit now of thirty-five
on commissions for anybody for legal service. No one
under thirty-five, in other words, shall be commissioned
for legal services. On your point about - within the
Government, there undoubtedly are exceptions to it, but
I don't believe there have been many commissions issued
to other men in the Government service who have come
over.
MR. PATTERSON: Someone told me that Congress was
going to start an investigation of the War Department
and the Navy Department of the issuance of commissions.
MR. STEVENSON: The thing was pretty loose in our
place last summer.
MR. PATTERSON: Well, I don't think they can find
much on us.
H.M.JR: There are an awful lot of ensigns in this
town who so-called - in the Intelligence Service.
them.
MR. STEVENSON: Yes. Intelligence took a lot of
H.M.JR: There are a lot of young fellows that have
been given the commission of ensign in this town in the
so-called Intelligence Service. You know about it?
MR. STEVENSON: I know there are a lot of them
there, and I think there were a lot of them in the legal
section.
H.M.JR: This is a sort of a - what do you call it,
confession-for-the-soul meeting?
MR. STEVENSON: Well, I think it is something that
will react. The country may feel that there has been
- 26 -
107
some privileged class who has also enjoyed exemptions
but also have enjoyed commissions.
MR. PATTERSON: I will be surprised if under the
Secretary
of War's
there have been very many
of
those cases
withlimitations
us.
(Discussion off the record)
H.M.JR: Well, gentlemen, I would be very glad to
sign this report, but I think, Mac, it should be drawn
differently.
MR. McREYNOLDS: I put it up in the form of a
memorandum to the President, because I thought that might
be the way you would want to do it.
H.M.JR: Well, I think if it could be drawn from
us, you see - I think that - if I might suggest, I
think that the War and Navy should sign it, and I would
be glad to sign it, and the General should sign it, and
you, and it would be a memorandum to the President from
us, and then if he saw fit, he could send it out.
MR. PATTERSON: I would be glad to sign.
H.M.JR: If it could be drawn-MR. McREYNOLDS: I will fix it that way and have it
over to you in the morning.
H.M.JR: Would you put a space down in the corner
to be approved by him? And then it would go out, wouldn't
it?
MR. McREYNOLDS: Yes, it could be done that way.
The only reason I put it this way was because I tried to
put it in shape so that if you wanted to take it into
Cabinet on Friday and he approved it, he could sign it,
and it is ready to go then.
H.M.JR: Well, if you would have it drawn and have
- 27 -
108
a messenger
nd and just let him wait while they
sign and send it to me last. I think the three Departments should sign it, and I think the General should
sign it, and you, and then I will
MR. McREYNOLDS: I will put it in the form of a
recommendation from your committee to the President.
H.M.JR: But will the General and you also sign it?
MR. McREYNOLDS: Yes, we will sign it.
H.M.JR: And I will give it to the President Friday
at Cabinet.
MR. STEVENSON: And that will come to the Departments
Friday for signature?
MR. McREYNOLDS: Yes.
H.M.JR: I think that is a good job.
109
TO HEADS OF DEPARTMENT AND ESTABLIS
In order to promote uniform treatment of Federal officers and
employees who are eligibili For military service, it is directed that
requests for deferment of officers and employees from military training and service on occupational grounds shall be subject to the
following conditions:
1. Request for the deferment from service under the
Selective Training and Service Act. approved September 16.
1940, as amended, of any officer or employee of the United
States government shall be made only by the head of the
appropriate department, independent establishment OF other
agency. OF by a person designated by such head to take such
action. Such request must be made on the form or forms
prescribed by the Selective Service system.
3. No such request for deferment shall be made except
when the head of the appropriate agency, or a person desig-
nated by him. shall certify that
(a) The officer or employee is in a position,
the duties of which are clearly related to the var
effort or to essential supporting activities, and
that
(b) The officer or employee is in a type of
position listed by the Selective Service system as
one in which it is difficult to obtain replacements
or a type of position in which he can not be readily
replaced except by the training of a successor
through work experience for a period of at least
six months.
3. The initial request for deferment will, in accordance with
Selective Service regulations, be for a period of not to exceed
six months. If the duties of the position occupied by the officer
or employee are of a type which require work experience of less
than two years to attain a reasonable competence in their performance. the appropriate agency will take immediate steps to
train a successor.
-2-
110
4. Request for deferment beyond the initial six month
period will not be made except when the head of the department shall certify that one of the following conditions
existe:
(a) That to attain reasonable competence in the
performance of the duties of the position occupied
by the officer or employee requires work experience
of two years or more.
(b) That a replacement has been secured but that
a further period of training is required before the
trainee is qualified to assume the responsibilities
of the position.
(c) That the Selective Service system has found
that a shortage of persons with the qualifications
required in the position exists and it has been in-
possible to secure a replacement.
5. The heads of all departments, independent establishments
and other Federal agencies will immediately make an inventory
of officers and employees who, in all probability, will be
placed in class I-A. and where necessary. recruit and begin
the training of persons who, when the officers or employees
now holding the positions are inducted into the military
service, will be ready to assume the duties and responsibilities of the positions thus made vacant.
111
February 4, 1942
3:53 p.m.
Operator: Go ahead.
HMJr:
Mr. Lawson
Hello.
Stone:
Hello. Yes.
HMJr:
Mr. Stone.
S:
Yes, sir.
HMJr:
Henry Morgenthau,Jr.
S:
Yes, air.
HMJr:
S:
HMJr:
Today's Wednesday. I wondered if you had
come to any conclusion in your own mind as
to whether or not - the opportunity being
available - you'd care to come to Washington.
Well, I must admit that I have been struggling
with myself on that; and I'll be honest, I
really haven't come to any conclusion.
You haven't? Well, then, let's leave it this
way, Mr. Stone; when you know that you do want
to come, would you drop me a line?
S:
Yes. I think that - I think that's a good way
to leave it. I'm pretty well tied into New
York. When I begin to think of all the things
I have to cut off, it's a little difficult,
you see.
HMJr:
Well, I'm sure that we would be able to use
your services to advantage here.
S:
Well, that's very nice.
HMJr:
And when you are prepared to know that you do
or don't want to come, if you'd let me know,
then I'd like you to meet Mr. Foley, our General
Counsel.
S:
I see. The thing that you have in mind would be
probably along that line, would it, sir?
112
-2HMJr:
S:
HMJr:
Well, the thing is this. This alien property
thing is not cleared up at all.
Yes.
It's still all in the air. So the thing that
we would do, what we had in mind, would be to
let you familiarize yourself with the Treasury
pending one of our top men being drafted, you
see?
S:
HMJr:
I see.
And so let you get familiar with the Treasury,
which is a fairly complicated machine.
S:
Yes.
HMJr:
And then when one of these top men are drafted,
why you would be available; because it really
takes months to get to know this machine.
S:
Well, I was going to say, I should think it
would easily take several months.
HMJr:
And you would be familiarizing, so to speak,
S:
Yes.
HMJr:
And there are a number of young men in very
S:
Yes.
HMJr:
That was what I had in mind.
S:
you'd go into training.
important positions who, I think, will be
drafted in the not-too-distant future.
Well, I probably will be coming down to Washington
within a short time anyway
S:
Well, if you do
and if I should reach a conclusion first,
I would write you and if not, I would certainly
let you know by that time.
HMJr:
Fine.
HMJr:
113
-3S:
May I ask you another question, sir?
HMJr:
You can ask me two, three.
S:
(Laughs) I'll ilmit it to one.
HMJr:
Right.
My partner here tells me that there's a drug
S:
concern that's been taken over some way I'm not too clear on it myself - by the
Treasury Department, and that the name of it
is the Schering Company.
HMJr:
That' - well, we haven't taken it over. We've
simply put our men in to study it.
I see.
S:
HMJr:
Well, as I understand it, that company probably
will be facing some readjustment or reorganization
which probably would center around some new
interest coming in, and when I say new interest,
I mean somebody other than a banking concern to
float a stock issue.
HMJr:
Yes.
And I understand that there is a Mr. Clay
S:
who apparently is representing the Treasury
Department there.
HMJr:
I don't know.
Well, what I was wondering was Mr.
thought that there might be some way there
S:
that he could be of some use if this is going
to involve such a sale, you see? And I was
wondering whether we could with propriety get
in touch with Mr. Clay and speak to him.
HMJr:
Well, that's all right. I'm not - I'm really
not familiar with the details.
S:
Yes.
HMJr:
But we haven't crossed any bridges as to what
-4-
114
we
propose
sales
or not.- whether we're going to have any
S:
HMJr:
I see.
But it's quite all right to get in touch with
him.
S:
And would it be improper if I would say that I
had sort of mentioned this to you, not for my
okay, but
HMJr:
No.
to say that it was proper to speak to him.
S:
HMJr:
No, that - if you were going to do that, I
never do that, Mr. Stone. I lean over backwards.
S:
That's perfectly all right. I don't
HMJr:
No. If any of you people - you'd have to do
it - I place responsibility in Mr. Foley and
hold him responsible.
S:
HMJr:
I see.
So if you were going to contact anybody, you'd
have to do it through him.
S:
Well
HMJr:
It will be perfectly all right to talk to him
S:
about it, but I'm not familiar beyond
Yes. Well, what I - I didn't want to happen,
was to go in there and have him simply say,
"Well, I don't know you and I
HMJr:
No. I think if you people want to do that,
you'd better do it through Mr. Foley
S:
I see.
HMJr:
.....and not do it direct.
S:
Well, then, would it be proper to write Mr. Foley
-
5
-
115
a letter?
HMJr:
That's all right.
S:
And T will not mention your name.
HMJr:
Well,
knows
about you, because I've spoken
to himhe
about
you.
S:
I see.
HMJr:
But I'd rather
S:
HMJr:
S:
HMJr:
No, I won't mention it. I'd rather not
It's quite all right to write him, but he
knows who you are now.
Yes. All right. Well, I.....
You see my position. I've never done it, and
my people know that and they know 1f I want
somebody I go to them direct.
S:
Well, what I'm - want to avoid doing is anything that will embarrass anybody, you see.
HMJr:
S:
HMJr:
S:
Well
And that's why I thought I should mention it
before just going in to him and saying.
Well, I would suggest that your partner contact Mr. Foley.
All right. Well, I will do that, sir; and I
won't mention anything at all.
HMJr:
And if and when you make up your mind, you let
me know.
S:
Yes, sir. I'll do that.
HMJr:
Thank you.
S:
I appreciate your calling very much.
HMJr:
Thank you.
S:
Good-bye, sir.
116
February 4, 1942
4:15 p.m.
GENERAL ANILINE AND FILM
Present: Mr. Foley
Mr. Swope
Mr. Bernstein
H.M.JR: Well, I found that I had read that, but I
didn't know that I had read it. I signed your (Foley's)
letter. I don't think it is too friendly, but I signed
2/4/42.
it and it will go.
MR. FOLEY: I had two, Mr. Secretary, and I made
that as friendly as I could. It doesn't say anything.
H.M.JR: No.
MR. FOLEY: And it answers his letter.
H.M.JR: All right.
MR. FOLEY: I haven't told you (Swope) this. I
mentioned it very briefly to the Secretary. What
Ralph Budd wanted to talk about was the over-all
problem in so far as cooperation is concerned, and also
about the Hammond situation, and he said that the
board of directors wasn't entirely satisfied with Mack's
at the last and that he had
of one
to come
usbeen out designated just how
as report a committee
meeting,
andtofind
we could get together and work closer together and report
back.
MR. SWOPE: Good.
MR. FOLEY: And he said, that he didn't intend to stay
with the company. He couldn t stay with the company very
long, but he had undertaken to do this job of bringing
117
2-
the Treasury and the company into line, and he was quite
frank, and I was frank as I could be, and I thought it
was helpful, and got up to on he said, "Why don't
you vest the stock of the company in the United States?"
I said, "Well, of course that is a remedy that would be
available to the Government," and he said, "Well, I mean,
isn't it the normal thing to do, for an Alien Property
Custodian?" So that - to mention that from him and
also to mention in Mack's letters that he would expect
whan an Alien Property Custodian was appointed that the
first thing he would do would be to vest these shares,
sort of indicates that the company was looking to us to
do the job, and was waiting. He said he would report back
to the company that we expected them to assume the initiative in Americanizing the company.
H.M.JR: Well, I think that all leads up to a meeting
on Friday with Ralph Budd, John Mack, Bill Bullitt, and
Leo Crowley.
MR. SWOPE: Good.
H.M.JR: And we know now we are in the clear, because
I testify tomorrow on the Chinese loan, so you know Friday
morning you will be clear.
MR. FOLEY: Right.
H.M.JR: So you will know there won't be anything to
interfere.
MR. FOLEY: All right. So we will go ahead and arrange a meeting, say, for eleven o'clock on Friday morning.
MR. SWOPE: It is all right with me.
H.M.JR: I think I would go ahead and if they all
say then and there - and then - well, I couldn't help
but overhear what you were whispering, Bernie. I don't
know that I was supposed to. They hope to - they have asked
for unanimous consent to report the bill out tomorrow and
pass it tomorrow. Just to show you how useful this machine
118
3-
is, my men thought it would be nice to get Knollenberg,
attorney, to take charge of this question of putting on
an educational fight. Have you heard this story, Ed?
MR. FOLEY: No.
H.M.JR: An educational fight, that we should tax
all outstanding state and municipal tax exempts. They
asked him down here Saturday. He said, well, he had to
think it over. He didn't know. He would think it over.
He wrote a long letter which I haven't seen saying well,
he could only do it under certain conditions. As of the
date the bill passed, the date I announced that you don't
tax them -- anybody that owns them prior to my Cleveland
speech, we will say, some cut-off date. So they wondered
what I should do, and I said, "That isn't my impression at
all." So I said, "+hat isn't my impression. My impression
is that Knollenberg is the man who sold this thing to me.
So I went back and read the whole thing up a little while
ago. He came in here and made his plea to me. He is the
man that urged it. He recommended it, and sat here and asked
for an opportunity to sell this particular thing to me,
and there was no qualification, and I go out on the end
of a limb and invite him to come down and help me popular-
ize the thing, and he puts up the conditions. And there
is nothing anywhere - page after page of the discussion
and not once did he question anything, but this was the
patriotic duty and why do you mention people's names,
why should they seek refuge and things? And I have gone
out and I said, "Now, come on down and help me." "Only
if you have a cut-off date. Which is, of course, nothing.
But the machine proves it, see. Isn't it an amazing
story, that he of all people -MR. SWOPE: Who is that?
H.M.JR: Knollenberg. He is librarian at Yale, but
prior to that he was a tax attorney for Lord, Day, and Lord
and had the position that Randolph Paul had, and Paul
succeeded to Knollenberg, and Knollenberg retired from
the firm of Lord, Day, and Lord as a tax expert to become
librarian of Yale, but he was one of the outstanding tax
119
4-
lawyers for corporations in New York, and it was he who
asked - the record shows Paul and Sullivan withdrew from
the room. They said, "Thia is something which is very
close to Knollenberg's heart, and he has asked for the
chance to sell you on this thing," and he was the man
who sold it to me.
So Sullivan says, "Should we argue?" I said, "No,"
because on a fight like that a man has to either believe
in it or not. If he has got any doubts he isn't a very
good salesman, is he?
MR. SWOPE: No.
H.M. JR: Isn't that an amazing story?
MR. FOLEY: Yes.
H.M.JR: In other words, when it gets hot he is not
a very good man to lean on. Well, that has nothing
to do with this but we were talking about the machine.
Are you all set on this now?
MR. FOLEY: Yes, we will go ahead and arrange a meeting.
MR. SWOPE: I saw Mr. Ralph Budd for a moment this
morning. Mr. Foley pulled me in, and I said, "How do you
do" to him. I knew him years ago, of course.
MR. FOLEY: He is a very reasonable fellow.
MR. SWOPE: Oh, he is a very good man.
H.M.JR: And Ambassador Bullitt. Those people -MR. FOLEY: He says the company should be Americanized,
and I pointed out as an example of what a company can do,
the Sterling Products Company. They got rid of the president, the chairman of the board, and forty of their people.
They broke their contracts, set up another sales agency
in South America, and are beginning to sell under their
own trademark down there now. So it can be done if the
120
-5company wants to do it.
MR. SHOPE: Did you get what I à statement
from the War and Navy Departments that you can incorporate?
MR. FOLEY: Have you got it, Bernie?
to
MR. BERNSTEIN: Not quite along those lines. We talked
Joe O'Connell and we - Joe O'Connell dictated over the
phone a three-point program. The difficulty they are having
with the present management, the utilization of resources
for the war effort, and the Treasury proposals. I have
it here. He says from the point of view of the utilization
of the company, he says there is no disposition on the part
of the current management to hold back. However, the
people brought in like Mack or Bullitt were men of the
type of Williamson who is a lawyer, and not a technical
man, and of necessity these men have to rely on the I.G.
Farben people. We pulled out five of the I.G. Farben
people. There is a whole group of maybe twenty or twenty-
five others that ultimately must go out. They are not
willing to pull these people out at this point, until
new management comes in, of a technical type, of the
business man type, who can run this company and can gradually substitute competent technical and business people
for the people that we have dropped out, and at that point
the Army and the Navy are in a much better position to
utilize this company for all the war purposes and similarly
the War Production Board through their facilities.
H.M.JR: How much gross does this business do? How
many dollars, have you any idea?
MR. FOLEY: About seven million, isn't it?
MR. BERNSTEIN: More than that, Ed. The net
last year, the net profit, was nine millions, and they
told me the gross was around fourteen.
H.M.JR: What?
MR. BERNSTEIN: This is a big company.
MR. FOLEY: It is a sixty million dollar company.
121
-6
H.M.JR: Let me get this. What were their total
sales?
MR. BERNSTEIN: Oh, I don't know, but their net
profits were nine millions of dollars.
MR. SWOPE: It would be between fifty and a hundred
million dollars, according to your figures.
teen.
MR. BERNSTEIN: Their gross profits were around four-
H.M.JR: That is a big company.
MR. FOLEY: It is a sixty million dollar company.
MR. SWOPE: Yes, that would be sales of about sixty
million dollars.
MR. FOLEY: And they employ -MR. SWOPE: Six thousand people.
MR. FOLEY: Six or seven thousand people.
H.M.JR: Well, I think that this is all right, and
I think by Friday night you may find that this thing is
in shape. I think that I would have something in mind,
so that - not just their word, possibly, but so you could
get them to sign something. Think that over. I mean
Mack and Budd and Bullitt, that they would join the
Treasury in a statement to the President to vest this stock,
you see. You might have something ready. Just think
about it.
MR. SWOPE: Oh, we ought to get that ready by noon,
so you can have it.
H.M.JR: So we can have something for them to say,
"We join the Secretary of the Treasury in urging you to vest
the stock," and I would sign first, and they could sign
next. Now, if you could have Crowley, Bullitt, and Mack,
122
-7. and Budd all sign it, you see. I mean, I am just
throwing that out as a suggestion.
MR. SWOPE: Well, I would change that, Mr. Secretary,
I would have them join in a recommenation to you, and
you sign alone for the President.
H.M.JR: That is better. but then you could have the
thing drawn up for them.
MR. SWOPE: Yes, we will have it come to you, yes.
H.M.JR: But while you get them all pepped up,
full of American flag, and 80 forth, that they sign then
and there. I think he is right.
MR. FOLEY: We will have something ready.
H.M.JR: And I think - don't you think so, Bernie?
MR. BERNSTEIN: Yes, I think that is a very good idea.
MR. SWOPE: Tell them to sign on the dotted line.
MR. FOLEY: I doubt if they will sign it, but we will
have it ready anyway (laughter).
H.M.JR: Well, we will say, "Well, Mr. Budd, would
you mind signing this to Mr. Morgenthau? And Mr. Bullitt
and Mack, just sign the thing. And then we could take my whole thought is, while they are all full of beans
and patriotism -- what?
MR. BERNSTEIN: That is right.
MR. FOLEY: Budd's attitude was all right.
H.M.JR: Have something ready.
MR. BERNSTEIN: I thought Budd was on the level.
H.M.JR: You know, when you get religion, that is
the time to confess.
123
-8 MR. FOLEY: You sound like a Holy Roller.
H.M JR: Well, I learn from wherever I can (laughter).
I even surprised you at lunch today.
MR. FOLEY: Yes, I thought you did fine. I am glad
you didn't ask me to do it.
H.M.JR: Well, thank you. This is good.
124
February 4, 1942.
I. Difficulties with the present management
The present 20d by Judge Mack, have thoroughly
deconstrated their interest in maintaining the status que and a fixed
resolve to frustrate any attempt that might be made to bring about substantial changes.
Judge York has stated in correspondence that he proposed to
make as few changes as possible, and that he must get along without the
"inspiration" of 1. G. Farben, and has from time to time indicated to
plant managers and others that he proposes to resist any substantial
c anges in existing personnel except inso far as it may be demonstrated
that particular individuals are actually "disloyal." As an example,
in Judge Mack's approach, which in charity night be termed naive, he
indicated to the Treasury representative some time ago that Dr. Hutz,
a life-long I. 0. Farben man, was absolutely "loyal" and in his judgment
was a man whom he (Judge Mack) could not be possibly get along without.
Furthermore, the recent suggestion to the Treasury representative that
we approve a plant management committee for the General Aniline works
division composed of four I. 0. Farben men, out of the total of five
on the committee, would seem to indicate a lack of awareness that
I.
Farben men in key positions present anything of & problem.
Other action by the new management, such as the removal from
the board of directors of Dr. Aickelin and Mr. vom Rath without changing
their positions as key men in the operations end, also illustrates
either a lack of understanding on the part of the present management or
a lack of desire to take the substantial steps necessary to correct
the existing situation.
As a practical matter there has been no cooperation between
the present management and the Treasury representatives. The present
management requested the resignation of Dr. Schwars and appointed
D. okler in his place as manager of the Binghampton plant without
any prior discussion of the matter with the Treasury representatives.
All the changes that have been made in the composition of the board of
directors since the Treasury representatives were installed in the
premises were likewise made without any prior discussion with or notice
to the Treasury representatives. A proposal to bring the law firm of
utz and Joelin, patent attorneys for I. 0. Farben, into General Aniline
as their patent division was practically consummated without any prior
otice to us and this move was blocked by freezing the accounts of
utz and Joslin and starting an investigation of their affairs.
a learned that Dr. Huts and other company officials were in the process
cant
125
-2 of renewing long-term employment contracts with many of their technical
men (the service of any one of whom we might think ought to be disposes
with) without any prior consultation with us.
In general, it can be said that despite protestations of a
desire to cooperate, actual practice seems to have been the reverse.
in fact, the attitude of the management has permeated down through the
organization to such an extent that our task has been rendered much
ore difficult than should have been the case. with the management
assuring the employees that the Treasury people would be "out" shortly
and that everything would be all right, it is obvious that any disposition on the part of any employee to facilitate our operation would
tend to be nullified.
--
126
II. Utilisation of resources for the war effort
So far as we know there is no indisposition on the part of the present
management to utilize the resources of the company to the fullest possible
extent in connection with the war effort. However, whether or not this
desire is being translated into accomplishment is quite another quest:
The fact is that the present management, without technical qualifications
of their own, are required to rely almost entirely upon I. G. Farben men
and other non of German background for all information and for all
recommendations and decisions as to the present and prospective utilisation
of the plant. Furthermore, it is difficult to see how the company can
expect to obtain defense contracts or to continue to utilize its present
productive resources, such less extend them, unless it is headed by an
aggressive and alert management pledged to obtaining the objectives
hereinafter outlined. Incidentally, we were recently advised by the Far
Production Board that the past attitude of the General Aniline and Film
Corporation has been the reverse of cooperative. This refers to a period
prior to the installation of Judge Mack.
III. Treasury Proposals
The first move which seems to be clearly indicated is the selection
and bringing into the company from outside a man or men who will be
competent to assume and will assume the active management of the affairs
of the company. Such men would be selected on the basis of their known
ability to assume a responsibility of this character and known to share
the Treasury view that the company must, over a period of time, be purged
of all personnel who, because of past affiliations or otherwise, are
suspected of being subject to I. G. Farben or other German control.
The new management would be pledged to obtaining this objective
at the earliest possible moment consistent with the desirability of keeping
the company operating at a high level of efficiency, and also with a view
to the fuller utilization of the present and potential capacity of the
company for the war effort.
Decisions as to the renoval of particular individuals who now remain
with the company and who represent the interests WO think to eliminate can
well await the appointment of the responsible officials referred to above,
although their elimination should be planned for the earliest possible
moment. Such officials as Mr. Williamson could undoubtedly be eliminated
very shortly after the designation of the new management heads without any
substantial effect upon company operations. Others, such as Grimmel,
Manager of the Rensselaer plant and Nawiasky, Vogt, Max, and Angermuller
of the Linden plant, would in all probability have to be kept for a somewhat find
longer period of time but only for such time as would be necessary to
capable substitutes for them.
Dictated over the phone
- 2/4/42.
127
FEB 4 1942
Dear Judge Mack:
I am in receipt of your letter of
January 29, 1942, and the two documents
enclosed.
I agree that our objectives are, or
ought to be identical. In consequence, I
assume that you are in accord with the changes
made by order of this Department on January
13, 1942. We were unfortunately unable to
reach you prior to the issuance of the order
but I can assure you that the decision was
made only after a thorough examination of the
facts.
I have asked Mr. O'Connell and the
other Treasury representatives in New York who
are supervising the operations of General
Aniline and Film Corporation to consult with
and cooperate closely with you or any of your
officers or directors in pursuing our common
objective.
I hope this exchange of views presages
an improvement in the situation.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Honorable John E. Mack
President
General Aniline and Film Corporation
230 Park Avenue
New York. New York
JJL:JJU*C:EHF/AP 2/3/42
cc. MeDennio
File n. m.c.
Surfrom Johnjoffin
128
GENERAL ANILINE & FILM CORPORATION
230 PARK AVENUE
NEW YORK
TELEPHONE
MURRAY HILL 4-1300
January 29, 1942
Honorable Henry Morgenthau, Jr.
Secretary of the Treasury
Washington, D. C.
Dear Mr. Secretary:
As of course you are aware, I became president
of General Aniline & Film Corporation on November 1, 1941.
For many months prior to my appointment, there had been
going on within the company an effort upon the part of the
American directors to free the concern of the foreign influence existing by virtue of the claimed ownership of a
majority of the stock of the company by I. G. Chemie, a
Swiss corporation, alleged by the Department of Justice
to be under the domination of I. G. Farben of Germany.
The American directors were not only seeking to Americanize the company, but to secure the sale of the foreignowned stock to a noncompetitive industrial group of undoubted American standing.
This internal struggle is fully revealed in the
minutes of the meetings of the directors; and, as a corollary
thereto, there were proceedings in the Chancery Court of
Delaware brought for the purpose of forcing a stockholders'
meeting in order that the Chemie stock could be voted by
its purported owners in an effort to oust the then existing officers and directors who were seeking to Americanize
the company. As you undoubtedly know, a hearing upon the
proceedings in Delaware has been postponed from time to
time at the request of the Attorney General of the United
States.
I was made aware of so much of this history as
had already transpired, and other details which I have not
time to enumerate, when I agreed to become president of the
company. It was represented to me and I fully believed,
and still believe, that by accepting the presidency of the
company I would be in a position to aid in important
matters of national defense, which, incidentally, have
become more and more important as time has gone on.
129
Honorable Henry Morgenthau, Jr.
January 29, 1942
2.
Upon accepting the presidency of the corporation,
I issued a public statement, a copy of which is attached
hereto. Since that time, I have consistently labored for
the purposes therein outlined. It was my thought that ul-
timately an Alien Property Custodian would be appointed
and that the stock in question would be taken over by the
United States Government, or, if there were difficulties
growing out of the claimed ownership by the Dutch, some
alternative method might be found by which this stock
could be disposed of to American purchasers. It was my
belief that my duty was primarily to conserve the interests
of the company as a going concern essential to the war purposes of our Government and to preserve the status until
such time as the Government saw fit to act through an Alien
Property Custodian. I recognized from the beginning that
my tenure of office might be temporary and in any event was
uncertain. It was for this reason, amongst others, that
my salary as president of the company was made payable upon
a monthly basis. You will do me the credit of believing,
I am sure, that the personal monetary considerations inpleased to have this opportunity to render a public service.
Incidentally, I may say that my salary was fixed by the
Board of Directors at precisely the amount paid my
volved were of secondary consequence. I was, however,
predecessor.
The changes that have been wrought in the official
setup of the company are well illustrated by an additional
memorandum which I attach hereto. You will note that
Ambassador William C. Bullitt is Chairman of the Board of
Directors. I was very much gratified when he found, after
full consideration and discussion of the problems involved,
that he was in a position to become a member of the Board.
I then issued another public statement, a copy of which is
also appended hereto. Prior to Mr. Bullitt's departure from
the country on a special mission for the President, he left
a written statement outlining the circumstances under which
he was appointed and the purposes he had in mind.
For many months prior to my appointment, the
Department of Justice, through the Antitrust Division, was
conducting a sweeping investigation into the affairs of
the company, its business affiliates and the status of
I. G. Chemie as related thereto. Indeed, there were two
grand jury investigations under way and one group of in-
dictments has already been handed down. These proceedings
130
Honorable Henry Morgenthau, Jr.
January 29, 1942
3.
are still active. As you will readily see, there was much
to require the constant attention of the officers of the
company and their counsel, both prior to and subsequent to
my election as president. Moreover, the demands upon the
time of the directors have been very heavy. The officers
and the Board of Directors are acting in complete harmony
and are fully conscious of the grave responsibility that
rests upon them.
In addition to these matters, I have been concerned with problems of personnel and have sought help in
this respect wherever I could secure it. This is especially
important in view of the history of the company, its ante-
cedents and the specialized work in which it is engaged.
of course, you could not possibly be more interested than
I am in purging General Aniline & Film Corporation of subversive factors, in freeing it completely of foreign domination and in making it in every sense of the work an
effective, loyal American enterprise. Your attention,
however, is drawn to the fact that recent communications
received through your representative, Mr. Joseph J. O'Connell,
Jr., amount to orders issued by you with reference to the
internal affairs of the company and its personnel without
any previous consultation with me and, indeed, without any
subsequent explanation.
You will realize that the corporation is large,
with wide flung interests and thousands of employees, many
of whom are working upon matters important to the Nation's
war effort. It would seem to me that before issuing orders
in the nature of unexplained commands, well calculated to
shake the morale of the company and to impair its usefulness, it would be desirable for your representative to
consult with me as to the wisdom and propriety of any particular move. The timing and method of an action otherwise
appropriate may be fully as important as the action itself.
Your order of January 13, 1942 (of which I had no
previous notice), directing the simultaneous and immediate
suspension of five individuals and barring them from the
company premises was, I am free to say, particularly illtimed. I also note that this order, signed by Joseph J.
O'Connell, Jr., "Treasury Representative", contains the
following language:
"All the company officers and employees
are to be advised immediately that they
131
Honorable Henry Morgenthau, Jr.
January 29, 1942
4.
are not to communicate with any of these
individuals, directly or indirectly,
without my prior written approval.
I cannot help but to Have that this portion of the order,
at least, was inadvertent for I am frank to say that I cannot
find for it any warrant in law or in fundamental justice.
So far as I am personally concerned, that portion of the
order I cannot be expected to honor. Nevertheless, you
will note that in all other respects the order has been
fully complied with, although the individuals concerned
were afforded no opportunity to know what accusations, if
any, were made against them and have had no opportunity
to be heard. Compliance with your order was based upon
the settled purpose of the management to cooperate as fully
as may humanly be possible with any branch of the Government having any authority in the matter whatsoever.
Frankness compels me to say that the method
adopted in ordering the foregoing suspensions could have
only an adverse effect upon the practical operation of the
affairs of the company. Furthermore, I regret to say that
certain sources, which I am not presently prepared to identify, have sought to shake the confidence the company enjoys
business.
with the various Government agencies with which it does
A little more restraint and a little less dispo-
sition to condemn upon the basis of ex parte statements
would seem to be indicated. In my judgment this company
cannot be successfully operated by remote control. There
should be an intimate and frank cooperation between the
company management and your Department. That frankness
and cooperation I not only would welcome but most earnestly
solicit. It lies well within your power to achieve this
result. I stand ready, and so do the officers and directors
of the company, to consult at any time with regard to any
feature of the business of the company. If this course
does not appeal to you, I shall have to assume that your
Department desires to manage the enterprise in every detail
without reference to the wishes, the advice or the exper-
ience of the officers and directors. I cannot believe that
you would wish to assume such a heavy burden or so great a
responsibility. Moreover, it would place me in an embarrassing position and render the task I have assumed increasingly
difficult. In view of the fact that our objectives are, as
132
Honorable Henry Morgenthau, Jr.
Tenuary 29, 1942
5.
I hope, identical, I would appreciate an authoritative
word from you which would tend to clarify the present
confused situation and prevent unnecessary friction.
Respectfully yours,
John E mack
JOHN E. MACK,
President
133
December 5, 1941
The following statement was issued by Judge John
E. Mack, President of the General Aniline & Film Corporation, this morning:
When I accepted the Presidency of General
Aniline & Film Corporation, I made an announcement of the policies which would guide me and
which were fully approved by the Board of
Directors. These policies in brief are to
improve the status of the Company, bring its
affairs into harmony with the purposes and
policies of the Government, and to establish
this important enterprise, so essential to
national defense, as unmistakably an American
organization. It is, therefore, with great
satisfaction that I am able to announce today
that Ambassador William C. Bullitt, who is
thoroughly in accord with the policies as set
forth, will today become a member of the
Board of Directors of our Company.
134
STATEMENT ISSUED BY JUDGE JOHN E. MACK
FOLLOWING HIS APPOINTMENT AS PRESIDENT
AND DIRECTOR OF GENERAL ANILINE & FILM
CORPORATION, NOVEMBER 1, 1941
I have accepted a place on the board of directors as
well as the presidency of the company -fter acquainting
myself with recent developments in the management indicat-
ing a determination upon the part of a majority of that
board to bring the affairs of the company into harmony
with the purposes and policies of the government and to
establish this important industry, which is now so essential to national defense, as unmistakably an American
organization.
I have expressed to the directors my views and they
are thoroughly in accord with the policy I intend to pursue. It seemed to me that there was here offered an
opportunity not only to develop fully and completely an
institution that was nurtured and grown on American
economic soil, but to make certain that it was truly
American in every sense of the word and completely free
from foreign influence or domination. I conceived this
to be a public service which I had no right to forego.
135
GENERAL ANILINE & FILM CORPORATION
Old Setup
New Setup
Officers
President - Schmitz
Secretary - Vom Rath
Treasurer - Williamson
Chairman of Board - Bosch
Mack
Gibbons
Williamson
Bullitt
Directors
Iselin
Mack
Schwartz
Schmitz
Bullitt
Breed
Hutz
Ford
Breed
Hutz
Bennett
Bennett
Aichelin
Schmitz
Budd
Stevens
Williamson
Williamson
Weiss
Vom Rath
Vacancy
Baragwanath
Talbott
Charles L. McCann
136
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATEFebruary 4, 1942
TO
FROM
Secretary Morgenthau
Mr. Swope
Referring to the sketches which you showed
me yesterday for the new movie by Walt Disney,
I thought last evening that a good introduction
to it would be some of the scenes from the
book, which was also made into a movie, "Little
Man, What Now?"
137
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE February 4, 1942
TO
FROM
Secretary Morgenthau
George Buffington
Some time ago you suggested that I seek the
cooperation of the Motion Picture Camera Operators Union.
The attached publicity appeared in the January 28 number
of the Union's general bulletin.
GTS.
Issued from the General Offices
28
of the
INTERNATIONAL ALLIANCE OF THEATRICAL
General
STAGE EMPLOYES AND MOVING PICTURE
Bulletin
MACHINE OPERATORS OF THE UNITED
STATES AND CANADA
No. 312
*
Wednesday,
January 28,
*
*
1942
*
*
INTERNATIONAL BUILDING, 630 FIFTH AVENUE NEW YORK, N.Y.
WALSH
LOUIS KROUSE General
HARLAND HOLMDEN
Fairview
Sagamore President:
Road,
Ohio:
l'oronto,
Detroit,
MORRIS,
Ontario,
Canada :
FLOYD
BILLINGSLEY
BRENNAN, FUIN President Ramsey
KENNEDY,
ROGER
Michigan
Woodland
GEORGE
T
b
S
IA
"
"United " in Purpose
First
Jones
Sixth
Kansas
Vice-President
City,
Missouri
LABOR AND NATION'S LEADERS AGAIN
UNITE IN CELEBRATION OF
PRESIDENT'S BIRTHDAY
Proceeds in Five Thousand Communities
to Warm Springs Foundation for Victims
of Injantile Paralysis.
O
KEEP GENERAL OFFICE POSTED ON
BOND PURCHASES
A
S stated in the last issue of the Bulletin, the General
Defense Bonds purchased by the various local union,
of
the International Request was made that information
in connection therewith be forwarded so that an accurate
tabulation could be had.
NCE again Labor will join with a Committee of
leaders in all fields of American life, launching a
nation-wic movement to honor President Roosevelt
his 60th birthday, January 30th. by raising a permanent
endowment fund for the Warm Springs Foundation on a
single night at Presidential Balls to be held in every com
munity in the Nation
It must be emphasized that this campaign was never
more important than now, since the effort to control in
on
fantile paralysis must be intensified. not relaxed. in war time
A national committee numbering more than fifty leaders
in all walks of life is in charge of the plans, while Labor
committees of several hundred have been organized
Labor members of the National Committee have been
formed into a Labor Division, of which President William
Green is Chairman, with Matthew Woll as Secretary.
Around these a National Labor Committee has been formed
A co-operating Labor Committee has also been formed
among officers of city central bodies and it is expected that
every central body will join in the national celebration, either
by holding a ball jointly with other bodies or by holding
a ball under its own auspices on the night of January 30th
A definite part of the price of each ticket will go to the
Warm Springs Foundation.
When President Roosevelt stepped into the White House
the only office which he retained among his many other
interests was the Presidency of the Warm Springs Founda
tion, said the statement announcing the National Committcc. "The retention of that office shows how near and dear
that potentially great medical and charitable instiution is
to his heart. I do not think that the President would appreciate any tribute to his unselfish and unflagging devotion to
Several responses have been received, especially within
the past few days, which would indicate that this drive IS
gaining momentum and should shortly swing into ful!
stride.
Communication received from Port Jervis, N. Y. Local
No. 353. advises that the members of the local organizeti
have bought a $500.00 Defense Bond and are going to
another next month.
New Britain, Cenn., Local No. 301, has also purchase
a $500.00 Bond to help the National Defense program
while Wheeling, W. Va., Local No. 64. negotiated th
purchase of $400.00 worth of Bonds, in addition to which
number of the members are investing in Bonds and Savings
Stamps.
Added Incentive-As If Any Was Needed!
The members of Akron, Ohio, Operators' Local No.
364. must have a particular hate for the little yellow men
(and we do mean "yellow," but we don't mean "men") of
Japan. since they bought a $250.00 Defense Bond to present
to the First American aviator to drop a bomb on Tokyo
It's a safe bet that our American Aces would do it without
the added inducement. but just out of sheer love for the
Nipponese. However, it is indeed a nice gesture. and oh
how many people are hoping that the Akron boys have to
pay off-AND IN A HURRY!
the public welfare more than the act of the American people
in fulfilling his own dreams for a great institution for the
treatment of infantile paralysis at Warm Springs. With
this fund the Foundation will be able to do a wider national
work.
"One-third of the physically handicapped in the nation
are crippled as a result of infantile paralysis, and it ought
to stir all of us to action to learn that this is essentially a
children's disease and that the majority of these young vic
tims could be helped immeasurably toward recovery by the
kind of exercise and treatment given at Warm Springs. No
one can visit Warm Springs without being touched to the
heart by the work being done there.
"This is not the usual kind of drive for funds. Our
committee is not soliciting large amounts from any person.
We ask only that our fellow citizens spend a part of their
usual and normal recreation budget on the President's Birth
day Ball in their own communities on January 30th, not
only as a personal tribute to the President for his zealous
and unselfish devotion to Warm Springs, but also for the
purpose of having a good time without increasing that
week's
expenditures It is a small thing for each of us to
do for him.'
As was the case last year, seventy per cent of all money
raised this year will remain in the community where it is
collected Complete arrangements for labor participation
have already been made and it is suggested that local labor
organizations make their local plans to help make this year's
celebration the most successful since its inception.
[2]
Office is compiling an accounting of the amount
$2,600.00 for Aurora Local
Evidently the members of Aurora, III., Local No. 221.
share the good feeling held by Akron Operators for the
Axis partners, as they haven't waited for any coaxing, but
have been making purchases of Defense Bonds from time
to time. All in all the local membership has kicked in with
$2,600.00 for Uncle Sam. which is a wholly gratifying re-
turn for a local having a roster of only twenty- three
members
Defense Funds for Defense Bonds
That's the unique method of helping the Government
devised by Morris County, N. J., Local No. 502. After
building a defense fund of its own through a small weekly
assessment on the earnings of their twenty-two members
and not anticipating any immediate need for such fund. the
local organization has purchased $1,000.00 in Defense Bonds
In addition to this they have decided to purchase Bonds of
$100 denomination each time the local defense fund exceeds
a stipulated amount?
This magnificent move is one that could well be adopted
by other locals, as it works no particular hardship on the
local treasury, helps meet defense demands and at the
same time represents a good investment
A Sacred Duty
Our grand business is not to see what lies dimly in
the distance, but to do what lies clearly at hand.
-CARLYLE
A
LMOST two months have elapred since this country was suddenly and deliberately attacked by the
Japanese Empire at a time when this Nation was at peace with it, and at the solicitation of Japan
was still looking toward the maintenance of peace in the Pacific.
Shortly following this was the declaration of war on the countries of Germany and Italy by the Joint
Congress of the United States.
In the interim, the people of the United States have had the opportunity to calmly deliberate and
form their opinion. They well understand the implication to the very life and safety of our Nation, and
no matter how long it may take us to overcome this premeditated invasion, the American people in their
rightcousness will go on to ultimate victory.
That sacrifice and suffering must be endured is a certainty.
That a righteous Democracy will triumph is also a certainty.
/ NEED YOUR HELP!
But first America must be strong and every man and woman must contribute their strength to the
strength of America at war.
Some are carrying guns-some are flying planes-some are giving their blood on ships at sea.
We must do everything in our power to smash the aggressors. The fighting forces can be counted
upon to do their best.
Behind the fighting forces the civil population must solidly line up with work, production, money
and the will to victory, no matter how long it takes or what it costs. Without civilian solidarity and united
effort, the effectiveness of our fighting forces will be gravely impaired.
It is to be expected that those affiliated with the Organized Labor Movement in this hour of supreme
trial will recognize the defense of the Country as their sacred duty, its life theirs to protect, and, if need
be theirs to die for.
The members of our International have in the past given every evidence of their loyalty and selfsacrifice in the upholding of American rights, and it is safe to assert that the same commendable spirit will
again be displayed.
IMPORTANT:
Just six items to fill in---
I. A. Members Asked to Practice "The New
Spirit." as Well as Project It.
T
Treasury Department, under the direction
of Secretary of the Treasury Henry Morgenthan has had the W.1. Dienee crudies produce
a short subject titled "The New Spirit." This picture has for its theme the very important function
I Your name, address,
and occupation
of impressing upon the American public the extreme
urgency for filing their income tax returns at the
earliest possible moment.
With the tremendous increase in the number of
persons who are compelled to file returns this year,
due to lowering the standard of incomes, it is imperative that this matter be taken care of promptly.
This will eliminate the indescribable rush and confusion that would result were we to follow the usual
custom of waiting until the last minute and just
2 Your dependents
beating the deadline.
Inasmuch as it is compulsory that this tax be paid,
if you have the money available, no particular purpose will be served in postponing payment. Aside
from this we will be pouring badly needed currency
into the coffers of the Government, and at the same
3 List your income
time alleviating the heavy burden confronting the
Treasury Department, which at best is faced with a
4 Subtract your credit
herculean task.
To facilitate and speed up the returns of wage
earners whose gross income is not more than $3,000
a year, a simplified income tax form, No. 1040A,
sample of which appears on the opposite page, can
be obtained from the Collector of Internal Revenue
for your district.
As to the picture, it is expected to be released for
showing some time between February 5th and 15th,
without cost to the theatres. Its running time is
approximately eight minutes and its exhibition is
a "must." Consequently, as a matter of patriotic
for dependents
Indicate your
family status
duty our members are enjoined to cooperate in every
manner at their disposal so that its purposeful
objective may be achieved.
Since we have been designated as disciples to
project the gospel of "The New Spirit," it would
hardly seem proper that we confine ourselves to its
mechanical projection. Instead let us all conscien-
tiously carry out its precepts to the letter and not
6 Read your tax directly
from the table
wait until tomorrow or next week to file our returns,
but do it now!
Like good Americans, let's take care of this important matter immediately.
FILE NOW- -PAY NOW-AND BACK UP OUR FIGHTING MEN
T1
78
91
92
as
n
ag
N
#
UP
14
68
67
49
43
so
5
as
T3TAX
860
108
114
102
104
106
110
112
117GROSS INCOME LESS ALLOWANCE FOR DEPENDENTS
119
day of
before - this
121
123
COLUMN
169
167
154
130
158
160
163
165
177
I've sweet (or affirm) that this return has been examined by me/us and to the best of maylear and belief,
145
147
132
132
134
130
150
.
ITS
174
180
183
15c
143
199
137
139
141
191
197
0128
194
Terms
COLUMA
2.350
2,375
2,400
2,450
2,473
2,500
2.550
2.818
E.TIM
2.500
2.525
2.928
2.725
2,780
2.025
2,630
2,325
2,300
2,525
2,550
2.600
2,700
2,950
2,678
2,000
2.975
2.574
3,000
2,425
82.278
2,300
2,376
2,400
2.325
2,350
2,875
2.000
2,650
2,776
2,500
2.700
2,728
2,900
2,878
2,825
2.903
2,550
2,525
2,625
#.750
2,470
2,950
2,500
-
2.075
2,425
2,475
2,450
2,975
2,860
82,250
.
as
14
04
as
43
48
se
37
39
41
45
33
17
24
32
T
&
.
2
a
01
11
13
13
22
30
DAY
cacs
Teach .
124
113
117
119
122
81
59
91
so
83
as
74
To
75
TO
72
GS
65
863
100
109
113
93
96
an
111
120
106
104
10g
and wife
COLUMA
Terms
BY
1,625
1,600
1.900
1,500
1,650
1,850
1.878
1,976
1,228
2.17%
#.200
2,150
2.100
2,000
2.078
2.100
2,028
1,950
1.176
1.825
1,750
1,725
1.700
2,250
1,615
1,578
1,550
1.20
2,000
81,525
IF
475
6. Tax is be paid (From Column A or B of table - other side)
2,100
2,125
2.060
2.078
1.900
1.973
2.005
2,150
1,900
1,925
1,823
2,000
One
1,750
1,000
1,530
1.675
1,525
1.55
2.173
1,500
2,000
1.700
9,220
1
1,725
1,675
1,650
1,625
81,500
FORM 1040 A, BACK
o
0
0
0
0
0
a
,
.
o
0
o
80
COLUMIC
2
a
16
61
39
ST
as
as
48
so
46
42
44
29
as
37
as
as
24
29
18
20
22
14
11
,
so
Tea lee
DTS
900
aso
928
STS
918
aso
800
.
COLUMB
773
8180
1,425
1,400
1,550
1,375
1,450
1,325
1,300
1.275
1,250
1,200
1.225
1,100
1,014
1,050
1,000
1,418
1,300
1,000
1,150
-
.
o
The income to be reported in this return is gross income (not including isea which is whilly exempt from income tax)
1,350
1,828
1,300
1,278
1.250
1.200
1,225
800
828
ass
775
150
1.000
1,025
One
1,000
1,375
978
1,400
926
1.425
878
IF YOU CHECKE ONE OF ABOVE FIND TOUR TAX IN COLUMN
1,450
900
year but each filing separate returns
FROM SOURCES STATED HEREON
1,478
as
ase
relative(s) in one household) on last day a year.
living with husband or wile who exercises family
without any deductions. The team in the above table are such that they am really compensate for deductions and credits
IF TOU CHECKED ONE OF ABOVE FIND YOUR TAX IN COLUMN A
---
4
-
00
00
-
-the
2400
combined
32.00
1941
filing
district
1832
their
220000
one
/
the
form
of
this
POLICE
3
-
Married and living with husband or wife on last day of
-
income
control and supports closely connected dependent
return
the
-
4
deal
form
make
2
the
may
on
with
made
and
be
(Centry
may
husband
A
return
incapable of all support
1942
mort.
/
Son
-
separate
Machinist
A
FORM 1040 A, FRONT
500
$1
100 Oak Street
of
Doeville, Doe Co., Doe
DEPENDENTS ON LAST DAY OF YEAR
$3,000
PLACE CHECK MARK () IN THE APPLICABLE E BLOCK BELOW
year and this return includes all income of humband
UNITED STATES
INDIVIDUAL INCOME TAX RETURN
Married and living with husband - will - last day
Single (and not head of family) on last day of year
CITIZENS OR RESIDENT ALIENS IF GROSS INCOME
Married but not living with husband or wife (and not
THIS RETURN MAY BE FILED INSTEAD OF FORM 1040 BY
Head of family (a single persons or married person not
head of family) on last day of year
IS NOT MORE THAN $3,000 AND IS ONLY
(Cabie's Stamp)
PRINT NAME AND NONE OR RENIDENTIAL ADDRESS PLAINLY BELOW
income
than
John (Name) (iia and mary Doe
Occupation
or your basis (as definition - when with - - of / - -
1,175
gross
payment
more
1
if
not allowable if this form is used
than $3,000. this return and - be - with the Collector of Internal Revenue for your
turn March not - 15. 1942. The las may be paid in equal quarterly intellects commencing March IS 1942. Pay tax. any to
not
and
having
lated dependent
income
Collector
persons
An income tax return is required to be And by single persons having gross income Chem above) of $750 - more and man
Less $400 for each dependent
the
FORM 1040 A
before a made by check or many order. make payable to "Collector of Internal Revombe.
ried
John Doe Ju
Subscribed and - to by
regulations issued under authority thereal and that Live had the income sources
true. correct. and complete return made in good faith for the taxable year stated Internal Revenue Code and
S. INCOME SUBJECT TO TAX
1. Salary. vages and compensation for personal services
223200
LI
400
4.
3. Total
2. Dividends interest. rent annuities and royalties
List persons denining their chid support from you (other than husband or wife) under 18 years of age or mentally or physically
gross
OPTIONAL
FILM EXCHANGE WORKERS RETAIN
"B" MEMBERSHIP
R
SITE OF '42 CONVENTION TO BE SET
AT MIAMI BOARD MEETING
EPRESENTATIVES of thirty-two out of a possible
W ITH the approach of the Thirty-sixth Convention
thirty-four Film Exchange local organizations, met in
Kansas City, Mo., for the purpose of taking up various
matters of interest to the Exchange locals.
of our International much speculation and interest
has already been indicated as to where it will be
held. While several points are currently under considera
tion, it will remain for the members of the General Executive Board - make the final choice at the Miami meeting.
broad discussion took place dealing with every phase of
the manner in which these locals have been functioning, as
well as to their future operation. Some comment was had
forth by the International governing their financial operation.
As an outcome of this meeung one development transpired which appeared to meet with the almost unanimous
approval of those participating. This was the granting of
permission by the International to Film Exchange locals to
hereafter conduct their own contract negotiations. Because
of the wide variance of conditions in which these groups
are located, this was deemed the most feasible policy.
Of special significance was the accomplishment of placing the National Screen Service under a blanket contract
with the Film locals. Previously the National Screen Service
had only one hundred and thirty-one Union employees.
With the consummation of this National basic agreement,
one hundred and twenty-two non-union workers were absorbed into membership, giving the International a one hun-
dred per cent unionized condition, and terminating a long
period of strife with this Company.
The outcome of the referendum taken to determine
whether the Film Exchange members would continue under
a "B" status or be classified as an "A" membership was
revealed. This referendum was held in accordance with
the provisions of Resolution No. 38, which was referred to
the General Office by action of the Louisville Convention:
"WHEREAS, We, the Film Exchange Employes
a
on the question of initiation fees and assessments. However, there was no change in the regulations originally set
It is only natural that the membership should display
keen
in the
setting for the biennial gathering
since its interest
pleasurable
access
important feature is the chance afforded to renew old fraternal acquaintances, which otherwise might be highly impossible. At the same time we are given an opportunity to
strike up new and lasting friendshins, To carries with
it the prospect of visiting a different city from the old home
town, with its attendant sightseeing features.
Many delegates avail themselves of the opportunity to
take their vacation in conjunction with convention attend
ance. They pack the "better-half" and the kiddies into the
family chariot and have a Cook's tour.
Consequently this apparent curiosity as to the forthcom
ing convention site certainly is not an unnatural one. Nor
is it limited solely to delegates, but appears to be quite
prevalent among the general membership.
Attendance at International Conventions is by no means
restricted to duly elected delegates. The presence of every
member having the means and the opportunity to be on
hand is strongly advocated. One is enabled to gain an
understanding of what is taking place in cities other than
your own. It is a trading post for ideas through mingling
with and hearing from those who have had perhaps more
Locals of the L A. and M. O. of the
experience, the methods used to successfully overcome gen-
U.S. and Canada, have been organized for over three
eral problems. Or possibly, beneficial suggestions to fellow
years, during which time we have gained a reasonable measure of experience and have become more
substantially able to guide our local organizations
under local autonomy, and
"WHEREAS, We have encountered problems
and experiences that cause us to believe we could be
of more benefit to ourselves and the International
Organization as a whole if we had more local
authority;
"WE, THEREFORE, Petition the International
President and the General Executive Board to grant
all Film Exchange Employes Locals an 'A' Status."
Ballots were cast by a total membership of 2,932, representing thirty-two locals. Of these, thirteen locals voted to
be accorded an "A" status, while nineteen locals balloted for
members can be offered.
In addition to this a first hand understanding of the
workings of the International is gained. You return home
with an accurate knowledge of the spirit of the International
-you know the legislation enacted and the reason it was
adopted. Being acquainted with the policy of the parent
organization you are able to counsel the local union into
avoiding errors of judgment.
Of course, the social activities indulged in by the delegates and guests are alone sufficient reason to be on hand
and participate in the festivities. For those who have attended previously, there is no need of going into detail in
this connection. Suffice it to say that those attending their
first convention will have a distinct treat in store for them.
the retention of a "B" classification. The total member.
ship indicated that there were 1,125 in favor of the "A",
while 1,807 voted to remain as "B" locals.
SILVER ANNIVERSARY CELEBRATED
BY STAMFORD LOCAL
The Twenty-fifth Anniversary of Stamford, Conn.,
Local No. 449, was celebrated by the membership with
elaborate festivities at the Piccadilly Restaurant in Stamford
The members and guests in attendance were treated to
a verbal panorama of the progress made by the local union
in its quarter of a century affiliation with the International
by the historian of the local, Brother Edward M. Rodgers.
Presentation of a solid gold wrist watch was made to
Nicholas Trimboli, Business Representative, who likewise
received an oral tribute for his faithful and efficient service
to the local organization.
TWENTY-FIFTH YEAR FOR
THAD BARROWS
For the twenty-fifth consecutive year, Thad C. Barrows
has been elected President of Moving Picture Machine
Operators' Local No. 182 of Boston, Mass. In addition,
Brother Barrows is National President of the Projection
Advisory Council and is a member of the Society of Motion
Picture Engineers.
This unbroken succession of regaining office comes as
no surprise and is readily understandable by those acquainted
with the popular and capable Thad, and is justifiable recog-
nition of his many years of efficient and faithful service to
the Boston local organization.
INTERNATIONAL JUMPS ON "BOND
WAGON" TO TUNE OF $50,000.00
Local Units Urged to Follow Sult in Answering Bombs With Bonds
INTERNATIONAL PRESIDENT RICHARD
F. WALSH, who worked for Uncle Sam in
I' World War I as a member of the armed forces,
has taken a healthy wallop at the Axis partners in
behalf of our Organization, through the purchase of
$50,000.00 in Defense Savings Bonds. This should
in some measure help to offset the historic sneak
punch delivered at
Pearl Harbor and con-
tribute toward pinning
himself in the service. To know that we are aiding
him should of itself prove sufficient incentive.
Every dime, every dollar that we put into Defense
Stamps will materially aid in a speedy
and successful termination of the conflict. This will
again put light, laughter, love and kindness, as well
as prosperity and happy days back into the homes
of America.
But before all this
FOR VICTORY
is made possible, the
respect, good will and
back the ears of the
loyalty of American
citizenship must for-
unholy trinity. No
time was lost by President Walsh in answer-
cibly assert itself. Not
through any lip-serv-
ing the Government's
ice, however, but by
digging deep down
plea for financial aid
in the war effort, the
money being drawn
into our jeans and
kicking in with the
from the general fund
of the Alliance.
green stuff that "keeps
em flying."
Awareness of the
fate that awaits us if
Unfortunately,
chemical engineering
has not yet reached a
we were to suffer a re-
versal in this titanic
struggle to maintain
our freedom should
point where "streetcorner gas" can be
utilized to fuel planes
and enable them to fly
over enemy territory
accelerate our spirits to
fever pitch in meeting
this most meagre of all
obligations-financial -
and drop bombs. Many
battles have been won
support.
on gas-but not verbal
When we consider
the hardships and sufferings that must be
endured by those in
-So let's save it and
substitute action!
Every member of
our International who
can do so is urged to
set aside a part of his
the armed service, who
give their -while
we merely lend, not
weekly earnings for
the purchase of De-
even of ourselves, but
fense Bonds and
our money, money
that is paid back at a
generous rate of in-
terest should be
immensely proud and grateful that we are so
privileged.
These fighting men of ours will deliver the goods
if we deliver the guns, planes and tanks they need.
Each of us must consider this matter in a personal
light, as with the tremendous Army, Naval and
Marine Corps in prospect, it is inevitable that some
relative, close friend or brother member will find
Stamps. Buy them
of Fachingian
every day, every week.
Buy as if your very life depended upon it. It does!
Any local union having a surplus fund that is not
used in the ordinary operation of the local, would be
making a patriotic gesture by swapping such funds
for Bonds.
Not only would you be aiding the victory effort,
but such money would be invested in the safest investment in the world-the United States of America.
CALLED TO THE COLORS
HOWARD BROUSSEAU
Local No. 1, New York, N. Y.
NORMAN ROCKETT
Local No. 44. Hollywood, Calif.
B. DWYER
WALTER VAIL
Local No. 1, New York, N. Y.
Local No. 44. Hollywood, Calif.
JULIUS GASVERDE. Jr.
Local No. 1, New York,
A. GORTA, Jr.
Local No. 1, New York, Y.
N. L. MOWER
Local No. 55. Roanoke, Va.
RAY KENNEDY
Local No. 58. Toronto, Ont., Canada
HERBERT ROSEMAN
WILLIAM A. BROWN
Local No. 1. New York, N.Y.
Local No. 60. Pensacola, Fla.
E. SALTZMAN
LEO J. BOWERS
Local No. 1, New York, N.Y.
Local No. 64. Wheeling, W. Va.
R. VAN BUREN
VIRGIL A. HICKMAN
Local No. 1. New York, N.Y.
Local No. 64. Wheeling W. Va.
DON McDONALD
LOUIS B. BESBECK
Local No. 15, Seattle, Wash
Local No. so, Hollywood, Calif.
FRED ROBINSON
WALTER N. BRINE
Local No. 15. Seattle, Wash
Local No. so, Hollywood Calif.
WALTER BARRINGER
Local No. 29. Troy, N.
JAMES BREENE
Local No. 29, Troy, N.
OLLIE D. FORRESTER
Local No. so, Hollywood, Calif.
HARRY GERZEN
Local No. so, Hollywood, Calif.
ROBERT F. BONE
FRANK GIBLER
Local No. 44. Hollywood, Calif.
Local No. so, Hollywood, Calif.
JOE CAMPANELLI
HAROLD HUTCHINS
Local No. 44. Hollywood, Calif.
Local No. so, Hollywood, Calif.
MORRIS C. CLINE
JAMES JENNINGS
Local No. 44. Hollywood, Calif.
Local No. so, Hollywood, Calif.
JOHN W. ERICKSON
CHARLES J. PULFER
Local No. 44. Hollywood, Calif.
Local No. 80. Hollywood Calif.
BEN H. HEATH
Local No. 44, Hollywood, Calif.
FRED RICHTER, Jr.
Local No. 80, Hollywood, Calif.
HAROLD D. HOGAN
HERBERT M. SMITH
Local No. 44, Hollywood, Calif.
Local No. 80. Hollywood, Calif.
DON R. JACOBSON
LLOYD A. TAYLOR
Local No. 44. Hollywood, Calif.
Local No. 80, Hollywood, Calif.
WINSTON R. JONES
SHELDON K. KNIGHT
Local No. 44. Hollywood, Calif.
Local No. 91. Bolse, Idaho
FRANK McKENNA
JOHN W. MURPHY
Local No. 44, Hollywood, Calif.
Local No. 91, Boise, Idaho
MAX MILLER
Local No. 44. Hollywood Calif.
WM. R. MOORE
Local No. 44, Hollywood, Calif.
ROBERT C. MURDOCK, Jr.
Local No. 44. Hollywood Calif.
PAUL H. RICHARDS
Local No. " Hollywood Calif.
JOSEPH E. SULLIVAN
Local No. 44. Hollywood, Calif.
WILLIAM S. BRADFORD
Local No. 105, London, Ont., Canada
ED. T. SUMMERFIELD
Local No. 105, London, Ont., Canada
JAMES FERGUSON
Local No. 106, Marion, Indiana
JAMES DUGAN
Local No. 133. Hammond, Indiana
EUGENE H. ALBRIGHT
Local No. 143. St. Louis, Missouri
RICHARD M. TOWNER
JOHN H. YEAGER
Local No. 44. Hollywood, Calif.
Local No. 143, St. Louis, Missouri
WM. L. ENGLEHARDT
Local No. 150, Los Angeles, Calif
LEO GLENN
Local No. 150, Los Angeles, Calif.
ROBERT JAY KOSKOFF
Local No. 150, Los Angeles, Calif.
C. O. LARSON
Local No. 150, Los Angeles, Calif.
D. B. POWERS
Local No. 150, Los Angeles, Calif.
RALPH O. WELLBAUM
Local No. 150, Los Angeles, Calif.
EDW. E. MATSCHULLAT
Local No. 151, Lincoln, Nebraska
WM. F. MATSCHULLAT
Local No. 151, Lincoln, Nebraska
H. A. KELLER
Local No. 151, Lincoln, Nebraska
BEN NEERLAND
Local No. 154, Seattle, Wash.
GERARD PETERSON
Local No. 154, Seattle, Wash.
M. D. RINGER
Local No. 154. Seattle, Wash.
A. A. ANSBACK, Jr.
Local No. 163, Louisville, Ky.
DONALD W. ARLEN
Local No. 165, Hollywood Calif.
LAFAYETTE B. HEDGE
Local No. 165. Hollywood, Calif.
OTTO LOCKE
Local No. 165, Hollywood, Calif.
R. BIASS
Local No. 168, Victoria, B. C., Can.
COLIN P. McDONALD
Local No. 168, Victoria, B. C., Can.
EUGENE L. PERRY
Local No. 169. Oakland, Calif.
WILLIAM MARCHECK
Local No. 171, Pittsburgh, Pa.
WILLIAM TATE
Local No. 171, Pittsburgh, Pa.
JOHN WYCICH
Local No. 171, Pittsburgh, Pa.
LOUIS APPLEBAUM
Local No. 173, Toronto, Ont., Can.
LLOYD COVERT
Local No. 173, Toronto, Ont., Can.
THEODORE F. COVERT
Local No. 173, Toronto, Ont., Can.
FRED S. JACKSON
Local No. 173, Toronto, Ont., Can.
CALLED TO THE COLORS
W. McCAUL
Local No. 173. Toronto, Ont., Can.
E. WOODBURN
Local No. 173. Toronto, Ont., Can.
DREW S. ANDERSON
Local No. 181, Baltimore, Md.
WILLIAM A. JOHNSON
Local No. 181, Baltimore, Md.
PAT CASEY
Local No. 194, Indianapolis, Ind.
GEORGE LYDAY
Local No. 194. Indianapolis, Ind.
E. A. WILSON
Local No. 216, Maryaville, Calif.
JAMES HERRING
Local No. 220, Sloux Falls, S. D.
WILLARD A. SHOLES
Local No. 223. Providence, R. L
ROBERT F. BLAKE
Local No. 224, Washington, D. C.
LOUIS BERNHARDT
Local No. 224. Washington, D. c.
GEORGE BURKE
Local No. 224, Washington, D.C.
JAMES W. PAGE
Local No. 224, Washington, D.C.
F. L. STEVENS
Local No. 224, Washington, D.
CHARLES H. FINCH
Local No. 225, Atlanta, Georgia
RALPH OLDKNOW
Local No. 225, Atlanta, Georgia
LESLIE ARNOLD
Local No. 260, Lake Charles, La.
R. T. SIPOLI
Local No. 260, Lake Charles, La.
CHARLES W. EINSEL
Local No. 267, Tiffin. Ohio
BRUCE FERGUSON
Local No. 267. Tiffin. Ohio
LAURENCE HARDY
Local No. 279. Houston, Texas
CHARLES ANSTINE
Local No. 283. York, Pa.
WILLIAM REEVER, Jr.
Local No. 283, York, Pa.
FRED CHATEAU, II
Local No. 293. New Orlgans, La
WILLIAM H. McKINLEY
Local No. 297. San Diego, Calif.
E. BARR
Local No. 299, Winnipeg. Man., Can
E. W. FOSTER
Local No. 299. Winnipeg, Man., Can
M. J. GILMAN
Local No. 299. Winnipeg. Man., Can
G. M. KRUGER
Local No. 299, Winnipeg. Man., Can
F. C. PITHART
Local No. 299, Winnipeg. Man., Can
FREDERICK PHILLIPS
Local No. 300, Saskatoon, Sank., Can
FRED PINTO
Local No. 301, New Britain, Conn.
J. R. ANSCHETZ
Local No. 302. Calgary, Alta., Can
R. ERIC GORDON
Local No. 302, Calgary, Alta., Can
F. D. HIRTLE
Local No. 302. Calgary, Alta., Can
BLAKELY McNEIL
Local No. 302. Calgary. Alta., Can.
ARTHUR E. SICK
Local No. 302, Calgary, Alta., Can
DAVID J. WILSON
Local No. 302, Calgary, Alta., Can
HAROLD HARRISON
Local No. 303, Hamilton Ont.. Can.
MILTON ALTMAN
Local No. 306, New York, N. Y.
RALPH BRODERICK, Jr.
A. CANCELLARE
Local No. 306, New York, Y.
LESTER B. DOYLE
HARRY E. KAPLAN
GERARD DUNKELMAN
NOLAN J. LABIT
Local No. 276, Goose Creek, Texas
Local No. 277, Bridgeport, Conn.
Local No. 277. Bridgeport, Conn.
FRANK MATERA
Local No. 277. Bridgeport, Conn.
CHARLES PRAKAS
Local No. 277. Bridgeport, Conn.
FRANK F. TOTH
Local No. 277, Bridgeport, Conn.
Local No. 306, New York, N. Y.
Local No. 306, New York,
A. DWORKIN
Local No. 306, New York N.Y.
ALBERT ENGEL
Local No. 306, New York, N. Y.
HERBERT A. FELDMAN
Local No. 306, New York, N.
LOUIS LOCKER
Local No. 306, New York, N.Y
M. MEYER
Local No. 306, New York, N.Y.
CLEMENTS MOREL
Local No. 306, New York N.Y.
E. H. NEWCOMB
Local No. 306, New York, N.Y.
DAVID QUINN
Local No. 306, New York, NY
STANLEY RZEMIENIEWSKI
Local No. 306, New York, N. Y.
SAMUEL WERTHEIMER
Local No. 306, New York, N.
ARTHUR WOLK
Local No. 306, New York, N. Y.
BERNAL L. SCHOOLEY
Local No. 316, Miami, Florida
JOHN F. FETTE
Local No. 321. Tampa, Florida
ROBERT R. SULLIVAN
Local No. 221, Tampa, Florida
NEAL E. BROWN
Local No. 323, Springfield, Illinois
LeROY M. LEHR
Local No. 324, Albany, N.Y.
STANLEY CREECH
Local No 348, Vancouver, B.C., Can
J. R. L. WATCHORN
Local No. 348, Vancouver, H. C., Can.
REGINALD WITT
Local No. 348, Vancouver, B. C.. Can
H. SWARTZENBURG
Local No. 357. Kitchener, Ont., Can.
MARTIN WAZLAHOWSKY
Local No. 376, Syracuse, N. :
JOE DOLAN
Local No. 386, Columbus, Ohio
ROBERT R. KNAPP
Local No. 386, Columbus, Ohio
LEE L. WALDSCHMIDT
Local No. 386, Columbus, Ohio
E. B. GARROW
Local No. 406, Moose Jaw. Bask Can.
LESLIE W. NELSON
Local No. 406, Moose Jaw, Sask. Can
BYRON G. SMITH
Local No. 412, Bradenton, Florida
EMMANUEL SCHIFANI
Local No. 423, Albuquerque, N. M.
BUFORD SPAULDING
Local No. 455, Fort Smith, Ark.
THE
COLORS
COLORS
VIC E WOODS
JAMES WILL
Ark
Local
WILLIAM WILKINSON
PHILIP NABHAN
405, Visalia, Calif
KISER
EDW. BOLINSKI
DONALD VARELI
Del
JOSEPH HOMALI
JOSEPH ROVNY
RALPH E KNOWLES
KENNETH KAUFHOLD
M. BERGER
RALPH F. LANTZ
PAUL A. KAUFMAN
ARTHUR L. GASKILL
RICHARD MARSHALL
New York
LESTER JACOUE
Bay,
Wis
ANDREW L GOLD.
GLEN SCHLINGERMAN
DANIEL RESTUCCI
No. 682. Hollywood Calle
RICHARD W. SEARS
DOUGLAS A. POPE
IRVING SMITH
WILLIAM J. WADE
482, Hollywood Calif
Calif.
New
BEN O. WRIGHT, Ir.
H. COTCHEFER
WIDMAYER
Local
Calif.
DUICH
EDW A. HILSON
LOUIS HORKAY,
Local
Calif
CLARENCE JOHANNES
CHARLES HARTLEY
EARL HOLLAND
CHARLES S. HISSERICH
FRANCIS J. BURGESS
Calir
WILLIAM A. COLLINS
Local
JOHN CAREW
Calif
ALLAN B. PARKER
Calif
Calif
HAROLD BENSON
Texas
EDW IRVIN
CADWELL
179. Miami.
EDW. H. BIRD
481,
DeMARCO
Callf
ED. CONNOLLY
JOSEPH DePINTO
Calif
RAYMOND E. DeCAMP
STEPHEN DOLLMAN
Calif
AUSTIN DOYLE
ESPOSITO
Callf.
VICTOR FADDEN
GARRISON
ELI WEINSTEIN
LOUIS W. BAEHR,
WILLIAM W. HANNAH
ROBERT J. KERN
WHEELER BARTRAM
CLIFTON L JOHNSON
DONALD McADOO
ALEXANDER BLANCHARD
EARL N. KENNEDY
New York
New York
127.
102. New York
728
S. T. BLOOM
JOHN MINGLE, Ir.
Local
102 New York
LOUIS L. KOLB. Jr.
Callf
No. TST
WILTON NATION
ROBERT BURKHARDT
BERNARD NEWSON
ALFRED DeGAETANO
111.
LISLE M. LUHR
No. 727 Hollywood, Calle
121 Hollywood
New York.
JOHN MONTE
Calif
GERALD DOBSON
ARTHUR OLSON
127. Hollywood
102. New York
Callf.
BURT H DREYER
JOSEPH SPALLUCCI
Calif
787.
702,
WILLARD F. EGGERT
LOUIS SPIVAK
102. York
No. 721 Hollywood
Calif
MARK GARBER
G. STRANDES
Local
192. New York
No. T2T. Hollywood
Callf
JOHN H. HALE
BRUCE E. THOMPSON
Calif
127.
102.
GALE HEMPFTLING
DAVID TOMKINS
Local
121 Hollywood
Calif
JOHN T. HUNT
PHILIP ULMER
Hollywood Calle
102 New
W. BRADLEY LaGUESS
AL VILLA
TO2 New York
T10.
Hollywood
125.
JOHN B. STINE
728
EUGENE W. STOUT
No 128. Hollywood
RUDOLF PRETZEL
St. Paul.
RICHARD RANK
KEN. WENNESHEIMER
CLARENCE E. BRAZEL
No
IRWIN ELLIS
Calle
ROY FARWELL
702. New
HORACE F. BLANTON
121.
ARTHUR G. SMALLWOOD
Callif
RALPH LARGEY
JOHN AUSTIN
New
Fla.
EUGENE E. FAY
102, New York
GEORGE THOMPSON
ALEX BATISTONI
JAMES WARREN
714 Parama City,
TOS.
H. CRESAP
GEORGE H. SMITH
713 Shellyvville
WILLIAM COOK
WILLIAM F. ALFANO
West
HAYS R CALDWELL
VICTOR HAWKINS
New York,
DAVID WAGNER
479. Miami
H. H. ENNIS
S RILEY
New
Ir.
HOWARD E McALLISTER
DEAN C. SPENCER
JEROME ALBERT
SMITH
Local
Calle
635
GUY NEWHARD
CLIFTON SCHRADER
LANE TURNER
No.
HOWARD W. LEWIS
CARLOS V. DIEHL
KOFORD
PAUL W. KRETSCHMER
ROBERT HAGER
FRANK LETLOW
No.
Local 483. Callr
GEORGE J. PATEE
Local
613 Callf.
JACK PICKARTS
H. LEVY
Bay,
PHILIP O. GLEAVE
HERMAN H. DIEHL
KENNETH D. HERVOCHON
682.
ROBERT B. GRAHAM
QUENTIN SCHROEDER
Va
Callf
NEAL F. GERARD
Hollywood, Calif
HERMAN WHITE
473,
683.
LOUIS ILLAR, Jr
Del
ROBERT B. BEST
THEODORE R. GIBSON
FLOYD FORAN
No.
Detroit,
IRVIN McCLELLAN
FRED ODGERS
Local No. TRT. Hollywood
JERRY McFARLAND
Local No. 127 Hollywood Callf
WILLIAM WILSON
GLENN A. MARRS
THOMAS ELLIOTT
No 127 Hollywood Calif
719.
TAD E. GOULD
DUDLEY A. ROONEY
ROBERT OLDHAM. Ir.
FRANK ROONEY
GALE WHITE
MILTON SCHREYER
GORDON BARNES
FORREST CRANDALL
TAT.
Texas
Call
No. 727, Hollywood, Calif
WILLIAM HOGUETexas
Freeport,
"ON THE HOME FRONT
UST where do the legitimately deferred members of our International fit into the picture of the current
World crisis?
Are we any less patriotic because we do not lay down the tools of our trade and pick up a musket
to defend our Country?
DRVICTORY
BUY
UNITED
STATES
SAVINGS
BONDS
Are we shirking our duty because we do not resign our positions and seek employment in so a
WE CAN'T ALL
DO YOUR JOB
BOYS BUT
WE CAN DO
defense industry?
AND
Should we throw up our jobs and join the armed forces?
THIS
THIS
Such uncertainty has unquestionably pervaded the mind of each God-fearing, Country-loving member
of
the International, who but for physical incapacity, family ties or other responsibilities would gladly
exchange his security for a crack at our "mad dog" enemies. But sanity and obligation must control
impulsive desires.
It has been ordained that we must do our duty in our shops or our kitchen, in the market. the street,
the office. the home, just as faithfully as if we stood in the front rank of some great battle and knew that
victory for mankind depended upon our bravery, strength and skill. When we do that the humblest of
us will be serving in that great army which achieves the welfare of the world.
The duties of our membership in these troublous times take on added importance. While performing
work out of all visible range, our services are vital, but unsung. Our reward must come from the selfsatisfaction gained through the knowledge of a job well done.
Aeroplane workers are building planes.
Shipyard workers are building ships.
We are building morale, which is so essential at a time when the masses are living under constant
strain and sacrifice, and spirits have receded to a low cbb. Increased days and hours of work call for
increased recreation.
What with daily blazing headlines and papers crammed with ghastly reports of war: intermittent
radio interruptions to bring its depressing course into every dwelling, while rarely any conversation terminates without some discussion of war, the theatre affords the only release from its horrors.
No apprehension should be felt as to any evasion or shunning of duty because we have been singled
out to play a non-combat role. Rather, since our International is a component part of an industry that is
productive of such universal benevolence, we should proudly exert our every effort in that direction in an
endeavor to bring some measure of happiness into a trouble-swept world.
J.R.WILLIAMS
UNTIL THE JOB'S DONEI"
To counteract the disastrous influence of millions of men being mobilized and billions being spent
for the lofty ideals of "slaughter and destruction," we on the home front should have a passion for internal
harmony within our Country that knows no frustration.
The past several days have witnessed an attempt to heal the breach existing between the American in the
Federation of Labor and the Committee of Industrial Organization, in an effort to make peace its
interest of America's war effort. Should these early feelers bear fruit and Labor eventually compose
differences, the Government will be aided materially in its operation of the war economy.
It has been conclusively that such rivalries and jurisdictional conflicts have no place in in the an
emergency such as faces America proven and the world today. All efforts should be directed toward unity
Labor Movement for the defense of our Nation.
COUNTY
107
AMENDMENTS TO
'A TOAST
(Corrected to January 22. 1942)
Zeal
Studio
Utility
Workers,
727, Hollywood,
ment
that
seemed
Audi-
SECRETARIES AND BUSINESS AGENTS
Wtt
Required in Duplicate Together with
Copy of Law to Be Amended
Municipal
No
senti
should
134
Reference Marks
(Stage). M (Mixed). o (Operatora)
o
LOCAL CONSTITUTION AND BY-LAWS
MUST BE SUBMITTED TO GENERAL
OFFICE PRIOR TO ADOPTION
Deat
NAMES AND ADDRESSES OF LOCAL
part,
just
Mechanical LT
(Laboratory
and Ticket
(Treasurers
Sellers
TT
ALABAMA
EFORE taking final action, all local constitution and
additions and revisions must first be forwarded
Japan.
General Office Such amendments should be
Nazis,
Nor their bluff.
furnished duplicate, together with a copy of the law
amended
Because
Several local unions have proceeded to revamp their laws
and have gone to the expense of having them printed before
submitting the inspection of the General Office
Unfortunately needless incurred for the reason
Christmas
that the with Inter
national necessitated the laws in ques
occasioned
have
Feather
fear
Our
Yunkee
latter
the
Of
no
Unity
oversight speeding up the printing of
the
441
Almighty,
through
either
a
failure
"
New Year,
tion being reprinted
Evidently
Payee
Uncle
241
Has
the
of
first
General
the
to
bells a-ringing,
Office
Santa down our lane,
Then delicate features involved
and
making
by-laws,
made.
being
contrary
to
OBITUARY
provisions
the
-Laws
alter
adopt,
without
and
though the same.
without
complete
amend
Let's enjoy this Festive Season
it
compiling
tremely
prior
BUSH. JOHN. charter member of Jamestown. N.Y., Local
ap
proval by the General Office. as provided in Article 19, Sec
Pages 52 and 53 of the International Constitution
By-Laws:
Alliance may adopt
individual and ly-Laws for their
carpenter
Opera
for
years
House
CAMP, (Doc), member of Peoria, III, Local No.
Member of local since 1900.
January 10, 1942.
thereto submitted to the International
President for his before adoption. No con-
HARKNESS, JOHN, member of Waukegan, III., Local No.
stitutional provision shall be adopted by any
JANSER, JOHN charter member of Hamilton, Ohio,
without
such
approval
the
by
its
local
union
ailment
749.
Local No. 136, on January 4, 1942 Served as Secreyears.
219, on January 12, 1942.
charter.
affiliated
lingering
LINK. member of Minneapolis, Minn. Local
Section shall be punishable by a fine, or
of
317,
tary
Any failing to comply with the provievent
428
December 3, 1941, in San Francisco, Calif.
GRIVET, EUGENE, member of Rochester, N. Y., Local
government, such laws any proposed amend
local
ARIZONA
shall
adopt any hereinabove pro
vided for with the provisions of this
McMAHON, B. R., member of Waukegan, III. Local No.
317. of heart attack.
MITCHELL, ROBERT (Bob), member of Peoria, III. Local
No. 75, on December 22, 1941.
Constitution and By-Laws, such local law shall be void
Rich-
271.
PETERMAN, FRANCIS member of Pottstown, Pa. Local
and of no effect and the members of the local union
No. 575. President of local at time of his death on
shall not be bound thereby.
December 23, 1941. as result of automobile accident
CALIFORNIA
POWDERLY. ELMER, member of Peoria, III., Local No.
75. on December 21. 1941. at Flushing, Long Island
TRAVELING ATTRACTIONS NOTE
RAILEY A. (Gus) member of Houston, Texas, Local
Fort Collins, Loveland and Windsor, Colorado, are
the jurisdiction of Fort Collins, Colo., Local No. 229.
No. 51, on December 10, 1941. at the age of sixty four.
Members playing any of the aforementioned points will
properly notify the Business Agent of the Fort Collins local
BRING ADDRESS CHANGES UP TO DATE
Carpenters with attractions booked to play Mr. Vernon,
Ohio,
are
requested
forward
advance
yellow
card
to Charles Hill, 121 East Sugar St., Mr. Vernon, Ohio.
Meadville, Pa. Local 398, requests that sufficient notice
be
given
the
where
unusual
number
men be supplied the local is not large enough
have subject to call too many extra men, com-
pliance with this request urged.
In this issue of the Bulletin all Secretaries and Business
Agents names addresses are completed up to the present
time according to the files of the General Office You are,
therefore, requested check the name and address the
local Secretary and Business Agent, and if
promptly advise the General Office
that accuracy be the list published
as the records. request to the General Office
address meet with instant compliance
Readdard
for
SL
Bas
SECRETARIES
a
THE OFFICIAL ROAD CALL
OFFICIAL
ROAD
NORTH CAROLINA
KANSAS
823 DURHAM- Old and New Duke Auditoriums.
1361 WINFIELD- Ritz
1430 INDEPENDENCE Beldorf (Colleyville).
1558 WICHITA-Wichita University High School North and High School
East.
1612 HUTCHISON State and Iria
1751 ARKANSAS CITY-High School Auditorium Gymnastum
958 WINSTON-SALEM Colonial
1316 WINSTON-SALEM Piedmost Park Association Fair.
1347 WINSTON-SALEM Hollywood.
435 HENDERSON Moon (Durham).
1583 SALISBURY Rowan County Fair
OHIO
MARYLAND
749 BALTIMORE-State
MASSACHUBEITS
183 SHELBY-Opera House and Castamba Theatres.
282 COLUMBUS- -Knickerbocker
829 MARION-Ohio
931 LIMA-Lyric
1112 FREMONT Puramount (Tiffin)
1354 MARIETTA-Hippodrome and Putnam.
410 LYNN Capitol.
713 HAVERHILLLatayette
841 BOSTON Symphony Hall
1697 DAYTON-Dayton Art Institute
1064 BOSTON Casino.
1145 HOLYOTE Halvoka Overa House.
1274 BOSTON Tremont
1637 NEW BEDFORD New Bedford High School Auditorium
1641 NEW BEDFORD Balley Square
1711 AMHERST-= Mararia Theatre of Amherst College
(Northampton)
MICHIGAN
469 FLINT High School Auditorium
1009 BATTLE CREEK-Battle Creek College Auditorium
1204
1063 OKMULGEE- Yole and Orpheum
1119 ENID-Chief
1298
BLACKWELLInca.
-Palace, Midwest and Rivoli (Arkanags City, Km.)
1438 OKMULGEE1616 BLACKWELL Bays (Arkansos City, Kan.)
1738 LAWRENCE Hot Brow
1392
OKLAHOMA
568 ENID-Aztec and New Mecca
BAY
CITY-Washington
GRAND HAVEN-Crescent (Muskegon).
1649 NORMAN-Sooner Varsity and University
OREGON
1702 PORTLAND-Third Avenue
1427School
LANSING -Lansing Central, West Junior, French Junior High
PENNSYLVANIA
Audiforiums
1718 GRAND RAPIDO Club 21.
1745 ANN ARBOR University of Michigan
MINNESOTA
1010 EAST GRAND FORKS-McDonald Brothers' State Theatre and
1233 ERIE-Colonial
286 YORK-York Theatre
1546 PITTSBURGH Pittaburgh Playhouse.
1699 BELLEFONTE Plaza and State (Lowiston).
1740 DEER LAKE- Deer Lake Theatre (Pottsville)
1741 ALLENTOWN Central Park
Dance Hall
RHODE ISLAND
MISSISSIPPI
333 YAZOO-Yozoo (Greenwood)
519 PAWTUCKET-Cap (Providence).
SOUTH CAROLINA
MISSOURI
1114 WEBB CITY-Civic (loplin).
1329 IOPLIN- Central High School Auditorium
1662 WEBSTER GROVES- Ozark (St. Louis).
696 COLUMBIA Town.
1504 GREENVILLE-Greenville Women's College Auditorium
1685 SPARTANBURG-Spartanburg County Fair Association
TEXAS
MONTANA
1562 BILLINGS--Billings High School Auditoriums
NEW HAMPSHIRE
1415 NASHUA-Colonial (Manchester)
NEW JERSEY
268 OCEAN CITY-Morlan (Atlantic City).
350 LAKEWOOD-Palace.
TOMS RIVER-Traco (Lakewood)
408
AKEWOOD-
278 BURKBURNETT-Palace
643 CAMBRIDGE-Strand
840 PARIS-Lamar (Greenville).
879 AUSTIN Gregory Auditorium
917 LUBBOCK and Palace
1390 TEXARKANA-High School Auditorium.
1473 FREDERICKSBURG-Hillsop Night Club.
1576 DENTON-TexasWomen'sCollege and North Texas State Teachers
College (McKinney)
1607 AUSTIN-Hogg Memorial Auditorium
1726 FORT WORTH-Colineum and Will Rogers Memorial City Audiforiums
Strand
448 BUTLER-New Butler (Morris County).
VIRGINIA
546 ATLANTIC -Royal
609
POMPTON LAKES Pompton Lakes
LITTLE FALLS-Oxford (Paterson)
1752 ROANOKE
SALEM-Colonial (Roanoke)
NEW YORK
377 Auditorium
BROOKLYN-Apollo, Classic, Parkway, Mapleton and Fulton
WASHINGTON
1608 SEATTLE-Meany Hall, University of Washington
391 LONG BEACH-Bayahore, Patchoque.
866 BROOKLYN- State, Kiamet and Summer.
955 DOLGEVILLE Strand
1057 NEW YORK-A H Schwarts, Century Circuit, Inc.
1058 LOCUST VALLEY Red Barn.
1122 BROOKL (N-Borough Hall.
1225
Auditorium
1306 POUGHKEEPSIE- School Auditorium
1125
WEST VIRGINIA
935 CHARLESTON High School Auditorium
615
CHARLESTON
Kearse
690 CLARKSBURG Opera House and Robinon Grand
1152 HUNTINGTON Palace
1378 CHARLESTON-Capitol
1348 BEACON Beacon boghkeepate).
WISCONSIN
1374 BEACON-Roosevelt_(Poughkeepsle).
1428 BROOKLYN-Schwaben Hall
1491 MINEOLA- Mineola (Nasacru County)
1644 (Nassau and Suffolk Counties).
1656 GOSHEN-Gosben (Middletown).
1750 SYRACUSE-New York State Fair Grounds
1196 ANTIGO-Home (Wausau)
WYOMING
983 CHEYENNE-Wyoming Consistory
139
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
February 4, 1942
Secretary Morgenthau
FROM Mr. Haas
the
1. Attached to this memorandum are tables
showing (1) the number of agents qualified to issue
Defense Savings Bonds, Series E, at the close of
business on January 31, classified by type of agent,
and (2) the number of such agents on selected dates
since last May.
2. On January 31 there were 19,098 agents
other than post offices qualified to issue Series E
savings bonds, an increase of 481 since January 24.
3. On January 31 there were 351 corporations
qualified to issue Series E savings bonds on payroll
allotment plans in accordance with the instructions
contained in your telegram of December 27 to the
Federal Reserve Banks. There were 240 corporations
so qualified one week ago.
4. There were 37 members of the investment
industry qualified to issue Series E savings bonds
on January 31, as compared with 10 members one week
ago.
Attachments
Classification of the number of agents qualified to issue
Series E Savings Bonds, on January 31, 1942
Building
and
Banks
Other : Invest- All
Credit
loan
associations
corpora- :
unions
ment
tions 1 /:industry
:others
Total
2
Corporations and Associations:
Federal Reserve District of:
831
228
199
14
-
12
1,169
251
367
32
7
37
831
105
94
101
-
-
359
292
28
182
119
19
Atlanta
1,167
1,022
1,005
144
156
17
Chicago
2,314
448
181
90
St. Louis
1,340
142
51
11
Minneapolis
Kansas City
Dallas
San Francisco
1,281
1,751
55
55
177
140
837
114
189
549
229
237
Sub-total
14,097
2,434
2,080
351
-
-
-
-
14,097
2,434
2,080
351
Boston
New York
Philadelphia
Cleveland
Richmond
Post offices
Grand total
Office of the Secretary of the Treasury,
Division of Research and Statistics.
1 In accordance with telegram of December 27, 1941.
2 Except post offices.
3
1,863
1,131
1
6
1
-
-
10
14
8
1
-
2
3
1
27
8
2
-
1
37
-
37
1,284
27
1
3
99
-
99
February 3, 1942
1,850
1,349
1,322
3,057
1,553
1,396
2,098
1,168
1,027
19,098
17,123
36,221
Number of agents qualified to issue Series E
Savings Bonds, May 7, 1941
to date
7
Commercial and savings banks
Building and loan associations
Credit unions
Other corporations 1
Investment industry
All others
Total other than post offices
Post offices
Grand total
Sept.
Jan.
30
10
Jan.
Jan.
24
17
11,571 13,832 13,966
7,676
Jan.
31
14,037
14,097
1,481
2,144
2,268
2, 65
2,434
8
389
1,529
1,736
1, 11
2,080
-
-
12
118
40
351
-
-
-
-
10
37
27
59
30
54
99
8,430 13,468 17,576 18,118
18,617
19,098
15,812 16,429 16,883 17,140
17,140
17,123
24,242 29,897 34,459 35,258
35,757
36,221
739
7
Office of the Secretary of the Treasury,
Division of Research and Statistics.
1
:
May
:
Type of agent
1942
:
1941
In accordance with telegram of December 27, 1941.
February 3, 1942
Stock of Series E Savings Bonds on Hand 1
January 20, 1942 to date
(In thousands of pieces)
:
20
21
22
23
24
25
26
27
28
29
30
31
Feb.
1
2
of day
this day
8,101
218
8,683
337
9,146
9,565
9,988
10,525
10,525
11,038
11,852
12,601
13,336
13,853
381
14,514
14,514
14,809
3
Sales
377
263
manufactured
:
:
Jan.
Stock on hand
: beginning
Bonds
this day
800
9,146
9,565
9,988
10,525
10,525
11,038
11,852
12,601
800
800
800
186
251
1,000
265
1,000
139
800
800
none-closed none-closed
505
158
day
8,683
1,000
1,000
283
close of
800
none-closed none-closed
487
Stook on hand
13,336
13,853
14,514
TBX
deliveries
this day
1,000
875
1,000
1,000
1,000
-
2,000
-
2,000
-
2,000
14,514
800
14,809
800
15,451
-
-
-
-
February 4, 1942
Office of the Secretary of the Treasury,
Division of Research and Statistics.
Includes stock in hands of (1) Federal Reserve Banks and branches, (2) Post offices,
(3) Federal Reserve Bank issuing agents, and (4) Treasury vaults in Washington.
1
CONFIDENTIAL
Unfilled Orders for Savings Bonds at the
Federal Reserve Banks and the Post Office Department
January 20 to date
:
:
Stock of
on hand*
1,184
1,000
875
bonds
86
20
202
411
800
59
21
86
86
59
800
22
697
1,546
1,676
569
800
50
1,871
86
24
727
800
28
50
25
28
26
28
27
none-no mail none-closed
490
434
7
28
474
7
407
6
29
426
8
30
6
31
Feb.
1
2
9
404
1,000 1
1,000 1
1,000 2
1,000 2
800 2
800 1
none-no mail none-closed
402
800 2
428
800 2
1,922
1,922
28
2,011
2,177
2,102
2,097
1,869
7
7
6
8
6
9
1,868
9
1,868
-
2,000
-
2,000
-
2,000
1,668
11
9
11
1,000
1,000
1,000
1,435
6
3
Office of the Secretary of the Treasury,
Division of Research and Statistics.
Bonds in Washington vaults only.
February 4, 1942
Includes 400 thousand pieces manufactured for inventory in the field.
Includes 600 thousand pieces manufactured for inventory in the field.
-
-
-
-
800
204
23
IBM
deliveries
this day
:
:
Jan.
:
:opening of
: business
:
Unfilled
orders at
(In thousands of pieces)
Unfilled
Bonds
New orders
orders at
manufactured
received
close of
this
day
business
this day
144
UNITED STATES SAVINGS BONDS
Comparative Statement of Sales During
First Two Business Days of February and January 1942 and December 1941
(February 2-3 January 12, December 1-2)
On Basis of Issue Price
(Amounts in thousands of dollars)
:
:
over
December
:
January
Percentage of Increase
February
:
February
over
January
:
:
:
Item
Amount of Increase
Sales
January
February
January
December
1942
1942
1941
$ 12,006
$ 8,784
$ 4,205
$ 3,222
Series E - Banks
42,037
20,964
6,496
21,073
14,468
100.5
222.7
Series E - Total
54,044
8,984
39,313
29,749
4,021
15,384
10,701
1.956
12,970
24,295
4,963
23,929
19,048
2,065
2,414
81.7
123.4
155.5
178.0
105.6
18.6
$102,341
$ 49,153
$25,627
$53,188
$23,526
:
Total
Office of the Secretary of the Treasury, Division of Research and Statistics.
:
Series G - Banks
:
Series F - Banks
$ 4,579
:
Series E - Post Offices
over
January
36.7%
108.2%
over
December
108.9%
91.8%
February 4, 1942.
Source: All figures are deposits with the Treasurer of the United States on account of proceeds
of sales of United States savings bends.
Figures have been rounded to nearest thousand and will not necessarily add to totals.
Note:
145
UNITED STATES SAVINGS BONDS
Daily Sales - February 1942
On Basis of Issue Price
(In thousands of dollars)
Post Office
Date
All Bond Sales
Bank Bond Sales
Bond Sales
Series E
Series E
Series F
Series G
Total
Series E
Series F
Series G
Total
$ 8,435
$ 34,150
$ 6,191
$ 19,795
$ 60,136
$ 42,585
$ 6,191
$ 19,795
$ 68,571
3,572
7,887
2,793
19,518
30,199
11,459
2,793
19,518
33,770
$ 12,006
$ 42,037
$ 39,313
$ 90,335
$ 54,044
$ 8,984
$ 39,313
$102,341
February 1942
2
3
Total
$ 8,984
Office of the Secretary of the Treasury, Division of Research and Statistics.
Source: All figures are deposits with the Treasurer of the United States on account of proceeds of
sales of United States savings bonds.
Note: Figures have been rounded to nearest thousand and will not necessarily add to totals.
February 4, 1942.
146
FEB 4 1942
The Comptroller of the Currency
To:
The Commissioner of Internal Revenue
The Commissioner of Customs
The Chief of the United States Secret Service
The Director of the Procurement Division
Secretary Morgenthau
From:
Attached is a photostat copy of a letter from the
Attornsy General of the United States to me dated
January 31, 1942, and a photostat copy of my reply to
him dated February 4, 1942.
You are requested to bring these letters to the
attention of the proper officials under your jurisdiction in order that the policy of the Attorney General,
with which I fully concur, may be carried out effectively.
(Signed) K. Morgenthau. JO.
JLS:CLK:t
2-3-42
147
FEB 4 1942
:
Dear Mr. Attorney General:
I have your letter of January 31, 1942, in which
you state that you have established in the Criminal
Division of your Department a special unit to examine
cases of criminal conduct in business transactions
connected with the defense program.
with a view to aiding you in your endeavor to
presecute business concerns which seek to defraud the
Government, I have advised the Office of the Comptroller
of the Currency, the Bureau of internal Revenue, the
Sureau of Customs, the United States Scoret Service,
and the Procurement Division of the work you are undertaking, and have asked them to bring to my attention
any transactions which indicate criminal conduct so
that I may transmit the summ to your Department for the
attention of the new unit.
Sincerely yours,
(Signed) a. Mergenthau. Jr.
Secretary of the Treasury
The Honorable
The Attorney General
n.m.c.
Copies to shoupon
JLS:CLK:t
2-3-42
148
Office of the Attorney (General
Washington D.C.
January 31, 1942
The Honorable
The Secretary of the Treasury,
Washington, D. C.
Dear Mr. Secretary:
As you are well aware, the program of the government for
national defense and prosecution of the war has made it necessary
for the government to enter into a great many contracts with busi-
ness concerns all over the country in which billions of dollars
are involved. While the great majority of the people with whom
such contracts are made are honest and patriotic citizens and will
deal honestly with the government, unfortunately there will doubtless be & few who will see in the emergency an opportunity to take
advantage of the government and will do so.
The Department of Justice will take appropriate action
as expeditiously as possible in all cases in which criminal conduct
in shown to exist with the hope that prompt action may not only
result in A just treatment of such cases but will serve AS a deterrent to others who might otherwise be tempted to deal dishonestly
with the government.
Accordingly, I have caused to be set up in the Criminal
Division of my Department a special unit whose duty it shall be to
examine All cases in which such offenses are indicated, to the end
this appropriate action may be taken promptly.
As an aid to carrying out this program, I shall appreciate
: if you will advise me promptly of any specific instances of
criminal conduct that may come to your attention, to the end that
ne watter may be fully investigated and proper action taken.
With kind regards,
Sincerely yours,
transcritional
ATTORNEY GENERAL.
149
Mr. Sullivan said as result of this
Oerview, it was not necessary to send
written reply to Mr. . Green.
150
MEMORANDUM
February 4, 1942.
TO:
The Secretary
FROM:
Mr. Sullivan
Pursuant to your instructions I interviewed President
illiam Green of the American Federation of Labor in regard to
his request that you support his demand that Social Security taxes
be included in the coming revenue bill.
I explained to President Green that the delay to the
enactment of the revenue measure of from three to five months which
would result if concurrent consideration were given to Social Security
taxes along with the revenue bill would cause a loss of revenue of
about $500 million. He immediately interrupted me and said that he
quite understood our situation and that we couldn't ask for such a
large increase in taxes and at the same time request something which
would cost us a half a billion dollars. He was very cordial and
asked me to explain to you that he did not intend to embarrass you in
any way when he wrote the letter and he could readily understand why
you could not accede to his request.
We then discussed sales taxes and I am sure that his
organization will prove a valuable ally for us in our attempt to
defeat the sales tax.
THS
AMERICAN FEDERATION OF LABOR
Executive Council
President WELLIAN
Ganna
151
3870-1-2-3-4
DISTANCE
CABLE ADDRESS AFEL.
Washington, D.C.
January 23, 1942
The Honorable Henry Morgenthau,
Secretary of the Treasury,
Washington, D.C.
Dear Secretary Morgenthau
I was glad to have the assurance, in your letter of
December 3, 1941, of your agreement that the Social Security Act
needs substantial amendment and 1iberalization I am today writing
Chairman Doughton of the Ways and Means Committee, urging that the
question of amending the Social Security Act and of levying such
additional taxes as may be necessary to finance the improved system
be taken up in the early stages of the consideration of the entire
Social Security Act.
If the question of social security taxation is deferred
until after the general tax bill is framed, it seems clear that it
will not get fair attention and that other undesirable forms of
taxation will be levied which will make a reasonable increase in
social security taxes impossible. As you recognized in your letter,
there is an immediate connection between the government's regular
fiscal program and social security taxation. All taxes which take
a large part of the income of wage earners in the lower-paid
brackets restrict the degree to which payroll taxes can be levied
for social insurance. other methods of taxation also restrict the
worker's chance to save for emergencies such as unemployment, ill-
ness, retirement in old age. Social security taxes make funds
available for current government use, help prevent inflation, and
provide a fund from which withdrawals may be made later, offsetting
deflation in the post-war period. The only tax which can be levied
on a low-income group without seriously undermining basic living
standards is one which supports a social insurance system from
which payments are made to supply income in emergencies.
152
Honorable Henry Morgenthau
-2-
January 23, 1942
Increasing social security taxes would be an important
factor in preventing inflation, and would be the best bar to a
sales tax which is both inflationary and regressive in its effect.
We believe that sound principles of taxation require that all the
taxes to be levied be studied for their total effect before any
new taxes are imposed or old ones increased. May I ask your
support of our request that the social security tax increases,
proposed by President Roosevelt to finance an enlarged and improved
social insurance program, be considered at the same time, not
after, other taxes are under consideration before the Congress.
It goes without saying that no increase in social security taxes
should be made except to provide additional security under the Act.
Sincerely yours,
What
President
American Federation of Labor
LMcC
TREASURY DEPARTMENT
153
INTER OFFICE COMMUNICATION
DATE
FEB 4 1942
TO FROM Mr. Mr. Thompson Haas the
In further response to your request of December 26,
1939, there is submitted herewith for the Division of
Research and Statistics a memorandum listing, with brief
descriptions, the studies or projects completed or under
way, and the names of persons working on each, for the
month of October 1941.
154
DIVISION OF RESEARCH AND STATISTICS
Report of Studies or Projects Completed or Under
Way, and the Names of Persons Working on Each,
for the month of October 1941
For convenience of reference, the studies listed are
grouped under general subject heads.
The names shown for persone working on each project
include only those who participated fairly directly, as
explained in the introductory note to the corresponding
report submitted on December 28, 1939. No attempt has
been made to cover also persons whose responsibility in
each particular case was mainly in planning, supervising,
or consulting.
Financial Analysis
I. Projects or studies completed
1. Three reviews of current developments in the high-grade
securities markets were prepared, and memoranda were
transmitted to the Secretary on October 1, 15, and 30. Mr. Haas, Mr. Murphy, Mr. Foy, Mr. Matlock, Mr. Robbins,
Mr. Barnett, Mr. Rosen
These reviews contained, in addition to analysis of the
current situation, the following special studies:
(a) Effects of previous changes in reserve requirements on prices and holdings of United States
securities (Review of October 1, pages 3-5). Mr. Foy
(b) Distribution of holdings of outstanding taxable
bonds (Review of October 1, pages 5-6). Mr. Robbins, Mr. Barnett
(c) Borrowing costs for medium- and long-term money
(Review of October 15, pages 3-5). - Mr. Foy
(d) Recent movements in bank deposits (Review of
October 15, pages 5-6). - Mr. Rosen
(e) New tap issue of British national war bonds
(Review of October 15, page 6). - Mr. Matlock
-2-
155
(f) The new Treasury note (Review of October 30,
page 3). - Mr. Barnett
(g) Bank and insurance company absorption of
Government securities (Review of October 30,
pages 4-5). - Mr. Foy, Mr. Robbins
(h) New Australian loan announced (Review of
October 30, pages 5-6). - Mr. Matlock
2. A memorandum was prepared, containing recommendations
with respect to the October financing, accompanied by
a chart, and was transmitted to the Secretary on
October 3. A copy was transmitted to Mr. Morris. -
Mr. Haas, Mr. Murphy, Mr. Lindow, Mr. Tickton,
Mr. Sandelin, Mr. Conrad
3. Two tables were prepared on October 6 and 7, showing
estimated yield bases and probable prices of proposed
new issues of Treasury securities with optional call
periods, for five alternative maturities, based
respectively, on closing bid prices on October 4 and 7. -
Mr. Sandelin, Mr. Conrad
4.
A memorandum was prepared, containing a suggestion with
respect to the October financing, and was transmitted
to the Secretary on October 10. - Mr. Haas, Mr. Murphy,
Mr. Sandelin, Mr. Conrad
5. At the request of the Secretary on October 18, a
memorandum was prepared on the refunding of the security
issues guaranteed by the United States maturing in
November, and was transmitted to the Secretary on
October 20. - Mr. Haas, Mr. Murphy, Mr. Lindow,
Mr. Tickton, Mr. Sandelin, Mr. Conrad, Mr. Robbins
6. Two tables were prepared on October 21 and 22, showing
estimated yield bases and probable premiums on pro-
posed new issues of Treasury notes, for three alternative maturities, based, respectively, on closing quotations on October 20 and 21. - Mr. Sandelin, Mr. Conrad
-3-
156
7. A maturity calendar for each issue of direct and
guaranteed bonds and notes of the United States was
prepared, showing by date the amounts outstanding,
classified by the maturity, first, and final callable
dates. The calendar was prepared as of October 1,
and was transmitted to the Secretary on October 2. -
Mr. Barnett
8. Yield rates on Treasury bonas and notes and on securities guaranteed by the United States, were cal-
culated daily on the basis of over-the-counter closing
quotations. They were summarized daily in a table
showing for each issue the closing bid and asked quotations and yields to call and maturity dates on that day,
the changes in prices and yields from the preceding
day, and the price range since the date on which first
traded, and also for the year 1941 to date. A chart
for each issue was kept up to date showing daily price and
yield figures together with comparative monthly data
since 1934, since the date OI issue, or since the date
first traded. In addition, yields were computed daily
on five high-grade corporate securities and two British
Government issues. - Mr. Moody, Miss McCoy, Mr. Kroll
9. At the request of the Secretary, arrangements have been
made to secure periodically from the British Empire purchasing missions certain information regarding purchases
in the United States by the British Empire. Reports
and tables are prepared from this information, and are
transmitted according to instructions by the Secretary.
Kr. Haas, Mr. Lindow, Mr. Wagner, Mr. March, Mr. Mayo,
Ar. Marcus
(a) Weekly statements are received from the British
Purchasing Commission concerning the physical
volume of airplane and airplane engine orders
placed in the United States by the British Empire.
This information is consolidated and coordinated
in the Division, and a weekly report, entitled
"British Empire Aircraft Statements" is prepared
containing the following analytical tables, classified by company and by type of airplane or airplane
engine: (1) current status of orders, deliveries,
and exports; (2) history of orders; (3) history of
deliveries; (4) history of exports: (5) scheduled
deliveries of unfilled orders; (6) options;
(7) spare parts; and (8) secondhand units. These
aircraft reports were prepared, and were transmitted
on October 3, 10, 17, 24, and 31.
-4-
157
(b) The Division receives each week from the British
Air Commission information concerning the disposition of airframes and airplane engines inspected
by the British Empire, and the status and location of airframes and airplane engines on hand
in the United States. These data are edited and
reviewed in the Division, and a weekly report,
entitled, "Disposition and Status of Airframes
and Airplane Engines Inspected by the British
Empire", 18 prepared containing the following
analytical tables for airframes and airplane
engines, classified by company and model:
(1) disposition of units inspected; (2) status
of inspected units on hand; and (3) physical
location of units awaiting export. These reports
were prepared, and were transmitted on October 6,
14, 20, and 27.
(c) The Division also receives weekly statements from
the British Purchasing Commission showing (1) the
dollar volume of orders placed by British Empire
Governments and (2) the dollar volume of deliveries
on orders placed by the United Kingdom through the
various missions. The information in these statements is itemized by contracts and classified by
twenty-five commodity groups.
These data are reviewed and edited in the Divi-
sion, and a bi-weekly report, entitled, "British
Empire Commodity Statements", is prepared summarizing in dollar volume the information on orders and
deliveries, by commodity groups. This report consists of eight statements: The first three relate
to orders placed in the United States during the
current period by British Empire Governments; the
next three consist of historical summaries of orders
placed in the United States by the British Empire;
the seventh and eighth relate to deliveries on orders
placed in the United States by the United Kingdom
through the British purchasing missions. These
statements were prepared, and were transmitted on
October 3, 17, and 31.
(d) The Division receives each week from the British
Purchasing Commission information relating to the
dollar value of commitments by the British Empire
for capital expenditures in the United States, and
-5-
158
for extraordinary charges designed to expedite
delivery. On the basis of the data submitted,
a bi-weekly report, entitled, "British Empire
Capital Statements", is prepared in the Division
containing the following analytical tables, classified by commodity group and company: (1) total
tangible capital commitments; (2) tangible capital
commitments during the current period; (3) total
commitments for extraordinary charges; (4) commitments for extraordinary charges during the current
period; and (5) details concerning machine tools
classified as capital. These statements were prepared, and were transmitted on October 3, 17, and
31.
(e) Each month the Division receives a detailed report
from the British Purchasing Commission concerning
the activities of its Iron and Steel Division.
On the basis of this information the Division prepares a report, entitled, "British Iron and Steel
Statements", containing analytical tables showing
on a physical volume basis: (1) current status of
iron and steel orders; (2) history of orders;
(3) history of deliveries; (4) history of exports;
(5) current status of orders of ferro-alloy and
silicon metals; (6) current status of drop forgings
orders; and (7) history of drop forgings orders.
These statements were prepared, and were transmitted
on October 31.
(f) The Division receives each month from the British
Purchasing Commission information, on a physical
volume basis, relating to the purchases of various
other important commodities. These data are edited
and consolidated in the Division and analyses of
British Empire orders are prepared for the several
commodities containing the following analytical
tables: (1) current status of orders; (2) history
of orders; (3) history of deliveries; and (4) scheduled deliveries of unfilled orders.
Statements for these various commodity groups were
prepared, and were transmitted as follows:
-6-
159
Airplane propellers, October 17
Explosives and propellants, October 14
Motor vehicles, October 10
Non-ferrous metals, October 31
Ordnance, October 24
Shells and bombs, October 14
Ships, small boats, and marine engines, October 14
Small arms ammunition, October 31
Small arms, fully automatic, October 6
Sub-machine guns, revolvers, and rifles, October 24
The statement relating to orders for chemicals is in
process of preparation.
(g) Each month the Division receives from the British
Purchasing Commission a fiscal statement summarizing the financial status of orders placed in the
United States by British purchasing missions, classified into twenty-five commodity groups. This information is edited in the Division, and a report,
entitled, "Status of Payments on Dollar Orders
Placed in the United States by the British Purchasing Missions", is prepared consisting of the following analytical tables: (1) status of payments;
(2) history of payments; and (3) estimated schedule
of future payments. This report was prepared, and
was transmitted on October 20.
(h) Each month the Division receives from the Citadel
Merchandising Company, Ltd., information relating
to machine tool orders placed in the United States.
Separate listings show by manufacturer, the orders,
deliveries, and unfilled orders at the end of the
month. These data are edited and reviewed, and a
report, entitled, "Analysis of Citadel Merchandising
Company, Ltd., Machine Tool Orders" is prepared
containing the following tables: (i) current status
of orders; (2) history of orders; and (3) history
of deliveries. This report was prepared, and was
transmitted on October 10.
10. At the request of the Secretary, arrangements have been
made to secure periodically certain information regarding
purchases in the United States by the Netherlands Purchasing Commission, and by Lindeteves, Inc. - Mr. Haas,
Mr. Lindow, Mr. Wagner, Mr. March, Mr. Mayo, Mr. Marcus
Weekly statements are received showing the dollar value
of orders placed in the United States by the Netherlands
Purchasing Commission and by Lindeteves, Inc., and the
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160
deliveries made thereon. These statements are itemized
by contracts and are classified by the twenty-five commodity groups used for reporting orders placed in the
United States by the British Empire.
These data are reviewed and edited in the Division, and
oi-weekly reports are prepared for each of these agencies
summarizing the information classified by commodity groups.
These reports consist of three tables each showing (1) the
history of orders; (2) the history of deliveries; and (3)
the current delivery status of orders. These reports en-
titled, "Netherlands Purchasing Commission Commodi ty Statements" and "Lindeteves, Inc. Commodi ty Statements" were
prepared, and were transmitted on October 10 and 24, ac-
cording to instructions by the Secretary.
11. At the request of the Secretary on July 8, tables were
prepared, and were transmitted to him on October 16,
showing deliveries during July, August, and September of
airplanes, tanks, flying-boats, and 4-engine bombers.
-
Mr. Tickton
12. At the request of the Secretary on October 22, seventeen
charts were prepared, and were transmitted on October 27,
showing lend-lease orders effected by the Procurement
Division May 1, 1941 to date. - Mr. Tickton
13. At the request of Under Secretary Bell, various memoranda
and charts were prepared for use in the Friday discussion
group meeting fortnightly to consider matters of eneral
interest in connection with defense financing. - Mr. Haas,
Mr. Daggit, Mr. Villard
The material prepared during the month included the following, presented on October 24:
Analyses were made of recent movements of commodity
prices illustrated by three wall charts.
The first chart showed, on the basis that August 1939=100,
the weekly average movement of the index of 12 foodstuffs
and 16 industrial raw materials from August 1940 to
October 22, 1941, and their daily average movement from
September 1 through October 22. On the same chart were
snown also for each of the 28 commodities, the percentage price changes from the August 1940 low to September 10,
and to October 22, 1941.
Comparisons were shown in the second chart of price in-
dexes for all commodities and for foods in the period
1939-41 and the period 1914-16, through October 18, on
the basis that July 1914=100 in the World War perio
and August 1939=100 in the current period.
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The third chart, on the basis that 1939=100, showed
the monthly movement of the BLS cost-of-living index
from June 1939 through September 15, 1941. On the
lower part of the chart were shown the weekly movements of the indexes of components.
In connection with = discussion of problems of fiscal
policy involved in financing the defense program, an
estimate was given of the amount of borrowing likely
to arise from inflationary sources. Suggestions were
made of ways by which such borrowings could be reduced.
14.
In response to a request by the Secretary on January 21,
1941, that measures be taken to obtain information to
assist in carrying through the defense financing program,
arrangements were made to obtain the necessary detailed
statistics on the holdings of each issue of the public
debt and of guaranteed securities by the various classes
of holders. - Mr. Haas, Mr. Tickton, Mrs. Wolkind,
Mr. D. J. Leahy, Mr. Blitman, Mrs. Barnes, Mr. Robbins
A summary was prepared of the data received as of
August 31, consisting of brief explanatory text and
six tables for publication in the Bulletin of the
Treasury Department for October.
The information as of September 30, received from 7,000
banks and insurance companies was coded, tabulated, and
analyzed. An analysis was prepared, consisting of
100 tables, showing this information, classified by
type of institution, by issue, by geographic area, by
call classes, and by tax-exemption provisions.
New letters were sent out to the banks and insurance
companies on October 29, requesting comparable data
as of October 31.
Special tabulations were prepared and were transmitted
to the Federal Reserve Banks of New York and Philadelphia,
covering ownership of securities issued or guaranteed by
the United States, as of August 31, 1941.
15. At the request of the Secretary, arrangements have been
made to prepare current statistical reports on the sales
of United States Defense savings bonds, series E, F,ofand
G, and Defense Postal savings stamps, on the basis
reports by the Treasurer of the United States, the
Federal Reserve Banks, and the Post Office Department.
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The reports prepared during October were transmitted
according to instructions by Mr. Graves. - Mr. Haas,
Mr. Reagh, Mr. Brown, Mr. Tickton, Mr. Kroll,
Mr. D. J. Leahy
(a) Daily tables were prepared, showing the dollar
volume, on the basis of the issue price, of
sales of savings bonds, series E, F, and G, by
Post Offices and by banks, with totals. The first
table, prepared on October 1, presented these data
for each business day of September, with totals
for the month. The next table, prepared on
October 2, showed these data for October 1.
Succeeding tables showed the data for the successive business days of October, with cumula-
tive totals. The table prepared on October 31
covered the period from October 1 through
October 30.
(b) Daily tables were prepared, containing a comparative statement of sales of bonds, series E, F, and
G, in October, in September, in August, and in
July, by Post Offices and by banks. The dollar
volume of sales was shown on the basis of the
issue price, together with the absolute and percentage changes in October from September, in
September from August, and in August from July.
The table prepared on October 1 contained these
data for the full months of September, August,
and July. The first table showing the comparison
for October, September, and August, prepared on
October 2, showed the data for the first business
day of each month. Subsequent tables showed
cumulated data for successive business days. The
table prepared on October 30 covered the first
25 business days of each month.
(c) A table was prepared on October 1, showing sales
of savings bonds, series E, F, and G, by Post
Offices and by banks, in dollar volume, on the
basis of the issue price, in each month from
May through September, with totals.
(d) A table was prepared on October 22, showing sales
of savings bonds, series E, in September, in dollar
volume, on the basis of the issue price, by States,
with totals.
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163
(e) A table was prepared on October 27, showing sales
of savings bonds, series E, in dollar volume on
the basis of the issue price, by States, in each
month from May through September, with totals.
(f) A report consisting of 150 pages, was completed
on October 23, showing sales of savings bonds,
series E, for the month of September, in dollar
volume, on the basis of the issue price, by
Federal Reserve districts, by States, by cities,
and by counties, all classified by sales agents
and denominations.
(g) A table was prepared on October 21; showing for
savings bonds, series F and G, the number of units
sold, by denomination, in each month from May
through August.
(h) A table was prepared on October 9, showing the
estimated total sales of Defense Postal savings
stamps, by months from May through September.
(1) A table was prepared on October 10, showing the
estimated total value and number of units of
Defense Postal savings stamps, classified by denominations, sold in each month from May through
September, with totals.
(j) A table was prepared on October 13, showing estimated dollar volume of Defense Postal savings
stamps sold by States, in September.
(k) A table was prepared on October 24, showing estimated dollar volume of Defense Postal savings
stamps sold by States, in each month from May
through September.
16. The proposed improvement in the procedure for reporting
sales of Defense savings bonds and the method of preparing statistics showing direct sales by geographic areas,
discussed with the fiscal officer of each of the Federal
Reserve Banks in September, were put into effect in
October. - Mr. Reagh, Mr. Tickton
17. Four proposals of the RFC that the Secretary request
that corporation to purchase stock or debentures in
four banks were examined. - Mr. Murphy, Mr. Foy,
Mr. Barnett
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164
18. A table was prepared, summarizing sales during August
and September of Treasury notes, Tax Series A and Tax
Series B, in par amounts, by individuals and by corporations. The table was transmitted to the Secretary
on October 16, and a copy was given to Under Secretary
Bell. - Mr. Tickton
19. A table was prepared, showing sales during August and
September of Treasury notes, Tax Series A and Tax
Series B, in par amounts, classified by denomination.
The table was transmitted to the Secretary on
October 16, and copies were given to Under Secretary
Bell, and to Mr. Buffington. - Mr. Tickton
20. At the request of the Secretary on October 8, a memorandum
was prepared, and was transmitted to him on October 13,
on the effect of the total amount of debt after outstand-
ing guaranteed obligations are replaced by direct obligations. - Mr. Murphy
21. At the request of Under Secretary Bell on September 12,
a memorandum was prepared on "Consideration of Interest
Rate Reductions on Special Obligations", and was transmitted
to the Secretary and the Under Secretary on October 6. Mr. Haas, Mr. Lindow, Mr. Foy, Mr. Rosen
22. At the request of Under Secretary Bell, the agenda were
prepared for the meeting of representatives of the
Treasury Department and the Board of Governors of the
Federal Reserve System held on October 29, for the
purpose of discussing financing policy. Minutes were
written, and the following memoranda were prepared for
use in connection with the meeting, and were transmitted
to the Under Secretary on October 28. - Mr. Haas, Mr. Murphy,
Mr. Lindow, Mr. Foy, Mr. Sandelin
(a) Pro's and con's on continuing the use of exchange
rights. - Mr. Lindow
(b)
Proposed sale of general market Government securities
on continuous tap. - Mr. Lindow, Mr. Sandelin
(c) A two-day tap security. - Mr. Lindow
(d) Preferential allotment to investors other than banks. Mr. Foy
(e) Desirability of increasing the down payment on subscriptions to Government securities. - Mr. Foy
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165
(f) A special Treasury issue designed to absorb
surplus funds of municipalities. - Mr. Foy
(g) A proposal to offer a special type of security
to insurance
companies, savings banks, and trust
funds.
- Mr. Sandelin
(h) A proposal to offer a special type of short-term
security to tap idle funds of corporations. Mr. Sandelin
23. At the request of the Secretary, a series of meetings
have been attended which were held by representatives
of the Treasury Department and the Board of Governors
of the Federal Reserve System for the purpose of discussing general and selective credit controls.
Various memoranda, reports, and the minutes have been
prepared for use in connection with the meetings.
During the month one meeting was held, on October 15.
Mr. Haas, Mr. Murphy, Mr. Lindow, Mr. Villard, Mr. Foy
24. At the request of Mr. Morris on October 14, a memorandum
was prepared for the Secretary on "Domestic Bond Flota-
tions (excluding Federal), Corporate Issues of $10 millions or more, State and Municipal Issues of $5 millions
or more." The data were transmitted to the Secretary on
October 15, and photostats were transmitted to Under
Secretary Bell, Mr. Morris, and Mr. Buffington. -
Mr. Sandelin
25. At the request of Assistant Secretary Sullivan on
October 18, a memorandum was prepared on the nature of
the fiscal burden of a large public debt, and was transmitted to him on October 19. - Mr. Villard
26. At the request of Under Secretary Bell on September 19,
a memorandum was prepared, and was transmitted to him
on October 7, with respect to the question of listing
in the revised yield circular, the amounts outstanding
of the various issues of securities. - Mr. Lindow
27.
Sixteen tables were prepared showing yields on hypothetical
securities under various combinations of coupon rates,
maturities, and premiums, and were completed on October 1
and 16. - Mr. Kroll
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166
28. At the request of Mr. South Trimble, Clerk of the House
of Representatives, in a letter dated September 17,
statistical information on banks in addition to that
transmitted on September 29, was prepared. This information was transmitted to Mr. Trimble in a letter
signed by Under Secretary Bell on October 30. Mr. Conrad
29. At the request of Mr. Buffington on October 8, a table
was prepared, and was transmitted to him on October 9,
showing the number of issuers having securities traded
on the United States exchanges, June 30, 1941. Mr. Barnett
30. At the request of Under Secretary Bell on September 24,
cooperation was given the Division of Tax Research and
the Office of Press Relations in the preparation of a
statement to be released for the purpose of publicizing
tax anticipation notes. The statement transmitted to
the Under Secretary on October 2, was accompanied by a
table showing monthly savings required to meet the
various income tax payments. - Mr. Brown
31. At the request of Mr. Milton in a letter dated October 4,
a manuscript entitled "Financing Defense" was reviewed,
and was returned to him under cover of a memorandum on
October 27. - Mr. Villard, Mr. Breithut
32. At the request of the Under Secretary on October 11,
assistance was given in checking Mr. Blough's speech
on "The Fiscal Situation", for delivery before the
National Tax Association, on October 14. - Mr. Murphy
II. Projects or studies under way
1. A study is being made of the relative interest costs
of short- and long-term borrowing. - Mr. Foy,
Mr. Barnett, Mr. Rosen
2. A study is being made of the available sources of funds
for Treasury financing. - Mr. Tickton
3. A memorandum is being prepared on a negotiable "tap"
security. - Mr. Sandelin, Mr. Murphy
4. A study is being made of the probable excess reserves
in 1941-42. - Mr. Barnett
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167
5. Tables
are being prepared which will present various
data on new Treasury notes and bonds and on guaranteed
new issues. - Mr. Conrad, Mr. Rosen
6. A memorandum is being prepared on the advantages and
disadvantages of increasing the short-term debt. -
Mr. Foy
7. A revision is being made as of June 30, 1941, of the
estimates of the ultimate increase in interest costs
which would result from removal of the tax-exemption
privilege from all public securities. - Mr. Conrad
6. A memorandum is being prepared recommending legisla-
tion terminating miscellaneous types of tax exemption
analagous to the exemption of interest on Federal
securities, but unaffected by the Public Debt Act of
1941. - Mr. Foy
9. A study is being made of war-financing measures in
belligerent countries in the present war. - Mr. Matlook
10. A comparison is being made of the British Fiscal Program
1941-42 with the Keynes plan proposed in "How to Pay for
the War", by Mr. J. M. Keynes. - Mr. Matlock
11.
At the request of Under Secretary Bell on October 14, 1940,
a memorandum is being prepared on a memorandum submitted
by Mr. John Evans, President of the First National Bank
of Denver, Colorado, in reference to United States
Government bonds now owned by the Federal Reserve System
and its member banks, and suggestions concerning a refunding and change in form which would appear to be in
interest of the Treasury Department, the Federal Reserve
System, the member banks, the Federal Deposit Insurance
Corporation, and the public generally whose money is deposited in member banks. - Mr. Murphy
12. In response to a request by Under Secretary Bell on
January 27, comments are being prepared on a memorandum
by Mr. George Eddy to Mr. White, in regard to a plan of
Mr. N. E. Peterson, entitled, "A Means of Financing the
Defense Program". - Mr. Murphy
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168
13. At the request of Under Secretary Bell on February 5,
an analysis is being made of his plan for investing
savings banks' and insurance companies funds in
special 2 percent Treasury certificates. - Mr. Tickton
14. At the request of Under Secretary Bell on February 11,
a memorandum 18 being prepared to the Secretary regarding a letter from Mrs. Sylvia F. Porter, New York Post
dated January 22, suggesting a plan for the distribution of United States Government securities. - Mr. Haas,
Mr. Murphy.
15. At the request of Under Secretary Bell on April 21,
a memorandum is being prepared on Mr. Salant's memorandum on "Limitation on Purchases of Defense Savings
Bonds". - Mr. Murphy
16. A table is being prepared for Professors Viner and
Stewart, showing prices and yields of selected obligations of the United States. - Mr. Foy, Mr. Rosen
17. A study 18 being made of the market action on the various
maturity classes of Government securities in relation to
the type of holder. - Mr. Conrad
18. At the request of Mr. Morris, on October 27, a review
is being made of his memorandum entitled, "A Summary
of the Major Pro's and Con's on the Question of Rights".
-
Mr. Haas
19. A further analysis is being made of the capacity of insurance companies and mutual savings banks to absorb
long-term Government securities. - Mr. Tickton,
Mr. Robbins
20. At the request of the Secretary on October 7, a memorandum
18 being prepared on "Mr. Knight's Anaylais of the Reserve
Position of New York City Banks". - Mr. Murphy, Mr. Rosen,
Mr. Barnett
21. A study is being made of developments in the reserve
position of the banks. - Mr. Murphy, Mr. Rosen,
Mr. Barnett
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169
22. At the request of Under Secretary Bell on October 31,
report is being prepared on the "Bondex" service
and reports. - Mr. Murphy
a
23. At the request of Mr. Morris on October 27, a review
18 being made of a memorandum and table on proprieties
and practical results of various excess-profits taxes
and limitations under war (or emergency) conditions. Mr. Murphy
24. At the request of the office of the General Counsel on
August 14, a reply is being prepared to a letter from
the Senate Committee on Banking and Currency, request-
ing the opinion of the Secretary on S. 1797, the Farm
Credit Act of 1941. - Mr. Foy
25. At the request of Under Secretary Bell replies are
being prepared to certain questions asked by the Wagner
Committee preparatory to its investigation of banking
and monetary conditions pursuant to Senate Resolution 125. Mr. Haas, Mr. Murphy, Mr. Foy
26. At the request of Under Secretary Bell on May 24, cooperation is being given to Mr. Bartelt and Mr. Blough
in preparing replies to the list of questions accompanying a letter from Senator Tydings of May 5. The replies
are for use by the Senate Committee created to find ways
and means of automatically balancing the Federal Budget
in times of peace. - Mr. Murphy, Mr. Foy
Revenue Estimates
I. Projects or studies completed
1. The regular monthly statement was prepared, showing
the latest revised estimates of receipts, by months
and by principal sources of revenue, for the period
October 1941-June 1942. The statement was transmitted
to the Bureau of Accounts. - Mr. Bronfenbrenner
2. The regular monthly summary comparison was prepared,
showing estimated receipts and actual receipts in
September 1941 on the daily Treasury statement basis. -
Mr. Bronfenbrenner
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170
3. The regular monthly detailed comparison was prepared,
showing estimated and actual receipts in September 1941,
based on the collections classification. - Mr. Smith,
Mr. Bronfenbrenner
4.
At the request of the Bureau of the Budget on October 6,
a revision was made of the preliminary and tentative
estimates of the revenue for the fiscal year 1943
which were prepared in September. The estimates were
transmitted on October 28. - Mr. Haas, Mr. O'Donnell,
Mr. Daggit, Mr. Leahey, Mr. Bronfenbrenner, Mr. Smith,
Mr. Colclough, Miss Spiegel, Mr. Saunders, Miss Hagedorn
5. A revision was completed of the forecast of the monthly
distribution of estimated revenue on the basis of the
October revision of the Budget estimates for the fiscal
years 1942 and 1943. - Mr. O'Donnell, Mr. Daggit, Mr. Leahey,
Mr. Bronfenbrenner, Mr. Smith, Miss Spiegel, Mr. Colclough
At the request of the Bureau of Accounts received on
October 6, preliminary and tentative estimates were
prepared for the fiscal years 1942 and 1943 of receipts
from taxes under the provisions of the Federal Insurance
Contributions Act, and of the Federal Unemployment Tax
Act, from the tax on carriers and their employees, from
6.
the Railroad Unemployment Insurance Act, and the amounts
to be deposited in the Unemployment Trust Fund by States
and by the Railroad Retirement Board. The estimates
were transmitted in a memorandum to Mr. Maxwell on
October 7. - Mr. Smith
7. At the request of the Legal Division on October 21, a
summary tabulation was prepared of the numbers of
Individual and fiduciary individual income tax returns
filed, taxable and nontaxable, on liabilities of calendar
years 1938-1941. The tabulation was transmitted to
Mr. Tarleau on October 22. - Mr. Leahey, Mr. Bronfenbrenner
8. For use in evaluating the proposals submitted by
Mr. Barnard on October 15, for family and economic
stabilization reserves, the following revenue estimates
were prepared, and were transmitted in a memorandum
addressed to him on October 20. A copy was given to
Mr. Shere. - Mr. O'Donnell, Mr. Leahey, Mr. Smith,
Mr. Bronfenbrenner
- 18 (a)
171
An estimate was prepared of the revenue which
would be derived from a contribution of 5 percent
a
year.of all salaries and wages in excess of $1,000
(b) An estimate was prepared of the total required
contribution if taxable individuals earning less
than $2,000 were required to contribute 25 percent
of all increases in spendable funds in 1942 over
1941,
and
other taxable individuals 50 percent of
all
such
increases.
(c) An estimate was prepared of the amount of the
business stabilization reserve contributions, at
income
levels
forecast for the calendar year 1942,
at
the rates
specified.
(d) Estimates were prepared of the loss in revenue
under the individual income tax and corporation
normal and surtaxes, which would result from
corporation contributions, on three assumptions:
(a) if compulsory contributions result in corporations distributing no dividends; (b) if the net
income remaining after deduction of all corporation
income taxes and compulsory contributions is dis-
tributed in dividends; (c) 1f compulsory contributions do not affect corporation dividend policy
except as regards net income available.
9. Under a modified plan presented by Mr. Barnard on
October 20, a revenue estimate was prepared of the
amount of yield which would be derived from a 5 percent contribution on the entire wages and salaries of
recipients with wages and salaries of over $1,000,
with a complete exemption of recipients of wages and
salaries of $1,000 or under. The estimate was transmitted to Mr. Barnard on October 20, and a copy was
given to Mr. Shere. - Mr. O'Donnell, Mr. Smith
10.
In connection with Mr. Barnard's proposals, the following revenue estimates were prepared at the request of
the Division of Tax Research on October 17, for
Mr. Sullivan. The estimates were transmitted in a
memorandum addressed to Mr. Blough on October 20. The
original and two copies were transmitted to Mr. Sullivan,
and one copy to Mr. Shere. - Mr. O' 'Donnell, Mr. Smith,
Mr. Bronfenbrenner
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172
(a) Provisional estimates were prepared of the revenue
effects of proposals for an additional separate
individual income tax on the same base as the
present surtax at flat rates of (a) 10 percent,
(b) 15 percent and (c) 20 percent, the taxes
with respect to wages, salaries, dividends, and
bond interest to be collected at the source, and
the tax liability with respect to all sources of
income to be allowed as a deduction for purposes
of the regular normal and surtax of the individual
income tax; showing separately (a) the total tax
liability and (b) the amount of tax collected at
source with respect to the specified items.
(b) Estimates were prepared of the revenue effects of
the proposals under (a) above but with the substitution of exemptions of $500 and $1,000 for
the present $750 and $1,500, and $300 credit for
dependents for the present $400, retaining, however,
the present exemptions and credits for the regular
income tax.
(c) An estimate was prepared of the increase in
individual income tax liabilities from a proposal for mandatory joint returns with the pro-
visions of the Treasury proposal for relief for
earned income.
(d) An estimate was prepared of the revenue effects
of a proposal to increase corporation surtax rates
from 6 and 7 percent, to 16 and 17 percent, respectively.
(e) An estimate was prepared of the revenue effects
of a proposal to increase the tax rate on
automobiles, bodies, and chassis, as defined in
section 544 (b) of the 1941 Revenue Act, from
7 to 35 percent.
(f) An estimate was prepared of the revenue effects
of increasing the rates on mechanical refrigerators
from 10 percent to 25 percent.
(g) An estimate was prepared of the revenue effects of
reducing estate and gift tax exemptions and the
insurance exclusion from $40,000 to $25,000, and
of increasing the rates as follows: Double the
bracket rates in the net estate classes through
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173
$1,250,000, and substitute an 80 percent rate for
all brackets above $1,250,000, making correspond-
ing adjustments in the gift tax rates.
(h) An estimate was prepared of the revenue effects
of increasing the tax on small cigarettes from
$3.25 to $4.50 per thousand, with corresponding
increases for other cigarettes.
11. In further connection with Mr. Barnard's proposals,
at the request of the Division of Tax Research on
October 22 and 24, revenue estimates were prepared as
follows. The estimates were transmitted in a memorandum
addressed to Mr. Blough on October 28. - Mr. O'Donnell,
Mr. Smith, Mr. Bronfenbrenner
(a) Estimates were prepared of the revenue effects
of the proposal that an added special individual
income tax of 10, 15 and 20 percent, respectively,
be imposed on net income in excess of personal
exemptions of $1,000 for married persons and $500
for single persons, with a dependent credit of
$300, collected at the source on wages and salaries,
dividends, and interest received.
(b) Estimates were prepared of the revenue effects of
compulsory saving at 15 percent as specified in
(a) above, on the first $200 of supplementary tax
at specified rates and gradations of tax amounts.
(c) Estimates were prepared of the revenue effects,
assuming a 15 percent rate for the supplementary
income tax, of a proposal to allow a deduction
for medical expenses in excess of 5 percent of
net income, not to exceed $2,500, the change to
be made with respect to the regularincome tax
and the supplementary tax.
(d) Estimates were prepared of the revenue effects,
assuming a 15 percent rate for the supplementary
individual income tax, of raising the maximum age
of dependent children from 18 to 21 years of age,
the change to be made with respect to the regular
and the supplementary income tax.
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174
(e) Estimates were prepared of the revenue effects
with respect to the Social Security taxes, of
making effective January 1, 1942, instead of
1943, the scheduled increase of 2 percent over
and above the rates now in effect.
12. In connection with the proposed revision of the revenue
laws in 1942, at the request of the Division of Tax
Research on October 28, revenue estimates were prepared of proposed changes in the individual income
tax, with an added special tax of (a) 10 percent on
interest; and (b) 10 percent on wages and salaries
and dividends, and 15 percent on interest, with per-
wages and salaries, and 15 percent on dividends and
sonal exemptions and dependent credits lowered for
special tax purposes only, and allowance of 110 percent of personal exemptions and dependent credit made
on source collections from wages and salaries. The
estimates were transmitted in a memorandum to Mr. Blough
on October 31. - Mr. Leahey, Mr. Bronfenbrenner
13. In connection with the proposed revision of the revenue
laws in 1942, at the request of the Division of Tax
Research on October 30, estimates were prepared of the
gross tax liabilities of an added special tax on
individuals and the net revenue effect after allowance
of the special tax as a deduction from the existing
individual income tax base, distributed by net income
classes and by taxable status existing prior to the
Revenue Act of 1940. The estimates were transmitted
in a memorandum to Mr. Blough. - Mr. Bronfenbrenner,
Mr. Leahey
14. The following projects for revising and improving methods
of estimating revenues from the taxes listed below, have
been discontinued for the present, because of a change in
the basis of estimating revenues from these taxes. Mr. Daggit, Miss Spiegel
(a) Passenger automobiles and motorcycles
(b) Automobile trucks
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175
II. Projects or studies under way
1.
At the request of the Division of Tax Research on
July 12, 1940, an estimate is being made of the additional revenue which would be derived if mutual insurance companies other than life insurance companies
taxable under Section 207 of the Internal Revenue Code
were made taxable in the same manner as stock insurance companies other than life insurance companies
taxable under Section 204, and at the same time the
exemption under Section 101(11) were restricted to
local mutual companies of the assessment type. Mr. Leahey
Economic Conditions Related to Fiscal
and Revenue Matters
1. Projects or studies completed
1. Memoranda on the business and price situation were prepared, and were transmitted to the Secretary on
October 6, 13, 20, and 27. - Mr. Haas, Mr. Daggit,
Mr. Chevraux
These memoranda contain in addition to analysis of the
current situation the following special studies:
(a)
Factory employment and payrolls from January
1929 to date, and average weekly earnings of
factory workers from January 1932 to date.
(Chart in memorandum of October 6. Also
described below under Economic Conditions, I,
as item 14). - Mr. Daggit, Mr. Chevraux
(b)
A comparison of the cost of living in the United
States and Canada from January 1939 to date.
(Chart in memorandum of October 13. Also de-
scribed below under Economic Conditions, I, as
item 12). - Mr. Daggit, Mr. Colclough, Miss Hagedorn
(c)
Factory employment payrolls and average weekly
earnings of factory workers from January 1939 to
date. (Chart in memorandum of October 27. Also
described below under Economic Conditions, I, as
item 15). - Mr. Daggit, Miss Hagedorn
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176
2. Monthly or weekly reports are received from 25 individual companies, in response to the Secretary's requests, giving confidential data on new orders and sales.
The data in these reports are tabulated and charted currently for the Secretary's information, and are also
combined into an index of new orders, which accompanies
the weekly memorandum on the business situation. -
Miss Washabaugh
3. Memoranda on employment under the Work Projects Ad-
ministration were prepared on October 6, 13, 20, and 27. -
Miss Hagedorn.
4.
At the request of the Secretary, a memorandum with
three tables and a chart, was prepared, and was transmitted to him on October 17, showing employment in
the aviation manufacturing industry as of August 31.
-
Mr. Lindow, Mr. Wagner
5. At the request of the Secretary, a table is prepared
each week summarizing exports of petroleum products,
scrap iron, and scrap steel, from the United States to
Japan, the U.S.S.R., Spain, and Great Britain, as
indicated by departure permits reported daily by the
Office of Merchant Ship Control. The tables were prepared for the weeks ending October 4, 11, 18, and 25. On
October 6, 13, 20, and 27, respectively, the original
and 13 photostats were transmitted to Assistant Secretary
Gaston. - Mr. Tickton, Mr. D. J. Leahy
6. Compilations were made of daily quotations on selected
commodities, and daily and weekly figures on selected
business indexes, foreign and domestic security trans-
actions, security prices, exchange rates, as well as
other data for the Secretary's chart book. - Mr. Chevraux
7. At the request of the Secretary on September 17, the com-
pilation of daily, weekly, and monthly prices of cotton,
connection with the charts listed in item 8 of this
section. - Mr. Daggit, Mr. Colclough
wheat, flour, and bread, was maintained for his use in
8. At the request of the Secretary on September 17, the
following charts showing cotton, wheat, flour, and bread
prices, were kept up to date daily: - Mr. Daggit,
Miss Hagedorn, Mr. Cololough
- 24 -
177
(a) BLS prices of wheat flour and wheat feeds (bran
and middlings) at Minneapolis, weekly, September
1940 to date.
(b) Cotton prices: Market price (average, 10 spot
markets) and our estimated farm price, weekly
from August 1940 to date and daily from August
1941 to date, compared with the Department of
Agriculture monthly farm price and parity price.
(c) Wheat prices: Market price (average of Number 2
red winter at Chicago, Number 1 dark northern
at Minneapolis, and Number 2 hard winter at
Kansas City), weekly from August 1940 and daily
from August 1941 to date, compared with the
Department of Agriculture monthly farm price and
parity price.
(d) BLS retail prices of bread and wheat flour in
51 cities, monthly from August 1940 to date.
9. At the request of Mr. Buffington on October 8, a
memorandum was prepared containing information on
employment, and was transmitted to him on the same
date. - Mr. Daggit
10. In accordance with the request of Mr. Leon Henderson
on July 19, copies of eight charts on commodity prices
and the cost of living were transmitted to him. -
Mr. Daggit
The monthly movements of the NICB cost-of-living index
compared with the BLS index of 889 commodities were
shown from 1935 to date. On the same chart were shown
the weekly movements of the BLS index of 889 commodities
compared with the BLS index of 28 basic commodities from
August 1939 to date. Four charts as of October 4, 11, 18,
and 25, were transmitted on October 7, 14, 21, and 28, respectively.
Three other charts showed weekly and daily movements of
the indexes of 11 basic imported commodities and 17
basic domestic commodities from April 1940 to date.
- 25 -
178
On the same charts were shown percentage changes for
each of the 28 commodities from the August 1940 low.
Successive charts showed the changes to October 3, 10,
and 17. These charts were transmitted on October 7,
14, and 21, respectively.
One chart showed weekly and daily movements of the
indexes of 12 foodstuffs and 16 industrial raw materials
from April 1940 to date. On the same chart was shown
the percentage change for each of the 28 commodities
from the August 1940 low to October 24. This chart
was transmitted on October 28.
11. At the request of the Secretary on October 14, memoranda
on developments in the cost of living, were prepared,
and were transmitted to him on October 21 and 29. A
chart showing the combined cost of living and selected
items, by months from June 1939 to date, on the basis
that June 1939=100, accompanied the memorandum of
October 21, and will be kept up to date as figures become available. - Mr. Daggit, Miss Spiegel
12. A study of the cost of living in the United States and
Canada was made from January 1939 to date. A chart
showing the Dominion Bureau of Statistics indexes of
the cost of living and retail costs of food for Canada,
and corresponding BLS indexes for the United States,
were presented with the business memorandum of October 13. Mr. Daggit, Mr. Colclough, Miss Hagedorn
13. An analysis was made of the State distribution of United
States defense savings bonds series E during August and
September, in relation to workers' income by States, and
to average earnings of workers in manufacturing, whole-
sale, and retail trade. - Mr. Haas, Mr. Daggit,
Mr. Colclough, Mr. Saunders
14. A study was made of the movements of the BLS index of
factory employment and payrolls from January 1929 to
date, and of the BLS series on average weekly earnings
of factory workers from January 1932 to date. A chart
showing these changes was used in connection with the
business memorandum of October 6. - Mr. Daggit,
Mr. Chevraux
- 26 15.
179
A study was made the movements of the BLS index of
factory employment payrolls and average weekly earnings
of factory workers from January 1939 to date. A chart
showing these movements was presented with the business
memorandum of October 27. - Mr. Daggit, Miss Hagedorn
16. A forecast was made of the following basic business
series for the calendar years 1941 and 1942 and the
fiscal years 1942 and 19+3, for use in estimating
Federal revenues; FRB index of industrial production
(September 1941 revision); BLS index of wholesale
prices; BLS index of factory payrolls (January 1941
revision); our index of the value of industrial pro-
duction; Standard Statistics index of 420 stock prices;
Department of Commerce series on salaries and wages
(July 1941 revision); and the FRB series on bank debits
outside New York City. - Mr. Daggit, Miss Spiegel,
Mr. Colclough, Mr. Saunders
17. At the request of the Secretary on October 2, a memorandum
and table were prepared, and were transmitted to Mr. Coe
on October 8, showing lend-lease food purchases made by
18.
the Surplus Marketing Administration. - Mr. Daggit
At the request of the Secretary on October 21, a table
was prepared, and was transmitted to him on October 22,
showing regulations of the Commodity Exchange Administra-
tion, covering trading in the futures markets. - Mr. Daggit
19.
A letter was received on September 28 from Mr. Leon E.
Truesdell, Bureau of the Census, requesting comments on
proposed table forms showing data obtainable from
proposed labor force tabulations on wages, salaries,
hours, and related subjects. A review was completed of
the forms. - Mr. Murphy, Mr. 'Donnell, Mr. Daggit,
Mr. Villard
20. At the request of Mr. Kuhn, data were checked for use
in preparing the speech delivered by the Secretary before the American Bankers Association on October 2.
Mr. Daggit
-
- 27 -
180
21. At the request of Under Secretary Bell on September 25,
a review was made of the testimony by the Secretary on
the Price Control Bill, H. R. 5479, before the House
Banking and Currency Committee on September 24. Mr. Murphy, Mr. Foy
II. Projects or studies under way
1. with respect to the "Index of consumer expenditures,
in dollar value", progress has been made in developing
individual series, in determining their suitability
for inclusion and the necessary adjustments. These
series have been classified in two broad groups:
dursole goods and non-durable goods. The purpose of
the index is to cover as large as possible a proportion
of the purchases of ultimate consumers. This project
is temporarily in abeyance. - Mr. Colclough
2. A project in process is designed to develop an index
of industrial production that will indicate week by week
the approximate level of the FRB index. It will include
a larger number of weekly series than are included in
any current business indices, with weightings and
seasonal adjustments approximating those in the FRB
index. This project is temporarily in abeyance. Mr. Daggit
Actuarial Problems
I. Projects or studies completed
1. In response to a memorandum of September 29, from the
office of the General Counsel, transmitting a copy of
H. R. 5568, a bill for the relief of certain widows of
Foreign Service officers, for a voluntary report if
desired, a memorandum was forwarded to Mr. Bernard on
October 14, stating that the Division did not wish to
make such a report.- Mr. Reagh
2. A communication was received under date of September 30,
from the office of the General Counsel, transmitting
a copy of S. 1932, a bill to amend the Social Security
Act to provide for general pensions, and suggesting that of
the Division might wish to cooperate with the Bureau
Accounts in any action concerning the bill. A review
was made of the bill and was transmitted orally to the
Bureau of Accounts on October 2. - Mr. Reagh
- 28 3.
181
Mr. A. R. Pilkerton, Auditor of the District of Columbia,
has requested the Treasury Department to make an actuarial quinquennial valuation of the Teachers' Retirement Fund of the District of Columbia, as required by
the 1942 District of Columbia Appropriation Act,
approved July 1, 1941. In a letter dated September 13,
Mr. Pilkerton was informed that inasmuch as a valuation had been made as of December 31, 1936, the next
valuation was not due until after December 31, 1941.
Therefore, the matter will be held in abeyance until
the end of the year. - Mr. Reagh
II. Projects or studies under way
1. The Board of Actuaries of the Civil Service Retirement
and Disability Fund is laying out detailed plans for
tabulating and processing data for use in preparing
the regular five-year valuation of the Civil Service
Retirement Fund for the purpose of determining the
liabilities of the Government under the Civil Service
Retirement law. Under the law, such a valuation must
be prepared as of July 1, 1940. Valuation plans are in
process of preparation. - Mr. Reagh, Mr. Brown
2. The Foreign Service Retirement Law, as approved April 24,
1939, Section 26(m), provides that the "Treasury Department shall prepare the estimates of the annual Appropriations required to be made to the Foreign Service Retirement and Disability Fund and shall make actuarial valua-
tion at intervals of five years, or oftener if deemed
necessary by the Secretary of the Treasury". The State
Department has requested an estimate of the appropria-
tion required for the fiscal year 1943. A preliminary
estimate was given to the Department of State on
October 18. - Mr. Reagh, Mr. Brown, Mr. Kroll
3.
At the request of Mr. A. R. Pilkerton, Auditor of the
District of Columbia, an actuarial quinquennial valuation is being made of the Policemen's and Firemen'
Pension Fund of the District of Columbia. This valua-
tion will be made by the Treasury Department in accordance with the 1942 District of Columbia Appropriations
Act, approved July 1, 1941. An outline of the information required for the valuation was submitted to
Mr. Pilkerton in a letter dated September 13. The
basic data were received on October 31. - Mr. Reagh,
Mr. Brown
- 29 -
182
4. At the request of Under Secretary Bell on July 10,
a memorandum is being prepared in regard to the 1941
legislative program of the Social Security Board. Mr. Reagh
5. In response to a letter from the Bureau of the Budget
on October 13, requesting the views of the Treasury
Department on H. R. 5568, a bill "For the relief of
certain widows of Foreign Service Officers". data
for a cost analysis of the bill were obtained from
the Department of State and an estimate and report
are being prepared. - Mr. Reagh, Mr. Brown, Mr. Kroll
Other Projects or Studies
1.
At the request of the Legal Division on July 1, in response to a request from Senator Elbert D. Thomas,
in a letter of June 27, a report was prepared on
S. 1666, a bill to coordinate Federal reporting services,
to eliminate duplication and reduce the cost of such
services, and to minimize the burdens of furnishing reports and information to governmental agencies. The
report was based on comments on the bill by the various
bureaus and divisions of the Department. The report
was transmitted to the Legal Division on October 10, in
a letter addressed to Senator Thomas. - Miss Michener
2. Publications
(a) For the October issue of the Treasury Bulletin
data were prepared on average yields of long-term
Treasury bonds and high-grade corporate bonds. -
Mr. Rosen
All the material submitted for the October issue
was reviewed and edited. Substantial revision
was made in the tables on budget receipts and ex-
penditures from 1933 to date, and in the tables on
trust funds.
Revisions are being considered for future issues. -
Mr. Lindow, Mr. Lynch
- 30 -
183
(b) For the publication Market Prices and Yields of
Outstanding Bonds, Notes, and Bills of the United
States, computations were made and copy was pre-
pared for the issue covering the month of
September. This publication shows by securities
the coupon rates, maturities, interest payment
dates, and for each day of the month, together with
a monthly average, closing market quotations
(accrued interest to be added), and yields.
A revision is being made in this statement. Beginning with the issue for September all prices
will be on the over-the-counter basis and in addition to the categories hitherto included, there
will be added conversion bonds, securities guaranteed by the United States and securities of
Federal agencies not guaranteed. The revised
statement is entitled "Prices and Yields of Public
Marketable Securities Issued by the United States
Government and by Federal Agencies". - Mr. Reagh,
Mr. Brown, Mr. Lindow, Mr. Moody, Miss McCoy
(c) Material for the text of the Annual Report of the
Secretary of the Treasury for the fiscal year
1941 was prepared on the following subjects:
receipts in general and special accounts; securities owned by the United States; receipts, expenditures, and trust accounts; market movements of
Government securities; and a table showing prices
and yields of Treasury bonds and notes and of
securities guaranteed by the United States. An
article on estimates of receipts is in preparation. -
Mr. O'Donnell, Mr. Reagh, Mr. Tickton
Manuscript for the Annual Report is being given
an editorial review as received. The usual handling
of the material is going forward. - Mr. Tickton,
Miss Westerman
(d) At the request of Under Secretary Bell, a review
was made, and was completed on October 27, of a
proposed draft for the November Federal Reserve
Bulletin discussing Treasury finance and banking
developments. - Mr. Haas, Mr. Lindow
- 31 (e)
184
At the request of Assistant Secretary Gaston on
July 17, an article 18 being prepared on the operations of the Treasury Department during the year
1941 to be incorporated in the 1942 Americana
Annual. - Mr. Barnett
(f) At the request of Mr. Collie on September 17,
data were prepared on holdings of United States
Government securities for Moody 8 Manual of
Investments, and were transmitted to him in three
tables under cover of a memorandum on October 6. -
Mr. Conrad
3. Correspondence
Replies were prepared to letters received on subjects
relating to the work of the Division, and letters
drafted elsewhere and submitted to the Division for
that purpose were reviewed. - Miss Michener, Mr. Lindow,
Miss Ziegler, and other members of the staff in
appropriate fields of work.
During October 435 letters were received in the Division
and 341 were handled as required.
4.
Charts
Charts are prepared and continually brought up to date
for use in memoranda and in chart books on special subjects, and corresponding photographic, photostatic,
and multilith work is carried on. This 18 done in the
Graphic Section under the supervision of Mr. Banyas.
A statistical report on the work of the Graphic Section
for the month of October is attached.
185
Work completed in the Graphic Section, Division of
Research and Statistics, during October 1941
Type of work
For Division
For
of R & S
Others
34
15
Total
rachic:
New charts:
49
-
-
-
26 (t)
-
Total charts completed
Bond book charts completed
26 (t)
681
28
709
12
11
23
57
42
99
148
49
197
225
108
333
263
69
332
183
32
215
1,144
4,801
408
Charts brought up to date:
3 bond ohart books brought up to date
All other charts brought up to date
Miscellaneous:
Total jobs
hotographic
Photographs:
Total jobs
Number of-
Neratives
Contact prints
Enlargements
Photostats:
Total jobs
Number of-
Lettersize copies
All other copies
593
1,737
5,209
Multilith:
27
Total jobs
23
4
Number of-
Zine plates
144
180
6
Miscollaneous:
Total jobs
19
11
30
Work Completed by the
Repor
Graphic Section, Division Research and Statistics, by months,
beginning July 1941.
:
July
Sept.
Aug.
Oct.
Nov.
Dec.
Total
:
:
Type of work
:
A. Graphic:
Charts brought up to date
Bond book charts completed
Bond books brought up to date
Miscellaneous
34
43
721
727
58
2
34
49
757
709
-
1
New charts completed
26(times)
26 (t)
27 (times) 26-(t)
27
31
26
23
B. Photographic:
Photographs:
Total jobs
Number ofNegatives
Contact prints
Enlargements
87
99
173
165
197
654
972
333
332
91
59
193
254
141
335
82
169
202
164
215
2,802
7,519
1,287
5,276
2,071
5,986
1,737
5,209
20
27
135
150
Photostate:
Total jobs
Number of-
Lettersize copies
All other copies
Multilith:
Total jobs
22
22
153
166
Number of-
Zinc plates
Miscellaneous:
Total jobs
LB:wlt
8-1-41
9-18-41
186
34
37
29
30
187
February 4, 1942
Dear Steve:
This will acknowledge receipt of your
memorandum of January 29th regarding speeches
by members of the Cabinet and other officials.
I think 1: is a good idea to have these
speeches cleared by Archibald MacLeish, and
I shall be glad to cooperate in every way.
I have also sent copies of your memorandus to the Treasury officials whose
speeches should be cleared.
Sincerely,
(Signed) Henry
Hon. Stephen Early,
The White House,
Washington, D. C.
FK/cgk
File n.m.c.
By Messenger Happens 3:10
2/5/42
Copies to Thorpson
188
February 3, 1942
Photostatic copies sent to the following:
Mr. D. W. Bell
Mr. Blough
Mr. Buffington
Mr. Foley
Mr. Gaston
Mr. Graves
Mr. Haas
Mrs. Klotz
Mr. Kuhn
Mr. Morris
Mr. Odegard
Mr. Paul
Mr. Schwarz
Mr. Sullivan
Mr. Swope
Mr. Thompson
Mr. Viner
Mr. White
189
THE WHITE HOUSE
WASHINGTON
January 29, 1942
MEMORANDUM FOR:
ALL MEMBERS OF THE CABINET, THE
FEDERAL ADMINISTRATORS,
UNDER SECRETARIES AND ASSISTANT SECRETARIES OF THE
EXECUTIVE DEPARTMENTS AND
HEADS OF INDEPENDENT AGENCIES
It is requested, until further notice, that members of the
Cabinet, the Federal Administrators, Under Secretaries and Assistant
Secretaries of the Executive Departments, and heads of independent
agencies, submit to Mr. Archibald MacLeish, Director, Office of Facts
and Figures, advance copies of such public addresses as they may de-
liver from time to time.
The Office of Facts and Figures, in cooperation with this of-
fice, will endeavor to clear the speeches before their delivery. It
will be greatly appreciated, therefore, if drafts of all speeches are
submitted for clearance well in advance of their scheduled delivery.
It is recognized that the war has brought increased responsi-
bilities to high Government officials and that public statements by
them, including radio addresses, should be subjected to more careful
scrutiny now than has been the custom in time of peace.
Secretary to the
Signature STEPHEN EARLY President Eg
190
February 4, 1942
by dear Mr. President:
I have read Donald Nelson's letter
to you, dated January 29th, and in accordance with your request I am returning it
for your files.
Yours sincerely,
(Signed) a. Morgenthan. Jr.
The President,
The white House.
fila n. m.c.
By Messenger Haphies 4:20 for
191
THE WHITE HOUSE
WASHINGTON
February 3, 1942.
MEMORANDUM FOR
THE SECRETARY OF THE TREASURY
FOR YOUR INFORMATION AND
RETURN FOR OUR FILES.
F.D.R.
WAR PRODUCTION BOARD
WASHINGTON. D.C.
19%
The
January 29, 1942
NELSON
The President,
The White House.
Dear Mr. President:
On October 28, 1941, you requested the Director
General of the Office of Production Management to appoint
a special consittee on tax amortization. In accordance
with your request the Director General appointed AS chairman, Mr. Floyd B. Odlun, Director of the Division of Contract Distribution, and as co-members, Mr. Leon Henderson,
Director of the Division of Civilian Sunply, and myself,
as Executive Director of the Supply Priorities and Allocations Board.
In view of the establishment of the Mar Produc-
tion Board, the transfer of the functions of the Division
of Contract Distribution to the Production Division, and
the changed responsibilities of ir. Odium, I have taken the
liberty of abolishing the Tax Amortization Committee and
transferring its general functions and responsibilities to
the Production Division. This action has been taken with
the full concurrence of all members of the Comittee and
the Director of Production.
Respectfully,
Im Culson
Donald M. Nelson
Executive Report No.1
194
Office of Lend-Lease Administration
SECRET
STATEMENT OF ALLOCATIONS AND OBLIGATIONS
Weekly Report as of January 31, 1942
Adjusted
Appropriation Category
Appropriations
Jan. 31, 1942
Allocations
Obligations
Jan. 31, 1942
Jan. 23, 1942
Jan. 23, 1942
$ 2,234,800,000
$ 2,146,403,666
$ 2,146,380,266
$1,132,268,657
2,877,000,000
2,832,250,860
2,831,133,792
1,952,665,312
971,100,000
934,174,875
914,674,875
475,144,680
1,657,500,000
1,571,656,667
1,561,156,667
1,160,169,771
466,500,000
454,158,409
432,158,409
99,692,446
Production Facilities
1,016,600,000
1,006,652,689
1,001,542,689
574,659,330
Agric. and Indust. Commod's
3,092,750,000
2,522,717,514
2,481,117,514
1,369,355,355
310,750,000
297,019,833
294,219,833
185,580,215
325,000,000
266,789,944
263,674,944
44,112,723
20,000,000
8,033,352
7,829,352
2,674,217
$12,972,000,000
$12,039,857,809
$11,933,888,341
$6,996,322,706
Ordnance and Ordnance Stores
Aircraft and Aero. Material
Tanks and Other Vehicles
Ships
Misc. Military Equipment
vicing Repair of Ships, etc.
Services and Expenses
Administrative Expenses
Total
Adjusted
Obligations
Allocations
Appropriations
Jan. 31, 1942
Jan. 31, 1942
Jan. 23, 1942
Jan. 23, 1942
War Department
XXXXXXXXXXX
E 6,604,645,101
$ 6,524,505,701
$3,575,363,108
Navy Department
XXXXXXXXXXX
2,508,868,946
2,494,692,878
1,553,238,076
Maritime Commission
XXXXXXXXXXX
1,104,669,000
1,101,869,000
831,100,301
Treasury Department
XXXXXXXXXXX
825,926,879
817,112,879
426,975,770
Department of Agriculture
XXXXXXXXXXX
994,927,939
994,927,939
609,054,663
Other
XXXXXXXXXXX
819,944
779,944
590,788
$12,039,857,809
$11,933,888,341
Procuring Agency
Total
$12,972,000,000
$6,996,322,706
Funds for freight and other necessary charges are not included in obligations.
OF
117
THE
RACE "THIS DOCUMENT CONTAINS INFORMATION AFFECTING THE NATIONAL DEFENSE OF THE UNITED STATES WITHIN THE TO WEAKING AN UNAUT BORIZED PER-
ACT U.S.C. so: 31 AND 32. THE TRANSMISSION OR THE REVELATION OF ITS CONTENTS IN ANT MARRER
BOX is PROMIBITED BY LAW.
ESPIO-
195
SECRET
LEND-LEASE FUNDS
TOTAL
WAR DEPARTMENT
(Millions)
Millions
$
14,000
$
7,000
12,000
6,000
10,000
5,000
Procurement
Authorizations
8,000
Procurement
Authorizations
PROGRAM LIMITATION
4,000
APPROPRIATIONS
ALLOCATIONS
6,000
3,000
ALLOCATIONS
OBLIGATIONS
OBLIGATIONS
4,000
2,000
2,000
EXPENDITURES
1,000
EXPENDITURES
o
1942
1941
1942
1941
NAVY DEPARTMENT
o
Mor Apr Moy Jun Jul Aug Sep Oct Nov Dec Jon Feb Mar
Mo Age Moy Jun Jul Aug Sep Oct Nov Dec Jan Feb Mor
(Millions)
MARITIME COMMISSION
(Millions)
2,800
1,200
2,400
1,000
Procurement
Authorizations
2,000
Procurement
Authorizations
PROGRAM LIMITATION
ALLOCATIONS
1,600
-
800
PROGRAM LIMITATION
1,200
ALLOCATIONS
600
OBLIGATIONS
400
800
OBLIGATIONS
200
0
Mgr Apr May Jun Jul Aug Sep Oct Now Dec Jon Feb Mos
Mo Apr Moy Jun Jul Aug Sep Oct Nov Dec Jon Feb Mor
I
1941
EXPENDITURES
400
EXPENDITURES
1942
1941
1942
DEPT. OF AGRICULTURE
TREASURY DEPARTMENT
(Millions)
(Millions)
1,500
1,000
$
DIFFERENCE BETWEEN
APPROPRIATIONS AND
800
1,250
ALLOCATIONS DUE TO
$488 MILLION RESERVE
1,000
Procurement
Authorizations
Procurement
600
Authorization
750
PROGRAM LIMITATION
400
OBLIGATIONS
PROGRAM LIMITATION
500
ALLOCATIONS
OBLIGATIONS
w1
200
ALLOCATIONS
250
EXPENDITURES
EXPENDITURES
Mor Apr Moy Jun Jul Aug Sep Oct Nov Dec Jon Feb Mon
1941
1941
1942
Office of Lend-Lease Administration - February 3,1942
1942
-
Mor Apr May Jun Jul Aug Sep Oct Nov Dec Jon Feb Mor
TOTAL AMOUNT OF FUNDS OBLIGATED
IN EACH WEEKLY PERIOD
Millions of Dollars
SECRET
500
196
500
400
400
300
300
200
200
100
100
o
o
Jan
Dec
Nov
Oct
Feb
Mar
1942
1941
AMOUNT OF FUNDS OBLIGATED, BY WEEKLY PERIODS
Thousands of Dollars
1942
1941
Jan. 9-15
Jan. 16-23
243
47,501
101,140
9,669
20,439
40,437
13,396
12,911
8,053
36,978
9,608
11,490
2,501
36,424
81,138
3,010
3,821
63,714
32,321
49,789
4,895
7,371
9,541
50,862
46,698
21,769
464
89
116
233
290,837
245,935
193,139
287,193
127,839
38,546
17,775
63,868
42,797
64,035
139,148
20,108
22,629
87,667
32,293
6,241
20,319
46,570
145,543
87,206
16,043
38,368
12
14
290,837
245,935
Dec. 24-31
APPROPRIATION CATEGORY
32,566
124,451
2,665
23,832
1,754
Ordnance and Ordnance Stores
Aircraft and Aero. Material
Tanks and Other Vehicles
Ships
Misc. Military Equipment
- 10,267
Production Facilities
110,448
5,167
Agric. and Indust. Commod's
Servicing and Repair of Ships
Services and Expenses
Administrative Expenses
Total
PROCURING AGENCY
War Department
Navy Department
Maritime Commission
Treasury Department
Department of Agriculture
Other
Total
-
Jan. 1-8
29,924
- 29,571
1
49
193,139
1
32
287,193
117
Office of Lend-Lease Administration
197
MINISTER FOR FOREIGN AFFAIRS
REPUBLIC OF CHINA
Eet 4, 1872
tearst
(a M Maryenthan
me teleprophed me
that he is security leaving for India &
Busma t discuss concerted measures for
& defence g Burna against the Johnson
this is a happy development
as an relations with the British have her
for from cardial
Replies to my message will
how he someshal delgion as he brongest
with him an old code, to which I would
not dare to entrust important messages.
bith kind years
Jone very Sincerely
Interview
Treasury Department
Division of Monetary Research
Date Feb. 9
To:
1942.
Miss Chauncey
For your files.
MR. WHITE
Branch 2058 - Room 214
TREASURY DEPARTMENT
-
198
y
INTER OFFICE COMMUNICATION
DATE February 4, 1942
Mr. White
TO
FROM
Mr. Friedman
Subject: Digest of cable from Adler dated February 3, 1942
regarding Chinese Stabilization Board.
1. Central Bank of China has submitted to the
Board an application for a loan of about
U.S.$5,673,000 and to 2,338,000 sterling on
the grounds that the Board is obligated to
meet all Government requirements for foreign
exchange and all legitimate commercial requirements.
2.
Mr. K. P. Chen, Chairman of the Board, believes
there is no need for acting immediately on the
Central Bank's application. He feels that it
would be advisable to await the clarification
of the situation with respect to Rangoon.
3. It should be noted that if the loan is granted,
it will practically absorb the outstanding
balance of the Chinese contribution to the
Stabilization Fund.
4. Questions raised by the request for a loan
of dollars instead of United States dollars
in exchange for yuan are being explored. These
questions should be discussed with Mr. Fox on
his arrival here.
199
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy, Chungking, China
DATE: February 3, 1942, 9 a.m.
NO.: 84
A strictly confidential telegram (TF-17) from Adler
for the Secretary of the Treasury.
Paragraph 1. An application has been submitted to
the Board by the Central Bank of China for a loan of
United States dollars $5,672,954 and pounds sterling
2,337,282 (all figures herein are given to the nearest
dollar or pound). These sums constitute the difference
between the Bank's foreign exchange outpayments and its
(i) of total inpayments from August 16 to December 31.
The basis of the application is an understanding of the
Board with the Minister of Finance which was formally
acknowledged by the Chairman of the Board in a letter to
the Foreign Exchange Control Commission dated November 1.
Under this it was provided that the Board should get all
the foreign exchange the Central Bank received from exports
and overseas remittances while in return the Board should
meet Free China's legitimate commercial requirements and
all government requirements for foreign exchange by the
Foreign Exchange Control Commission.
Paragraph 2.
t 200
Pagagraph 2. Details of the application are as
follows:
U. S. Dollars Sterling
A. For imports into
Kunning and Chungking before
the Board opened offices there $ 900,736
B. Government require-
ments from August 21 to
October 31, 1941.
27,298
2,730,522
1,300,787
3,066,658
1,409,165
$6,697,356
2,437,454
remittances, etc.
1,024,043
100,172
BALANCE
$5,672,954
2,337,282
C. Government require-
ments from November 1 to
December 31, 1941.
TOTAL
Subtract:
D. Accruals from
It appears from statements of the Central Bank that
the latter has not yet received all the foreign exchange
accruing subsequent to remittances, etc. For example,
the National Resources Commission is in process of turning
over to the Central Bank United States $1,000,000 which it
has from exports, while the Bank has yet received December
United States dollars representing remittanoes from the
United States since the operative date of general license
no. 75.
GAUSS
A recheck is being made of the figures which are
reported above as they were received and decoded.
The sum of a, b, 0 dollar figures as received in
telegram 84 is $6,697, 916 and not $6,697,356 as received.
The sum of D and the Balance as received is 6,696,997 and
not 6,697,356 as received. The decipherment of the sterling
figures of Item B is indicated by the code room as uncertain.
a 201
PARAPHRASE OF TELEGRAM RECEIVED
FROM: American Embassy, Chungking, China
DATE: February 3, 1942, 9 a.m.
NO.: 84 (Section two)
It would be appreciated in this connection If, in
order that the Board may have some idea how much to
expect from this source, you could ascertain and telegraph
the balance of general license 75 reported on TVR-132
in accordance with general license 75, Section III.
Paragraph 3. I have the following information
obtained informally:
(a). In the opinion of the Chairman of the Board,
since there is no need for acting immediately on the
Central Bank's applications, it would be advisable to await
clarification of the situation with respect to Rangoon and
the possibility of maintaining the flow of imports into
China.
(b). The British feel disposed to satisfying the
application for the period beginning November 1 and to
keep the understanding between the Board and the Minister
of Finance in effect, even though remittances may have
become a trickle rather than a flow, since in the future
the requirements of the Chinese Government for foreign
exchange will probably be comparatively small.
Paragraph 4. To facilitate the efforts of the Board
to reconstitute its records, it would be helpful if the
following
202
following information could be obtained for Fox to bring
back with him when he returns:
(a) The sums which were paid out on instructions of
the Board by the Federal Bank to banks in New York in
week or two preceding December 8 but which had not yet
been transmitted by these banks to the officers and agents
at Shanghai. Answers are also desired to the questions:
What is the status of these SUMB and has the Board a
right to ask that they be refunded to the Federal
(b) What is the exact amount of Fapi held by the
National City and Chase branches at Shanghai on the Board's
account?
(o) What amount of setoffs WILS on the books of the
National City and Chase, Shanghai, not yet credited to
the Board?
Paragraph 5. Pei, Hall-Patch and Cassels are in
Eurning but it is expected the two former will be back soon.
It is requested that Fox be informed.
and OF MESSAGE.
GAUSS
Page 1042
CONGRESSIONAL RECORD FOR FEBRUARY 4, 1942
The SPEAKER Is there objection to
the present consideration of the resolution?
FINANCIAL AID TO CHINA
BLOOM Mr. Speaker, I ask
consent for the immediate
of House Joint Resolution
consideration authorizing the President of the
States to render financial aid to
Mr. McCORMACK Mr. Speaker, reserving the right to object, of course I
am wholeheartedly for the resolution
As the gentleman from New York (Mr.
There is one thing the American pub-
tution unanimous report of the Committee on
civilian, because war today is an over-all
The roodest of the gentleman from New
Mr BLOOM!?
York FISH Mr. Speaker, reserving
Mr to object- and I do not propose
right this is a very important resoAffairs. It involves $500,000,000
Foreign furnish aid to China In my opinion,
to proper and wise move and a sound
military and diplomatic investment
China has been fighting Japan with
great gallantry for the last 4 or 5 years.
It has a tremendous reservoir of manpower. It has a population of 457,000.-
000 people-3 or 4 times as many as
the United States. The Congress and
the American people are completely
united in winning this war. If we want
to be sure of winning it, what is better
and wiser than to supply arms, ammunition. defensive and offensive weapons,
airplanes tanks and artillery in large
quantities to the Chinese. who have
ready shown the utmost gallantry. but
no are lamentably lacking in artillery.
airplanes. and modern weapons with
which to defeat the Japanese?
When this resolution is passed- and
am sure it will pass unanimously-I hope
we will proceed at the earliest possible
moment to try to get airplanes, the best
picture: not alone the men in service
who are waging the war. The child in
the crib is in this war. After this war
is over everyone. from the babe in the
crib up. will be a veteran of this war
Civilian defense is a very important part
of our war, and those in civilian life
should actively participate in all such
activities. If there is one thing we have
learned from Pearl Harbor it is that we
should be prepared for anything. We
might think something may not happen.
but we should not rest upon that thought
and be inactive. We must be prepared
for anything that can possibly happen.
As far as China is concerned, the
American people have always had a
warm feeling of friendship for the people
of China and for the Chinese Government. Even before December 7 and our
entry into the war, our people had a
warm friendship for them and a strong
feeling of support in their defense against
can carry the war to Japan an offensive
war from the shores of China across the
aggression and in their future aspirations. Today we are allies, and our Government since December 7 and prior to
that time has done everything possible
and our Government will do everything
seas to Japan- bomb Japanese cities
possible to assist the people of China, to
equipped and the most modern airplanes
in the world. to the Chinese, so that they
and destroy them as the Japs did to
them
We must not minimize this war. If
China should be driven out of the war,
If she should collapse if she should make
peace. If she should be beaten, I do not
and win this war if it is not necessary
to divert our resources and energies to
equipping the military forces of our own
war.
to object- It comes to the House with the
SPEAKER Is there objection to
and now that we are committed to fight
FISH) has said, we must not minimize the
lic must be watchful of, and that is an
attitude of complacency. We cannot feel
overconfident On the other hand, we
must not have a feeling of lack of confidence or defeatism. I think the state of
mind of the American people must be
one of grim determination That state
of mind must be possessed not only by
the leaders in the armed forces, every
member of the armed forces, but every
United and for other purposes
China The Clerk read the title of the resolu-
203
assist the Government of China as ally
and as a friend in the successful termination of the war. to which we are all so
anxiously looking forward to see brought
about as soon as possible. This bill is a
very important bill in connection with
country
The SPEAKER Is there objection to
the request of the gentleman from New
York (Mr. BLOOM
There being no objection. the Clerk
read the House joint resolution as follows:
Whereas China has for more than 4 years
valiantly resisted the forces of Japanese ag-
gression: and
Whereas financial and economic aid to
China will increase her ability to oppose the
forces of aggression: and
Whereas the defense of China is of the
greatest possible importance Therefore be It
Resolved etc That the Secretary of the
Treasury. with the approval of the President
is hereby authorized on behalf of the United
States to loan or extend credit or give other
financial aid to China in an amount not to
exceed in the aggregate $500,000.0 at such
time or times and upon such terms and conditions as the Secretary of the Treasury with
the approval of the President shall deem in
the interest of the United States
Sec 2. The authority herein granted shall
be in addition to any other authority provided by law
SEC 3. There is hereby authorized to be
appropriated out of any money in the Treasury not otherwise appropriated such sum or
sums. not to exceed $500,000,000 as may be
necessary to carry out the provisions of this
joint resolution
Mr. BLOOM Mr. Speaker, with reference to the resolution now under consideration-House Joint Resolution 276-
I would like at this time to present the
letter of the President of the United
States which was sent to the Speaker of
the House of Representatives under date
of January 31. 1942:
THE WHITE HOUSE
Washington, January 31, 1942
Honorable
The
the SPEAKER OF THE HOUSE OF
REPRESENTATIVES
MY DEAR Ms. SPEAKER: Responsible officials
both of this Government and of the Government of China have brought to my atten-
the existence of urgent need for the
tion immediate extension to China of economic
and financial assistance going beyond in
amount and different in form from such aid
Congress has already authorized I be-
as that such additional assistance would
lieve serve to strengthen China's position as re-
both her internal economy and ber ca-
the defense of the people and the Gov-
pacity gards in general to function with great mill-
bill from our own angle. and as a part of
tary effectiveness in our common effort
I urge. therefore. the passage by Congress
fronted with an equally serious situa.
tion I think we would then face the
possibility of a stalemate. But as long
I know there is no opposition to this bill.
of appropriate hereto a suggested draft of a joint
and continue to fight, we are bound to
win, particularly if we supply them with
China
believe we could win the war for many
years and without terrible losses and
trials If Russia should collapse or be
forced to make peace. we would be con-
as Russia and China remain in this war
weapons to fight with
I hope there will be no objection to the
resolution
Mr. CELLER Mr. Speaker, will the
tentleman yield?
Mr FISH Yes: yield.
Mr CELLER In other words this is
exceptionally fine movement for our
vernment to make?
Mr FISH And a vote of confidence
for the present Chinese Government,
which has been carrying on this war for
ment
without proper arms or equip-
ernment of China. It is an important
our war action in this great conflict
legislation to this effect and
but we want to have a record made of
attach resolution which would accomplish this pur-
the love and affection on the part of the of
pose
people of America for the people
Mr. WHITE Mr. Speaker. reserving
the right to object. I subscribe to what
our leader has just said that there is no
opposition to this particular joint resolution. but I do want to say a word in reference to the plan be proposes. I am won-
dering If he thinks it is financially possible for the people of the United States
to finance the war activities of every nation on the globe that is opposed to the
Central Powers. I am wondering how
far we can he and the leader-
of this Congress understand that
there ship is a limit to the financial resources
and productive ability of this country-
Sincerely yours.
FRANKLIN D. ROOSEVELT
During the hearing held be the Comon Foreign Affairs on February 3.
mittee 1942. on this measure. the committee
heard testimony from the Secretary of
the Treasury Henry Morgenthau, Jr.: the
Secretary of War, Henry L Stimson: the
Secretary of the Navy. Frank Knox: the
Secretary of Commerce Jesse H. Jones:
and Assistant Secretary of State Breckinridge Long
The witnesses discussed the backof our relations with China and
ground detailed the recent political, nimitary. and
economic developments. In the opinion
CONGRESSIONAL RECORD FOR FEBRUARY 4, 1942
if the committee these developments
fully justify the financial aid which this
joint resolution would authorize
It was thought desirable that the Sec-
retary of the Treasury. acting with the
approval of the President, should be
given the widest possible latitude in ar-
ranging for the financial aid to be extended The joint resolution was deemed
adequate to permit the Secretary of
the Treasury. acting with the approval
of the President to accept any direct or
indirect benefit to the United States as
ample consideration for either part or
the whole of the assistance to be extend-
ed to China
The witnesses reported to the committee the various forms of credits and loans
and aids that have heretofore been ex-
tended to China and the splendid record
of the Chinese Government in discharg-
ing its obligations and commitments to
Page 1043
204
nancial, and production measures that is
being found necessary within the United
States
for the pursuit and winning of the
war.
bling and without revealing to our enemies how it is to be used. The Chinese
The long historic association, cultural,
their oriental foe. We can most effectively show our appreciation of their ef-
educational, and economic, which has
thrived between the United States and
China since the early days of our Repub-
can do Is to do it quickly without quib-
have developed oriental ways of defeating
fective resistance which means so much
to us. by helping them to continue their
lic, is now further amalgamated in a
common war effort. This measure will
be a further manifestation of the unity
of purpose, the tenacity, the faith, and
the determination of the free nations
own kind of resistance in their own way.
Mr. CHIPERFIELD Mr. Speaker. I
am wholeheartedly in favor of immedi-
tant action and one which I am sure will
contribute very materially to a successful
termination of the war effort.
that are united in defense of freedom.
ate passage of this bill. We have all ad-
mired the gallant and long-enduring
fight that China has made. We should
come to her aid in her time of need.
While it is rash to make predictions in
time of war, I believe this loan or gift of
Mr. EBERHARTER Mr. Speaker, the
House today rose to the occasion and
unanimously adopted a resolution au-
thorizing a loan or grant to Clinic of
$500,000,000 This was a vitally impor-
By our action today. the Government
of the United States and the people of the
United States are showing to the Government of China and to the people of
China that we are joined together in a
the United States. The additional assistance now proposed is much more
$500,000,000 to China will repay us many
single task: fighting the common enemy
comprehensive in scope, and is of a dif-
against the Axis Powers. I have no doubt
but what China will carry on with the
same stubborn resistance until we can
soldiers of China and soldiers of America
fighting together: our resources and ma-
terial wealth combined with the resources
other economic aids. The aid contem-
plated in the joint resolution should be
to fight with which she so badly needs.
all, with a spiritual determination common to the peoples of both countries to
regarded as the financial counterpart of
diate assistance. I for one am glad she
ferent character from the stabilization
loans, Export-Import Bank loans, and
lend-leasing war materials. It is de-
signed to the same end-namely, the successful prosecution of the war and should
be evaluated in the same terms.
From the beginning of the vicious onslaught in 1937 by the Japanese armed
forces upon China, the Chinese Govern-
ment, the Chinese people, and the Chinese armed forces have heroically and
with great sacrifice resisted a ruthless in-
vasion. The areas which Japan has
succeeded in occupying have not been
yielded until after the Chinese people
have. with unbelievable sacrifice and for-
titude. stripped them of materials that
might be of value to the enemy. China,
cut off from communication with the
outside world except by long and difficult
routes, deprived of its great industrial
shipping and commercial centers, and
denied the greater part of its normal
sources of revenue, is continuing after
almost 5 years a valiant fight against
aggression. The tenacity of the Chinese
in this battle for their national existence
has won the unstinted praise of free
peoples everywhere.
The country which attacked China in
1937 attacked the United States in 1941.
That country and its partners in world
crime declared war on the United States.
This country thereupon declared war on
them. China also declared war on them
Today the United States and China are
actively engaged, along with other countries that have been attacked by the ag-
gressor nations, as comrades in arms
fighting for the same great purpose
against common enemies, In the decla-
ration of January 1942. by the United
Nations the United States and China
and their associates took a common
pledge to cooperate fully to the end that
the war against Japan and its partners
should be successfully carried on to
victory
times over in helping us to win the war
give her the material and the machines
This financial aid will give her imme-
is going to get it and that this bill was
passed by the unanimous vote of the Foreign Affairs Committee and of this House.
Mr. VORYS of Ohio. Mr. Speaker, I
urge prompt and unanimous approval of
this resolution, without further debate or
discussion. Ordinarily I would oppose
the consideration of such a gigantic authorization in this manner. but the situation in the Pacific clearly requires action, rather than words, in attempting to
match with such aid as we can render the
matchless aid to us which China is rendering.
see the war through to victory. The lim-
itless courage displayed by the army of
the Republic of China has aroused the
admiration of all governments and of all
peoples throughout the world
A TRIBUTE TO DR. MU SHIM
Mr. CANFIELD Mr. Speaker, as the
House today passed unanimously the bill
authorizing a $500,000,000 loan to China,
my thoughts turned to one of the most
refreshing and democratic gentlemen I
have been privileged to meet in the Na-
tion's Capital-D Hu Shih, China's
Ambassador to our country.
I came to know Dr. Hu only yester-
There is no precedent for what we are
doing here: there is no precedent in hisour country and China: there is no precedent for the fight the Chinese have made
of membership in the Paterson. N.J., Y's
tory for the unique friendship between
beautifully bound tribute and certificate
Men's Club. Young men of this organi-
under their great Chiang Kal-shek
zation have studied the life of China's
against odds that, according to all the
most distinguished scholar, educator and
precedents, were overwhelming.
in Washington and they have been
Hunan Province where the Chinese first
deeply impressed by his contributions to
international amity.
defeated the Japanese in 1939 and where
they have since administered four bloody
room of the Embassy
I taught for a year at the college of
Yale in China, in Changsha, the city in
defeats to the Japanese Changsha is a
symbol of defeat to the Japanese. The
Japanese general who lost 100,000 men
there has just committed suicide. I am
proud to feel that I knew China and the
Chinese in the very place where they have
done their best. I know their capacity
for stubborn, wily, effective resistance,
their stout, fighting hearts. They are in-
herently democratic They are our
friends. Based on performance to date.
they have been the most potent antiAxis force on earth
They know what total war is. We are
just learning. This aid we are authorizing today is for more than lease-lend
materials; it is a form of total aid to total
friends against mortal enemies.
assistance is intended to contribute to-
China of the structure of economic, fl-
out, all-around financial aid. The least
ward the strengthening within
and material wealth of China: and above
day when at the Chinese Embassy I presented him with a suitably inscribed and
An oriental proverb says, "To give
quickly is to give twice." The most we
In essence this measure of financial
shoulder to shoulder and side by side:
can do right now is to authorize this all-
historian, now representing his country
I was humming Far Above Cayuga's
Waters as Dr. Hu entered the reception
"Congressman, are you a Cornell man,
too?" he asked smilingly.
I had to respond in the negative but
I did say I knew of his years at Ithaca.
A profound student of our American
Government, Dr. Hu told me how. back
in 1912 while at Cornell, he had sub-
scribed to the New York Times, the New
York Tribune, and the New York Journal
in order to get "all possible slants on the
Wilson, Roosevelt, and Taft campaigns.
The Ambassador was not pessimistic
about the war. He did not feel victory
was remote. Proudly be described the
Chinese will to defeat their enemies.
We can do so much with a little help.
a little equipment. he said. Dr. Hu,
who looks more like 41 than 51, went on
to say that his country was the first in
Asia to work out a democratic form of
government. Historical factors have
CONGRESSIONAL RECORD FOR FEBRUARY 4, 1942.
been at work for tens of centuries and
have given the Chinese people the tradi-
tion and the preparation for the de-
velopment of modern democratic institutions.
Of these institutions, the Doctor emphasized three: First, a thoroughly democratized social structure; secondly,
2,000 years of an objective and competi-
tive system of examinations for civil
service; and thirdly, the historic institution of the government creating its own
opposition and censorial control.
Dr. Hu is worth knowing. I shall see
him soon again. He told me on my
leaving yesterday he was coming to Pat-
erson in March or April personally to
thank the Y's Men for remembering
him.
The House joint resolution was ordered to be engrossed and read a third
time, was read the third time, and
passed, and a motion to reconsider was
laid on the table.
205
Page 1044
CONGRESSIONAL RECORD FOR February 4, 1942.
Page A414
has never wavered, because she knows
her cause is just. She has suffered time
Aid to China
and time again defeat, treachery, and
disillusionment, but she still carries on,
to the undying honor of her leaders and
her people. The poet, in the following
verses has well portrayed the spirit of
EXTENSION OF REMARKS
OF
HON. JAMES P. RICHARDS
China:
OF SOUTH CAROLINA
Out of the night that covers me.
IN THE HOUSE OF REPRESENTATIVES
Black as the pit from pole to pole
I thank whatever gods that be
For my unconquerable soul.
Wednesday, February 4. 1942
Mr. RICHARDS. Mr. Speaker, under
leave to extend my remarks, I make these
additional observations relative to the
unanimous passage by the House today
of House Joint Resolution 276, authoriz-
ing the President of the United States
to render financial aid to China through
a loan or extension of credit in a sum
not to exceed $500,000,000.
The fact that this resolution was
passed unanimously, without a single
remark of criticism from any Member
of the House, is a tribute seldom if ever
seen before to the honesty, integrity,
and patriotism of a great nation and a
great people.
China is a good financial risk because
of her unlimited natural resources and
because of her often exhibited determination to exist as a nation and as a free
people. The records of our Treasury Department reveal that she has in every
instance made every effort to live up to
her financial obligations to the United
States.
China is a good moral risk, because its
Government is founded on morality. law.
and freedom, and because its people have
for centuries lived under a moral code
unexcelled by the people of any other
nation
But. Mr. Speaker, there is another reason why we want to help China in her
war against wanton aggression. Americans know that the Chinese Government
and the Chinese people are real friends
of the United States. Of all the nations
of the earth, China probably is the most
friendly to the United States. In their
love and admiration for this country the
Chinese people have displayed none of
the envy. jealousy. and rivalry so openly
displayed by other nations
Should we desire to consider this loan
from a selfish standpoint, then we must
admit that there is no better way to help
our own country today than by aiding
the Chinese people. It is necessary-yes,
China
is
as
are for
for ourour
own
China we
tinue
essential-that the fight against Japan. be able defense This to con- loan
It hand
to finally conquer
Navy. mainly just appropriations It as hope is necessary through that Army Japan. must and
bitter end to
must is with battle China, to the in China hand, will win that never this we
war.
It is my belief that
fall us under her Generalissimo Chiang
Kal-shek. Practically unalded by any
other she has battled forone4 long
on
face
years most of powerful against nation. the earth Japan. military equipped Facing machines with airplanes of the the
and tanks and other modern implements
of warfare, China has battled on over
thousands of the dead bodies of her sons
with only rifles and rocks and clubs. She
In the fell clutch of circumstance
have not winced nor cried aloud
Under the bludgeonings of chance
My head is bloody. but unbowed.
206
207
NEW YORK TIMES, WEDNESDAY, FEBRUARY 4, 1942.
To Push Railroad Building
Dr. Chiang said part of the do-
CHINA IS GRATIFIED
OVER LOAN PLANS
Plans to Use U. British Aid
to Stabilize Currency, Make
Purchases, Build Railroads
mestic loan would be used to push
forward certain railroad projects
for which rails are already on
hand, having been torn up from
Japanese-occupied areas Also,
China will start an enormous num-
Do Much Talking
chinery as can be produced in
China, he continued He replied
negatively when asked " any
It was revealed this morning
that the Executive Yuan had dismeasures Dr. Chiang said Chine
in the past had mobilized her re
sources in part and now planned
to push ahead with more complete
radical and tational utilization of
all her .nan power and resources
By HARRISON FORMAN
Wireless to THE New YORK TIMER
CHUNGKING, China, Feb. 3
As the Chinese Government
spokesman at a press conference
today. Dr. T. F. Chiang, former
Ambassador to Russia, said in re-
gard to the news of projected
American and British loans:
"It is gratifying news to learn
that President Roosevelt has sent
a message to Congress asking for
a $500,000,000 loan to China and
that the British Government has
made known it is ready to lend
China 150,000,000.
Questioned on how the new loans
would be used, Dr. Chiang replied
that they would be spent partly
for purchases abroad and partly in
China as security for a domestic
loan that might be called a "victory loan." He believed the loans
would undoubtedly contribute to
currency stabilization in China because they would absorb some of
teb tremendous amount of notes
issued during the past few years
which are held partly responsible
for rising commodity prices.
message to the
Knox's special Chicago Navy Chinese and Frank his
people have removed all
by
statement And then
Dr. H. J.
earlier sion yesterday aroused reports apprehen- of only his
Governor of
ber of enterprises based on China's
cussed at length mobilization
Dr. T. F. Chiang Declared It Is
Fashion of Democracies to
speech in
sent us a
man power and such simple ma-
strings were attached to the loans.
REASSURED ON WAR MOVES
Praises Knox's Stand
"Secretary of the
"While We are sure our Allies
will continue to give us aid we are
determined to do our part even
better than we did while we fought
the enemy single-handed for the
past four and a half years," he
added.
Asked whether the loss of stra.
tegle points in the Southwestern
Pacific by the United Nations
would affect China's war effort.
Dr. Chiang replied that that would
depend on the time element. He
said China was self-sufficient in
food and in clothing, too, for she
still had plenty of unused spindles
evacuated from the coastal areas.
He disclosed, furthermore, that
already China had received plenty
of war materials from the United
Nations, and he said it would tax
China's transportation facilities
for more than a year to transport
these supplies to localities where
they could be used against the
enemy.
He said Chinese troops in Burma
had still not come into contact
with the enemy. He added, smiling,
"But I think they will soon."
On China's general stand Dr.
Chiang said:
"During the last few weeks
many assurances regarding the
strategy of the United Nations
have been given to China in the
fear that she might shift in her
stand with her allies because of
Initial reverses suffered by Britain
and America in the South Pacific.
I can unhesitatingly say that such
assurances were entirely unneces.
sary.
"President Roosevelt in his
statement made it clear that the
United States would devote a due
proportion of America's fast-devel.
oping power to the war in the
Pacific. Prime Minister Winston
Churchill's eloquent speech in the
House of Commons was frank and
confident in regard to Europe and
Asid
and
Lieutenant message erlands, of appreciation very Van the handsome Mock, Neth- con-
fidence, showing how clearly he
understands the interdependence
between China and the Nether.
lands Indies."
Dr. Chiang said it was the fash-
ion of democratic countries to
"sandwich a great deal of talk be-
tween actions." "It is clear," be
continued "that the United Na.
tions have a common purpose It
remains only for all of us to find
ways and means of fullfilling that
common purpose. We are sure
that Britain and America are doing their best to rush aid to the
South Seas.
He said Japan was determined
to prevent the rise of an independent and strong China
"Japan chose the moment for
attack.V he said. "We had no
choice but to meet the attack as
well as we could. We suffered reverses. We had to retreat and retreat. Night fell early upon China's
independence But we held on, hop.
in gagainst hope. Then at mid-
night, at the darkest hour. we sud-
denly found at our side stout and
loyal companions in arms. Now we
are surer than ever, although we
may still have a few hours of dark.
ness ahead there will be dawn and
victory.
208
THE HOUSE PASSED AND SENT TO THE SENATE WITHOUT DEBATE THE
JOINT RESOLUTION AUTHORIZING A $500,000,000 LOAN TO CHINA.
2/4--R1219P
ADD CHINA LOAN APPROVED, HOUSE
THE HOUSE APPROVED THE RESOLUTION BY VOICE VOTE AFTER REP. HAMILTON
FISH WARNED THAT THE U. S. CANNOT DEFEAT THE AXIS IF CHINA OR RUSSIA
ARE FORCED TO CAPITULATE TO JAPAN OR GERMANY.
*IF CHINA IS DRIVEN FROM THE WAR, COLLAPSES, OR IS FORCED TO MAKE
PEACE," FISH SAID, "I DON'T BELIEVE WE CAN WIN THIS WAR. IF RUSSIA IS
FORCED TO MAKE PEACE OR IS DEFEATED I DON'T BELIEVE WE CAN WIN.
"I THINK THEN THE WAR WOULD BE FOUGHT TO A STALEMATE. BUT IF RUSSIA
AND CHINA STAY IN WE WILL DEFEAT THE AXIS POWERS."
MAJORITY LEADER MCCORMACK COMMENTED THAT THE LOAN WOULD BE A
DEMONSTRATION OF THE SUPPORT OF THE AMERICAN PEOPLE FOR CHINA'S WAR
AGAINST JAPAN.
THE OBSERVATIONS OF BOTH MCCORMACK AND FISH WERE MADE ON THE QUESTION
OF TAKING UP THE CHINA WAR LOAN OUT OF ORDER. THERE WAS NO DEBATE ON
THE MEASURE ITSELF.
2/4--$1227P
208
THE HOUSE PASSED AND SENT TO THE SENATE WITHOUT DEBATE THE
JOINT RESOLUTION AUTHORIZING A $500,000,000 LOAN TO CHINA.
2/4--R1219P
ADD CHINA LOAN APPROVED, HOUSE
THE HOUSE APPROVED THE RESOLUTION BY VOICE VOTE AFTER REP. HAMILTON
FISH WARNED THAT THE U. S. CANNOT DEFEAT THE AXIS IF CHINA OR RUSSIA
ARE FORCED TO CAPITULATE TO JAPAN OR GERMANY.
"IF CHINA IS DRIVEN FROM THE WAR, COLLAPSES, OR IS FORCED TO MAKE
PEACE," FISH SAID, "I DON'T BELIEVE WE CAN WIN THIS WAR. IF RUSSIA IS
FORCED TO MAKE PEACE OR IS DEFEATED I DON'T BELIEVE WE CAN WIN.
"I THINK THEN THE WAR WOULD BE FOUGHT TO A STALEMATE. BUT IF RUSSIA
AND CHINA STAY IN WE WILL DEFEAT THE AXIS POWERS."
MAJORITY LEADER MCCORMACK COMMENTED THAT THE LOAN WOULD BE A
DEMONSTRATION OF THE SUPPORT OF THE AMERICAN PEOPLE FOR CHINA'S WAR
AGAINST JAPAN.
THE OBSERVATIONS OF BOTH MCCORMACK AND FISH WERE MADE ON THE QUESTION
OF TAKING UP THE CHINA WAR LOAN OUT OF ORDER. THERE WAS NO DEBATE ON
THE MEASURE ITSELF.
2/4--S1227P
208
THE HOUSE PASSED AND SENT TO THE SENATE WITHOUT DEBATE THE
JOINT RESOLUTION AUTHORIZING A $500,000,000 LOAN TO CHINA.
2/4--R1219P
ADD CHINA LOAN APPROVED, HOUSE
THE HOUSE APPROVED THE RESOLUTION BY VOICE VOTE AFTER REP. HAMILTON
FISH WARNED THAT THE U. S. CANNOT DEFEAT THE AXIS IF CHINA OR RUSSIA
ARE FORCED TO CAPITULATE TO JAPAN OR GERMANY.
"IF CHINA IS DRIVEN FROM THE WAR, COLLAPSES, OR IS FORCED TO MAKE
PEACE," FISH SAID, "I DON'T BELIEVE WE CAN WIN THIS WAR. IF RUSSIA IS
FORCED TO MAKE PEACE OR IS DEFEATED I DON'T BELIEVE WE CAN WIN.
"I THINK THEN THE WAR WOULD BE FOUGHT TO A STALEMATE. BUT IF RUSSIA
AND CHINA STAY IN WE WILL DEFEAT THE AXIS POWERS."
MAJORITY LEADER MCCORMACK COMMENTED THAT THE LOAN WOULD BE A
DEMONSTRATION OF THE SUPPORT OF THE AMERICAN PEOPLE FOR CHINA'S WAR
AGAINST JAPAN.
THE OBSERVATIONS OF BOTH MCCORMACK AND FISH WERE MADE ON THE QUESTION
OF TAKING UP THE CHINA WAR LOAN OUT OF ORDER. THERE WAS NO DEBATE ON
THE MEASURE ITSELF.
2/4--$1227?
209
THE WHITE HOUSE
WASHINGTON
February 4, 1942.
MEMORANDUM FOR
H.M. Jr.
In regard to the memorandum
sent you on January 25th from the
Chancellor of the Exchequer, I think
it would be a mistake to raise this
additional question at this particular
time.
F.D.R.
210
February 6, 1942
Copies to:
Mr. Bell
Dr. White
211
February 4, 1942
D. W. Bell
Harry White
Secretary Morgenthau
Mr. Dean Acheson called me and said that they are
very much worried in the State Department because they
can't get the British Cabinet to ratify the over-all
agreement on Lend-Lease. The President had sent a very
strong message to Churchill urging him to do it, and Dean
Acheson read this message to me over the phone.
Dean Acheson then asked whether they could send a
message in my name to Sir Kingsley Wood whom they under-
stand is one of the principal objectors. He read a draft
of that message to me over the phone, and I made one
slight change and told him to let it go. I asked him
to send a copy of my message and a copy of the over-all
agreement to me. Acheson was extremely appreciative.
Footnote for Mr. White:
When the copy of my message to Sir Kingsley Wood
comes in, send for Sir Frederick Phillips and read a
paraphrase of this message to him but don't let him take
any notes; also don't let on to him under what circumstances
this message was sent.
Bee i see
OFFICIAL COMMUNICATIONS
HE SECRETARY OF STATE
WASHINGTON c.
212)
DEPARTMENT OF STATE
WASHINGTON
February 4, 1942.
Dear Henry:
May I again express to you my very grateful apprecia-
tion for your splendid cooperation with us in the
message which you were good enough to authorize me to
send for you to Sir Kingsley Wood. I believe that
this message will be exceedingly helpful.
I enclose, in accordance with your request, a
paraphrase of the message and a copy of the draft Lease
Lend Agreement referred to in it.
Yours sincerely,
an Germ
Enclosures:
1. Paraphrase.
2. Draft Lease Lend
Agreement.
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury.
213
PARAPHRASE OF TELEGRAM
To: American Embassy, London.
Dated: February 4, 1942.
TRIPLE PRIORITY
FOR THE AMBASSADOR.
Please deliver at the request of the Secretary of
the Treasury a personal message as follows to Sir Kingsley
Wood as soon as possible:
"May I express to you my personal concern
that delay in reaching agreement on interim
Lend Lease Agreement will impede and embarrass
work between us on many immediate and pressing
matters 8.8 well as on more long range matters. The
present draft, in my judgment, is most fair and
reasonable and leaves ample scope for meeting
and agreeing upon problems of the war and post-
war periods along constructive lines of mutual
advantage. The continued failure to produce an
agreement is working harm to unity of war effort
and purpose. Morgenthau."
214
whereas the Governments of the United States of
America and the United Kingdom of Great Britain and
Northern Ireland declare that they are engaged in a 00operative undertaking, together with every other nation
or people of like mind, to the end of laying the bases of
a just and enduring world peace securing order under law
to themselves and all nations;
And whereas the President of the United States of
America has determined, pursuant to the Act of Congress
of March 11, 1941, that the defense of the United Kingdom
against aggression 18 vital to the defense of the United
States of America;
And whereas the United States of America has ex-
tended and is continuing to extend to the United Kingdom
aid in resisting aggression;
And whereas it is expedient that the final determination of the terms and conditions upon which the
Government of the United Kingdom receives such aid and
of the benefits to be received by the United States of
America in return therefor should be deferred until the
extent of the defense aid is known and until the progress
of events makes clearer the final terms and conditions
and benefits which will be in the autual interests of
the United States of America and the United Kingdom and
will promote the establishment and maintenance of world
peace;
And whereas the Governments of the United States of
America and the United Kingdom are mutually desirous of
concluding now a preliminary agreement in regard to the
providing of defense aid and in regard to certain considerations which shall be taken into account in
determining
215
-80
determining such terms and conditions and the making
of such an agreement has been in all respects duly
authorised, and all acts, conditions and formalities
which it may have been necessary to perform, fulfil or
execute prior to the making of such an agreement in con-
formity with the laws either of the United States of
America or of the United Kingdom have been performed,
fulfilled or executed as required;
The undersigned, being duly authorized by their respective Governments for that purpose, have agreed as
follows:
ARTICLE I.
The Government of the United States of America will
continue to supply the Government of the United Kingdom
with such defense articles, defense services, and defense
information as the President shall authorize to be transferred or provided.
ARTICLE II.
The Government of the United Kingdom will continue
to contribute to the defense of the United States of
America and the strengthening thereof and, should circum-
stances arise in which the United States of America in
its own defense or the defense of the Americas may re-
quire articles, services, or information, will provide
such articles, services, or information as it may be in
a position to supply.
ARTICLE III.
The Government of the United Kingdom will not with-
out the consent of the President of the United States
transfer title to, or possession of, any defense article
or defense information transferred to it under the Act
or permit the use thereof by anyone not an officer,
employee,
216
employee, or agent of the Government of the United
Kingdom.
ARTICLE IV.
If, as a result of the transfer to the Government
of the United Kingdom of any defense article or defense
information, it becomes necessary for that Government
to take any action or make any payment in order fully
to protect any of the rights of a citizen of the United
States of America who has patent rights in and to any
such defense article or information, the Government of
the United Kingdom will take such action or make such
payment when requested to do so by the President.
ARTICLE V.
The Government of the United Kingdom will return to
the United States of America at the end of the present
emergency, as determined by the President, such defense
articles transferred under this Agreement as shall not
have been destroyed, lost or consumed and as shall be de-
termined by the President to be useful in the defense
of the United States of America or of the Western Hemi-
sphere or to be otherwise of use to the United States of
America.
ARTICLE VI.
In the final determination of the benefits to be
provided to the United States of America by the Government of the United Kingdom full cognizance shall be taken
of all property, services, information, facilities, or
other benefits or considerations provided by the Government of the United Kingdom subsequent to March 11, 1941,
and accepted or scknowledged by the President on behalf
of the United States of America.
ARTICLE VII.
217
s
ARTICLE VII.
In the final determination of the benefits to be
provided to the United States of America by the Government of the United Kingdom in return for aid furnished
under the Act of Congress of March 11, 1941, the terms
and conditions thereof shall be such as not to burden
commerce between the two countries, but to promote
autually advantageous economic relations between then
and the betterment of world-vide economic relations.
To that end, they shall include provision for agreed
action by the United States of America and the United
Kingdom, open to participation by all other countries of
like mind, directed to the expension, by appropriate
international and domestic measures, of production, employment, and the exchange and consumption of goods,
which are the material foundations of the liberty and
welfare of all peoples; to the elimination of all forms
of discriminatory treatment in international commerce,
and to the reduction of tariffs and other trade barriers;
and, in general, to the attainment of all the economic
objectives set forth in the Joint Declaration made on
August 12, 1941, by the President of the United States of
America and the Prime Minister of the United Kingdom.
At an early convenient date, conversations shall be
begun between the two Governments with a view to deter-
mining, in the light of governing economic conditions,
the best means of attaining the above-stated objectives by
their own agreed action and of seeking the agreed action
of other like-minded Governments.
ARTICLE VIII.
218
ARTIOLE VIII.
This Agreement shall take effect as from this day's
date. It shall continue in force until a date to be
agreed upon by the two Governments.
Signed and sealed at Washington in duplicate this
day of
. 1941.
ON BEHALF OF THE GOVERNMENT OF THE UNITED STATES OF AMERICA
[F1t197
ON BEHALF OF THE GOVERNMENT OF THE KINGDOK OF GREAT BRITAIN
AND NORTHERN IRELAND.
Title7
Treasury Department
219
Division of Monetary Research
Date 2/6/42
To:
19
Miss Chauncey
Unless I hear to the contrary
from you, I shall assume that the
Secretary doesn't want to see these
reports monthly.
In any case I will call his
attention to any transaction which I
believe merits his attention.
H.D.W.
MR. WHITE
Branch 2058 - Room 214
o
no
220
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE February 4, 1942
TO
Mr. White
FROM Mr. Hawkey
There follows a summary of the Stabilization Fund's gold transactions with
the central banks and governments of foreign countries during the month of January:
Purchased from:
Argentina
$ 4,988,000
Chile
$ 350,000
Mexico
5,876,000
18,142,000
Neth. East Indies
Peru
Portugal
Switzerland
Uruguay
U.S.S.R.
Venezuela
Total
Sold to:
644,000
2,502,000
21,070,000*
$48,584,000
2,989,000
39,900,000
8,000,000
$55,877,000
*Purchased on January 3, 1942, for delivery within 180 days.
It will be seen that the Fund's sales of gold exceeded purchases for
immediate delivery by more than 28,000,000. In order to supply foreign buyers.
and to maintain a small gold balance, the Stabilization Fund purchased $37,800,000
in gold during January from the Treasury's General Fund through the New York Assay
Office.
TREASURY DEPARTMENT
221
INTER OFFICE COMMUNICATION
DATEFebruary 4, 1942
Secretary Morgenthau
FROM
Mr. Haas
404
Subject: The Export Freight Situation
Lighterage freight in storage and on hand for unloading
in New York harbor at the end of last week amounted to 19.768
carloads. This is practically the same as for the previous
week. (See Chart 1.) There was additional storage space
available for 10,051 carloads on February 2, as compared with
10,114 a week earlier.
Exports from New York increased last week to 6,856 cars
from 5,393 in the previous week. (See Chart 2, upper section.)
Receipts of export freight at New York continued their rising
trend and reached 8,029 cars, as compared with 5,980 cars in
the previous week. (Lower section of chart).
The receipts of export freight at 9 other North Atlantic
ports show a 56 percent increase over the previous week, and
are higher than at any time since at least the beginning of
last year. This high figure, 4,230 carloads, is due to
large increases in export freight receipts at Philadelphia
Baltimore, and Hampton Roads. The receipts for export at 6
Pacific ports increased to 1,622 cars, or by nearly 24 percent, bringing the average for the month of January well
above any of the months in 1941. (See Chart 2, lower
section.)
Chart 1
222
LIGHTERAGE FREIGHT IN STORAGE
AND ON HAND FOR UNLOADING IN NEW YORK HARBOR*
1942
1941
CARLOADS
CARLOADS
Thousands
Thousands
24
24
22
22
-
20
20
18
18
16
16
14
14
12
12
10
10
8
JAN
MAR
8
.........
+++++++
MAY
SEPT.
JULY
NOV.
JAN
MAR
MAY
1941
JULY
SEPT.
NOV.
1942
Largely export freight, but about 10% represents freight for local
*
and coastal shipment. Figures exclude grain.
Office of the Secretary of the Treasury
Division of Research and Statistics
C-303-0
EXPORT FREIGHT MOVEMENT
1942
CARLOADS
Thousands
1941
CARLOADS
Thousands
Exports
10
10
9
9
8
8
From New York*
7
7
6
6
5
mm
4
5
4
3
3
III
we
m IIIII
NOV.
SEPT.
JULY
MAY
MAR
JAN
NOV.
SEPT.
JULY
MAY
MAR
2
JAN
UNITED
IIII
2
HALL IIIIIII
1942
1941
CARLOADS
Thousands
CARLOADS
Thousands
Receipts for Export
10
10
9
9
8
8
At New York
7
7
6
6
5
5
4
4
At 9 other North
Atlantic Ports ..
with
..
I
LLL
111
JAN.
MAR
MAY
JULY
1941
SEPT.
.
o
NOV
111
JAN.
-
As estimated from date of general managers' association
Association of American Retroods
Office of the Secretary of the Treasury
- / - Hubble
III 0
I
At 6 Pacific Ports
2
ym
2
3
3
MAY
MAR.
JULY
SEPT
NOV
1942
of
New
York
382-8
224
Treasury Department
Division of Monetary Research
D
Date February 4.19 42
To:
From:
1.
Secretary Morgenthau
Mr. White
Are you interested in seeing
information about exports to the
European neutrals which may be
of possible value to the Axie?
2. Are you interested in reising
this problem with the Board of
Economic Warfare?
no
225
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE February 4, 1942
TO
Mr. White
FROM
Mr. Ullmann
Subject: Exports of Possible Use to the Axis
Our export information from our office in New York shows:
1.
The S. S. San Miguel, scheduled to sail soon, has loaded over 1.5
million pounds of copper scrap consigned to Portugal.
2. The Ile de Re (French) sailed on January 26 for French North Africa.
It carried over 1500 metric tons of pitch and 4200 long tons of
bituminous coal.
3. Other recent shipments from here include:
850,000 gallons aviation gasoline to Sweden
11,200,000 lbs. sugar to Switzerland (ship clearing for Genoa, Italy)
13,000,000 lbs. sugar to French North Africa
7,000,000 yds. cotton piece goods to French North Africa
4.
All of these exports are covered by Export Control licenses. As for
Foreign Funds, the exports to Switzerland, Sweden, and Portugal are
covered by general licenses, while the French North African shipments
come under the State Department agreement covering this area.
TREASURY DEPARTMENT
226
INTER OFFICE COMMUNICATION
DATE February 4, 1942
TO
FROM
Secretary Morgenthau
Mr. White
In December 1941 and January 1942, the United States
imported 13,426,000 ounces of silver from Mexico, as
against 12,680,000 ounces in the same two-month period a
year ago.
Since the Treasury has bought no silver under the
Silver Purchase Act in the past two months, most of the
recent imports of silver into this country have found
their way into the commercial market. The New York market
price for silver has been generally steady, at about 3/80
over the Treasury's quotation of 35d.
There 18 thus far no evidence to support the fears
expressed last November that Mexico would use the Silver
Purchase Arrangement to withhold silver from the market
80 as to force up the price.
TREASURY DEPARTMENT
227
INTER OFFICE COMMUNICATION
DATE Feb. 4, 1942.
TO
FROM
Secretary Morgenthau
Mr. White
subject: Decision of Mexican Supreme Court on subsoil rights
1. A recently announced decision of the Mexican
Supreme Court modifies and possibly reverses decisions
handed down in 1938 on which the Mexican Government has
based its refusal to compensate expropriated American
oil companies for subsoil rights. It appears that this
decision has not yet been signed.
2. The effect of this decision may be to bring the
tion of valuation of the properties of the expropriated
American oil companies. Previous Mexican valuations have
not included any value for subsoil rights. It is now
United States and Mexico much closer together on the quesbelieved that the appraisers named by the Mexican and
United States Governments may include the value of sub-
soil rights in their final valuations of the properties.
3. It is too early to know how this will affect
the United States-Mexican Stabilization Agreement. It
does mean that Mexico may have to pay out more dollars
than otherwise would be the case. on the other hand,
the decision may attract enough capital to Mexico to more
than offset the loss in foreign exchange.
TREASURY DEPARTMENT
228
INTER-OFFICE COMMUNICATION
DATE February 4. 1942
TO
Secretary Morgenthau
FROM r.DDestrich
CONFIDENTIAL
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
£35,000
Purchased from commercial concerns £17,000
Open market sterling held at 4.03-3/4, with no reported transactions.
The Cuban peso, which advanced from par to a premium of about 11/16% during
the week ended yesterday, was quoted at 5/8% premium today.
In a very thin market, the Venezuelan bolivar improved about 1/2 to close
at .2775.
In New York, closing quotations for the foreign currencies listed below
were as follows:
Canadian dollar
Argentine peso (free)
Brazilian milreis (free)
Colombian peso
Mexican peso
Uruguayan peso (free)
11-5/8% discount
.2365
.0516
.5775
.2065
.5250
There were no gold transactions consummated by us today.
The Federal Reserve Bank of New York reported that the Bank of Canada shipped
$3,449,000 in gold from Canada to the Federal for account of the Government of
Canada, for sale to the New York Assay Office.
In London, spot and forward silver remained at 23-1/2d and 23-9/16d
respectively, equivalent to 42.67$ and 42.78
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 35-1/84.
We made no purchases of silver today.
A
229
P
W.T. 1100/CD/2/42
BRITISH EMBASSY,
WASHINGTON, D.C.
SAFE HAND
4th February, 1942.
Dear Mr. Dietrich,
With reference to my letter of 30th October,
reference No. 1121/426/41, I think you may be
interested to have for your file the enclosed copy
of a letter which was sent by the Trading with the
Enemy Branch to the Anglo-Prague Credit Bank in
London.
Yours sincerely,
(Signed) W. Ritchie
Mr. Frank Dietrich,
Room 279,
U.S. Treasury Department,
Washington, D.C.
WR:MLC
230
Trading with the Enemy Branch,
(Treasury and Board of Trade),
24, Kingsway, London. W.C.2.
Gen/41/pt.II
December, 1941.
Sir,
With reference to your letter of the 13th December concerning
your relations with the New York Agency of the Prague Credit Bank,
I am directed to inform you that this Branch is satisfied to raise
no objection so far as the provisions of the Trading with the
Enemy Act, 1939 are concerned:-
(a) to your communicating by letter or cable with the
New York Office in question on matters relating
to normal current banking business without seeking
the prior approval of this Branch;
(b) to your maintaining in your books a current account
in the name of that office subject to the approval
and directions of the Bank of England being obtained
for this purpose, and
(c) to your opening credits here for the New York Agency
provided they place with you the relative sterling
funds in advance.
The foregoing is subject to due compliance with the provisions
of the Defence (Finance) Regulations, 1939.
Your documents are returned herewith.
I am, Sir,
Your obedient Servant,
The Chairman,
Anglo-Prague Credit Bank,
48, Bishopsgate, E.C.2.
Copy:vw:2-5-42
Treasurv Department 231
Division of Monetary Research
Date February 6 1942
To:
Miss Chauncey
From:
Mr. Southard
This cable probably need not
be shown to the Secretary since
it is one more in a string of
cables on the destruction of values
in the Philippines.
PARAPHRASE OF TELEGRAM RECEIVED
232
NO: 38.
FROM:(Manila)
United States
High Commissioner, Fort Mills,
via N.R.
DATE: February 4, 1942, 11 a.m.
FOLLOWING FOR TREASURY RECORD.
Committee comprising Vice President Oamena, Acting
ecretary of Finance, Jose Abad Santos, Colonel Howard A.
Smith (representing General MacArthur), and Evett D. Heater
(representing High Commissioner), reported to their best
knowledge and belief contents of vaults one, two and three
of Philippine Treasury reservation, Corregidor, (not up to
present delivered into High Commission custody) are RB
follows: 269 bars gold bullion each numbered and marked in
grams totalling 1,343,493.95 marked grame which results from
melting 805,410 face value coin held prior to December 28,
1933 (see redio 708, October 29, 1936, Acting High Commissioner
for Queson to Secretary War and radio 317, May 5, 1936, Treasury
to High Commissioner); silver coins amounting to 16,422 pesos
free value being Philippine monetary reserves; 19 boxes which
Commonwealth officials say contain Philippine paper currency
amounting to 57,761,825 pesos; piece gold marked 406.30; silver
bare marked 5400/3850.66/893.0..1 envelope gold dust marked
1.60; piece gold and silver 7.50 ounces; gold ber marked
B8305.20 tagged to 91.779 grame; gold bar marked 1646.10.
SAYRE.
Treasury Department
Division of Monetary Research
Date
To:
Secretary Morgenthau
From:
Mr. White
233
2/5/42
19
ubject: Brazil and the War.
You may be interested in the attached statement of President Vargas of Brazil to his
Director of Exchange that "We are now in
the same boat with the United States and
must cooperate to the fullest extent". The
Bank
of Brazil is effectively restricting
the use of Axis assets.
0
234
P
Y
DEPARTMENT OF STATE
WASHINGTON
February 4. 1942
In reply refer to
IF 840.51 Frozen Credits/5250
The Secretary of State presents his compliments
to the Honorable the Secretary of the Treasury and
transmits five copies of telegram no. 319, dated
February 2, 1942, from the American Embassy, Rio de
Janeiro, quoting instructions to the Director of Ex
change by President Vargas, dealing with the admini
tration and control of Axis funds in Brazil.
Enclosure:
Five copies of telegram
no. 319, dated February 2,
1942, from Rio de Janeiro.
Copy:ec:2-4-42
235
0
P
Y
PD
This telegram must be
paraphrased before being
Rio de Janeiro
communicated to anyone
Dated February 2, 1942
other than a Governmental
Rec'd 6:10 p.m.
agency. (BR)
Secretary of Washington,
Washington.
319, February 2, 3 p.m.
My 274, January 2, 3 p.m.
President Vargas told the Director of Exchange on Saturday:
"We are now in the same boat with the United States and must
cooperate to the fullest extent. You are responsible for the
administration and control of Axis funds in Brazil. Private
interests must not interfere with plans of the Government."
Although the Brazilian Government has not (repeat not) promulgated supplementary control measures, the Bank of Brazil has
the situation in hand and is effectively restricting the use of
Axis assets.
INFORM TREASURY.
CAFEVERY
LMS
Copy: VWI 2-4-42