The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
313
February 11, 1942
4:00 p.m.
FINANCING
Present: Mr. Haas
Mr. Murphy
Mr. Morris
Mr. Bell
Mr. Hadley
(Secretary held a telephone conversation with Mr.
Eccles as follows:)
314
February 11, 1942.
4:10 p.m.
HMJr:
Operator:
HMJr:
Operator:
HMJr:
Hello.
Chairman Eccles.
All right.
Go ahead.
Hello. Hello.
Mr.
Marriner
Eccles:
Hello, Henry.
HMJr:
Marriner?
E:
HMJr:
Say, Ronald and John.....
Yeah.
and Goldenweiser and Piser who were over there
E:
this morning are in here with me.
HMJr:
Good.
E:
And I've got the speaker - the loud speaker on.
HMJr:
So have I.
E:
O. K.
HMJr:
All right. Ah - well, what about this last suggestion
E:
HMJr:
now - June fifteen, fifty-two, fifty-five?
Well, I think that we are favorable to that one. As
I understand it, you've decided now on the one issue.
That's right.
E:
And with no option?
HMJr:
That's right.
E:
In view of that, I think we favor the fifty-two,
fifty-five.
HMJr:
of June?
-2E:
HMJr:
E:
of June. That's right.
All right.
How do you people feel about it?
HMJr:
Well, they're all for it.
E:
You all agree on that?
HMJr:
E:
HMJr:
315
Yeah.
What price do you figure that gives you?
Well, now let me just ask the boys. Just a second.
Well - from - from three-quarters of a point to a
little bit over a point.
E:
HMJr:
E:
HMJr:
E:
Yeah. Well, we've got a hundred more, 80 it's
You've got a hundred more? Hello.
Yes.
Woll, we're not very far apart.
Well, Piser says that today it's seven-eighths.
HMJr:
Seven-eighths?
E:
Yeah.
HMJr:
Well, my boys say from three-quarters to a little bit
above a point.
E:
Uh-huh. Well, that's right. Well, we've checked
pretty closely on it.
HMJr:
What?
E:
We've checked very olosely on it.
HMJr:
E:
Well, that ought to be enough margin.
I think SO. If this 18, see, this is - will under be, a
Well, as John said, that in a few months it will be
ten-year issue.
HMJr:
That's right.
E:
Now
I've got to talk to Ronald and John here - just
had a moment
-3 HMJr:
316
Yeah.
about the discussion that I'd had with you a half
or three-quarters of An hour ago
HMJr:
Year.
about what per gent would do.
E:
HMJr:
Yeah.
See?
HMJr:
Yeah.
E:
And just 80 that well all hear it together here
HMJr:
Yeah.
E:
I indicated - I stated to you that we would be
willing to support this market
HMJr:
Yeah.
E:
Hello.
HMJr:
E:
HMJr:
E:
I'm right here.
That after - that we - that I felt that there'd be
no question about it being fully subscribed.
That's right.
Now, it may be that people who have gotten in the past
only n fifth or a tenth of what they subscribed for
HMJr:
Yeah.
Might - bello.
HMJr:
Yes.
E:
May get all of it or half of it.
HMJr:
Yes.
E:
In which ORBE there would be a big secondary market.
HMJr:
That's right.
E:
And in that case the Fed would stand ready to take.
HMJr:
Wonderful.
317
E:
HMJr:
E:
HMJr:
E:
HMJr:
Whatever
was necessary
in order to see that this issue
didn't go through
par.
Well, I couldn't ask for anything better.
Well, now, that's - that's the way we feel about it.
Now I haven't checked with - with - with Allen, but
I'm sure that he would feel exactly the same way
about it, and we're three of the five members of the
committee.
Well, he feels all right.
Yeah, I'm - I'm sure he would agree with that
Uh-huh.
same idea.
E:
HMJr:
E:
Yeah.
Now on the other hand, if there should - if it - if
it should appear
HMJr:
Yeah.
that the issue 18 not being subscribed even.....
E:
HMJr:
E:
Yeah.
fully, that, inasmuch as we can't, of course,
buy directly, which we can do when this bill gets
through
HMJr:
Yeah.
we could go to the dealers
E:
HMJr:
Yeah.
and could get the dealers to put in whatever
E:
subscription seemed to be necessary
HMJr:
Yeah.
E:
In the - and - and agree to take it off their hands.
So I think there could be no question about - about
the issue being taken care of and there can't be a
HMJr:
failure on it.
Well - I - I - on that basis I am more than satisfied
to go ahead.
-5 -
318
Yeah. Well, okay then, Henry.
Now you know we're going to - we won't - we've sent
it out but we're not going to file the O. K. until
around
three - four tomorrow afternoon depending upon
the war news.
Well, now - yeah, I won't be here tomorrow - I - I -
as you know, I agreed to go up on this "Town Hall of
the Air" tomorrow night with Johnny Hanes
HMJr:
John.
On this financing of the war.
HMJr:
E:
Oh, yeah.
So - 80 I've got a little job cut out for me with
Johnny tomorrow night.
HMJr:
That's right.
So I'll be going up there tomorrow afternoon.
HMJr:
E:
HMJr:
Yeah. Well
But you can reach - but you could - but I can be
reached, of course, in New York.
Well, tell Johnny, remember we've got a financing.
(Laughs.)
Yeah - (laughs) - I'll tell him.
What?
E:
I think - I don't know how I've - I may tell him a
lot before we get through.
Well, both of you remember we've got a financing.
(Laughs) - Well, what I've got - what I've got in the
picture ought to help it.
All right. (Laughs.) Okay.
I'm going to - what I've got I'm going to - to submit
it to - to Herbert and Paul. In fact, I talked to
them about it.
-6HMJr:
E:
319
Well, don't you have to get a clearance from MacLeish?
Oh, yes. Yeah, we'll submit it to Archie, too. We
won't give him much time on it, though.
(Laughs.)
HMJr:
Did you see the cartoon in tonight's Star?
No.
E:
HMJr:
Send for it. Harold Ickes submitted a speech to
Archie, and see what happened to it.
HMJr:
Oh, oh. (Laughs.) Okay.
It's wonderful.
E:
Just a second. John McKee said something. Hello.
HMJr:
E:
.
E:
Yes.
John says he thinks it'11 go all right, but he still,
in spite of what New York says, feels that he'd just
as soon give them the option.
HMJr:
E:
HMJr:
Well. I think we'11 pull in our belt and take a
nose dive and
That's right.
After all, a billion and a half from now on is
going to be
E:
HMJr:
It's going to look awful small a year from now.
That's right.
E:
Okay.
HMJr:
Thank you.
E:
Goodbye.
320
-2H.M.JR: Now, I will call up New York, and you can
get the stuff out. I talked to Jesse Jones, and he
said, O.K., it sounds good to him. Is he using much
money?
MR. BELL: Yes, he is spending quite a little.
H.M.JR: He draws on you, doesn't he?
MR. BELL: Yes, he does.
H.M.JR: How much does he - how much?
MR. BELL: RFC has spent thirty-eight million dol-
lars in January.
H.M.JR: Net?
MR. BELL: Yes, net. That is quite a lot of money.
H.M.JR: I had Carter Glass in to see the Donald
Duck picture this morning. He said, "I don't know
whether it would make anybody pay his income tax who
didn't want to. If I am having a meeting on it right
after this. I am letting Norman handle that.
MR. BELL: Do you want me, tomorrow, to go with
you?
H.M.JR: No.
MR. BELL: I have got some other things to do that
I can make arrangements for if you don't want me. If
you do, I will help.
H.M.JR: No, I pinned this onto Sullivan, but I will
go up. Thanks just the same. I don't think it is a
question of selling it. They have all made up their own
minds.
MR. BELL: Didn't the Chairman of the House Committee
advise against going to the Senate?
321
3-
H.M.JR: Some of them advised against going on
the picture, but not on the rest of the appropriation.
MR. BELL: But you are going on the Donald Duck, too?
H.M.JR: I don't know. I said I would drop in and
see Glass just before I testify and make up my mind just
before I testify. No, the advice in the House pretty
generally was to drop it.
MR. BELL: That is what I thought.
H.M.JR: But I am going to be in this position, Dan.
Somebody is going to ask me, "What about this Donald
Duck picture, even if I don't say anything. But the
main thing I am going to go up on is these other appropriations.
(The Secretary held a telephone conversation with
Mr. Sproul and Mr. Rouse as follows:)
322
February 11, 1942
4:18 p.m.
HMJr:
.....
Allan
Sproul:
They are.
on that Defense Board.
Yeah, we're all right.
What is CT
Well, just what we said before.
Two and a quarter?
Two and a quarter, June 15, '52-'55.
That does it.
One shot on the nose.
Right.
HMJr:
What?
All right.
Is that all right with you?
Yes, it 1s.
So we'll get the stuff out, but we want to
hold it until tomorrow afternoon.
Yes, we understand.
And - until my spiee tell me what's going on
in Singepore. I think that the people are
pretty well prepared for what's going to happen
there, don't you think so?
S:
Yes, I do.
What t?
Yes, I do.
Everybody can read or listen to the radio.
323
-2I don't see that they've left any doubt,
do you?
No. I don't think there's any doubt about
that, and I also think they have in mind that
no matter what happens, we': re going to have to
finance
thisthat.
job and we're going to do it,
and that's
S:
HMJr:
I think so, and I think a billion and a half
is the smallest we can go to the market for
now.
Well, I don't - I think a billion and a half
could be split, but I won't argue that. I think
S:
the billion and a half in one issue will go, and
HMJr:
Robert
we don't need to worry unduly about Singapore.
How has the bond market been the last hour?
Rouse:
There's still practically nothing going on,
just waiting.
HMJr:
It's no weaker?
R:
No weaker.
HMJr:
Has it leveled off?
R:
HMJr:
R:
HMJr:
It has leveled off earlier in the afternoon,
and was a shade better; and I think price-wise
there's been - there's no change.
I see. Is the market open tomorrow?
No, the market will be closed tomorrow.
I see. Okay. Thank you all very much. Hope
for the best.
R:
All right.
S:
All right, fine.
HMJr:
Thank you. Good-bye.
TREASURY DEPARTMENT
324
INTER OFFICE COMMUNICATION
DATE February 11, 1942
Secretary Morgenthau
TO
W. H. Hadley
FROM
TREASURY NOTES
Approx.
Coupon
Maturity
Date
Yield
Price
Premium
is
2 yrs. 10 mos.
12/15/44
0.85
100.14
14/32nda
1$
3 yrs. 1 mo.
3/15/45
0.90
100.10
10/32nds
3 yrs. 4 mos.
6/15/45
0.95
100.6
6/32nds
1-1/85
3 yrs. 7 mos.
9/15/45
1.00
100.14
14/32nds
1-1/4%
4 yrs. 4 nos.
6/15/46
1.15
100.13
13/32nds
1-1/4%
4 yrs. 7 mos.
9/15/46
1.20
100.7
7/32nds
1-3/85
4 yrs. 10 mos.
12/15/46
1.25
100.19
19/32nds
1st
18 June 45 - upt
TREASURY DEPARTMENT
325
INTER OFFICE COMMUNICATION
DATE February 11, 1942
TO
Secretary Morgenthau
FROM W. H. Hadley
TREASURY BONDS
Approx.
Maturity
Date
Yield
Price
Premium
Coupon
2-1/45
10 1/4- 12 1/4 yrs.
1952-54
June 15
2.09
2.11
101.16
101.9
1 pt. 16/32nds
1 pt. 9/32nds
10 1/4- 13 1/4 yrs.
1952-55
June 15
2.11
2.13
101.9
101.3
1 pt. 9/32nds
1 pt. 3/32nda
10 1/2- 12 1/2 yrs.
1952-54
2.11
2.13
101.12
101.6
1 pt. 12/32nds
1 pt. 6/32nds
2.12
2.14
101.8
101.2
1 pt. 8/32nds
1 pt. 2/32nds
2.14
2.16
101.4
100.30
30/32nds
10 3/4- 12 3/4 yrs.
1] 13 yrs.
Sept. 15
1952-54
Dec. 15
1953-55
Mar. 15
1 pt. 4/32nds
February 11, 1942
?
-
1-3/8 )
1-1/4 )
First National -
-
Northwestern Ins
-
1.500
500
54-56
53-55
2-1/4
1-3/8
-
-
-
-
2-1/2
61-63
-
-
1.500
2-1/4
53-55
750
49-51
2
-
-
-
-
61-66 )
60-65 )
500
2-1/2
65-70
53-55
-
-
-
-
-
-
-
-
-
-
-
2-1/2
2-1/4 1.500
-
750
-
-
}
-
Travelers Ins.
-
12-46 1-3/8
750
-
-
60-63
-
-
One issue (?)
-
-
-
-
-
-
lfrs. Trust
-
-
-
-
-
-
-
1-1/4
9-45
Devine
One issue
-
750
Brown-Chicago(?)
-
-
-
-
59-63
Split
-
48
-
same
1.000
-
-
2-1/2
2-1/2
Detroit
3-45 1-1/8 )
-
-
-
12-16
9-45
-
1.500
750
750
-
-
?
-
53-55
Harrimon
-
2-1/2
-
2-1/4
750
2
-
1.500
750
-
?
-
-
-
-
-
2-1/2
750
750
1-1/4
6-45
1.500
1-1/8
-45
Discount
12
Gilmortin(Quincy)
6
-
-
-
?
-
-
-
-
-
59-61
57-59
-
-
-
Long Bond
-
-
-
-
-
: Rate 1 Amount
-
-
-
2-3/8
53-55
-
1.500
2-1/4
-
-
2-1/2
-
1.500
1.500
-
-
Date : Rate : Amount : Date : Rate : Amount : Date : Rate : Amount : Date
2-1/4 Bond
Short Bond
Notes
Knight - Chicago
Prudential Life
Life
Central Union
327
OFFICE OF
TREASURY DEPARTMENT
WASHINGTON
SCRI
FIAT
February 11, 1942
Dear Mr. President:
In order to place the Treasury in funds to
provide for expenditures authorized by law, I propose,
subject to your approval, under authority of the Second
Liberty Bond Act, as amended, to offer for cash subscription $1,500,000,000, or thereabouts, of 2-1/4 percent
Treasury Bonds of 1952-55.
The authorizing act provides that bonds may be
issued only with the approval of the President. Accordingly, I trust that the proposed issue will meet with
your approval. It is my intention to make public announcement of the offering on Friday, February 13.
Faithfully yours,
Secretary of the Treasury.
The President,
The White House.
APPROVED:
PORDEFENSE
BUY
UNITED
STATES
OTHCS
BONDS
328
February 11, 1942
4:30 p.m.
TREASURY APPROPRIATION BILL - DONALD DUCK MOVIE
Present: Mr. Blough
Mr. Thompson
Mr. Charles Bell
Mr. Kuhn
Mr. Buffington
Mr. Cairns
Mr. Foley
Mr. Schoeneman
Mr. Paul
Mr. Gaston
Mrs. Klotz
H.M.JR: What is this?
MR. SULLIVAN: You asked for a statement.
H.M.JR: My God, I didn't ask for a book.
MR. SULLIVAN: That includes the Donald Duck part.
H.M.JR: I haven't got the time or the energy. Why
can't I do this tomorrow? I can't do this. I am still
in the midst of a financing. Before we get to this,
John, if I go up there and simply say, "Gentlemen, I am
here to represent the Treasury - now, you have asked me
what you want. I have brought my various heads of
departments and each one will have to speak for himself."
Well, then if it gets onto the tax thing, John, I
think you should speak on that.
MR. SULLIVAN: Yes, sir.
329
-2-
If it is on the Donald Duck thing, I will
take H.M.JR:
care of that.
MR. SULLIVAN: Yes, sir.
H.M.JR: How is that?
MR. SULLIVAN: That is all right.
MR. THOMPSON: That is much better.
MR. SULLIVAN: The first fifteen pages of that is
Donald Duck. The other is what we did.
H.M.JR: I don't want anything on Donald Duck, but
if it comes down to this thing here, why they want the
balance of the money for taxes, I think you ought to be
able to explain that. Can't you?
MR. SULLIVAN: Yes, sir.
H.M.JR: Is that agreeable?
MR. SULLIVAN: Yes, sir.
H.M.JR: What do you think, Norman?
MR. THOMPSON: I think that is much better.
H.M.JR: Norman, before we decide whether we do or
don't want to do anything, are you prepared as my
Administrative Assistant to tell me whether I can or
can't do this, this eighty thousand dollars?
MR. THOMPSON: Yes, sir. I talked with Commissioner
Helvering in the hospital today, and he is all ready to
go along.
H.M.JR: And you are ready to recommend it?
MR. THOMPSON: Yes, sir.
H.M.JR: And that goes for your gang?
--
330
MR. THOMPSON: That is right. You see, I had his
initials on that meeting in December.
H.M.JR: Let me look at it. If you are embarrassed,
you can be excused, Ed.
MR. THOMPSON: Yes, Ed says it is legal.
MR. FOLEY: I am not embarrassed. I think that is
just the risk of being accused of repeating myself. I
think that is the wise thing to do.
H.M.JR: What is the wise thing to do?
MR. FOLEY: Pay the bill.
H.M.JR: Oh, you do think so?
MR. FOLEY: Sure I do. Don't tell me I am repeating
myself. (Laughter)
H.M.JR: I mean, you can boil it down that much?
MR. FOLEY: Yes, pay the two dollars.
MRS. KLOTZ: You know that joke?
MR. FOLEY: I will never forget it.
MRS. KLOTZ: That is marvelous.
H.M.JR: What is the story?
(Discussion off the record.)
MR. GASTON: Will the Committee raise this question,
if you don't raise it, of Donald Duck?
H.M.JR: One second, Herbert. Here is a document
which has been dug up which I can't remember.
MR. THOMPSON: I don't think you ever saw that. You
331
-4may have. It came to me for initialing.
MR. SULLIVAN: Is that the one last December,
Norman?
MR. THOMPSON: Yes.
MR. SULLIVAN: To keep the record straight, when
the Commissioner initialed that, he said it was with the
understanding that he would be reimbursed.
MR. THOMPSON: That is right. He has agreed now
that
he has the money today, and he is not raising any
issue.
H.M.JR: Well, there is nothing on that here. What
it says here, from Buffington to me, initialing the
attached memo Helvering said in a comment to Sullivan,
"Of course this would be paid by the Bureau of Internal
Revenue and in turn would be given a deficiency appropriation."
MR. THOMPSON: And today he says he has the money.
H.M.JR: Who handed this to me?
MR. THOMPSON: I handed it to you just now.
H.M.JR: Did you know that was behind it?
MR. THOMPSON: Yes.
H.M.JR: Well, that doesn't make such good reading.
MR. THOMPSON: Well, he had the money then, but he
always hedges that way.
H.M.JR: It is like that memorandum sent to me this
morning. Take it away.
MR. THOMPSON: I never pay any attention to the
Commissioner because he always finds he has the money.
332
-5H.M.JR: As of this morning, what did he say?
MR. THOMPSON: As of this morning he said he raised
no
on the
money, and he would pay the bill if
we question
sent it down
there.
H.M.JR: He would pay it with a new spirit?
MR. THOMPSON: With a new spirit, (Laughter)
MR. PAUL: What about the rest of the matter?
H.M.JR: That is a horse of a different color. We
will come to you in a minute. I mean, as far as I know,
you are on a different level. You are not an artist.
You are just a lawyer.
MR. PAUL: Some people have accused me of having a
temperament at times.
MR. KUHN: That is just a frivolity. (Laughter)
H.M.JR: Before we get on this question of should
we or shouldn't we, I am asking, can we?
MR. THOMPSON: Yes.
H.M.JR: You sand we can and should?
MR. THOMPSON: I think we should, yes.
H.M.JR: I am not trying to lead you.
MR. THOMPSON: I think we should.
H.M.JR: And Ed?
MR. FOLEY: That is what I recommend you do.
H.M.JR: Where is the Chairman of the Budget Committee?
MR. SCHOENEMAN: Right here. Very definitely we
333
-6should not go to Congress.
H.M.JR: I see.
MR. SCHOENEMAN: On Donald Duck.
H.M.JR: Charlie?
MR. BELL: Yes, sir.
you?
H.M.JR: You boys have all been together, haven't
MR. BELL: Yes, sir.
MR. FOLEY: I haven't.
H.M.JR: But you feel definitely what?
MR. BELL: That the bill should be paid immediately.
H.M.JR: Have you got a bill?
MR. BELL: We have one from Technicolor, and we have
a verbal bill from Walt Disney of forty thousand dollars.
H.M.JR: Couldn't he send you an actual bill, put
it in the mail today.
MR. BUFFINGTON: I have been after him for a week
to send it.
MR. THOMPSON: We only have a bill from Technicolor.
We will have to get a voucher from them.
H.M.JR: If you decided you are going to do it,
couldn't you get on the phone and get him to put it in
the mail?
MR. BUFFINGTON: Yes, sir. He promised to put it
in the mail tonight to me.
H.M.JR: Who?
-7-
334
MR. BUFFINGTON: Walt Disney was going to talk to
Roy Disney and send it in the mail to me tonight.
H.M.JR: Now we get to Technicolor. The question
we were going to ask, Herbert, is should we?
MR. GASTON: Yes. I wanted to add the words, "shut
up and not say anything about the bill having been
settled." They don't know anything about that. That
is a subject that isn't worrying them at all.
H.M.JR: Who?
MR. GASTON: The Disney people. I am just afraid
that somebody out there might say, "Well, in spite of
what the House did, we got the money." They should be
cautioned against that.
H.M.JR: Well, the Disney Studios gave out a state-
ment yesterday.
MR. BUFFINGTON: I didn't know that.
H.M.JR: It wasn't too good.
MR. GASTON: They should say nothing.
ment.
MR. BUFFINGTON: I didn't know they gave out a state-
H.M.JR: It came over the ticker. It is available.
MR. GASTON: The other thing, I think the less that
is said now, if we are going to do that, the better. If
we can avoid having the subject even raised in the Senate
Committee, I should think it would be very desirable.
H.M.JR: Ferdie? I haven't asked you.
MR. KUHN: I think that you should not go and ask
the Senate for this thing. I would like to see it drop
out, and I am also afraid of jeopardizing other pro-
motional expenses, bonds and other Government Departments.
335
-8H.M.JR: Well, we crossed that on the Defense Bonds,
you see.
MR. KUHN: I know, but there is always the danger
that they might put in a blanket prohibition against the
use of motion pictures or so on.
H.M.JR: Well, of course there are CWO I
had Senator Glass down this morning. To give you the
background - some of you haven't asked before. Most of
the people in the House, including the Speaker, have
asked me to drop it. I had old man Glass down here
today. He Saw the picture, and he said, "I like it. It
is a good picture, but I don't think anybody who wasn't
going to pay his taxes would pay it, because he saw this
picture." Well, he has gotten - I said, "Well, look,
Senator, I will drop into your office a little bit before
I testify tomorrow morning. Think it over and tell me
what you think." He said he would do that. He liked
that. He didn't want to be rushed. This morning when
I talked to McKellar, who is Chairman of the Subcommittee,
he was waiting to talk to Glass. He knew Glass was
coming, and he, McKellar, had gone to see the picture
last night at the Trans-Lux, and he wasn't very much
impressed. Of course, nothing would impress McKellar
if he didn't want to do it. Here is the thing that
John raised that I am going to be faced with, you see.
Supposing I don't raise it, and we just go on the tax.
Somebody is going to say, "Well, what about the Disney
picture?"
MR. GASTON: That is what I was going to mention.
H.M.JR: And then I am going to tell them what I
think about it and nobody is going to stop me, because I
will not sit there and cringe about it, because I still
think and no one has changed my mind, that that is one
of the best things that the Treasury ever had anything
to do with, and I am going to say so.
MR. FOLEY: That is all right.
MR. GASTON: Yes, you have got to.
-9-
336
MR. FOLEY: I think you should.
H.M.JR: If they say, "What about the money?" I will
say, "Well, gentlemen, you know that is up to you."
MR. GASTON: You have asked for a deficiency appro-
priation, and you think one should be voted.
H.M.JR: But that is up to them, but I won't come
forward with nine pages on it.
MR. SULLIVAN: Do you want that question to be
asked?
H.M.JR: Do I? No, I don't - I would leave them
alone and let nature take its course, John.
MR. SULLIVAN: Well, I know you are going to be.
That is why I am asking this question.
H.M.JR: I am going to be asked?
MR. SULLIVAN: Yes. I had dinner last night with
Senator Danaher at his home and Talbot, the new
Republican Congressman from Connecticut, who had voted
against this, was there, and he went after me, and I
explained why we did it. Danaher said, "Well, that is
perfectly absurd. I will be glad to do what I can to
help you out on this thing, and, not knowing what the
decision would be, I didn't say yes or no ; but if we
are going to lay off, I should let him know so that he
won't be dragging it in.
H.M.JR: Let who know?
MR. SULLIVAN: Danaher.
H.M.JR: I would let him know.
MR. SULLIVAN: You would let him know?
H.M.JR: Yes.
- 10 -
337
MR. SCHOENEMAN: He is not a member, though, of
the Subcommittee.
MR. SULLIVAN: Not of the Subconmittee, but he is
a member of the Appropriations Committee.
H.M.JR: Well, I would tell him to lay off. Danaher
never helped me yet on anything.
MR. KUHN: Would they be apt to ask how the bill
is going to be paid?
H.M.JR: I will tell them. I have got to. I have
got to take the chance that they will put something in
to stop it. That is why I would like to pay it, most
likely tomorrow.
MR. GASTON: Could they stop it?
H.M.JR: Yes.
MR. FOLEY: Yes, they could expand this and say that
none of the funds herein appropriated or heretofore
appropriated shall be used for producing motion pictures.
H.M.JR: But I have never yet ever tried to hide
anything, and it would be foolish to start that now.
Well, as long as all of you people feel I can pay
it, if you have the thing ready tomorrow when I come
down off the Hill, unless something happens there,
unless somebody says, "Now, we direct you not to pay it,"
at the Committee, you see, I think we will pay it tomorrow.
MR. THOMPSON: Mr. Buffington had better be sure
that we get it on the way tonight, both vouchers, not the
bills but vouchers, Treasury vouchers.
H.M.JR: You had better explain it to him. Let
Mr. Thompson explain to you what he means after this
meeting, George. Have you got anything?
- 11 -
338
MR. SCHOENEMAN: I just wanted to understand that
you will go to the Capitol and make a preliminary statement regarding the necessity for the tax staff, and then
John will take that up from that point and give them the
details?
H.M.JR: What I think they ought to have is this,
just on one page, the amount of money we need for the
tax staff, just one page.
MR. THOMPSON: You have that, Mr. Schoeneman. You
remember you prepared it for the Secretary.
H.M.JR: Well, would you (Schoeneman) mind, after
you leave here, seeing Miss Chauncey and get her to get
the things out on the debt, all those things that Dan
Bell had for me, because Dan won't be there. (free me
in
MR. SCHOENEMAN: Yes, sir.
H.M.JR: She had about three different pieces of
paper. Maybe you did them for Dan.
MR. SCHOENEMAN: No, I did not.
H.M.JR: She is very good. Just tell her there are
three pieces of paper that she had for me. There was
the debt and the tax things. If I have got that, I
think I am all right. I will make a little introductory
statement on the tax thing, you see, but I won't say
anything - we need this, you see, and I will say Mr.
Sullivan will give them the details. Is that all right,
John?
MR. SULLIVAN: Yes, sir.
H.M.JR: Mr. Sullivan will be there to give them
the details.
MR. GASTON: I think it would be much better if you
would prevent the Donald Duck issue being raised at all
in the Committee.
- 12 -
339
H.M.JR: Pardon?
MR. GASTON: I think it would be much better if
you could prevent the Donald Duck issue being raised at
all in the Committee.
-
H.M.JR: Herbert, if you do anything other than
If
John had dinner with the fellow. If you try to stop
it, they are bound to bring it up. I am not afraid of
it.
MR. GASTON: Well, it is a question of how this
Committee stands. Of course, this Committee will
probably be with you, won't they?
MR. FOLEY: Herbert, McKellar is Chairman of the
Subcommittee and McKellar, two years ago, enlarged the
film service in the Federal Government on the ground
that the Federal Government should be making movies,
and you couldn't have a more caustic critic of this
sort of activity than McKellar. I don't believe he has
changed much in two years.
H.M.JR: Well, now, do I stick to the budget esti-
mate or the Committee's report?
MR. SCHOENEMAN: The Committee.
H.M.JR: That is all right. I have got budget
estimates, debt, emergency fund. Where is Donald Duck
on this?
MR. SCHOENEMAN: Just one item.
H.M.JR: Well, I will leave that off. And you
can explain that Buffington is down for five thousand,
Paul is down for fifty-four hundred, Gulick sixty-four
hundred, and so forth.
MR. SCHOENEMAN: Correct that Gulick to sixty-two
thousand.
MR. SULLIVAN: Sixty-two?
340
- 13 MR. SCHOENEMAN: Sixty-two thousand eight hundred
ninety dollars.
MR. SULLIVAN: That is right.
H.M.JR: Have you got another copy of this?
MR. SULLIVAN: Yes.
H.M.JR: Because I might read the other stuff
tonight - I will keep this thing.
MR. SULLIVAN: Yes, sir.
H.M.JR: I think that is about all.
MR. SULLIVAN: I think what I will do for a formal
statement will be to read these ten pages here, and
then handle--
H.M.JR: And I will stay there right with you until
the thing, is through, so if there is anything on Donald
Duck or the silver legislation or anything else, I will
be there, and I will stay with you until it is over. You
see, we are only due at eleven. What time do they go into
session?
MR. FOLEY: The Senate convenes at twelve.
hour.
H.M.JR: So they won't have us there more than an
MR. THOMPSON: I have one further matter.
H.M.JR: What is that?
MR. THOMPSON: Mr. Kuhn has submitted to me a
letter today to Walt Disney authorizing a six thousand
dollar expenditure for preliminary work on the Defense
Savings films.
H.M.JR: No, just hold that.
341
- 14 MR. THOMPSON: In view of the Wigglesworth amend-
ment, we had better hold it.
H.M.JR: Hold that, and the thing you (Buffington)
asked me about March 15.
MR. BUFFINGTON: Yes, sir.
H.M.JR: What did I do with that memorandum.
MR. BUFFINGTON: I have it here.
H.M.JR: Well, keep that. That is a lifetime off.
MR. SULLIVAN: Have these already been sent to the
members of the Committee, these books?
H.M.JR: Yes, haven't they?
MR. BUFFINGTON: They were just about to go when
I came up here.
MR. SULLIVAN: If we are going to kill this, do we
want that to go? I don't think it is consistent.
H.M.JR: Has it gone?
MR. BUFFINGTON: It hadn't when I left.
H.M.JR: Call up and find out.
(Mr. Buffington left the conference temporarily.)
MR. BUFFINGTON: They had not gone.
H.M.JR: What do you think?
MR. SULLIVAN: They should not go.
H.M.JR: Kill it. Have you held it.
MR. BUFFINGTON: Yes, sir.
342
- 15 H.M.JR: What else? Any ideas?
MRS. KLOTZ: I am satisfied. (Laughter)
She MR.
is inSULLIVAN:
the clear. This happened while she was away.
MR. GASTON: If they notice it is not included,
they will probably notice it is not included in this
detail, won't they? That will indicate you have dropped
your effort to get a deficiency.
H.M.JR: Oh, somebody is going to ask me about it.
MR. GASTON: That raises the question-MR. THOMPSON: There are too many members on that
Committee.
MRS. KLOTZ: They would burst if they didn't.
H.M.JR: So would I.
MR. GASTON: That then raises the point whether you
hadn't better go ahead with your request in your detail for
it, if they are going to raise it anyway.
H.M.JR: No, I think, Herbert, I will have to wait
a little bit on Senator Glass, and then kind of feel it;
but I am so full of this thing, you see, and I am so out-
raged at the whole thing, that there is no use giving me
anything to read, because I don't know what I will say
when I get up there. (Laughter)
MR. GASTON: No, what I was thinking, if it is going
to be raised anyway, maybe you had better have it in
your detailed estimates.
H.M.JR: Oh, I have got it here.
MR. GASTON: And maybe you had better present it to
the Committee as part of your estimates.
- 16 -
343
H.M.JR: I will take your advice and maybe not
follow it. Harold Graves begged me not to say, "Give me
all or nothing." I wanted a vote of confidence. I went
through and said, "If you are going to cut me six million, take the whole twenty-six."
MR. KUHN: You were being pushed on it.
H.M.JR: Not very hard. I said, "I want all or
nothing," and I got it all. I don't know what I will do
tomorrow. I can't tell.
MR. SULLIVAN: It is going to be fun.
MR. SCHOENEMAN: Mr. Secretary, Mr. Gaston's point
is good. Our official letter will go down tonight telling
the Committee that we would like to protest ninety-five
thousand dollars.
H.M.JR: You are going to protest everything except
the eighty?
MR. SCHOENEMAN: Yes, sir.
MR. SULLIVAN: That is right.
H.M.JR: The others only come to ninety-five?
MR. SULLIVAN: Ninety-five thousand.
H.M.JR: I thought they came to three hundred thirty.
MR. SCHOENEMAN: Oh, no, we didn't lose that much.
MR. SULLIVAN: The Wigglesworth amendment reduced it
to twenty-five thousand four ninety. It cut it ninetyfive thousand dollars.
H.M.JR: You are going to protest everything except
the Donald Duck?
MR. SULLIVAN: Yes.
- 17 -
344
MR. GASTON:
the Donald
Duck too. Maybe it would be better to protest
MR. SCHOENEMAN: Then you are in the fight.
H.M.JR: Well, that was the whole point of this
meeting. The point was, Norman and his staff plus the
General Counsel, were going to tell me could I pay it,
and the concensus is, pay it. It is all right. I know
I have got the money, and I know I can pay it; and the
other thing is, should I make a fight or shouldn't I
make a fight? So far, everybody has told me not to.
MR. GASTON: Well, the point that occurred to me
belatedly was that if they are going to raise this thing
anyway, you might just as well be sticking by your request
for the eighty thousand, whether you press it or not.
MR. FOLEY: I don't think that is necessary. You
can say you are going to pay for the picture out of
current appropriations, and you are not going to press
for a supplementary appropriation for that particular
purpose.
H.M.JR: Well, that is another reason.
MR. GASTON: That is the tip-off then that you are
finding a way to pay it.
MR. FOLEY: Sure.
H.M.JR: Well, there is another thing, Herbert.
MR. FOLEY: Obviously. Otherwise we would fight
about it.
H.M.JR: There is another thing. Doing it this way,
I am really keeping faith with Sam Rayburn who has asked
me to drop it.
MR. GASTON: Yes, that is right.
H.M.JR: By not including it. If Sam said, "What
- 18 -
345
happened, Henry, why did you do this?" I would say,
"Well, what would you do if they jumped on you? Then
you would defend yourself." I didn't send it up in my
request. That is right, isn't it, John?
MR. SULLIVAN: Yes, it is.
H.M.JR: "I didn't send it up in my request. I took
your advice. But when they jumped on me I had to defend
myself, see." But Sam Rayburn said, "Drop it." McCormack
said what?
MR. SULLIVAN: Same thing.
MR. GASTON: Well, that is good advice.
MR. SULLIVAN: I think probably after tomorrow, if
they do bring it up, I had better go to Sam and explain
to him that it was eliminated from our protest, and
that we did not raise it, and we merely defended our
position when it was raised by the Committee.
MR. FOLEY: That is all right.
MR. GASTON: This is the franker way to do, only
that it will be discovered that you have dropped it, and
it probably will be listed before the Senate Committee
that you are finding other ways to pay it, and now we
may have another stink raised in the House that in spite
of what the House did, Secretary Morgenthau is going to
pay this anyway.
MR. SULLIVAN: The House already knew that the film--
MR. GASTON: That is perfectly defensible.
MR. SULLIVAN: The House already knew, Herbert, that
the film had been produced and was being shown in the
theaters right at the time they debated it.
H.M.JR: And they asked John yesterday, "Have you
other ways of paying for it?" and John said, "Yes," and
- 19 -
346
and they told him, "Go ahead and pay for it."
MR. SULLIVAN: That was Rayburn. He was the only
person who asked that.
H.M.JR: And Rayburn said to go ahead and pay it,
didn't he?
MR. SULLIVAN: That is right.
MR. FOLEY: Just no need of fussing about it. We
are going to raise a lot of fuss about something that we
did perfectly normally and properly.
H.M.JR: I wanted you to come in at this stage,
Herbert, fresh, because I have been - this has bothered
me more - it has outraged me more than anything that has
happened in a long time, but I wanted a fresh viewpoint.
MR. GASTON: Yes.
H.M.JR: What?
MR. GASTON: Yes.
MR. THOMPSON: Mr. Schoeneman, didn't the Clerk of
the Committee tell you it was more or less immaterial
whether you had this letter and, if so, why send up any
letter?
MR. SCHOENEMAN: All right.
MR. SULLIVAN: I don't know now, about Sam.
MR. THOMPSON: What do you mean.
MR. BLOUGH: You would have to take the letter if
you didn't send it.
MR. THOMPSON: This is a letter asking for restora-
tion of the items.
H.M.JR: I think our record is better if you send
- 20 -
347
the letter.
MR. SULLIVAN: So do I.
MR. SCHOENEMAN: I think so. I would rather send
the letter.
H.M.JR: I think our record is better if we send
the letter.
MR. SULLIVAN: So do I.
MR. SCHOENEMAN: That is right.
MR. SULLIVAN: I found out something else yesterday that seems incredible. These Congressmen have seen
the advance publicity on Donald Duck, and those that
haven't seen the films thought that these were critical
cartoons.
H.M.JR: Critical? I don't get it.
MR. SULLIVAN: Instead of its being a news story
to promote the sale of the film, they thought that it was
the unfavorable reaction of the newspaper in criticizing
the films.
H.M.JR: Well, John, you have been around town long
enough to know what the I.Q. of the average Congressman
is. (Laughter)
MR. SULLIVAN: Yes, but I am talking about the
lower group.
H.M.JR: Lower what?
MR. SULLIVAN: I am talking about the I.Q. of the
Irish Congressmen.
H.M.JR: I didn't say Irish.
MR. SULLIVAN: Oh, I beg your pardon.
- 21 -
348
MR. THOMPSON: I thought he said Irish. (Laughter)
H.M. JR: I know them. I put them up on top. No,
I said "average." You were thinking of yesterday when I
said I had a little Irish in me.
Well, it is pleasant to take your advice. We will
all sweat together. Remember, when I am in prison, I
sill have to have my Rye-Krisp.
349
THESE LETTERS WERE SIGNED . BY THE
SECRETARY BUT IT WAS THEN DECIDED
NOT TO SEND THEM.
350
SENATE DEFICIENCY APPROPRIATIONS COMMITTEE
Senate Office Bldg.
Democrate
Carter Glass, Lynchburg, Virginia
Kenneth McKeller, (Chairman) Memphis, Tenn.
Carl Hayden, Phoenix, Arizona
Elmer Thomas, Medicine Park, Oklahoma
Millard E. Tydings, Havre de Grace, Maryland
Richard B. Ressell, Winder, Georgia
Pat McCarran, Reno, Nevada
John H. Overton, Alexandria, Louisiana
John H. Bankhead, II, Jasper, Alabama
Joseph C. O'Mahoney, Cheyenne, Wyoming
Room 315
Room 221
Room 131
Room 326
Room 227
Room 410
Room 409
Room 458
Room 217
Room 232
Republicans
Room 332
Gerald P. Nye, Cooperstown, North Dakota
Henry Cabot Lodge, Jr., Beverly, MassachusettsRoom 141
Room 348
Rufus C. Holman, Portland, Oregon
C. Wayland Brooks, Chicago, Illinois
Senator albers a Ba bley
Room 205
Room 111
2/11/10
351
SENATE APPROPRIATIONS COMMITTEE
Democrate
Senate Office Bldg.
James M. Meade, Buffalo, New York
Room 240
Room 321
Room 354
Room 204
Room 350
Burnet R. Maybank, Charleston, South Carolina
Room 454
Harry S. Truman, Independence, Missouri
Theodore Francis Green, Providence, R.I.
Francis Maloney, Meriden, Connecticut
Dennis Chavez, Albuquerque, New
Wall Doxey, Holly Springs, Mississippi
Roc= 304
Repbulicans
Styles Bridges, East Concord, New Hampshire
Wallace H. White, Jr., Auburn, Maine
Chan Gurney, Yankton, South Dakota
Room 145
Room 417
Room 241
352
.
February 11, 1942
Dear Senator Gurney:
I think you may be interested in
the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The New Spirit".
These editorial comments are from
well known editors and oritics of outstanding newspapses and magazines, and
from a parener sa a large and successful
advertising agency.
Sincerely,
Honorable Chan Gurney,
United States Senate.
GB:eh 2-11-42
G.D.
-the
February 11, 1942
Dear Senator White:
I think you may be interested in
the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The New Spirit".
These editorial comments are from
well known editors and orities of outstanding newspapers and magasines, and
from a partner in a large and successful
advertising agency.
Sincerely,
Honorable Wallace H. White, Jr.,
United States Senate.
GB:eh 2-11-42 G.D.
353
February 11, 1942
Dear Senator Bridges:
I think you may be interested in
the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The New Spirit".
These editorial comments are from
well known editors and critics of outstanding newspapers and magazines, and
from a partner in a large and successful
advertising agency.
Sincerely,
Honorable Styles Bridges,
United States Senate.
GB:eh 2-11-42
G.S.
354
355
February 11, 1942.
Dear Senator Maybank:
I think you may be interested
in the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The Now Spirit",
These editorial comments are
from well known editors and critics of
outstanding newspapers and magasines,
and from a partner in a large and success=
ful advertising agency.
Sincerely,
Honorable Burnet R. Maybank,
United States Senate.
GBtamo 2/11/42
G.S.
356
1
February 11, 1942.
Dear Senator Doxey:
I think you may be interested
in the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The New Spirit".
These editorial comments are
from well known editors and critics of
outstanding newspapers and magasines,
and from a partner in a large and successful advertising agency.
Sincerely,
Honorable Hall Doxey,
United States Senate.
GB:amo 2/11/42
GTS.
357
February 11, 1942.
Dear Senator Modes
I think you may be interested
in the enclosed folder in which you will
find photostatic copies of comments on
the Dismay film "The New Spirit".
Those editorial comments are
from well known editors and critics of
outstanding newspapers and magasines,
and from a partner in a large and successful advertising agency.
Sincerely,
Benerable James N. Meads,
United States Senate.
GBsamo 2/11/42
GTS.
358
February 11, 1942.
Dear Senator Chaves:
I think you may be interested
in the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The New Spirit".
These editorial comments are
from well known editors and critica of
outstanding newspapers and magasines,
and from a partner in a large and successful advertising agency.
Sincerely,
Honorable Dennis Chaves,
United States Senate.
GB:amo 2/11/42 Grs.
359
February 11, 1942.
Dear Senator Haloney:
I think you may be interested
in the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The New Spirit".
These editorial comments are
from well known editors and critics of
outstanding newspapers and magasines,
and from a partner in a large and successful advertising agency.
Sincerely,
Honorable Francis Haloney,
United States Senate.
GBtamo 2/11/42
GDS.
360
February 11, 1942
Dear Senator Green:
I think you may be interested in
the enclosed folder in which you will
find photostatic copies of comments on
the Dieney film "The New Spirit".
These editorial comments are from
well known editors and critics of out-
standing newspapers and magazinee, and
from a partner in a large and successful
advertising agency.
Sincerely,
Honorable Theodore Francis Green,
United States Senate.
GB:vm 2/11/42 G.S.
361
February 11, 1942
Dear Senator Truman:
I think you may be interested in
the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The New Spirit".
These editorial comments are from
well known editors and critics of outstanding newspapers and magazines, and
from a partner in a large and successful
advertising agency.
Sincerely,
Honorable Harry S. Truman,
United States Senate.
GB:eh 2-11-42
GTS
362
February 11, 1942
Dear Senator Brooks:
I think you may be interested in the
enclosed folder in which you will find
photostatic copies of comments on the
Dieney film "The New Spirit*.
These editorial comments are from well
known editors and critica of outstanding
newspapers and magazines, and from a partner
in a large and successful advertising agency.
Sincerely,
Honorable C. Wayland Brooks,
United States Senate.
GB:vm 2/11/42
GIS
363
February 11, 1942
Dear Senator Holman:
I think you may be interested in
the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The New Spirit*.
These editorial comments are from
well known editors and critics of outstanding newspapers and magazines, and
from a partner in a large and successful
advertising agency.
Sincerely,
Honorable Rufus C. Holman,
United States Senate.
GB:vm 2/11/42
GIS.
364
February 11, 1942
Dear Senator Lodge:
I think you may be interested in
the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The New Spirit".
These editorial comments are from
well known editors and orities of outstanding newspapers and magazines, and
from a partner in a large and cuccessful
advertising agency.
Sincerely,
Honorable Henry Cabot Lodge, Jr.,
United States Senate.
GB:vm 2/11/42
GTS.
365
February 11, 1942
Dear Senator Nye:
I think you may be interested in
the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The New Spirit*.
These editorial comments are from
well known editors and oritics of outstanding newspapers and magazines, and
from a partner in a large and successful
advertising agency.
Sincerely,
Honorable Gerald P. Nye,
United States Senate.
GB:vm 2/11/42
GM
366
February 11, 1942.
Dear Senator O'Hahoneys
I think you may be interested
in the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The Now Spirit".
These aditorial comments are
known editors
from well and critics of
outstanding newspapers and magasines,
and from a partner in a large and successful advertising agency.
Sincerely,
Honorable Joseph C. O'Eshoney,
United States Senate.
GB:amo 2/11/42
G.S.
367
February 32, 1942,
Beer Senator Bankhead:
I think you may be interested
in the enclosed folder in which you wi33
find photostatic copies of comments on
the Disney Film "The New Spirit".
Those editorial comments am
from well known editors and crities of
outstunding newspapers and magasines,
and from a partner in a large and BUCCESS⑉
ful advertising agency.
Sincerely,
Henorable John H. Bankhoad,
United States Senate.
QTS.
GBsamo 2/11/42
GTS
368
February 11, 1942.
Dear Senator Overtons
I think you may be interested
in the enclosed folder in which you will
find photostatic copies of comments on
the Disney Film "The New Spirit".
These editorial comments are
from well known editors and critics of
outstanding newspapers and magazines,
and from a partner in a large and successful advertising agency.
Sincerely,
Honorable John H. Overton,
United States Senate.
GTS.
GB:amo 2/11/42
369
February 11, 1942
Dear Senator NoCarran:
I think you may be interested in
the end losed folder in which you will
find photostatic copies of comments on
the Disney film "The New Spirit".
These editorial comments are from
well known editors and critics of out-
standing newspapers and magazines, and
from a partner in a large and successful
advertising agency.
Sincerely,
Honorable Pat NoCarran,
United States Senate.
GB:vm 2/11/42
QTS
370
February 11, 1942
Dear Senator Russell:
I think you may be interested in
the enclosed folder in which you will
find photostatic copies of conments on
the Disney film "The New Spirit".
These editorial comments are from
well known editors and critics of outstanding newspapers and magazines, and
from a partner in a large and successful
advertising agency.
Sincerely,
Honorable Richard B. Russell,
United States Senate.
GB:eh 2-11-42
Grs
371
February 11, 1942
Dear Senator Tydings:
I think you may be interested in
the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The New Spirit® .
These editorial comments are from
well known editors and critics of outstanding newspapers and magazines, and
from a partner in a large and successful
advertising agency.
Sincerely,
Honorable Millard E. Tydings,
United States Senate.
G.S.
GB:eh 2-11-42
372
February 11, 1942
Dear Senator Thomas:
I think you may be interested in
the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The New Spirit".
These editorial comments are from
well known editors and critics of outstanding newspapers and magazines, and
from a partner in a large and successful
advertising agency.
Sincerely,
Honorable Elmer Thomas,
United States Senate.
GTS.
GB:eh 2-11-41
373
February 11, 1942
Dear Senator Hayden:
I think you may be interested in
the enclosed folder in which you will
find photostatic copies of comments on
the Dieney film "The New Spirit".
These editorial comments are from
well known editors and critics of outstanding newspapers and magazines, and
from a partner in a large and successful
advertising agency.
Sincerely,
Honorable Carl Hayden,
United States Senate.
GIS.
374
February 11, 1942
Dear Senator McKeller:
I think you may be interested in
the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The New Spirit".
These editorial comments are from
well known editors and critics of outstanding newspapers and magazines, and
from a partner in a large and successful
advertising agency.
Sincerely,
Honorable Kenneth HoKeller,
United States Senate.
GTS.
375
February 11, 1942
Dear Senator Glass:
I think you may be interested 15
the enclosed folder in which you will
find photostatic copies of comments on
the Disney film "The New Spirit".
These editorial comments are from
well known editors and orities of outstanding newspapers and magazines, and
from a partner in a large and successful
advertising agency.
Sincerely,
Honorable Carter Glass,
United States Senate.
GTS.
376
February 11, 1942.
Dear Senator Barkleys
I think you may be interested in
the enclosed folder in which you will
find photostatic copies of comments on
the Dieney film "The New Spirit".
These editorial comments are from
well known editors and oritics of outstanding newspapers and sagazines, and
from a partner in a large and successful
advertising agency.
Sincerely,
Honorable Alben W. Barkley,
United States Senate.
GB:amo 2/11/42
377
Batten, Barton, Durstine & Osborn, Inc.
ELdorado 5-5800
383 Madison Avenue, New York
Advertising
February 4, 1942
Mr. Alexander Woollcott
Bomoseen, Vermont
Dear Alex:
Perhaps this comment might be worth
passing along as your own comment to those in
Washington who have to guide public morale
At the Radio City Music Hall, the
other night, I saw a Donald Duck. When it came on
the screen the audience clapped. The picture, with
no sacrifice of humor or dramatic action or entertainment value, changed the minds of the audience about
paying taxes. Within a few minutes, people who had
long since made up their mind that they are being mistreated in being made to pay income taxes, were made
to feel that it is a pleasure and a privilege to pay
the government every penny they could make or borrow.
This picture could be taken as a model
against which every proposal for propaganda might well
be tested.
Cordially,
AFO:K
The
SAN FRANCIS
BUFFALO .
CHICAGO . CLEVELAND . HOLLYWOOD PITTSBURGH . MINNEAPOLIS .
THE
378
NEW YORKER
FEB
1942
THE TALK OF THE TOWN
Notes and Comment
VERY now and then we go back
the same: his name was Fritz and the
balloon that issued from his mouth contained vaudeville Dutch. He was drawn
Fuhrer's dream of it. We did this last
in many poses but most frequently
either with one hobnailed boot on the
body of a beautiful young woman
week, skipping around in the section devoted to Eastern policy, and at least two
comments we found there had, it seemed
a bayonet. We look in vain for any
E
to "Mein Kampf," just to check
the progress of the war against the
us, a timely quality. Discussing Russia's value as a possible ally, the boss ob-
served that the Soviets would soon "completely drop out
as a technical factor
the struggle." "Russia," he said,
labelled "Belgium' or else in comic surrender to a contemptuous athlete with
such foolish, reassuring composite to-
day. The artists still draw Germans,
but there is no agreement among them
and out of all the faces comes no face at
all. It occurs to us that the faceless
cally offers the sole possibility of reinforcing the British world position in
the face of the aspiring American continent." Nice prophesying, kid, we murmured, and picked up our paper, which
dealt that day with a Russian gain of
dy-two miles in the Ukraine and variconspiraciesagainst
to a state of utter helplessness, and that
the bombs, if any, will flop harmlessly
FRIEND of ours who reviews
movies for a living strode into the
hotel lobby where we sometimes go to
sit at dusk, beating sleet off his hatbrim
the fact of the conclusion of a treaty
sponsible. but which, nevertheless, politi-
bombed-out topers should be delighted.
Manhattan's best protection against air
raids is not blacked-out streets but the
baffling fact that if you walk, or fly, due
west from the East River, you come to
the North River, We are confident that
this will reduce the German navigators
A
potor vehicle that really runs. Thus
which, viewed racially, is perhaps irre-
and if the brave glow of a barand-grill succeeds in diverting a Nazi bomber from his true objective, the
in the bogs of New Jersey.
"can still not call its own a single facory in which can be manufactured a
would be the end of Germany.' The
ther note had to do with Japan. Here
Hitler's vision was of an Anglo-Japanese pact directed against the United
States, "England would be doomed
were she to stand alone," he wrote.
"Hence they anxiously reach out for
the yellow fist and cling to an alliance
pocket anyway, in the ordinary way of
hings-pierheads, warehouses, and the
men, the blank symbols of a race that has
surrendered its identity, are better propaganda than the Hun at his bloodthirsty
worst. They may even be a healthy
symptom, indicating that we are outgrowing our political age of innocence.
New Yorkers are a lovable, sun-
Wt
ing in the to stay
scared constructive way.
people, totally lack-
ny-tempered in capacity any get scared and month Aft-
er spending the better part of a
purchasing flashlights, sleeping hag>,
phosphorescent doorknobs, commodes,
portable radios, yard goods, and other
"blackout supplies, we found ourselv
and grinning all over. He told us he'd
just been to see the much-talked-of
film in which Donald Duck pays his
income tax. "Good we asked, indulgently "Definitely recommended," he
said. "It was," he added, consulting a
press release that he pulled from his
ulster pocket, "a Walt Disney-Treasury
Department Donald Duck Production
That's official." Over a couple of dutyfree domestic apéritifs, We agreed that
a nation whose Treasury Department
could sponsor (or, to be exact, co-spon-
sor, with secondary billing) a Donald
Duck Production could never lose a was
of nerves
T times feel, have a tendency to
little Ary brothers.
HE Nazis, people who, we some
NE of the minor curiosities of this
overreach themselves, were recently re-
war is the fact that so far the artists
ported to favor the establishment of
have failed to produce anything recogmizable as the typical German soldier.
different, of course, in 1917. We
were looking over a collection of old
cartoons the other day, and there he was
on almost every page- fat-necked
barbarian, wearing a spiked helmet and
decorated with the Iron Cross: a monstrous baby with disgusting habits. No
matter who drew him, he was always
worldwide prohibition. Considering that
spiritually prepared not for an air raid but
for Newbold Morris's calm announcement that, since Manhattan Island is
outlined by water and thus unmistakable
from the air, there is no use in blacking it
out. We think. if anyone cares to hear
what we think. that Morris is absoluteIv right. Military objectives are as dark as
they also seem to be in favor of first
winning the war and then managing the
affairs of everybody, including us, W
cannot help admiring their pluck. The
awful prospect of trying to enforce prohibition in the United States something
which only the Nazis could face without
cringinz. and even though they could
CINEMA
379
culture. publicizing Lend-Lease aid to the
Allies: a recruiting short for the U.S
Merchant Marine: three more bond-selling
shorts and an Army anti-tank-rifle train
film for Canada; a series of U.S. Army
training films similar to the Navy's
Sullivan's Travels (Paramount). See
narist Preston Sturges, who became
cinema director two years ago. has suc
cessively and refreshingly satirized U.S.
machine politics (The Great McGinty)
advertising Christmas in July and the
boy-meets-girl formula (The Lady Eve
He now aims his brisk sarcasm at the
SPIRIN
moviemakers themselves
But the parts of Writer-Director
Sturges fourth picture are better than its
whole: it is a confusing mixture of satire
slapstick drama melodrama, comedy. Even
so, it has many novel. hilarious moments
Sturges whipping boy is one John L
Sullivan (Joel McCrea). director of such
comic hits as So Long Sarong. Hey, Hey in
the Hayloft, etc., who unexpectedly rebels, wants to make a sociological epic
named Oh Brother, Where Art Thou!
Sullivan, outfitted as a tramp. goes on the
bum to find out about life. His bosses
who came from that side of life. know
all about it and want no reminders have
him tailed by a busload of studio publicists
-just in case,
The spoon-fed director meets Veronica
(1 Wanted Wings) Lake (called simply
The Girl). an out-of-work chorine headed
for home & mother. They team up. The
Girl annoys Sullivan by praising his come
TAXPAYER DUCK
He is fit to be tied.
The New Pictures
the Axis! it chants. When the Duck
armament money
The New Spirit (Disney) reveals the
astonishing fact that one of the world's
realizes buy, blotter, he inkwell, can't what his Day. His to work will
most beloved cinema actors earns less than
$to a week. That miserable retainer not
only has to support himself in the extravagant style to which Hollywood is ac-
customed but also has to feed, clothe
and house his three adopted nephews.
This underpaid box-office paragon: Donald Duck
Bachelor Duck has complained about
& lot of things, but his salary ($2,501)
wait for Tax pen,
account book go
on his short-form income-tax blank (for
incomes under $3,000). Donald finds he
owes a $13 tax. He scurries all the way to
Washington to get it in on time.
Although the cartoon does not make the
blank crystal clear, it gets
its across with
of and great
blessing new propaganda short-form laughter the good anesthetic humor. effec.
As cinema. The New Spirit is a most
tive job. It has a brand-new patriotic mel-
is not one of them. Its revelation is pure
ody, The Yankee Doodle Spirit (com-
patriotism on his part. His employer,
Walt Disney (whose reputation is any-
posed in one day by Oliver Wallace who did
thing but a pinchpenny's), was asked by
U.S. Treasury Secretary Henry Morgenthau Jr. to make a picture reminding U.S.
citizens that millions of them are expected
to pay an income tax for the first time
this year.
The New Spirit, an eight-minute cartoon short, opens with the indignant Duck
throbbing to a radio voice telling of the
needs The of
the Dumbo tunes which is a humdinger.
If Walt Disney has anything to say
about it, U.S. World War II propaganda
will be leavened with a humor and an
artistry that were absent from World War
I's The New Spirit is his first U.S. Govern-
ment film. Made in four weeks, it set a
record for the studio, which usually takes
six to eight months for a short.
Disney's facilities are now 75% given
wartime production.
for the Navy on
new Donald's "Your spirit country in the U.S. you! Exhorts the pupils radio:
identification;
eleven
morefor and the
over 20 warship
cartoons to His airplane
schedule
plores the radio to tell him how he can
help. Says the inexorable machine: "By
U.S. Treasury 52 for the State Department, promoting Allied and Hemisphere
paying your income tax.'
solidarity; twelve for the Rockefeller Committee and its Hemisphere good-will pro-
eyes literally flag-wave as he im-
Donald, at that, is fit to be tied. But the
radio goes to work on him. "Taxes to beat
36
gram: one for the Department of Agri-
dies. by condemning sociological epics
("There's nothing like a deep-dish movie
to drive you out in the open
Sullivan eventually tastes life. Home
again from a social worker's tour of hobo
jungles with The Girl, he is unexpectedly
robbed. stuffed into a freight car headed
south, railroaded into a prison chain gang
and officially pronounced dead. In prison he
learns the value of making people laugh
returns to Hollywood a sadder & wiser
director (especially after a punishing sojourn in the prison sweatbox).
Some of Sturges slapstick sequences
(a Keystone cops auto chase: no less than
four people shoved into the swimming
pool) are a waste of film and satire. But
many another is classic ma-especially
the scene of a Negro pastor cautioning his
flock against showing their superiority over
the convicts who are coming to share the
parishioners Sunday night Mickey Mouse
movie.
CURRENT & CHOICE
Kings Row (Betty Field, Robert Cummings, Ronald Reagan, Ann Sheridan
TIME, Feb. 2).
The Man Who Came to Dinner (Monty
Woolley, Bette Davis, Jimmy Durante
Reginald Gardiner: TIME, Jan. 26).
Louisiana Purchase (Victor Moore Bob
Hope, Vera Zorina, Dona Drake
TIME, Jan. 26).
H. M. Pulham, Esq. (Robert Young
Hedy Lamarr, Ruth Hussey, Charles Co
burd; TIME. Jan. 5).
Dumbo (Dumbo, Timothy Q. Mouse
Mrs. Dumbo: TIME, Oct. 27).
TIME, February 9. 1942
CINEMA
379
culture. publicizing Lend-Lease aid to the
Allies: a recruiting short for the U.S
Merchant Marine: three more bond-selling
shorts. and an Army anti-tank-rifle train
ITA film for Canada: a series of U.S. Army
training films similar to the Navy's
Sullivan's Travels (Paramount). See
narist Preston Sturges who became
cinema director two years ago. has successively and refreshingly satirized U.S.
machine politics (The Great McGinty)
advertising Christmas in July and the
boy-meets-girl formula (The Lady Evr
He now aims his brisk sarcasm at the
SPIRIN
moviemakers themselves
But the parts of Writer-Director
Sturges' fourth picture are better than its
whole: it is a confusing mixture of satire
slapstick drama. melodrama, comedy. Even
so. it has many novel. hilarious moments.
Sturges whipping boy is one John L.
Sullivan (Joel McCrea). director of such
comic hits as So Lone Sarong. Hey, Hey IN
the Hayloft, etc., who unexpectedly rebels, wants to make a sociological epic
named Oh Brother, Where Art Thou!
Sullivan, outfitted as a tramp. goes on the
bum to find out about life. His bosses
who came from that side of life. know
all about it and want no reminders have
him tailed by a husload of studio publicists
-just in case.
The spoon-fed director meets Veronica
(I Wanted Wines) Lake (called simply
The Girl). an out-of-work chorine headed
for home & mother. They team up. The
Girl annoys Sullivan by praising his come-
dies. by condemning sociological epics
("There's nothing like a deep-dish movie
to drive you out in the open
TAXPAYER DUCK
Sullivan eventually tastes life. Home
He is fit to be tied.
The New Pictures
The New Spirit (Disney) reveals the
astonishing fact that one of the world's
most beloved cinema actors earns less than
$co a week. That miserable retainer not
only has to support himself in the extravagant style to which Hollywood is ac-
customed, but also has to feed, clothe
and house his three adopted nephews.
This underpaid box-office paragon: Donald Duck.
Bachelor Duck has complained about
a lot of things, but his salary ($2,501)
not one of them. Its revelation is pure
patriotism on his part. His employer,
Walt Disney (whose reputation is anything but a pinchpenny's). was asked by
U.S. Treasury Secretary Henry Morgenthau Jr. to make a picture reminding U.S.
citizens that millions of them are expected
to pay an income tax for the first time
this year.
The New Spirit, an eight-minute cartoon short, opens with the indignant Duck
throbbing to a radio voice telling of the
the Axis!' it chants. When the Duck
armament money
wait for Tax pen,
account go
realizes buy, blotter, he inkwell, can't what book his Day. His to work will
on his short-form income-tax blank (for
incomes under $3,000). Donald finds he
owes a $13 tax. He scurries all the way to
Washington to get it in on time.
Although the cartoon does not make the
blank crystal clear, it gets
its across with
of laughter and great
blessing new propaganda short-form the good most anesthetic humor. effecAs
cinema, The New Spirit is a
tive job. It has a brand-new patriotic mel-
ody, The Yankee Doodle Spirit (composed in one day by Oliver Wallace, who did
the Dumbo tunes), which is a humdinger.
If Walt Disney has anything to say
about it, U.S. World War 11 propaganda
will be leavened with a humor and an
artistry that were absent from World War
I's. The New Spirit is his first U.S. Govern-
ment film. Made in four weeks, it set a
record for the studio, which usually takes
six to eight months for a short.
Disney's facilities are now 75% given
wartime production.
spirit in the radio:
for the Navy on
needs The of
warship identification; eleven more
eyes as he im- U.S.
52 for the
plores the radio to tell him how he can
over 20 cartoons to His airplane schedule: for and the
new Donald's "Your country literally U.S. you!" flag-wave Exhorts the pupils
help. Says the inexorable machine: "By
paying your income tax."
Donald, at that, is fit to be tied. But the
radio goes to work on him. "Taxes to beat
36
Allied
twelve for the
ment, solidarity; Treasury: promoting Rockefeller and State Hemisphere Depart- Com-
mittee and its Hemisphere good-will pro-
gram: one for the Department of Agri-
again from a social worker's tour of hobo
jungles with The Girl, he is unexpectedly
robbed, stuffed into a freight car headed
south, railroaded into a prison chain gang
and officially pronounced dead. In prison he
learns the value of making people laugh
returns to Hollywood a sadder & wiser
director (especially after a punishing sojourn in the prison sweatbox).
Some of Sturges' slapstick sequences
(a Keystone cops auto chase: no less than
four people shoved into the swimming
pool) are a waste of film and satire. But
many another is classic hema-especially
the scene of a Negro pastor cautioning his
flock against showing their superiority over
the convicts who are coming to share the
parishioners Sunday night Mickey Mouse
movie.
CURRENT & CHOICE
Kings Row (Betty Field. Robert Cummings, Ronald Reagan, Ann Sheridan
TIME, Feb. 2).
The Man Who Came to Dinner Monty
Woolley, Bette Davis, Jimmy Durante
Reginald Gardiner: TIME, Jan. 26).
Louisiana Purchase (Victor Moore. Bob
Hope, Vera Zorina, Dona Drake
TIME, Jan. 26).
H. M. Pulham, Esq. (Robert Young
Hedy Lamarr, Ruth Hussey, Charles Co-
burf: TIME. Jan. 5).
Dumbo (Dumbo, Timothy Q. Mouse
Mrs. Dumbo: TIME, Oct. 27).
TIME, February 9. 1942
CHICAGO TRIBURE
REB 1942
Chicago Tribune 2/9/42
DONALD DUCK TOTALLY
RECALLED.
11
We are Indebted to the United States treasury
for a thousand word essay describing a recent
Donald Duck picture. The account covers two
closely typed pages. We had already seen the
picture and had enjoyed it as long as Donald was
permitted to take part. After that. it got pretty
sticky with propaganda directed at the nine year
old level. The purpose of the film is to encourage
people to pay their taxes. It does so by showing
how even so self-centered a citizen as Donald is
eager to pay his and then by suggesting that the
money is needed to buy munitions
It is just possible that the second of these ideas
may have occurred from time to time to the more
thoughtful among the citizenry. What we started
out to say. however, was that this two page sylla
bus is a welcome Indication that the treasury is
working back to the principles of Alexander Ham
Ilton. Mr. Hamilton's public accounts were mod.
els of their kind. The citizen who wanted to know
about his government's finances could find the
whole story in the great secretary's published
records He was for candor and completeness
Latterly the treasury's reports have been some.
what less satisfactory in these particulars, but
the Donald Duck syllabus suggests that a return
to first principles may be imminent
Every scene is described in full detail A thou
sand years from now. any one who wants to know
what Donald Duck was thinking about can get
all the dope.
"Suddenly," says the treasury. " to the sound
of sinister music, an underwater shot is
shown of an axis submarine resembling a prowling shark. Depth charges fall into the scene and
blast the sub to the surface. where It is blown
to bits and sinks. On the swirling water only
the swastika is left. which sinks beneath the sur-
face as the voice says, To take the axis for a
ride."
As a critic of the drama. if not as a fiscal
agency, the treasury suffers from the ailment
which psychiatrists have named total recall."
Once launched upon his description there is no
stopping Mr. Morgenthau Every detail of every
scene is recalled seriatim Evidently the treas
ury doesn't tak too seriously the predictions of
a paper shortage put forward by colleagues in
WPB. Or maybe there's nothing more useful to
be done in Washington these days than to tell
the story of an animated cartoon
Another explanation is. of courre, possible. The
day the treasury's essay was received the house
of representatives refused to approve an appro-
priation of $80,000 to Mr. Walt Disney for his
production Maybe Mr. Morgenthau figured that
if he could cover two whole pages with a mere
outline or synopsis of the film, congress would
conclude that it had obtained its money's worth
380
CHICAGO HERALD AMERICAN
9 1942
CHICAGO HERALD-AMERICA
10
Ashton Stevens
...
...
Disney, Aguinaldo,
Stock, 'Fats'
When a movie laughs you into
making out an income tax return
that isn't a swindle sheet and bor.
rowing money to pay It on the line
that isn't just pecuniary propaganda, that's magic that partakes
of the miraculous. That, in a
word, is Walt Disney's "The New
Spirit," an eight-minute cartoon
that shows how and why Citizen
Duck quacked up his government's
needed share of his fifty-dollar
weekly pay check
I can explain why this eightminute picture is better than any
current eighty-minute picture only
by repeating what a professor of
English literature once told me
about the superiority of one line
in Punch compared to a long poem
for which John Milton was paid
the same amount as the contributor to London's humorous weekly.
Professor Armes told me: Advice
to young man about to marry
Don't was a better joke than
Paradise Lost.'
"Laugh as You Pay" might have
been a better title than The New
Spirit." but anyway Disney Donaid has certainly made a glorious
reverse action out of the old game
of Duck Your Income Tax. He
has reversed the national bellyache
into a national bellylaugh
Revenion to Tumn
381
382
RELEASE MONDAY. FEB. 9. 1949
New York Day by Day
By Charles B. Driscoll
Title Reg U. $ Patent Office
NEW YORK - Diary: Witnessing a screening
of Walt Disney's Donald Duck picture about income taxes, I get a feeling of respect for our Trea-
sury Department and Mr. Morgenthau It was
a smart Idea to try to amuse
and entertain the customers
while facing them with the
compulsory job of paying burdessome taxes Do you sup-
pose any authority in Joe
Stalin's democracy asks the cus-
tomers whether they like to pay
their taxes or not. or attempts
to make the job less disagree
able by a bit of pleasant horseplay?
The impression grows
upon me that this man Morgenthau whom I've
never met. must be a right guy Pleasant
of ... with Rest.
.
383
The New York Times.
EB
8 1942
TOP TO BOTTOM
By BOBLEY GROWTHER
Duck and Taxes
One word about "The New
Spirit." the one-reel Walt Disney
cartoon which was made for the
Treasury Department and is currently to be seen in almost any
theatre you happen to hit. Briefly
it makes Donald Duck an American income-tax payer and shows
how his contribution is used to help
pay for means to beat the Axis. It
is an excellent bit of persuasion
toward a good-natured acceptance
of a heavy burden on the part of
the people. Indeed, it is the most
effective of the morale films yet
released by the government and is
timely witness to the perfection
and speed with which our estab
inlished and incomparable film
distry can turn out such pictures
when given a chance Why doesn't
ashington draw more often
this ample reservoir?
a
NEW
384
YORK
Herald
Tribune
Donald Duck Enlists for Duration
H
OLLYWOOD That well
known individualist Donald
Duck has jumped on the
bandwagon and is in complete sol-
idarity with his fellow citizens on
the matter of winning the war
In his latest picture, The New
Spirit. Donald has cast off his misanthropic robe to spread the gospel
of joy through sacrifice. But it is
hard decision for him: his supercharged ego undergoes much batter.
ing before he is ready to receive
the light. Having once received it
however, he becomes more raucous
than ever to espouse the war effort
Walt Disney's first production for
the Treasury Department should go
an incalculable way toward easing
the grief and dismay with which the
public customarily views its income
tax If sourpuss like Donald Duck
can be stimulated into paying with
a smile then so can the meanest
of us
Donald Into duckie is not an easy
metamorphosis and it takes all of
the Disney wizardry to effect it. A
voice which emanates from a radio
cabinet and which seems to address
itself with a significant directness to
Donald paints a glorious picture of
how the average citizen can be of
help to his country in these times
Donald, skeptical at first. shows a
growing willingness to help Espeis his imagination fired by the
marrial aspect of his opportunity
If his country wants him for military service he will not fail
With fervor be shoots out of the
room and returns a jiffy later
equipped to the teeth with the im-
plements of war. But no. that is
not to be the sacrifice. the Voice
says: one must be prepared to give
By Thornton Delehanty
With undiminished enthusiasm Don.
ald again disappears to return bearing a truckload of his cherished pos-
sessions, among them his school
algebra and large bottle of aspirin
prepared to lay them at the feet
of his government
But the Voice is mysteriously lead-
ing up to some other sacrifice and
as Donald listens. tense with the
desire to jump in there and pitch
come what may he is fairly flattened by the anti-climax At the
mention of the income tax Donald
like the rest of us, reels
Yet the felicity with which the
inkpot the fountain pen and the
tax blank come alive and dispose
themselves for Donald and the
soothing Voice as it gives forth instructions, quickly revive the co.
operative spirit in Donald When
his financial contribution to the
government is envisioned in terms
of tanks, guns, airplanes and the
other appurtenances of war, Donald
is once more on his patriotic toes.
The remainder of the film forgets
Donald It is preoccupied with the
parade of industrial might, climaxing against a Turner sunset which
with white clouds and appropriate
patches of blue sky, turns into .
rough and stimulating suggestion of
the Stars and Stripes.
Disney was not at the studio when
The New Spirit and a group of
other defense shorts were shown to
us He had left on a hurried trip to
Washington to confer with Secretary
Henry Morgenthau jr. on further
pictures for the Treasury Department. The studio is engaged also
on twenty films for the Navy and
one for the Department of Agriculture for which there are likely to
be more-and has completed five
for Canada.
The impression has got around
that because of this war effort Disney has given up his other produc-
tions This is not true. Work is
going ahead on the twelve shorts or
South America which were projected
after Disney and his party returned
from there last fall. The first of
these will be ready for distribution
by May 1. Sometime this summer
Bambi will be released and about
& year from now Peter Pan will be
completed.
385
THE EVENING STAR
D. C., FRIDAY, FEBRUARY 6, 1942.
Donald Duck Joins Up
Becomes Hero, and Inspiring One,
In Income Tax Feature
Donald Duck beloved symbol of righteous indignation and one of
the loudest practitioners of freedom of speech, will surprise the life out
of you in his latest film appearance The New Spirit. The short. which
finds D. D. inspiringly espousing quick and unquestioning payment
of your 1941 income taxes. went on display at all downtown movie
houses yesterday. It is likely to steal any bill on which It appears in
that seeing Donald's dudgeon turn
into communicable enthusiasm
forces on which freedom bases its
especially on income taxes- all but
hope
knocks you out of your seat. All the
other conversions of which you ever
heard become relatively insignificant
In lending his and everybody
else's pet duck to the United States
Treasury Department Walt Disney
steps all the way from fantasy to
reality without loss of that quality
which his pictures have more than
any other r-charm "The New Spirit"
has that in abundance but it also
has other things dramatic force.
comedy grimness and an important
message In endowing it with those
elements Disney has reconciled the
irreconcilable and produced what
seems to be the best of the Government's numerous fine documentary
films
The documentary of which Donald
Duck is the strangest of all possible
heroes in this impossible world
actually makes you want to sit
down. nu out your income tax blank
revise your budget. and feel like a
singularly free man by the time the
calendar reaches March 15.
Never has the life of the taxpayer's dollar been more dramatical-
by illustrated It is shown. in
spectacular technicolor building fac-
tories, bombers submarines, machine guns, anti-aircraft guns, and
above all, the civilian and fighting
AMUSEMENTS
Donald never looked more herole
nor worthy of a special medal J.C.
NEW YORK JOURNAL AMERICAN
JAN 23 1942
Donald Duck is the first Walt
Disney movid reverse to be sent
out by Uncle Sam on an income
tax mission. He's the star of "The
New Spirit," a movie made to
show us how to pay our income
tax. Donald, of course, is a
bachelor. so he doesn't have to pay
for a wife. but he has some mar-
ried friends in his movie.
Over a thousand prints have
been ordered and It is estimated
that the picture will be seen by
as million to 125,000,000 people.
More people will hear and see
Denald Duck in his income fax
epte than saw "Gene with the
Wind."
386
SINCE
A
1000
Allen's
PRESS CLIPPING BUREAU
LOS ANGELES
SAN FRANCISCO
PORTLAND ORE
MIDELES CAL EXAMINE
Cir, 560,800
- Duck is the first
Disney movie favorite to -
our by Uncle Sam on an income
tax mission. He's the star of "The
New Spirit," a movie made to
above us how to pay our income
tax. Donald of course, is a bach.
elor, so he doesn't have to pay for
a wife, but be has some married
friends in his movie. Over a thou.
seas printe have been ordered
and It is estimated that the pie.
terre will be shown to from 85,600,000 to 125,000,000 people. More
people will hear and ste-Donald
Dack in his Income tax epic than
saw "Gone
CHICAGO HERALD-AMERICAN
January 12, 1942
VANDERPOEL
Great Educational
Campaign on Taxes
Plan of Treasury
By Robert P. Vanderpoel,
Financial Editor.
WASHINGTON, Jan. 12 One of the greatest educa
tional campaigns in American history is being planned by
the United States Treasury Department
It is impossible to make taxes popular, but the purpose
of this campaign is to come as close to that objective
as is humanly possible.
First of all. there are millions
of Americans who never before
have paid an
income tax. but
who will be required to do so
on March 15.
Many of these
are men and
women who,
financially
speaking. live
the winning of the war and the
preservation of that broad some
thing called the American eye.
tem
Translated Into Planes
Back in the years of boondog.
gling the American citizen unfortunately came to think of taxes
in terms of leaf-raking shovelleaning and similar. emergency
from day to
and at times discouraging endes
payday to pay-
Now he is to have taxes trans
lated into airplanes, tanks, war
day. or from
day. Their in-
come frequent-
ly is spent be-
fore It is reThese men Was Many
celved
and women must be taught the
necessity of putting something
aside for Uncle Sam. Banks can
play an important part in helping
these people by setting up special
income tax savings accounts and
encouraging regular deposits each
payday. Employers also can help
through offering payroll deduc-
tion plans supplementary to those
that are or will be set up for the
purchase of Defense Bonds
To Push Tax Notes
FOR.
ships. bombs, cannon, clothes and
rations for the fighting forces
With the Japa boasting that they
will dictate the peace in the White
House, # is a more inspiring pic.
ture.
As John Q. Public feels the full
impact of the income tax it tail
hoped that be will remember Pearl
Harbor and that his resentment
will turn against the Japa and
Hitler rather than against his
good Uncle Sam.
A Walt Disney Film
Walt Disney has made a new
film which according to those who
have seen the preview should go
a long way toward breaking down
the prejudice of the masses against
federal taxes. It is propaganda
A better acquaintance with tax
savings notes the profitable way
but of the right type (unfortu-
to those with incomes below the
lowest brackets Interesting de
done with a certain simplicity and
just the right degree of good bu-
of saving for taxes is also part nately during recent years we have
of the plan. particularly helpful had too much of the wrong type
is something that can be done
quickly and without technical
knowledge The information that
must be given is held to a mini-
mum.
There is an even bigger. If hard
more important problem
bringing home not only to the
ty
small but to the large taxpayers.
including even the corporations
the vital importance of taxes
mor
Donald Duck should do much
is and the cartoonist depicture of
the taxpayer as a meek. anemic
sort of a creature with the award
of Damocles or something of that
nature hanging over his head, or
almost broken. attempting to support an ever-growing tax burden
The idea, rather, is to paint the
taxpayer as an upstanding. rather
chesty little guy. just a bit proud
in the knowledge that be through
his tax payments is doing his part
to bring victory and preserve
free America . part less dra-
matic. less romantic but no less
essential than that of mm in
uniform.
a
velopments along this line are cur-
rently taking place.
The simplicity of the new. great.
ly abbreviated tax form for those
with gross incomes below $3,000
a year also is being emphasized
Preparing the tax schedule for
those qualified to use this form
TREASURY DEPARTMENT
389
INTER OFFICE COMMUNICATION
DATE February 11, 1942
TO
Secretary Morgenthau
FROM
George Buffington
Mr. Jack Cohen, Eastern Division Manager of
National Screen Service Corporation, gave me the follow-
ing information over the telephone:
Mr. Cohen met a number of out of town
corporation executives who had just seen the
film "The New Spirit" at Loews Palace Theatre.
They told Mr. Cohen they were so impressed
with the spirit of the picture they were
arranging to advance money to employees need-
ing it for March 15 tax payments, permitting
repayment out of future earnings.
I asked Mr. Cohen if he could have these facts
confirmed to me in writing and he said he knew he could
from at least two sources.
GIS
390
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATEFebruary 11, 1942
Secretary Morgenthau
TO
FROM
George Buffington
Following is a list of the cities in which distributing
offices of the National Screen Service Corporation are located.
NUMBER OF THEATERS BOOKING
*THE NEW SPIRT" WEEK ENDING
FEBRUARY 8, 1942.
Albany
19
Atlanta
64
Boston
107
Buffalo
18
Charlotte
62
Dallas
Des Moines
89
102
Detroit
51
Memphis
62
Milwaukee
85
Minneapolis
79
New Haven
New York
Oklahoma
Philadelphia
Pittsburgh
DISTRICTS FROM WHICH REPORTS HAVE NOT YET BEEN
RECEIVED.
Chicago
Cincinnati
Cleveland
Denver
Kansas
Los Angeles
St. Louis
San Francisco
Seattle
Washington, D. C.
38
146
51
74
15
1062
You will notice that the Des Moines exchange exhibited the
film during the period ending February 8th in 102 theatres. The
Boston exchange during the same period, exhibited the film in
107 theatres. I will submit to you later a complete record of all
bookings obtained.
GR.
Attachments.
COPY
391
ADVERTISING ACCESSORIES, INC.
1003 High Street, Des Moines, Iowa
February 7, 1942
Mr. Herman Robbins, President
National Screen Service
New York, New York
Dear Mr. Robbins:
Following is a list of the theatres in which the NEW SPIRIT played
during the week from February 1st to 7th:
Theatre
Fireman's
Marion
Lake
State
Cecil
Palace
Palace
Orpheum
Capitol
Iowa
Rialto
Rialto
Majestic
Princess
Ritz
King
Grand
Capitol
Call
Iowa
Elma
Rialto
Strand
Roxy
Mallard
Grand
Coliseum
Casino
Odeon
Tyke
Strand
Orpheum
Lyric
Avon
Holland
Town
New Hampton, Iowa
Playdate
2/1-3
Marion, Iowa
Clear Lake, Iowa
Farmington, Iowa
Mason City, Iowa
Exira, Iowa
Mason City, Iowa
2/6-7
Clinton, Iowa
Winterset, Iowa
2/1-2
2/4-5
2/6-7
2/1-3
Des Moines, Iowa
Adel, Iowa
Clinton, Iowa
East Moline, Ill.
Boone, Iowa
Chariton, Iowa
Albia, Iowa
Oelwein, Iowa
Marshalltown, Iowa
Algona, Iowa
Algona, Iowa
Elma, Iowa
Ft. Dodge, Iowa
Ft. Dodge, Iowa
Armstrong, Iowa
Mallard, Iowa
Decorah, Iowa
Lamoni, Iowa
Marshalltown, Iowa
Marshalltown, Iowa
Titonka, Iowa
Ft. Madison, Iowa
Ft. Madison, Iowa
Decorah, Iowa
Keota, Iowa
Pella, Iowa
2/1-2
2/4-6
2/1-2
2/4-5
2/1-3
2/5-11
2/5-7
2/1-4
2/6-7
2/1-2
2/4-5
2/6-10
2/1-2
2/1-2
2/4-6
2/3-5
2/7-9
2/1-2
2/4-6
2/1-3
2/5-6
2/1-3
2/5-8
2/1-3
2/5-7
2/8-10
2/1-3
2/5-6
2/7
Town
Theatre
Majestic
State
American
Orpheum
Strand
Fayette
Family
Dewitt, Iowa
Mason City, Iowa
Corning, Iowa
Strawberry Point, Iowa
Richland, Iowa
Fayette, Iowa
Marshalltown, Iowa
Amuzu
Fonda, Iowa
Strand
Lido
Wapello
Hampton, Iowa
Castle
Plaza
Paramount
Grand
Des Moines
Atlantic
Roosevelt
Windsor
Blackhawk
Avery
Story
Howard
Iowa
Garden
Center
Avon
Creston, Iowa
Wapello, Iowa
Manchester, Iowa
Manchester, Iowa
Des Moines, Iowa
Atlantic, Iowa
Des Moines Iowa
Atlantic, Iowa
Des Moines, Iowa
Hampton, Iowa
Lansing, Iowa
Garner, Iowa
Story City, Iowa
Jefferson, Iowa
Jefferson, Iowa
Des Moines, Iowa
Grundy Center, Iowa
Dysart, Iowa
Des Moines Iowa
Strand
Strand
McGregor, Iowa
Strand
Monroe, Iowa
Elite
Metropolitan
Rex
Lamont
Lido
Empress
Foxy
Perry
Alamo
Ogden
State
Osage
Olympic
Rialto
Tallcorn
Isis
Webster
Palace
State
Iris
Laurens, Iowa
Iowa Falls, Iowa
Iowa Falls, Iowa
Lamont, Iowa
Manly, Iowa
Rockwell City, Iowa
Perry, Iowa
Perry, Iowa
New London, Iowa
Ogden, Iowa
Washington, Iowa
Osage, Iowa
Calmar, Iowa
Pocahantas, Iowa
Kanawha, Iowa
Webster City, Iowa
Webster City, Iowa
Vinton, Iowa
Carroll, Iowa
Postville, Iowa
Playdate
2/1-3
2/5-7
2/1-3
2/7-8
2/1-2
2/4-5
2/6-8
2/1-3
2/5-7
2/1-3
2/5-6
2/1-2
2/3-4
2/6-12
2/1-3
2/5-11
2/1-3
2/5-11
2/1-3
2/6
2/1-3
2/4-6
2/1-2
2/3-4
2/6-9
2/1-3
2/4-5
2/6-9
2/1-2
2/4-5
2/7-8
2/1-3
2/4-5
2/7-8
2/1-3
2/5-7
2/1-2
2/3-4
2/6-8
2/1-3
2/5-7
2/1-3
2/5-6
2/1-3
2/4-5
2/1-2
2/3-4
2/6-7
2/1-3
2/5-7
392
393
Theatre
Town
Ritz
Rolfe, Iowa
Lyric
Roxy
Rex
Grand
Northwood
Strand
Stuart
Arlington
Grand
Winfield
Iuka
Strand
Pastime
Princess
Fenton
Garden
Playdate
Seymour, Iowa
St. Ansgar, IOwa
Scranton, IOwa
Sheffield, Iowa
Northwood, Iowa
Ackley, Iowa
Stuart, Iowa
Arlington, Iowa
Wellman, Iowa
Winfield, Iowa
Tama, Iowa
Marshalltown, Iowa
Maquoketa, Iowa
Odeboldt, Iowa
Fenton, Iowa
Sigourney, Iowa
2/1-3
2/6-7
2/1-3
2/5-7
2/1-3
2/4-5
2/1-2
2/4-5
2/7-8
2/3-5
2/3-5
2/3-4
2/5-11
2/3-4
2/6-7
2/3-4
2/6-7
This is a total of 102 playdates for the first week. Naturally,
we won't be able to hold to this schedule throughout the six weeks,
but I am almost certain we will be able - to cover every pledge.
Kindest regards.
Sincerely,
Louis Patz
BOSTON, MASS.
394
2/7/42
THE NEW SPIRIT
THEATRES THAT HAVE PLAYED THE NEW SPIRIT FROM JAN. 28 TO
FEB. 8 INCLUSIVE.
THEATRE
Seville
South Station
Telepix
Central
United
Poli
Poli
Majestic
Wakefield
Middleboro
Playhouse
TOWN
East Boston
Boston
Boston
Westerly
Westerly
Worcester
Springfield
Providence
Wakefield
Middleboro
Wellesley
Strand
Lawrence
Colonial
Nashua
Saugus
Norwood
State
Norwood
Strand
Capital
Davis Sq.
Regent
Orange
Spencer
Ayer
Randolph
Peoples
Strand
Lafayette
No. Brookfield
Buzzards Bay
Randolph
Maynard
Ipswich
Central Falls
Strand
Uxbridge
Westboro
Capitol
Central
Manville
Star
Pascoag
Cameo
Roosevelt
Ware
State
Star
State
Wellfleet
Strand
Mohawk
tate
State
Leroy
New Hampshire
Massachusetts
Arlington
Park
Buzzards Bay
1/28-31
Wellfleet
Somerville
Orange
Playhouse
Massachusetts
Massachusetts
Massachusetts
Rhode Island
Rhode Island
Massachusetts
Massachusetts
Rhode Island
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Whitinsville
Rockland
Pawtucket
Bridgewater
Athol
Star
PLAYDATE
Massachusetts
Massachusetts
Massachusetts
Rhode Island
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Rhode Island
Rhode Island
Rhode Island
Massachusetts
Massachusetts
Massachusetts
York
Capitol
STATE
Winchendon
Valley Falls
Beverly
E. Milton
Calais
Maine
Boothbay Harbor
Maine
Portland
Maine
No. Adams
Manchester
Pawtucket
Massachusetts
New Hampshire
Rhode Island
1/30-2/5
1/30-2/4
1/31-2/3
2/5-7
1/29-2/4
1/29-2/4
1/20-2/5
2/1-2
2/1-3
2/2-5
2/2-3
2/1-3
2/1-3
2/1-4
2/1-2
2/1
2/1-3
2/1-3
2/1-2
2/1-3
2/1-3
2/1-2
2/1-3
2/1-2
2/1-2
2/1-2
2/1-3
2/2-4
2/1-2
2/1-2
2/1-2
2/1-2
2/1-3
2/1-2
2/1-2
2/1-4
2/1-3
2/1-3
2/4-5
2/4
2/4-5
2/5-7
2/5-11
2/4-7
2/4-7
Page 2
BOSTON, MASS.
2/7/42
THEATRE
rpheum
Elm
Community
strand
Metropolitan
Fenway
Marlboro
Dorchester
Netropolitan
Strand
Keith Memorial
Strand
Lafayette
Palace
RKO Boeton
Opera House
Modern
Carlton
Bijou
Provincetown
Sawyers
Modern
Olympia
Albert
Princess
Strand
Capitol
Sanford
Strand
TOWN
STATE
PLAYDATE
Foxboro
Massachusetts
Massachusetts
Massachusetts
Rhode Island
Massachusetts
Massachusetts
2/4-6
2/4-7
2/4-8
2/4-5
2/5-11
2/5-11
2/5-7
2/5-7
2/5-7
2/5-6
2/5-11
2/5-11
2/4-10
2/5-7
2/6-12
2/6-7
2/6-7
2/6-12
2/6-12
2/6-7
New Hampshire
2/7
Millbury
Wakefield
Peabody
Boston
Boston
Marlboro
Dorchester
Leominster
Haverhill
Boston
Providence
Haverhill
Arctic
Rhode Island
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusette
Rhode Island
Bo ston
Massachusetts
Rhode Island
Massachusetts
Barre
Vermont
Marlboro
Providence
Springfield
Provincetown
Greenville
Boston
New Bedford
Berlin
Berlin
Berlin
Sanford
Sanford
Pawtucket
Massachusetts
Massachusetts
New Hampshire
New Hampshire
New Hampshire
Maine
Maine
Salem
Rhode Island
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Acme
Kennebunk
Maine
Florence
Scollay
Boston
Hollie
Plaza
Palace
Capitol
Capitol
Brockton
Little
Haines
Framingham
Pittefield
Pittsfield
So. Barre
Worcester
Brockton
Whitefield
Waterville
Civic
Portland
Quincy
Quincy
Quincy
Strand
Fairlawn
Cameo
Pawtucket
So. Weymouth
Braintree
Braintree
Onset
Onset
Greenwhich
E. Greenwich
Community
Dedham
Court Sq.
Springfield
Broadway
Lawrence
toneham
Stoneham
epperell
E. Pepperell
Massachusetts
Massachusetts
Massachusetts
Massachusetts
New Hampshire
Maine
Maine
Massachusetts
Massachusetts
Rhode Island
Massachusetts
Massachusetts
Massachusetts
Rhode Island
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
2/6-12
2/6-12
2/6-7
2/6-7
2/6-7
2/6-7
2/6-7
2/6-12
2/6-7
2/6-12
2/7-10
2/7-10
2/6-7
2/7
2/6-12
1/31-2/5
1/31-2/5
2/8-9
2/8-10
2/8-14
2/8-11
2/8-10
2/8-9
2/8-9
2/8-10
2/8-9
2/8-10
2/8-10
2/8-11
2/8-11
2/8-10
2/8-10
395
BOSTON, MASS.
2/7/42
Page 3
TOWN
STATE
PLAYDATE
Fitchburg
Fitchburg
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
Massachusetts
2/8-11
2/8-11
2/5-7
2/5-7
2/5-7
2/5-7
2/5-7
2/5-7
THEATRE
Fitchburg
Sheas
St. George
Gorman
Orhpeum
Uptown
Colonial
Garden
Framingham
Framingham
Gardner
Gardner
Laconia
Laconia
TOTAL BOOKINGS:
New Hampshire
New Hampshire
107
396
397
February 11, 1942
My dear Mr. Chairman:
Reference is made to the First Deficiency Bill,
fiscal year21942 (H.R. 6548) passed by the House of
Representatives on February 9, 1942, containing
estimates of deficiency appropriations required by
the Treasury Department during this fiscal year due
to the War emergency.
The House of Representatives reduced the requested
appropriation under "Consolidated Emergency Fund",
office of the Secretary, Treasury Department, from
$350,000 to $172,000, a total reduction of $178,000.
The $178,000 which was eliminated included certain items
of personal services, aggregating $95,000, which this
Department hereby respectfully requests to be restored
to the Bill. The detail of this $95,000 is as follows:
OFFICE OF THE SECRETARY
"Consolidated Emergency Fund"
Page 20, line 22, strike out $172,000 and insert $267,000
Page 21, line 3, strike out $ 25,490 and insert $120,490
The Department requests restoration of the following
items:
398
-2Personal Services:
Additional personal services required for economic and legal tax
research necessary in connection
with increased volume of work on
tax legislation,
$90,000
Additional personal services required for educational work relating
to the tax program,
$ 5,000
Total amount requested to be restored, $95,000
It is respectfully requested that officials of
this Department be given an opportunity to appear before
the Deficiency Appropriations Sub-Committee of the
Committee on Appropriations of the Senate, for the pur-
pose of explaining in detail the necessity for restoring
the above Items to the Bill.
Very truly yours,
(Signed) D. W. Bell
Acting Secretary of the Treasury.
Honorable Carter Glass,
Chairman, Committee on Appropriations,
United States Senate.
399
February 10, 1942
Ed Foley
Secretary Morgenthau
Please have a man start immediately to go back
over Taber's vote on important measures to prepare
for war and let me see where he stood for the last
three years. Please do this for Congressman Wiggles-
worth also. I want this information late this after-
noon without fail.
memo submitted 2/11/42
400
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
FROM
FEB 1 1 1942
Secretary Morgenthau
Mr. Foley
In accordance with your request, I have checked
the voting records of Congressmen Taber and Wigglesworth
during the last three years on important war measures.
I am attaching a table showing their voting records on
52 measures covering the period from January 3, 1939,
the opening of the 1st session of the 76th Congress,
through January 31, 1942.
The table indicates rather clearly, I think, that
prior to January 1940 both men were almost unanimous in
their opposition to everything that the President proposed to help prepare us for war, although Taber's record
is slightly worse than Wigglesworth's. During this
period Taber voted against 12 of the 13 measures while
Wigglesworth voted against 10 of the 13.
From January 3, 1940 until January 3, 1941, their
records were much better. During this period each voted
for 8 out of 10 Administration proposals.
401
-2During the year 1941, their votes were not consistent.
Twenty-four roll-calls were held and each voted against
Administration proposals 6 times. However, Taber did not
vote on 4 measures. Their most significant adverse votes
during this period were those against the Lend-Lease Bill
and the Property Requisition Bill. Taber also voted against
the Price Control Bill.
Since January of this year 5 significant votes have
been taken. Wigglesworth was against the Administration
twice and Taber once - both voted against the Price Control
Bill.
E.N.7h
402
TABLE SHOWING VOTING RECORDS OF CONGRESSMEN
TABER AND WIGGLESWORTH ON IMPORTANT MEASURES
TO PREPARE FOR WAR-January 1939 to February 1942.
76th Cong., 1st Sess. (Jan. 3 to Aug. 5. 1939)
Measures
Taber
H. B. 3791 (Pub. No. 18).
Wigglesworth
Yes
Yes
No
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Authorizing the expenditure by the Secretary
of Mar of $300,000,000 to equip and maintain
6,000 serviceable airplanes. Provides for
President to order annually, for one year's
duty with regular Army 4,300 Reserve Officers.
Increases commissioned strength of Army from
14,659 to 16,719, and basic allotment of enlistment men to Army Air Corps from 21,500 to
45,000. Authorizes $23,750,000 for construction
in Panama Canal Zone.
H. R. 6149 (Pub. No. 90).
Makes appropriations for the Navy Department
for 1940, including $500,000 for strategic
materials, $750,374 for reserve materiel,
and $252,604,712 for replacement of naval
vessels.
H. R. 6260.
Power's motion to recommit H. R. 6260, War
Department Civil Functions Appropriation, with
instructions to reduce amount of bill $50,000,000.
S. 1369 (Pub. No. 104).
Authorizing the Secretary of the Treasury to
construct 3 coast guard cutters of 2,000 tons,
maintain a coast guard base and air station on
the coast of Alaska, and to purchase or construct 15 seaplanes.
H. R. 6791.
Power's amendment to H. R. 6791, Supplemental
Military Appropriation, decreasing by 1,283
planes and approximately $37,000,000 the au-
thority of the bill.
H. J. Res. 306.
Vorys' amendment to H. J. Res. 306, Neutrality
Act of 1939, providing for arms embargo.
H. J. Res. 306.
(
Tinkhem motion to recommit H. J. Res. 306,
Neutrality Act of 1939.
403
-2Measures
H. J. Res. 306.
Taber
Egglesworth
No
No
Yes
Yes
On passage of H. J. Res. 306, Neutrality
Act of 1939.
H. R. 5129.
On Schafer (Wisconsin) motion to recommit
H. R. 5129, authorizing and providing for the
construction of additional facilities on the
Canal Zone.
3-
404
76th Cong., 2d Sess. (Sept. 21 to Nov. 3, 1939)
Measures
H. J. Res. 306.
Taber
Wigglesworth
Yes
Yes
The Vorys amendment to H. J. Res. 306, Neutrality Yes
Act of 1939, limiting export of arms and ammuni-
Yes
Wollcott amendment to H. J. Res. 306, Neutrality
Act of 1939, preventing Government agencies from
lending money to belligerents.
H. J. Res. 306.
tion to belligerents,
H. J. Res. 306.
Motion by Hanley to instruct conferees to insist Yes
Yes
on arms embargo to H. J. Res. 306, Neutrality
Act of 1939.
H. J.Res. 306 (Public Res. 54)
Adoption of conference report on Neutrality
Act, 1939.
No
No
405
76th Congress, 3rd Session (Jan. 3.1940-Jan. 3,1941)
Measures
Taber
Wigglesworth
H.R. 8026 (Public No. 629)
Passage of H.R. 8026, to increase by
167,000 tons the naval tonnage and the
total number of useful planes to 4,500;
authorizes the President to acquire 75,000
tons of auxiliary vessels; appropriates
$35,000,000 for shipbuilding, ways and docks;
and $6,000,000 for essential equipment; creates
Yes
Yes
Yes
Yes
naval consulting board.
H.R. 9850 (Public No. 703)
Passage of H.R. 9850, expediting and strengthening national defense and authorizing the Presi-
dent to curtail exportation of military materials,
applies the Walsh-Healy Act to all contracts, suspends during fiscal year 1941 all limitations on
the number of flying cadets in Army Air Corps and
number and rank of officers of Reserve Air Corps
who may be ordered to extended active duty; au-
thorizes the President during fiscal year 1941 to
assign officers and enlisted men to branches of
the Army; authorizes the President with or without
advertising to provide for emergencies affecting
the national defense; to provide for furnishing
of government-owned facilities at privately-owned
plants; to provide for procurement and training of
civilian personnel necessary to protect essential
items of equipment; appropriates $66,000,000 to
procure strategic and critical materials.
H.R. 9822 (Public No. 671)
Passage of H.R. 9822, to expedite and increase
neval ship construction; for authorizing advence
payments of not more than 30% of contract price
on contracts awarded; for authorizing the nego-
tiation of contracts with or without advertising
or competitive bidding for the construction, repair,
or alteration of naval vessels or aircraft; by providing that all orders placed by Army or Navy shall,
in the discretion of the President, take priority;
limits profit under contracts to 8% of total contract price; limiting application to contracts in- Yes
volving over $25,000.
Yes
I
406
-5
Measures
H.R. 9848 (Public No. 635)
Passage of H.R. 9848 to expand Naval
Air Force not exceeding 10,000 and for
Taber
Wigglesworth
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
training of 16,000 naval aviators.
H.R. 8438
Motion by Scrugham to agree to Senate
amendment with an amendment to H.R. 8438
making appropriations for Navy Department,
providing $43,850,000 for naval aviation
with certain limitations.
H.R. 8438.
Substitute amendment by Plumly under Senate
amendment providing emergency fund for the
President (to H.R. 8438, making appropriations for Navy Department).
H.R. 10039 (Public No. 656)
Passage of H.R. 10039, raising revenue for
national defense and providing for issuing
of bonds.
H.R. 10055 (Public No. 667)
Passage of H.R. 10055, making supplemental
appropriations for national defense in the
total sum of $1,479,777,142.
H.R. 5138
Adoption of conference report on H.R. 5138
making it unlawful to interfere with military
discipline and setting up alien control including fingerprinting.
H.R. 10127
Motion to recommit H.R. 10127, to authorize
the Federal Reserve banks to open accounts
for foreign banks or states for the purpose
of open-market operations, and other purposes.
General pair General pair
407
-
77th Cong., 1st Sess. (Jan. 3.1941-Jan. 31,1942)
Measures
H.R. 1437 (Pub. No. 4.), on passage of H.R. 1437,
authorizing $315,000,000 for equipment and facili-
Taber
yes
Wigglesworth
yes
ties at either private or naval establishments for
building or equipping navel vessels, and $194,000,000
for the manufacture of ordnance materiel, munitions,
and armor at such establishments.
H.R. 1776 (Pub. No. 11), on motion to recommit to the yes
Committee on Foreign Affairs, H.R. 1776, the Lease-
yes
Lend bill.
H.R. 1776 (Pub. No. 11), on passage of H.R. 1776
(Lease-Lend Bill), empowering the President, when
no
no
yes
yes
yes
yes
no
no
he deems it in the interest of national defense to
authorize the heads of any Government Department
or agency (1) to manufacture or procure defense
articles for any country whose defense he deems vital
to ours; (2) to sell, lease, lend, etc., such defense
articles to such governments; (3) to outfit, repair,
etc., the defense article of any such nation; (4) to
communicate defense information to or for the benefit
of those nations; and (5) to release for export any
defense article disposed of under the Act to any such
government.
H.R. 4050 (Pub. No. 23), (Defense Aid Supplemental
Appropriation Act, 1941), to enable the President
to carry out the provisions of the Lease Lend Act,
$7,000,000,000 appropriated to remain available until
June 30, 1943.
H.R. 4124 (Pub. No. 29), on passage of H.R. 4124,
Fifth Supplemental National Defense Appropriation Act,
1941, making deficiency and supplemental national de-
fense appropriations for the fiscal year 1941, to the
extent of $4,073,810,074.
S.J.Res. 43 (Pub. No. 33), to carry out the obligations of the United States under the Inter-American
Coffee Agreement, to promote the registration of
American-owned vessels under foreign registry by
the United States Maritime Commission during the
continuance of the European War.
-7-
Measures
H.R. 4466 (Pub. No. 101), on motion to recommit
H.R. 4466 to empower the President to purchase or
408
Taber
Wigglesworth
not voting yes
requisition any foreign vessel lying idle in U.S.
waters which is necessary to national defense and
other purposes to the Committee on Merchant Marine
and Fisheries.
H.R. 4466 (Pub. No. 101), on passage of H.R. 4466
not voting yes
for the acquisition and utilization of foreign
merchant tonnage.
H.R. 4671 (Pub. No. 203), on amendment relating
no
yes
H.R. 4965 (Pub. No. 139), on H.R. 4965 appro-
yes
no
no
no
yes
yes
yes
yes
no
no
yes
yes
to appointment of civilian personnel for plant
protection force for naval shore establishments.
priating $9,826,509,492 for the military establishment for the 1942 fiscal year.
S. 1580, on veto by President of S. 1580, the
Defense Highway Act of 1941, authorizing the
construction of a strategic network of highways.
S. 1579 (Pub. No. 274), on S. 1579 to authorize
the President to requisition property for national
defense purposes and to use, sell, or otherwise
dispose of such requisitioned property.
S. 1579 (Pub. No. 274), on motion to recommit the
conference report on S. 1579, to authorize the
President to requisition property for national
defense purposes.
H.J.Res. 222, on motion to recommit H.J.Res 222,
declaring a national emergency and authorizing
use of armed land forces in excess of the regular
army and extending all enlistments, appointments,
and commissions.
H.J.Res. 222, on passage of H.J.Res. 222, relat-
ing to selective compulsory military training and
service.
409
-8Measures
H.R. 5788 (Pub. No. 282), on passage of H.R. 5788,
Defense Aid Supplemental Appropriation Act, 1942,
Taber
Wigglesworth
yes
yes
appropriating $5,985,000,000 to carry out LeaseLend Act and $10,000,000 for administrative expenses.
H.J.Res. 237 (Pub. No. 294), on motion to recommit
not voting no
H.J.Res. 237, to repeal section 6 of the Neutrality
Act of 1939, and to authorize the President to arm
American vessels.
H.J.Res. 237 (Pub. No. 294), on passage of H.J.Res.
not voting yes
237, to repeal section 6 of the Neutrality Act of
1939 and to authorize President to arm American
vessels.
H.R. 6159 (Pub. No. 353), on motion to recommit
H.R. 6159, Third Supplemental Appropriation Act,
no
no
yes
yes
no
yes
yes
yes
yes
yes
yes
yes
1942, making supplemental national defense appro-
pristions for the fiscal years 1942-1943.
H.R. 6159 (Pub. No. 353), on passage of H.R. 6159,
the Third Supplemental National Defense Appropriation Act of 1942.
H.R. 5990, on passage of H.R. 5990, to further
the national defense and security by checking speculative and excessive price rises.
H.J.Res. 256, on passage of H.J. Res. 256, to
declare war against Germany.
S.J.Res. 120 (Pub. No. 332), on the passage of
S.J.Res. 120, to declare war against Italy.
S.J.Res. 254, on the passage of S.J.Res. 254,
to declare war against Japan.
-Measures
410
Taber
Wigglesworth
77th Cong., 2d Sess. (Jan. 3, 1942
S. 1936, H.R. 5727 (Public No. 415).
On amendment to strike out "Director of
Civilian Defense" and insert "Secretary
of War" in H.R. 5727, to authorize the
the Director of Civilian Defense to pro-
Not voting
Yes
vide facilities, supplies, and services
for the adequate protection of persons
and property from bombing.
H.R. 5990 (Public No. 421)
On motion to recommit H.R. 5990 relating
to the Emergency Price Control bill.
Yes
Yes
relating to the Emergency Price Control Act.
No
Yes
H.R. 6448 (Public No. 422)
On passage of H.R. 6448, Fourth National
Defense Appropriation Act.
Yes
Yes
Yes
Yes
H.R. 5990 (Public No. 421)
On agreeing to conference report on H.R. 5990
H.R. 6460
On passage of H.R. 6460, making appropriations
for the Navy Department and Navy Service for
the fiscal year 1943 and for other purposes.
411
FEB 11 1942
My dear Mr. President:
In accordance with your request
of January 27th I enclose a memorandum
covering the matter involved, together
with a suggested reply to Commissioner
Healy.
.
Faithfully,
(Signed) a. Borgenthau, St.
The President
The White House
DHX.JR:MCH
2/9/42
Photofile nsm.c.
Thompson
412
FEB 11 1942
Memorandus to the President:
In regard to the attached memorandum from
Commissioner Healy and the suggested reply thereto,
you may be interested in the following background.
A few days prior to the time when Mr. Eicher
sent you a memorandum on December 17, 1941, he had
brought the matter to my attention through Ganson
Purcell who called on me. The personnel, in addition to a Treasury representative, suggested by the
Securities and Exchange Commission, for a Capital
Funds Committee consisted of:
Chairman of the Securities and Exchange
Commission
Secretary of Agriculture
Federal Loan Administrator
Chairman of Federal Reserve Board
All of those mentioned were consulted with, or
written to, and also for obvious reasons the matter
413
-2-
was referred to Henry Wallace. Chairman Eccles ex-
pressed the feeling that because of the increasingly
effective control through priorities, etc. there did
not currently appear to be any need for a Capital Funds
Committee. The Department of Agriculture felt the
matter might be worth discussing, but no expression of
opinion has yet been received from either of the others
consulted.
It may be of interest to note that in Commissioner
Healy's memorandum he does not currently appear to con-
sider it necessary to consult either the Secretary of
Agriculture or the Federal Loan Administrator, but
substitutes the Army, the Navy, and the Federal Deposit
Insurance Corporation.
I am keeping this matter very much in mind and
should any clear cut need for such a committee develop,
I will be glad to recommend it. In the meanwhile I
would, of course, be glad to arrange for a further discussion of it if Commissioner Healy cares to follow up
the matter along the lines suggested by the enclosed
memorandum to him from you.
DHM,JR:MCH
2/9/42
414
Memorandum for Mr. Healy:
I have your memorandus of January 19th
regarding priorities on capital.
As you probably know, this matter has
come up at various times during the past year
or so. In each instance it has seemed that,
while many factors are involved, a primary one
was the relationship of private capital to
Treasury financing. In view of this I have
regularly asked that this situation be discussed with Henry Morgenthau, Jr.: and so, as
I know he is constantly studying this matter,
may I suggest you take it up with him.
Mr. McIntyre:
I would appreciate 1 6 very mich if
would show this to the President if you
everanfind
a time
not
Impo
Itionwhen
to do you
so. feel that it is
1/22/12
The
THE WHITE HOUSE
WASHINGTON
January 27, 1942.
ME OR / NDUM FOR THE
P
SECRITARY OF THE TREASURY
FOR RECOMDMENDATION.
F.D.R.
MEMORANDUM
To:
The President
From: R. E. Healy, Commissioner, SEC
Re: Priorities on Capital
Priorities as to capital, in other words, control
of the use of capital, is just as logical as priorities as
to steel, brass, etc. It is true that no immediate shortage
of capital is indicated but it is extremely important that
means should be taken at once to see that no such shortage
comes upon us. The early stages of such control should be
marked by easy and liberal policies, by forestalling a pinch,
and by perfecting office routine, organizations, administration,
forms, etc., SO that if the pinch comes an organization will
not have to be improvised in a great hurry. We don't put off
organizing a fire department until the fire starts. The corporation applying for leave to finance will ordinarily be required by law to also register under the Securities Act of
1933. A great many of them will have already registered with
the SEC under one or more of the Acts administered by it so
that a great fund of pertinent information will have been compiled in advance. Furthermore, the task of enforcement, i.e.,
preventing unauthorized persons from selling, is closely related to the task which the SEC has performed since 1934, i.e.,
preventing the sale of unregistered securities. One agency
should not be chasing unlicensed sales while another agency is
chasing the same securities as unregistered sales. Waste of
time and money by both industry and government can be avoided
if the SEC is made the administrator and enforcement agency.
However, I do not suggest that the decision as to permission
to raise capital should be made by the SEC. I do suggest that
it be made by an interdepartmental board made up of those (and
alternates) designated by the Treasury, the Army, the Navy,
Federal Reserve, FDIC, and SEC, and probably some other departments. The application should be filed with the SEC on forms
devised by SEC, with advice of other agencies, the views of
interested departments and all pertinent facts should be compiled by the SEC and laid before the Control Board and the enforcement should be done by SEC, which has a staff trained to
detect and prevent unregistered sales. If some authority
built along other lines is to make the decision, I still suggest it should be serviced by the SEC so that industry may make
its filings both for licensing and registration in one place,
and so that economy of time and money both for industry and
government may be promoted.
January 19, 1942.
ZGH
418
The Lombardy
ORLANDY
One Eleven East Folly-sixth Street
NewYork
Febs. 11.42.
Dear Henry your note with
Torcanim is decision
was us surprise to
we as Mr. Rainey
had already notified
me. of course, J am
sorry it Ausued out
as is did, but want
to thank you again
for all the inderest
and trough you
419
(
have taken in this
mather. J wish we
could find a con- -
duchas who would
like my compositions
as much as you do.
In any case, I apprecial
deeply all you have
done for me.
with love from
both
of
us
to
you
o
and Elli
yours
besures
420
TREASURY DEPARTMENT
m
WASHINGTON
February 11, 1942.
MEMORANDUM FOR THE SECRETARY:
Re: Employment of Automobile Salesmen in
Defense Savings Staff.
You asked me for a report on this subject today.
Representatives of the Defense Savings Staff have
been in touch with representatives of General Motors,
Ford, and Chrysler, about this matter.
The plan now is for us to notify these companies
at the earliest practical date of the number of positions
we have to fill, and their locations, whereupon the
companies will furnish us with the names of qualified
persons they have available, and they will be interviewed by our State Administrators with a view to determining their suitability for employment on our work.
As you know, the House of Representatives has some-
what reduced our appropriation for the current year, and
the Committee indicated that we would be expected to go
slow with additional field appointments. I believe,
however, that we will be able to make a few, including
some additional deputy administrators.
some of the automobile people
possibly
Perhaps
forty could
the used
in
these places,
if we authorize
them,be
although
persons
chosen will in all cases have to be approved by those
in charge of our State organizations.
The whole subject of additions to our field staffs
is now being studied, and regional meetings are being
held
that
in
the
Mr. Mr. Sparks,
country for by purpose Gamble, different and sections their associates. the of the
These meetings will be concluded by the end of month,
and by that time we will know better what we will be
able to do.
GRAVES.
421
PUBLIC OPINION NEWS SERVICE
or Release Wednesday, Feb. 11, 1942
Public Willing To Have
Pay Deduction of 10-15%
For Defense Bonds, Poll Shows
Treasury Likely to Be
Surprised at Willingness of
Public to Make Sacrifices
WAGE DEDUCTIONS FOR DEFENSE BONDS
PAY WINDOW
BUY
U.S.
DEFENSE
SAVING
By GEORGE GALLUP
BONDS
Director, American Institute of Public Opinion
PRINCETON. N. Feb. 10.-Treasury officials will
HERE
likely be surprised at the extent to which American
wage earners are willing to accept pay deductions for
the purchase of defense bonds,
66%
Per Cent Deduction
have
your
to
Should 10% of your salary be set aside each
payday to buy defense bonds for you?
YES 66%
NO 27%
UNDEC. 7%
Should 15% of your salary be set aside each
54%
No
Undecided
results
are
often
The
and
payday to buy defense bonds for you?
YES 54%
further
NO 41%
UNDEC. 5%
(3) Federal Reserve Bank issuing agents, and (4) Treasury vaults in Washington.
Includes stock in hands of (1) Federal Reserve Banks and branches, (2) Post offices,
Division of Research and Statistics.
Office of the Secretary of the Treasury,
-
2,500
-
-
-
-
2,000
-
2,000
-
2,000
-
this day
deliveries
IBM
none-closed
none-closed
16,839
16,998
16,539
15,989
15,451
14,809
14,514
none-closed
159
341
250
262
158
505
14,514
800
800
13,336
12,601
11,852
11,038
10,525
1,000
1,000
1,000
1,000
13,853
day
close of
Stock on hand
800
800
800
800
800
16,839
16,839
this day
manufactured
Bonds
Sales
7
NO
5
4
3
14,514
14,514
2
1
Feb.
13,853
13,336
12,601
11,852
11,038
10,525
10,525
487
this day
8
16,539
15,989
15,451
14,809
139
283
265
251
186
none-closed
9
16,998
none-closed none-closed
none-closed
10
of day
beginning
Stock on hand
(In thousands of pieces)
January 25, 1942 to date
Stock of Series E Savings Bonds on Hand 1/
31
30
29
28
27
26
25
Jan.
:
2.500
17,200
193
379
:
-
705
740
:
-
17,712
17,200
16,839
:
February 11, 1942
2,000
1
2
Includes 600 thousand pieces manufactured for inventory in the field.
Includes 400 thousand pieces manufactured
inventory invaults
the field.
Bonds inforWashington
only.
Division of Research and Statistics.
Office of the Secretary of the Treasury,
-
-
2,500
-
2,500
-
869
911
872
o
o
none-closed
872
o
none-closed
1,098
o
1,044
1,188
o
o
1,435
6
1,668
1,868
-
-
11
9
1,868
-
2,000
-
2,000
-
2,000
-
this day
deliveries
IBM
9
1,869
o
2,097
8
2,102
6
2,177
2,011
7
7
1,922
28
on hand*
bonds
800
800
800
800
Stock of
business
close of
orders at
Unfilled
800 2
800
800
404
426
407
474
434
490
1,000 1
none-closed
none-no mail
this day
this day
Bonds
New orders
manufactured
received
g
o
226
346
344
441
428
402
none-no mail
1,000
1,000
1,000
9
o
none-no mail
none-closed
10
o
7
o
6
o
NN
5
o
4
6
11
3
2
9
1
9
Feb.
31
6
30
8
29
6
7
7
28
28
:
-
347
301
:
2,000
705 1
740 1
o
:
February 11, 1942
: business
:opening of
: orders at
: Unfilled
(In thousands of pieces)
January 25 to date
Federal Reserve Banks and the Post Office Department
Unfilled Orders for Savings Bonds at the
28
27
26
25
Jan.
Note: Figures have been rounded to nearestofthousand
and willStates
not necessarily
add to totals.
sales of United
savings bonds.
Source: All figures are deposits with the Treasurer of the United States on account of proceeds
Office of the Secretary of the Treasury, Division of Research and Statistics.
February 11, 1942.
-$ 11,763
119,826
$ 49,640
1941
1942
December
January
January
over
February
or Decrease (-)
Amount of Increase
Sales
:
January
:
over
:
: December
Series E - Total
Series E - Banks
145,421
Series E - Post Offices
$37,877
1942
February
:
$ 33,388
29,005
$ 16,252
:
:
:
:
: February
or Decrease (-)
Percentage of Increase
90,821
25,595
Series G - Banks
Series F - Banks
:
:
over
77,787
19,192
169,467
:
January
January
:
December
over
49,728
6,972
45,258
:
23.7%
28,059
12,220
124,209
48,418
6,123
13,831
:
-
$ 68,372
:
21.4
313.1
205.4%
126,205
25,315
183,298
$164,488
Total
:
62.2
31.9
8.2
56.4
175.3
274.4
$334,818
:
25.7%
161.3%
$266,446
$101,958
:
:
(Amounts in thousands of dollars)
On Basis of Issue Price
(February 1-10, January 1-9, December 1-9)
First Eight Business Days of February and January 1942 and December 1941
Comparative Statement of Sales During
UNITED STATES SAVINGS BONDS
CONT IDENTIAL
Item
Note: Figures have been rounded to nearest thousand
willStates
not necessarily
add to totals.
sales of and
United
savings bonds.
February 11, 1942.
$334,818
29,483
50,176
$126,205
12,679
16,265
21,256
50,269
37,413
43,882
33.770
6,174
18,620
14,640
18,515
19,518
$ 68,571
$ 19,795
Total
Series G
Source: All figures are deposits with the Treasurer of the United States on account of proceeds of
Office of the Secretary of the Treasury, Division of Research and Statistics.
$ 25,315
1,109
3,071
$183,298
15,695
30,839
$ 25,315
$145,421
$ 37,877
$296,941
$126,205
25,581
44,690
12,679
16,265
1,109
3,071
11,794
25,354
3,902
5,486
2,019
3,829
2,367
3.937
2,793
10,039
23,510
16,149
16,537
7,887
3,023
4,310
4,257
4,893
3,572
$ 6,191
$ 34,150
2,019
3,829
2,367
3,937
2,793
13,062
27,820
20,406
21,430
11,459
18,233
45,958
33,156
38,989
30,199
6,174
18,620
14,640
18,515
19,518
$ 6,191
$ 42,585
$ 60,136
$ 19.795
Series E
Total
Series 7
All Bond Sales
10
9
7
6
and
4
3
2
February 1942
Series G
Series F
Series E
Series E
Date
Bond Sales
Bank Bond Sales
(In thousands of dollars)
On Basis of Issue Price
Daily Sales - February 1942
UNITED STATES SAVINGS BONDS
CONFIDENT
$ 8,435
Total
425
Post Office
426
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE
TO
FROM
February 11, 1942
Secretary Morgenthau
Mr. Schwarz
a
For your information, Melvyn Douglas made a spirited
defense of his OCD post at the Press Club luncheon today
and won over the audience to the argument that there is a
job that needs doing in the work that has been assigned
to him.
He was obviously up against a hostile audience at
first and his initial frivolity didn't soften his listeners but he soon became serious and made telling points in
reciting what the British Government did along the lines
of entertainment for the armed forces, defense workers and
the civilian population, even during the worst of the blitz.
He said that his Arts Council would be a service exchange
between persons of talent and community defense projects
that wished their services. In answering questions, he
denied emphatically any Communist affiliations.
427
FEB 11 1942
My dear Mr. Attorney General:
The urgent need for increased revenues has necessitated
a considerable expansion of the staff of this Department
working on tax and related matters. any prospective officers and employees who have been offered positions in the
Department to do that work are men who have engaged in the
practice of tax law for many years. Their period of service
with the Government may be limited in duration, and they are
dependent for a livelihood upon the practice of tax law
after leaving the Government service. They, of course, desire advice, before becoming officers or employees, on how
restricted their activities will be after their service
with the Government is completed.
In undertaking to appoint or employ such men, the
question of the proper interpretation of section 190 of
Rev. Stat. of 1873 (U.S.C. title 5, sec. 99) presents,
therefore, a question of law arising in the administration
of the Department. In order that the Department may know
what disabilities are provided by that statute, your advice
-2-
428
is requested on the following questions:
(1) May a former officer or employee of the Department
of the Treasury, within two years of the termination of
such employment, act as counsel or attorney in prosecuting
any claim pending in the Department of the Treasury while
such officer or employee was there employed:
(a) Before the Department of the
Treasury;
(b) In the Court of Claims;
(c) In the District Court sitting
as a Court of Claims;
(a) By suit against the collector?
(2) May a former officer OF employee of the Department
of the Treasury, within two years of the termination of
such employment, act as counsel OF attorney in protecting
any right of a taxpayer which was the subject of any controversy during the period of such employment:
(a) Before the Department of the
Treasury;
(b) By resisting assessment of deficiency in the Board of Tax
Appeals and by appeal from its
judgment;
(c) By proceedings in the Board of
Tax Appeals which result in a
refund?
(3) What constitutes a claim within the meaning of
U.S.C. title 5, sec. 99? For example, does the filing
-3-
429
of a protest constitute a claim?
(4) When is a claim "pending" in the Department of
the Treasury, within the meaning of U.S.C. title 5, sec.
99? For example, is it pending from the time of filing
the return and payment of tax, the revenue agent's report,
or the filing of a claim for refund?
(5) What constitutes acting "as counsel, attorney,
or agent" for prosecuting a claim, within the meaning of
U.S.C. title 5, sec. 99, or aiding in such prosecution?
Further:
(a) May the firm of which such former officer
or employee of the Department of the Treasury is a member,
within two years of the termination of his employment,
(i) engage in the practice enumerated in questions (1),
(ii) share fees received by such firm for such services
with said former officer or employee, and (iii) include
the name of such former officer or employee in its firm
name, letter-head, or papers filed on behalf of its
clients?
(b) May such former officer or employee of the
Department of the Treasury, while a member of a firm
430
-4engaged in the practice enumerated above, undertake
matters connected wi th the presentation of a client's
interest to the Department of the Treasury, including
the preparation and filing of necessary written documents
and correspondence with the Department of the Treasury
relative to such interests, or assist other members of
his firm or associates in so doing?
(6) Do the answers to the foregoing questions apply
to a person who rendered services in an advisory capacity
and was paid on a per diem basis?
There is enclosed a copy of the Opinion of the General
Counsel for the Department of the Treasury on the foregoing
questions.
Very truly yours,
(Signed) E. Morganthan, Is.
Secretary of the Treasury.
The Honorable
The Attorney General of the United States.
n.m.c.
JAG:fag
1/21/42
File to Jaley
Sent from July office
431
FEB 1 0 1942
Mr. Paul
Mr. Foley
You have requested my opinion on certain questions which
arise when a former officer or employee of the Department of the
Treasury engages in the practice of tax law within two years of the
termination of his employment in the Department. Services in connection with matters to which the former officer or employee has
given personal consideration or concerning which he gained personal
knowledge while in the Government service are excluded from the
scope of the inquiry. It is understood that your request relates to
a former officer or employee who was employed in an administrative
and advisory capacity. In other words, your inquiry is intended to
eliminate any question of compliance with Department Circular No. 230
(Revised), except so far as that Circular requires compliance with
acc. 190 of Rev. Stat. of 1873 (U.S.C. title 5, sec. 99). Specifically,
you have asked six questions, which will be considered seriatin.
(1) You ask first whether such former officer or employee,
within two years of the termination of his employment, may act as
counsel or attorney in prosecuting any claim pending in the Department of the Treasury while he was there employed:
(a) before the Treasury Department;
(b) in the Court of Claims,
432
(o) in a District Court sitting as a
court of claims,
(d) by suit against the collector.
The answers to the specific inquiries under the first
question ares (a) No, (b) No, (c) No, and (a) No.
Employment in the Department of the Treasury imposes no
restriction upon the future activity of an officer or employee in
dealings with the Government except such restrictions as are found
in section 190 of Rev. Stat. of 1873 (U.S.C. title 5, sec. 99), or
in the regulations of the agency of the Government with whom he
deals. Consideration will not be given in this opinion to the effect
of the regulations of the Treasury Department or other agency, except
as they may require compliance with section 190, supra. That statute,
as it appears in the Code, provides:
"It shall not be lawful for any person
appointed as an officer, clerk, or employee in
any of the departments, to act as counsel,
attorney, or agent for prosecuting any claim
against the United States which was pending in
either of said departments while he was such
officer, clerk, or employee, nor in any manner,
nor by any meens, to aid in the prosecution of
any such claim, within two years next after he
shall have ceased to be such officer, clerk, or
employee."
Questions (1) (a), (b), and (c), raise the issue whether
the prohibition of the statute is limited to any particular tribunal.
If the claim which is prosecuted is one "against the United States"
(an aspect of the problem which will be discussed in the answers to
questions (2), (3)), it is clear that the prohibition of the statute
433
-3
extends to the prosecution of such claims before any agency or tribunal.
It might be noted that in the debates on the bill which because the Act
of June 1, 1872, 17 Stat. 202, from which section 190 was derived,
Senator Alcorn referred specifically to the Court of Claims as being
one tribunal before which former officers and employees could not prac-
tice if the bill were enacted. (1872) 103 Cong. Globe 3333.
In regard to question (1) (d), the issue is presented whether
the prohibition of sec. 190 of Rev. Stat, of 1873, supra, extends to a
suit against a collector of internal revenue. The problem is of signifLicence in connection with actions to recover alleged overpayments of
taxes. Assuming that a suit brought directly against the United States
for refund of taxes would be a "claim against the United States", the
fact that a suit for recovery is prosecuted against the collector of
internal revenue does not avoid the prohibition of the statute, at
least in the usual litigated case where the tax was collected by the
collector pursuant to an assessment or other direction of a proper
officer. In substance and in practical effect, the claim in such latter
case is against the United States. No opinion is expressed on the
case where the collector is sued and has not acted pursuant to an assess-
ment or other direction of a proper officer.
In George Moore Ice Creem Co... Inc. v. Rose, (1933) 289 U.S.
373, Mr. Justice Cardone reviewed the historical development of the
renedy by suit against the collector and concluded that, in such suits,
"the United States was almost always the genuine defendant* (p. 378)
--
434
and that, therefore, the enlargement of the collector's liability
after he had made collection infringed no constitutional right of
his. Sec. 989 of Rev. Stat. of 1873 (U.S.C. title 28, sec. 842),
conditioned the liability of the United States to reimburse the collector upon the issuance by the court of E certificate that he had
acted with probable cause or pursuant to directions of the Secretary
of the Treasury or other proper officer. Earlier cases had indicated
that until such a certificate was issued, after judgment, the action
was A personal one against the collector and not against the Government. United States v. Sherman, (1878) 98 U.S. 565, 567, Eage V.
United States, (1919) 250 U.S. 33, 37. Nevertheless, in the Moore
case, the tax having been ministerially collected pursuant to an
assessment, the certificate would issue as of right and the liability
of the Government for any judgment rendered VAS certain from the be-
ginning. In such circumstances, said the Court, the collector's
presence 6.8 a defendant "1s serely a remedial expedient for bringing
the Government into court". (p. 383) In the ease where the collector did not act pursuant to assessment or other direction, so that
the Government's liability is left to depend on the discretionary
action of the court after judgment, a different situation is presented, on which the Court avoided opinion.
It is true that, procedurally, the distinction between
suits against collectors and suits against the United States still
has substantial importance. Thus, a suit against the collector is
--
435
not res judicata in a subsequent suit against the United States.
Sage V. United States, SUREAS Bankers Pocshontes Cool Co. V. Burnet,
(1932) 267 U.S. 308, 312, United States v. Kalea, (1941) 62 Hup. Ct.
214. Suit cannot be maintained against the collector unless payment
was made to him. Smietanka V. Indiana Steel Co., (1921) 257 U.S. 1,
Love Brothers Company Va United States, (1938) 304 U.S. 302, 306.
A suit commenced against the collector may not be changed by amend-
ment into one against the United States after the running of the
statute of limitations. Hammond-Knowlton v. United States, (C.C.A.
2d, 1941) 121 F.(2d) 192, cert. denied (1941) 10 U.S. Law Week 3088.
However, those rules are procedural or involve the construction of
the nanner in which the Government has consented to be sued. The
ree judicata rule has been criticised as inconsistent with the principles of the Moore case. Paul and Zinet, Federal Tax Litigation felected Problems in Res Judicate (1937) 32 III. L. Rev. 139, 144,
Griswold, Res Judicate in Federal Tax Capes (1937) 46 Yale L. J.
1320, 1340; Hannond-Knowlton V. United States, supra.
The application of sec. 190 of Rev. Stat. of 1873 involves
no questions of procedure or jurisdiction. In cases where the collector acted pursuant to an assessment, or other direction of a proper
officer, it is certain from the beginning that the United States will
pay any judgment that is rendered. The United States undertakes the
defense and handles the case in all respects as if the United States
were the party defendant. The suit against the collector in, for
436
-6that purpose, a more procedural device by which the United States
is sued. See Lone Brothers Co. VA United States, SUPER, at page 306.
It cannot be said, therefore, that a suit against a collector, at
least where he collected the tax pursuant to en assessment or other
direction, is not a claim against the United States within the meaning of section 190, marra.
(2) Your second question coke whether such former officer
or employee may act as counsel or attorney in protecting any right
of a taxpayer which was the subject of any controversy during the
period of his employments
(a) before the Treasury Department;
(b) by resisting assessment of a deficiency in the
Board of Tax Appeals and by appeal from its
decision;
(c) by proceedings in the Board of Tax Appeals
which result in a refund.
(3) Your third question is inter-related with question (2),
and states
"That constitutes a claim within the
meaning of U.S.C. title 5, sec. 998 For
example, does the filing of a protest constitute a claim?*
Questions (2) and (3) will be discussed together for the
reason that both involve a consideration of the meaning of the word
"claim" in sec. 190 of Rev. Stat. of 1873, sures.
7-
437
It is clear that a claim for refund of taxes is a "claim
against the United States under any interpretation of the statutory
prohibition. Furthermore, a claim for credit (Internal Revenue Code
sec. 322) would appear to be included, since, although it does not
demand money, it is in the nature 02 not-off rather then a defense,
and represents a positive claim by the taxpayer. CC. Metropolitan
Cas. Inc. Co. VA Maloney, (On. App. 1937) 192 S.E. 320, 324-325.
However, it is more difficult to support an extension of
the interpretation of the phrase to cover asttors connected with FOR
sistance to the assessment OF collection of taxes. In that category
fall such matters as protests against assessments, claims for abate-
ment, applications for re-audit, and representations for the redue-
tion of proposed assessments. It is also difficult to extend the
statute to cover the defense of claims by the United States against
transferees and fiduciaries (Internal Revenue Code seen. 311-312);
the defense of suits for the collection of taxes (Id. sec. 3744), for
fines, penalties, and forfeitures (Id. sec. 3745), for the recovery
of erroneous refunds (Id. sec. 3746), for the personal liability of
a distrainee (Id. sec. 3710), and for the foreclosure of a lien
(Td. sec. 3678); the prosecution of an appeal to the Board of Tax
Appeals for the redetermination of a deficiency found by the
Commissioner (Id. secs. 272, 871, 1012); and the defense of a crim-
inal action. In all the proceedings mentioned, the action of the
taxpayer is essentially defensive, although in certain instances
--
438
the initiative is with him because of the nature of the tax procedure.
Thus, a protest against an assessment or a claim for abatement repre-
sents merely a request for reconsideration of a finding or proposed
finding by the Commissioner which would impose liability on the tax-
payer; it takes nothing from the United States. Likewise, in the
case of a petition to the Board of Tax Appeals to determine a defi-
ciency, although it is instituted by the taxpayer, the initiative is
with the Commissioner, and the petition is in the nature of an appeal
from that determination. The result of the proceeding in each instance is R determination that the taxpayer is or is not obligated
to the Government and not that the Government is obligated to the
taxpayer. Different considerations, of course, would apply if the
Board should be asked to find an overpayment (Internal Revenue Code
sec. 322(d)).
No court has squarely ruled on the question whether such
defensive proceedings are within the prohibition of the statute.
The one direct expression on the point is a dictum of the Court of
Appeal, Second District of California, in Day V. Laguna Land and
later Co., (Cal. App. 1931) 1 P.(2d) 448. The plaintiff in that
case sued for the reasonable value of his services in assisting the
defendant in the resistance of the Government's claim against the
defendant for additional income taxes. The plaintiff, prior to the
rendition of the services, had been employed in the Bureau of Internal
Revenue. The defendant contended that sec. 190 of Rev. Stat. of 1873,
-9
439
supra, made illegal the plaintiff's contract of employment. The court
stated (at page 450):
as . . There is no question, in our
opinion, but that the contract which plaintiff made required him to aid in the prosecution of a claim against the United States,
vis., the claim of the defendant Laguna Land
& Mater Company that the report of agent
Sullivan to the department concerning additi-
tional income tax liability of the corporation
for the years 1918-1922 was erroneous in the
three particulars mentioned in said defendant's
protest filed with the department, and that
such additional liability did not as E matter
of fact exist.' . 40
However, the court found that the claim was not "pending" while the
plaintiff was employed by the Bureau since he had resigned while the
investigation was in a preliminary stage.
In a memorandum dated March 31, 1933, deeling generally
with the meaning of the phrase, the Solicitor of the Treasury took
the position that a "claim against the United States", as used in
section 190, suora, is "one which either seeks to draw money out of
the public Treasury or to prevent money alleged to be due from going
into the Treasury". Resisting collection of . tax is, obviously,
seeking "to prevent money alleged to be due from going into the
Treasury."
On the other hand, the Solicitor of Internal Revenue has
ruled that presenting B protest to a proposed assessment of additional
taxes was not prosecuting a "claim against the United States". See
the unpublished ruling of the Solicitor of Internal Revenue in S.M.
440
- 10 1063 (1919). In an unpublished opinion in L. 0. 1089, dated
February 8, 1922, the Solicitor of Internal Revenue ruled that the
phrese "claim against the United States in the statute did not conprehend claims for abatement, applications for re-audit, or representations in behalf of a taxpayer for reduction of proposed assessments
of additional taxes. In Credit Bureau of San Diego V. Petrasich,
(C.C.A. 9th, 1938) 97 F.(2d) 65, and Cohens V. Virginia, (U.S. 1821)
6 Theat. 264, 405 at seq., there is support for the proposition that
"claims against the United States* and "prosecuted against" when used
in other laws do not include defensive action by individuals against
claims by the United States. On the other hand, other cases and au-
thorities dealing with "claims", as used in various contexts, include
defensive as well RB aggressive action. See Prigg V. Commonwealth
of Pennsylvania, (U.S. 1842) 16 Pet. 539, 615.
Section 190 of Rev. Stat. of 1873 was derived from section
5 of the Post Office Department Appropriation Act of June 1, 1872,
17 Stat. 202. The debates on the bill which because that Act indicate
that the Congress had in mind affirmative claims against the United
States, although not merely money claims. Thus, in (1872) 103 Cong.
Globe 3110, Senator Scott stated:
"The primary intention or object of the
section is to prevent persons who have been
in the Departments from making use of the
knowledge they acquire there to enforce money
claims against the Government."
- 11 -
441
Senator Edmunds, who was the chief defender of the provision on the
floor of the Senate, took the position that it also prevented a
member of one of the departments from undertaking "the land-grant
business before the Commissioner of the Land Office". 103 Cong.
Globe 3112. Senator Edmunds referred to the abuse at which the pro-
vision was principally aimed as that by which persons employed in the
Departments relinquished their employment to #become the agents and
attorneys of those who wish to get money out of the Treasury".
103 Cong. Globe 3109. Senator Bayard referred to the evil of "the
personal influences and indirect methods by which large stims of
money have passed away from the public Treasury into private hands."
103 Cong. Globe 3135. While, ordinarily, resort may not be had to
debates as an aid to the construction of a statute, nevertheless,
the fact that throughout the consideration of the legislation there
was common agreement in the debate with respect to the purpose of
the legislation may properly be considered in determining what that
purpose was and what were the evils sought to be remedied. Federal
Trade Commission V. Paladem Co., (1931) 283 U.S. 643, 650, Bright v.
Vinton Branch, (1937) 300 U.S. 440, 463-464, n. 8.
In answer to your question (3), I am constrained to the
conclusion that the proper interpretation of section 190 of Rev.
Stat. of 1873 is that the words "claim against the United States*
do not include assertions of non-liability, by a taxpayer, which
442
- 12 1/
are essentially defensive in character.
The answers to your inquiries under question (2) are,
therefore, as follows: (a) Yes, as to matters which do not constitute a claim against the United States; (b) Yes, and (e) No.
(4) Your fourth question reader
"When is a claim 'pending' in the Treasury
Department, within the meaning of U.S.C. title
5, sec. 99? For example, is it pending from the
time of filing the return and payment of tax,
the revenue agent's report, or the filing of a
claim for refund?"
In Day V. Laguna Land & later Co., MARKA, the court hold
that a claim was not pending in the Department until the taxpayer
had filed a protest to the revenue agent's report of deficiency.
The court did not deen that the mere filing of a return established
a "pending" claim.
In Day V. Gera Milla, (Sup. Ct. N.Y. Co. 1928) 231 N.Y.S.
235, an action for compensation by an attorney for services performed
1/
The word "claimants" is used in the Act of July 7, 1884, 23 Stat.
258 (U.S.C. title 5, sec. 261), authorising the Secretary to proscribe
regulations governing the recognition of persons representing claim-
ants before the Department. The word "claimante" has been administretively construed to include all those having any tax business whatsoever
with the Department. Practical considerations support and justify such
& construction. Obviously, it would be anomalous for the Secretary to
have authority to regulate the practice of persons representing taxpayers claiming refunds but not of those representing persons resisting inconsis-
proposed taxes. It in believed that that construction is not
tent with the above interpretation of section 190 of Rev. Stat. of 1873.
Sr. memorandus opinion of Mr. Oliphant, August 14, 1935. Furthermore, also
the regulations do not rest solely on the 1884 statute, but rest
on section 161 of Rev. Stat. of 1873 (U.S.C. title 5, sec. 22).
Phillips V. Bellinger, (1911) 37 App. D.C. 46, 50; (1880) 16 Op. Atty.
Gen. 486.
- 13 -
443
in connection with securing a reduction in his client's tax, the
defendant set up section 190 of Rev. Stat. of 1873, surre, as a
defense. It appeared that the plaintiff had been employed in the
Bureau of Internal Revenue, and the issue was whether the defendant's
claim for reduction of taxes was #pending" at that time. The court
held it was not, saying at (page 237):
NO . . The evidence, however, fails to
satisfy me that any claim for a special assessment for the year 1919 was pending in November,
1923, when plaintiff left the government's play. The first application for a special
assessment for that year appears to have been
filed in March, 1925." (Undersooring supplied.)
In anower to your specific inquiries, it appears that the
were filing of a return or a revenue agent's report of deficiency
is not enough to establish a spending" claim. On the other hand,
the filing of a claim for refund would, in my judgment, establish
a "pending" claim.
A possible test of pendency would be whether sufficient
action had been taken by the taxpayer to prevent the ber of the
statute of limitations. For example, section 322 of the Internal
Revenue Code prohibits the allowance of any credit or refund "unless
a claim for credit or refund is filed by the taxpayer within three
years . . **. There are numerous cases dealing with the sufficiency
of the action of the taxpayer to come within the limit of the statute.
See, for example, Corver V. United States, (ct. C1. 1939) 27 F. Dupp.
608, S.S. Pierce Co. v. United States, (C.C.A. 1st, 1937) 93 P.(2d) 599.
- 14 -
444
(5) Your fifth question reads
"What constitutes acting #as counsel, attorney,
or agents for presecuting a claim, within the neen-
ing of U.S.C. title 5, sec. 99, or aiding in such
prosecution?"
(a) As a specific illustration of the type of situation
which you have in mind, you ask whether the firm of which such former
officer or employee is a member say, within two years of the termina-
tion of his employment, (1) engage in the practice outlined in question
(1) above, (11) share fees received by such fire for such services with
said former officer or employee, and (fii) include the name of such
former officer or employee in its firm name, letter-head, or papers
filed on behalf of its client.
The prohibitions of the statute are not expressly made
applicable to a partnership. It has been the long continued administrative practice of the Department of the Treasury not to include a
partnership within the scope of the statute provided that the member
of the partnership who was a forner officer or employee of the Department does not personally aid or assist in any way in the prosecution
of the claims. No court has directly or indirectly passed upon the
question of the application of the statute to a law partnership.
Under those circumstances, it would appear that the administrative
practice should be followed and that your question No. 5(a) should
be answered as follows: (1) Yes, (11) Yes; (111) Yes.
(b) You have also asked in your fifth question the following inquiry:
- 15 -
445
"May such former officer or employee of the
Treasury Department, while a member of a firm ongaged in the practice enumorated above, undertake
matters connected with the presentation of a
client's interest to the Treasury Department, including the preparation and filing of necessary
written documents and correspondence with the
Treasury Department relative to such interests,
or assist other members of his firm or associates
in so doing."
By the phrase "engaged in the practice enumerated above",
I assume that you mean the practice of prosecuting claims within the
meaning of U.S.C. title 5, sec. 99.
The activities mentioned seen clearly to involve active
participation in the prosecution of the claims and are, therefore,
within the prohibition of the statute. There is no indication that
the statutory prohibitions are confined to actual appearances before
the agency or tribunal as distinguished from the preparation of
legal documents for such appearances. On the contrary, the statute
prohibits aiding in the prosecution of any such claim in any manner
or by any means. Therefore, your question 5(b) should be answered:
No.
(6) In question (6) you inquires
*Do the answers to the foregoing questions
apply to a person who rendered services in an
advisory capacity and was paid on a per diem
basis?*
By its terms, section 190 of Rev. Stat. of 1873 established
a limitation upon the activities of any person appointed as an officer,
clerk, or employee in any of the departments". The prohibition is not
446
- 16 -
limited or qualified in regard to the nature of the work or the
manner in which the compensation is paid. If on individual is appointed as an employee in any of the departments, he is within the
scope of the statute. An individual rendering services for a department for which he is paid on a per diem basis has been consistently treated, and referred to, as an employee. (1927) 7 Comp.
Gen. 246, 247; (1936) 15 Comp. Gen. 1058, 1063; (1937) 16 Comp.
Gen. 927, 930; (1937) 16 Comp. Gen. 1010, 1012. While an independent contractor rendering personal services for the Government
would not be an employee of the Government, and, hence, would not
be within the scope of the statute, the mere payment of compensation
on a per diem basis does not make a person performing services for
the Government an independent contractor. Therefore, it is concluded
that the answer to question (6) is: Yes.
(Signed) R. H. Foley, Jr.
General Counsel.
WTP:JaG:ABD:fsg
1/17/42
447
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE Feb. 11, 1942
Secretary Morgenthau
FROM
Mr. White
Subject: Data on Irving S. Friedman
Date of Birth: January 31, 1915 - Brooklyn, Now York
A.3. at C.C.N.Y.
A.M. at Columbia
Ph. D. at Columbia
1935
-
-
-
1938
1940
Economic Analyst and Acting Assistant to
Trade Commissioner of the Government of India
1-1/2 Years
Research Associate of International Secretariat 1-1/2 Years
-
Instructor at C.C.N.Y. and Brooklyn College
Author of "British Relations with China" - 1940
Author of about 20 articles in various
technical journals
Knowledge of Foreign Languages
Latin
French
Has Spanish been studying Japanese for 10 months.
2 Years
448
FEB 11 1942
Dear General Cox:
Receipt is acknowledged of your letter of February 6,
1942, indicating that you are required to withdraw the military
guard now stationed at the Bureau of Engraving and Printing
as of February 28, 1942. Please be advised that the Treasury
Department will be prepared to protect the Bureau of Engraving
and Printing upon the withdrawal of your guard on the date
indicated.
I take this occasion to extend the Department's appre-
ciation for the protection thus far rendered by the War
Department.
Very truly yours,
(Signed) E. Morgenthan. IN
Secretary of the Treasury.
Brigadier General Albert L. Cox,
Headquarters Washington Provisional Brigado,
War Department,
Washington, D. C.
n.m.c.-Photo file
Into to Thorpson
CSB.
2-9-42
HEADQUARTERS WASHINGTON PROVISIONAL BRIGADE
OFFICE OF THE BRIGADE COMMANDER
WASHINGTON. D. C.
February 6, 1942
The Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Washington, Do C.
My dear Mr. Secretary:
Under War Department directive I
am required to wi thdraw the military guard now
stationed at the Bureau of Engraving and Printing.
It is my desire that you be given sufficient time
before the withdrawal of this guard to organize such
forces as you may deem proper to take the place of
the troops now engaged in such guard. Responsive to
the directive, I plan to withdraw the military guard
on Saturday, February 28th, 1942.
Respectfully yours,
Albert
ALBERT L. COX,
Brigadier General, U. S. Army,
Commanding.
450
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE February 11, 194
TO
FROM
Secretary Morgenthau
Mr. White
Subject: TFR-300 reports on Dr. Soong and Dr. Kung
1. Soong
According to submitted TFR-300 reports,
the holdings of Dr. Soong amount to
$281,023.00.
In addition, Mr. T.L. Soong, who has the
same address as Dr. T.V. Soong, holds
about $794,000.00.
A Mr. T.A. Soong holds $868,985.00.
2. Kung
Dr. Kung holds only $6,501.00.
3. In neither case should TFR-300 reports
be considered definitive since it is very
likely that both Dr. Soong and Kung have
deposits under different names or in accounts held in the name of different
individuals.
II 451 91
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE
February 11, 1942.
TO
Secretary Morgenthau
E. H. Foley, Jr.
I think you will find the attached memorandum
from Thurman Hill concerning the American Bosch Corporation
interesting reading.
If you want us to go into more detail as to the
company's earnings, activities and sales we shall be glad
to do so.
In addition to Mr. Hill's reference to the
elimination from the company of a few individuals,
including one of the vice-presidents, we shall probably
recommend that the foreign-held shares voted by
George Murnane be vested in the Government.
Mr. Swope and I talked to Elihu Root, Jr, who
has been counsel for the company since 1920, on
Monday at which time the vesting of the stock was
broached to him in a preliminary way. He indicated
that he can see no objection to it. Mr. Swope and
I are seeing George Murnane and Leo Gottlieb, of
Mr. Root's firm, on Friday morning when we shall go
into the matter more in detail.
9.10.7
Attachment.
452
TREASURY DEPARTMENT
Washington
February 10, 1942
Memorandum to Mr. Foley:
In re: American Boach Investigation.
HISTORY
In 1906 Robert H. Bosch of Germany organized s corporation in
New York to engage in the business of manuf cturing and selling
electrical equipment, principally, magnetos. Later the name WES
changed to Bosch Magneto Company.
In 1918 this property was seized by the Alien Property
Custodian and by it sold in 1919 to the American Boach Magneto
Company, now named the American Bosch Corporation.
The corporation continued as a strictly American-owned company
until 1931 when by merger and majority stock acquisition, the property reverted to the control of German Bosch.
In 1934 the Mendelssohn Banking house of Amsterdan claimed owner-
ship. In 1940 the company passed into the hands of the Ballenbergs
at Stockholm, who claimed they had purchased 77 percent of the common
(voting) stock from the liquidators of the Mendelssohn Bank.
The Treasury originally blocked the accounts of American Bosch
as Swedish and Netherland and later on December 4, 1941, as German.
An investigation is now being made under Treasury authority to
determine the true ownership and/or control of these important war
defense material plants.
The company now manufactures aviation magnetos at its Spring- fuel
field plant where it employs 3400 people. It manufactures
injection pumps for Diesel ongines at its new plant in Providence, This
R. I., principally financed by the R.F.C. (about $700,000). A.B.C.
plant now employs 250 people. Both of these items made by the
are of vital importance to the defense program. For example, it is
new P-47 plane recently tested made a record ceiling the - due Bosch
claimed to a new type aviation magneto, produced at
Springfield plant. Last month this plant, working on a 24-hour
shift, produced 4600 aviation magnetos for Boeing and Pratt-Whitney.
453
-2-
Mr. Foley - ABC Investigation.
A four-engined bomber requires eight of the Bosch aviation magnetos.
The fuel injection pumps are used in the Diesel engines and now
are almost exclusively used in our submorines. This improvement
accelerates power which develops greater speed.
So great is the demand for these two vital articles that 80 percent of the company business is now war orders from the Army and Navy.
There are now about Fifteen Million Dollars of defense orders pending
and unfilled. Production is keeping abreast of the schedules for deliveries to Army and Navy.
FINANCIAL
The preliminary financial statement of the American Bosch Corporation for the year 1941 discloses, as of January 1, 1942:
Assets
Current Liabilities
$8,142,420
$1,782,378
The capital surplus is $3,441,990 and the net earning for 1941 after
depreciation taxes and reserves is $1,261,114. There is no bonded or
mortgage debts, and 692,644 shares of common stock are outstanding.
The gross sales of the company in 1941 amounted to $13,643,849
as compared to $7,143,474 in 1940. It is now estimated that 1942 gross
sales will exceed Twenty Million Dollars and earnings may not close to
Two Million Dollars.
SALARIES
The chairman of the Board, George Murnane, receives $15,000per
year. The president, Donald P. Hess, an American born, a minimum of
$35,000 with a maximum of $100,000 according to size of gross sales.
In 1941 and 1942 he will be paid the maximus.
CONCLUSION
At this stage in the investigation it appears the company is well
managed, all employees American born or naturalized. It may be necessary
however, to suspend a few individuals, one, a vice-president and in
charge of all engineering, due to close German connections.
At this stage in the investigation a prime facie case has been
made by the Treasury that the company is still controlled or influenced
in its ownership by the German Bosch Company and/or the Heichabank.
The investigation will probably be completed by March 1, 1942.
Thurman Hill.
Copied-nl 2/11/42
454
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE February 11, 1942
TO
FROM
Secretary Morgenthau
Mr. Haes
Subject: Export freight situation.
Lighterage freight in storage and on hand for unloading
in New York harbor increased by 1,312 carloads last week and
reached 21,080 carloads. This was higher than in any week
in 1941 with the exception of the last week of the year.
(See Chart 1.) There was additional storage space available
for 9,665 carloads on February 9, as compared with 10,051 a
week earlier.
The increased accumulation of export freight at New York
arises from a smaller volume of exports than the volume of
export freight receipts. Exports from New York last week de-
creased slightly to 6,575 cars. (See Chart 2, upper section.)
Receipts of export freight at New York increased 870 cars to
a total of 7,755 cars. (See lower section of Chart 2.)
At nine other North Atlantic ports the receipts for ex-
port last week amounted to 3,249 cars, a decrease of 23 percent from the high figure of the previous week.
The receipts for export at six Pacific ports (lower sec-
tion of chart) amounted to 2,359 cars, or an increase of
45 percent over the previous week. This is higher than any
weekly total recorded in the past year.
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
8
JAN.
MAR
MAY
SEPT
JULY
NOV
JAN
MAR
MAY
JULY
SEPT
NOV
1942
1941
Largely export freight. but about 10% represents freight for local
*
and coastal shipment. Figures exclude grain
Office of the Secretary of the Treaser)
- of Research and Statistics
C-303-0
EXPORT FREIGHT MOVEMENT
1941
1942
CARLOADS
Thousands
CARLOADS
Thousands
Exports
10
10
9
9
8
8
From New York
7
7
6
6
mm
5
4
5
4
3
3
2
2
JAN
MAR
MAY
JULY
SEPT.
NOV
JAN
MAR
MAY
1941
JULY
SEPT.
NOV.
1942
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
..
3
3
2
2
I
........
I
At 6 Pacific Ports
..
III
111
NOV
JAN
O
0
JAN
MAR
MAY
JULY
SEPT.
MAR
1941
MAY
JULY
SEPT
NOV
1942
As estimated from date of general managers' association of New York
. Association of American Reitords
Office of the Secretary of the Treasury
Division / - -
c 382-8
457
EEB 11 1942
My dear Mr. Perkins:
I - enclosing five copies of the
report on our exports to some selected
countries during the week ending
January 24, 1942.
Sincerely yours,
(Signed) 1. Morgonthau, Jr.
Secretary of the Treasury
Mr. Mile Perkins,
Executive Director,
Board of Economic Warfare,
2501 Que Street, S. W.,
Washington, D. C.
Enclosures
Messenger Hopkin 5:10
n.m. C.
By
hia
SDW.msh
1/30/42
458
FEB 11 1942
my dear Colonel Denovan:
I am enclosing copy of report on our
exports to some selected countries during
the week ending January 24, 1942.
Sincerely yours,
(Signed) 1. Morgenthau. Jr.
Secretary of the Treasury
Colonel William J. Donovan,
Coordinator,
office of Coordinator of Information,
old National Institute of Health Building,
25th and B Streets, N. W.,
Washington, D. C.
Emclesure
By
Messenger Haphins 5:10
w
Capin
HDW
1/30/42
file
459
EED 11 1942
My dear Mr. Secretary:
I am enclosing copy of report on our
exports to some selected countries during
the week ending January 24, 1942.
Sincerely yours,
(Signed) the Morganthau, JP.
Secretary of the Treasury
The Honorable,
The Secretary of State,
Washington, D. C.
Enclosure
By Messenger Haphins 5:10
n.m.c,
copie tow hite
HDW:mch
1/30/42
Ret to Secip office
450
FEB 11 1942
My dear Mr. President:
I am enclosing report on our exports
to some selected countries during the week
ending January 24, 1942.
Faithfully,
(Signed) H. Morgenthas. Jr.
Secretary of the Treasury
The President,
The White House.
Enclosure
m.m.c
capitalisn whia
Vin Secret Service 6:35
HDWameh
1/30/42
461
February 9. 1942
Exports to Russia, Free China, Burna and other
blocked countries, as reported to the Treasury
department during the week ending January 24, 1942
Beginning with this report information regarding exports
to Hong Kong, Japan and Cocupied China will be enitted.
1. Exporte to Russia
Exports to Russia as reported to the Treasury during the
week ending January 24, 1942 amounted to about $3,900,000, of
which the chief items were motor trucks and chassis and military
tanks and parts.
2. Exporte to Free Ghina and Burna
No exports to Free China and Suree were reported during
the week under review.
3. Exports to France
No exports to Frence were reported during the week ending
January 24, 1942.
4. Exports to other blocked countries
Exports to other blocked countries are given in Appendix A.
STRICTLY CONFIDENTIAL
NOT F462 UBLICATION
SUMMARY OF UNITED STATES
DOMESTIC EXPORTS TO SELECTED COUNTRIES
AS REPORTED TO THE TREASURY DEPARTMENT
FROM EXPORT DECLARATIONS RECEIVED
DURING THE PERIOD INDICATED 1
July 28, 1941 to January 24, 1942.
(In thousands of dollars)
July 28
to
Jane 30
Week ended
Week ended
January 17
January 24
888,795
8 5,874
Free China
28,460
1,695
Burma 2/
8,075
447
U. S. S. R.
France 3/
6
Occupied France
2
accounted France
#4
Spain
2,329
Switzerland
5,072
Sweden
Partugal
11,526
4,643
$ 3,880
Total
Demestic Exports
898,549
-
30,255
-
8,522
-
-
6
-
-
2
-
-
of
78
2,412
207
600
5,879
w
566
12,082
6
5,473
5
824
Treasury Department, Division of Monstary Research
January 27, 1942.
1/ Many of the export declarations are received with a leg of several days or more. of
Therefore this compilation does not accurately represent the actual shipment
a particular week. The longer the period covered, the closer will these figures
come to Department of Commerce revised figures,
2/ From September 11, 1941 to date - It is presused that a large percentage of
material listed here, consigned to Burna, is destined for Free China,
3/ Includes both Occupied and Unoccupied France through week ending October 42 1941.
Occupied and Unoccupied France separated thereafter,
Loss than $500.
Jilliner 1/27/42
463
APPENDIX B
Exports from the U. S. to Free China, Burna and
U.S.B.R. as reported to the Treasury Department
July 28, 1941 - January 24, 1942
(Thousands of vollers) V
Exports to
Free China
July 28 - Aug.
Burna 3/
-
Aug. 4 - Aug. 9
Aug. 11 - Aug. 16
Aug. 18 - Aug. 23
Aug. 25 - Aug. 30
Sept. 2 - Sept. 6
Sept. 6 - Sept.13
Sept.15 - Sept.20
Sept.22 - Sept.27
Sept.29 - Det.
4
Get. 6 - Oct. 11
Oct. 13 - Oct. 16
Oat. 20 - Oct. 25
Oct. 27 - Nov. 1
Nov. 3 - Nov. 6
2,735
2
204
2,281
%
3,822
110
1,225
5,312
2,333
449
684
323
58
6,845
1,924
5.623
4,484
342
as
2,677
35
5
403
269
4.772
1,672
Dee. 8 - Dec. 13
Jan. 12 - Jan. 17
Jan. 19 - Jan. 24
752
1,157
2,337
Dec. 29 - Jan. 3
Jan. 5 - Jan. 10
1,023
4,280
5,217
1
Nov. 10 - Nov. 15
Nov. 17 - Nov. 22
Nov. 24 - Nov. 29
Des. 15 - Dec. 20
Dec. 22 - Dec. 27
U.S.S.R.
986
309
2,852
1,226
3,239
Dec. 1 - Dec. 6
Exports to
.523
395
2
Total
Exporte to
1
15
91
1,695
-
$32,758
3,581
1,021
1,364
64
791
iii
552
18
8
196
2
1,073
447
-
17,409
2,436
3,609
12,040
4,580
1,829
3.993
8,247
5,874
3,885
898,902
1. These figures are in part taken from copies of shipping
manifests.
2.
exports to Free China during these destined weeks include for
Figures exports for to Rangoon which are presured to be
Free China.
3. It is presumed that a large percentage of experts to Burma
are destined for Free China.
Treasury Department, Division of Monetary Research February 7,1942
464
APPENDEX 0
Principal Experts from U.S. to U.S.S.R.
as reported to the Treasury Department
during the week ending January 24, 1942
(Thousands of Dollars)
1
& 3,865
TOTAL EXPORTS
Principal items:
926
640
263
261
174
126
Meter trusks and chaosis
Military tanks and parts
Men's boots and shoes
Inc-ectane postane (anti-kneek compound)
Insulated copper wire
Zinc alabe
Harted wire
Ethyl fluid (anti-knock compound)
119
105
Machine and heavy ordnance guss and carriages
Our parts
99
98
February 7. 1942.
Treasury Department, Division of Honetary Research
BF-08 2/7/42
OFFICE OF LEND-LEASE ADMINISTRATION
FIVE-FIFTEEN 22d STREET NW.
WASHINGTON, D. C.
E.R. Stettinius. Jr.
Administrator
February 11, 1942
MEMORANDUM
To:
The Honorable Henry Morgenthau
From:
E. R. Stettinius, Jr.
Subject:
Executive Reports
Transmitted herewith, for your
information, are copies of the latest
Executive Reports on Lend-Lease operations.
Attachment
465
Executive Report No.1
466
Office of Lend-Lease Administration
SECRET
STATEMENT OF ALLOCATIONS AND OBLIGATIONS
Weekly Report as of February 8, 1942
Adjusted
Allocations
Obligations
Appropriations
Appropriation Category
Feb. 8, 1942
Ordnance and Ordnance Stores
Aircraft and Aero. Material
Tanks and Other Vehicles
Vessels and Other Watercraft
Misc. Military Equipment
Production Facilities
Agric. and Indust. Commod's
:vvicing Repair of Ships, etc.
Services and Expenses
Administrative Expenses
Total
Jan. 31, 1942
Jan. 31, 1942
$ 2,199,206,000
$ 2,111,983,528
$ 2,146,403,666
$1,232,523,391
2,877,000,000
2,832,250,860
2,832,250,860
1,981,804,299
971,100,000
934,413,181
934,174,875
523,864,488
1,657,500,000
1,629,052,000
1,571,656,667
1,173,169,226
466,500,000
454,299,741
454,158,409
113,564,380
1,018,000,000
1,008,052,689
1,006,652,689
588,267,298
3,126,944,000
2,558,806,514
2,522,717,514
1,500,219,565
310,750,000
297,019,833
297,019,833
185,610,707
325,000,000
266,839,944
266,789,944
48,181,036
20,000,000
8,033,352
8,033,352
2,763,225
$12,972,000,000
$12,100,751,642
$12,039,857,809
$7,349,967,615
Adjusted
Appropriations
Feb. 8, 1942
Procuring Agency
Feb. 8, 1942
Obligations
Allocations
Feb. 8, 1942
Jan. 31, 1942
Jan. 31, 1942
$ 6,596,248,601 $ 6,604,645,101
$3,779,446,748
2,577,651,096
2,508,868,946
1,604,695,476
XXXXXXXXXXX
1,104,669,000
1,104,669,000
843,443,224
XXXXXXXXXXX
826,160,062
825,926,879
461,704,417
995,202,939
994,927,939
660,044,152
Department of Agriculture
XXXXXXXXXXX
819,944
633,598
XXXXXXXXXXX
819,944
Other
$12,100,751,642
$12,039,857,809
$7,349,967,615
War Department
XXXXXXXXXXX
Navy Department
XXXXXXXXXXX
Maritime Commission
Treasury Department
$12,972,000,000
Total
Funds for freight and other necessary charges are not included in obligations.
OF
THIS
RAGE
DOCUMENT
CONTAINS INFORMATION AFFECTING THE THE
NATIONAL
THE REVELATION DEFENSE OF OF THE ITS UNITED CONTENTS STATES IN ANT WITHIN MASSER THE TO WEANING AN UNAUTHORIZED PERTRANSMISSION
ACT.
U.S.C.
so:
31
BOX IS PROBIBITED ST LAW.
AND
32.
OR
THE
ESPIO-
467
LEND-LEASE FUNDS
SECURITY
TOTAL
WAR DEPARTMENT
(Millions)
(Millions)
$
12,000
10,000
PROGRAM LIMITATION
8,000
APPROPRIATIONS
-
7,000
6,000
5,000
Procurement
Authorizations
Procurement
Authorizations
$
14,000
AL LOCATIONS
6,000
ALLOCATIONS
4,000
3,000
OBLIGATIONS
OBLIGATIONS
4,000
2,000
EXPENDITURES
2,000
1,000
EXPENDITURES
o
Mon Apr May Jun Jul Aug Sep Oct Nov Dec Jon Feb Mor
1941
1942
1941
o
Mor Apr May Jun Jul Aug Sep Oct Nov Dec Jon Feb Mor
1942
MARITIME COMMISSION
NAVY DEPARTMENT
(Millions)
(Millions)
1,200
$
2,800
1,000
2,400
Procurement
Authorizations
2,000
800
PROGRAM LIMITATION
Procurement
Authorizations
1,600
PROGRAM LIMITATION
1,200
ALLOCATIONS
ALLOCATIONS
600
ORLIGATIONS
400
800
OBLIGATIONS
200
EXPENDITURES
400
EXPENDITURES
111.111
Mon Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mor
1941
1942
1942
1
DEPT. OF AGRICULTURE
TREASURY DEPARTMENT
(Millions)
(Millions)
,
1941
1
Mar Age May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mor
1,500
1,000
$
DIFFERENCE BETWEEN
APPROPRIATIONS AND
800
1,250
ALLOCATIONS DUE TO
$488 MILLION RESERVE
Procurement
Authorizations
1,000
Procurement
Authorizations
600
750
PROGRAM LIMITATION
ALLOCATIONS
400
GATIONS
200
mle
PROGRAM LIMITATION
1942
1941
Office of Lend-Lease Administration - February IO, 1942
500
250
ALLOCATIONS
EXPENDITURES
millio
EXPENDITURES
Mor Age May Jun Jul Aug Sep Oct Nov Dec Jon Feb Mor
OBLIGATIONS
Mor Apr May Jun Jul Aug Sep Oct Nov Dec Jon Feb Mon
1942
1941
468
TOTAL AMOUNT OF FUNDS OBLIGATED
IN EACH WEEKLY PERIOD
Millions of Dollars
SECRET
500
500
400
400
300
300
200
200
100
100
o
o
Dec
Nov
Oct
Mar
Feb
Jan
1942
1941
AMOUNT OF FUNDS OBLIGATED, BY WEEKLY PERIODS
Thousands of Dollars
1942
Jan. 1-8
APPROPRIATION CATEGORY
Ordnance and Ordnance Stores
Aircraft and Aero. Material
Tanks and Other Vehicles
Vessels and Other Watercraft
Misc. Military Equipment
Production Facilities
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
Other
Total
Office of Lend-Lease Administration
Jan. 16-23
Jan. 24-31
100,255
29,139
48,720
12,999
13,872
13,608
130,864
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
116
233
193,139
287,193
353,645
245,935
64,035
139,148
20,108
22,629
87,667
32,293
145,543
87,206
16,043
38,368
204,084
51,457
12,343
34,729
50,989
29,924
- 29,571
47,501
101,140
9,669
20,439
40,437
13,396
12,911
89
1
Department of Agriculture
Jan. 9-15
14
245,935
6,241
20,319
46,570
49
193,139
31
4,068
89
1
32
287,193
43
353,645
Executive Report No. 2
469
Office of Lend-Lease Administration
BECRET
STATEMENT OF ALLOCATIONS, OBLIGATIONS AND EXPENDITURES
Semi-Monthly Report as of January 31, 1942
Appropriation Category
Cumulative to January 31, 1942
Allocations
Obligations
Expenditures
Ordnance and Ordnance Stores
$ 2,146,403,666
$1,232,523,391
$ 136,506,425
Aircraft and Aero. Material
2,832,250,860
1,981,804,299
238,161,794
934,174,875
523,864,488
87,020,902
1,571,656,667
1,173,169,226
256,514,400
454,158,409
113,564,380
25,124,319
Production Facilities
1,006,652,689
588,267,298
157,878,173
Agric. and Indust. Commod's
2,522,717,514
1,500,219,565
783,419,925
Servicing, Repair of Ships, etc.
297,019,833
185,610,707
119,335,970
Services and Expenses
266,789,944
48,181,036
4,810,572
8,033,352
2,763,225
2,223,131
$12,039,857,809
$7,349,967,615
$1,810,995,611
Tanks and Other Vehicles
Vessels and Other Watercraft
Misc. Military Equipment
Administrative Expenses
Total
Cumulative to January 31, 1942
Procuring Agency
Allocations
Obligations
Expenditures
$ 6,604,645,101
$3,779,446,748
$ 536,793,669
2,508,868,946
1,604,695,476
261,137,384
Navy Department
1,104,669,000
843,443,224
419,926,707
Maritime Commission
825,926,879
461,704,417
172,416,140
660,044,152
420,253,449
633,598
468,262
$7,349,967,615
$1,810,995,611
War Department
Treasury Department
Department of Agriculture
994,927,939
819,944
Other
Total
$12,039,857,809
Funds for freight and other necessary charges are not included in obligations.
"THIS DOCUMENT CONTAINS INFORMATION AFFECTING THE NATIONAL DEFENSE OF THE UNITED STATES WITHIN THE WEARING UNAUTHORIZED OF THE ESPTO- PER-
PAGE ACT. U.S.C. so: 81 AND 32. THE TRANSMISSION OR THE REVELATION OF ITS CONTENTS IN ANY MARNER TO AN
BOX IS PROBIBITED BY LAW.
Executive Report No. 3
Office of Lend-Lease Administration
470
STATEMENT OF LEND-LEASE AID
Semi-Monthly Report as of January 31, 1942
Type of Aid
Cumulative to
January 31, 1942
Month of January
From Lend-Lease Appropriations:
$957,790,889
$206,003,766
Articles Awaiting Transf. or Use
313,415,716
121,864,015
Articles in Process of M'f'r
121,581,800
16,989,970
Servicing, Repair of Ships, etc.
113,423,562
29,540,574
Rental and Charter of Ships, etc.
161,321,466
26,147,601
Production Facilities in U. S.
140,724,929
43,600,277
2,737,249
811,143
Defense Articles Transferred
Miscellaneous Expenses
$444,957,344
$1,810,995,611
Total
From Other Appropriations:
Defense Articles Transferred
Total Lend-Lease Aid
$190,410,919
$ 16,701,135
$2,001,406,530
$461,658,479
Cumulative to Jan. 31, 1942 (000 omitted)
Type of Aid
Russia
$ 895,413
$34,431
$25,163
13,868
572
Articles Awaiting Transf. or Use
295,390
Articles in Process of M'f'r
121,582
From Lend-Lease Appropriations:
Defense Articles Transferred
Total
Other
China
Br. Empire
2,784
$ 957,791
3,586
313,416
121,582
-
-
Servicing, Repair of Ships, etc.
Rental and Charter of Ships, etc.
106, 992
139, 180
-
6,400
-
6,066
15,538
31
113,423
537
161,321
140,725
-
Production Facilities in U. S.
140,725
-
66
2,737
2,223
346
102
$28,558
$8,707
$148,751
$4,395
$76,297
$17,868
$1,848,379
$58,862
Miscellaneous Expenses
From Other Appropriations:
Defense Articles Transferred
Total Lend-Lease Aid
WEANING
$190,411
$2,001,406
OF
THE
THIS DOCUMENT CONTAINS INFORMATION AFFECTING THE OR NATIONAL THE REVELATION DEFENSE OF OF THE ITS CONTENTS UNITED STATES IN ANT WITHIN MANNER THE TO UT HORIZED PERTRANSMISSION
THE
RAGE
32.
AND
31
50:
ACT.
U.S.C.
BOX IS PROMIBITED BT LAW.
EXPIO-
Executive Report No. 4
Office of Lend-Lease Administration
SECRET
471
STATEMENT OF TRANSFERS
FROM LEND-LEASE APPROPRIATIONS AND OTHER APPROPRIATIONS
Semi-Monthly Report as of January 31, 1942
Appro-
priations
British
China
L. L.
$ 17,039
$ 1,753
20,082
1,641
$ 1,361
$1,873
23,981
28,328
1,472
2,537
568
322
60
5,305
19,395
3,540
2,414
5,272
10,772
261
Other
L. L.
Ammunition
Other
L. L.
Aircraft
Other
Aircraft Engines, Parts, etc.
L. L.
Other
L. L.
Combat Vehicles
Other
Non-Combat Vehicles
L. L.
Other
$ 18,793
24,957
-
-
633
Total
Other
Russia
28,558
34,014
20
27,342
14,966
12
19,657
3,561
723
6,432
53,318
-
19,657
3,196
-
-
353
-
-
6,432
36,385
-
Ordnance (Excl. Ammunition)
Cumulative to Jan. 31, 1942 (000 omitted)
-
45,680
2,297
571
15,639
17,451
1,206
10,368
73,514
4,277
15
774
-
30,630
49,242
-
Vessels and Other Watercraft
Misc. Military Equipment
Agric. Prod's (Foodstuffs)
L. L.
Other
L. L.
30,630
49,242
Other
7,731
4,452
L. L.
334,778
Other
-
-
-
3,766
595
11
373
1,649
-
12,095
4,836
3
-
336,427
-
-
-
-
87,837
-
Agric. Prod's (Excl. Food)
L. L.
87,837
-
-
-
-
-
Other
-
36,705
-
Metals
L. L.
Other
35
L. L.
103,072
Other
L. L.
Fuel
Other
L. L.
All Other
Other
L. L.
Total
Other
2,030
-
35
-
-
-
3,413
4,219
110,704
-
-
-
-
354
807
103,095
104,255
-
-
-
-
-
61,411
1,194
1,325
$895,412
148,751
$34,431
4,395
11
169
64,842
1,205
1,937
-
-
Machinery
34,674
$25,163
28,558
$2,784
8,707
$957,791
190,411
THIS DOCUMENT CONTAINS INFORMATION AFFECTING THE NATIONAL DEFENSE OF THE UNITED STATES WITHIN THE MEANING OF THE
FACE ACT. U.S.C. so: 31 AND 32. THE TRANSMISSION OR THE REVELATION OF ITS CONTENTS IN ART MANNER TO AN UNAUTHORIZED PERBY LAW.
472
February 11, 1942.
NOTE FOR THE SECRETARY'S FILES
Mr. White telephoned Mr. Pinsent this morning to obtain
further information about the gold receipts discussed in their
statement submitted to the Treasury on February 10. Mr. Pinsent
was out and Mr. White spoke to Sir Frederick Phillips. He told
Sir Frederick Phillips that the Secretary had received word from
the President with respect to his inquiry as to the $600 million
take-cuts. The President had said that the time was hardly propitious to take up the matter. Sir Frederick Phillips said he
would discuss the matter further with his Ambassador.
Sir Frederick Phillips stated, in response to Mr. White's
questions on gold, that the paragraph which they had prepared on
that subject in the statement submitted on February 10 had been
received from London and they felt if any statement on gold needed
to be made before the Congressional Committee, it should be that
and there was no further information he could add about gold.
Sir Frederick also felt that we ought not give any detailed
information about securities. He felt it should be enough to say
we had given that information about securities the last time and
that no great change had taken place. He was concerned less any
further details might raise the question that might be raised as
to whether the decrease in the value of securities left adequate
cover in Mr. Jones' hands for the loans which he had made. He
therefore thought it might be preferable not to say anything about
it.
473
MEMORANDUM
Mr. Bell's testimony before the House of
Appropriations sub-Committee September 30th, 1941 included
an estimate of the balance of payments of the sterling area
for the six months ending February 28th, 1942. Leaving
aside (for reasons given further on) the British Purchasing
Mission payments, $500 millions, and gold transactions; viz.,
receipts $290 millions and payments $25 millions (the latter
being part of the item of $60 millions shown under Head c),
this statement showed for the six months continuing receipts
of $595 millions, and continuing payments of $510 millions.
Thus on the continuing items there was a net credit of $85
millions in six months or at the rate of $170 millions a
year. The entry of the United States into the war and the
outbreak of hostilities in the Pacific has profoundly altered
almost every item of these estimates. But the essential
change is that instead of a continuing surplus there is now
on current account a substantial deficit.
In an attempt to estimate the size of this deficit
the following table covering a period of three months only
from February 1st has been constructed, but the figures must
be taken with the utmost caution since changes are continually
taking place. The result shown is a net debit of 855 millions
in three months, or at the rate of $220 millions a year, but
it is probable that this will grow.
Dollar payments and receipts of recurrent type
for the three months from February 1st to April 30th, 1942
can be estimated ES follows. We exclude all gold transactions
and also dollar transactions of non-recurrent type (B.P.M.
payments, R.F.C. Loan, take-outs, etc.).
O
474
2-
PAYMENTS
$ M.
RECEIPTS
$ M.
U.K.
U.K.
Imports from U.S.
Shipping
Interest & Films
30
Exports to U.S.
25
25
Shipping
15
15
pledged)
Other payments outside
Lend-Lease
Rest of Sterling Area
Imports from U.S.
Shipping, interest etc.
other Dollar Payments
011 (U.S. owned sources)
Bolivian tin, etc.
Interest (not
20
Other receipts
5
20
25
Rest of Sterling Area
Exports to U.S.
Invisible
10
15
Other Dollar Receipts
Unidentifiable
15
85
10
225
Net Debit
80
55
225
By comparison with the picture shown in the previous table there is a worsening by approximately $390 millions
a year. The largest single item in this is, of course, the
loss of about $290 millions a year for Malayan exports to the
United States. Other items, show on balance of loss of $100
millions. Among the factors operating are a further decline
in United Kingdom and some Dominion exports as a result of
the concentration of effort on war purposes, the need for
greatly increased supplies of oil in the Far East which calls
for dollar expenditure and a decline in the residual item of
unidentifiable receipts.
It is not practical to make a close estimate of
2.
gold production. Some of the smaller sources of supply are
close to the fighting zone, The availability of all newlymined gold is affected by shipping conditions. In any case
British holdings of gold and U.S. dollars are not held solely
or specifically against our liabilities in the United States
but constitute a partial cover for obligations and responsibilities of great magnitude and world-wide character. Gold
currently acquired differs from our original stocks in that
it can be acquired only by further increasing our overseas
indebtedness.
The present British official holdings of gold and
U. S. dollars are indicated in the following table:
o
475
--
Gold and Dollar Holdings, January 31st, 1942.
$ Millions
Gold
465
Dollars
55
520
Less:
Scattered Gold 52
Reserve against
immediate
liabilities
10
62
458.
3.
This leaves us with an estimated current dollar
deficit at the rate of $220 millions per annum, and with
the non-recurrent liabilities of the British Purchasing
Missions amounting to about $415 millions as at February 1st,
1942. This last figure allows for take-outs already agreed
and can be reduced to $340 millions by the non-recurrent
receipts of $75 millions in respect of the balance of the
R.F.C. Loan. This gives a total dollar deficit of about
$560 millions in the coming twelve months, and a probable
dollar deficit thereafter the size of which cannot well be
estimated at present. In the three months from February 1st
to April 30th, 1942 the estimated dollar deficit, assuming
the receipt in that period of the balance of the R.F.C. Loan,
is $165 millions made up as follows (neglecting minor items):
PAYMENTS
Net Current Deficit
B.P.M. Contracts
M.
55
185
240
Washington, D. C.
February 10, 1942.
RECEIPTS
R.F.C. Loan
Deficit
$ M.
75
165
240
COFY
476
(Handed to Mr. White by Mr. Pinsent
in Mr. White's office, Feb. 10, 1942)
MEMORANDUM
Mr. Bell's testimony before the House of Appropriations
sub-Committee September 30th, 1941 included an estimate of the
balance of payments of the sterling area for the six months ending
February 28th, 1942. Leaving aside (for reasons given further on)
the British Purchasing Mission payments, $500 millions, and gold
transactions; via., receipts $290 millions and payments 825 millions
(the latter being part of the item of 660 millions shown under Head c),
this statement showed for the six months continuing receipts of
$595 millions, and continuing payments of #510 millions. Thus on
the continuing items there was a net credit of $85 millions in six
months or at the rate of $170 millions & year. The entry of the
United States into the war and the outbreak of hostilities in the
Pacific has profoundly altered almost every item of these estimates.
But the essential change is that instead of & continuing surplus
there is now on current account a substantial deficit.
In an attempt to estimate the size of this deficit the
following table covering a period of three months only from February 1st
has been constructed, but the figures must be taken with the utmost
caution since changes are continually taking place. The result shown
is a net debit of 855 millions in three months, or at the rate of
$220 millions a year, but it is probable that this will grow.
Dollar payments and receipts of recurrent type for the
three months from February 1st to April 30th, 1942 can be estimated
-2-
477
as follows. We exclude all gold transactions and also dollar transactions of non-recurrent type (B.P.M. payments, R.F.C. Loan, take-
outs, etc.).
PAYMENTS
SM.
S.N.
RECEIPTS
U.K.
U.K.
Imports from U.S.
Shipping
Interest & Films
Other payments outside
Land-Lesse
Best of Sterling Area
Imports from U.S.
Shipping, interest etc.
Other Dollar Payments
011 (U.S. owned sources)
Bolivian tin, etc.
30
Exports to U.S.
25
25
Shipping
15
15
Interest (not
pledged)
20
Other receipts
5
20
Rest of Sterling Area
85
25
Exports to U.S.
Invisible
15
Other Dollar Receipts
Unidentifiable
10
Net Debit
225
80
10
15
55
225
By comparison with the picture shown in the previous table
there is a wersening by approximately $390 millions a year. The
largest single item in this is, of course, the loss of about $290
millions a year for Malayan exports to the United States. Other
items, show on balance of loss of $100 millions. Among the factors
operating are a further decline in United Kingdom and some Dominion
exports as a result of the concentration of effort on war purposes,
the need for greatly increased supplies of oil in the For East which
calls for dollar expenditure and a decline in the residual item of
unidentifiable receipts.
2.
It is not practical to make a close estimate of gold
production. Some of the smaller sources of supply are close to
478
3-
the fighting sone. The availability of all newly-sined gold is
affected by shipping conditions. In any case British holdings of
gold and U.S. dollars are not held solely or specifically against
out liabilities in the United States but constitute a partial cover
for obligations and responsibilities of great magnitude and world-
wide character. Gold currently acquired differs from our original
stocks in that it can be acquired only by further increasing our
overseas indebtedness.
The present British official holdings of gold and U.S.
dollars are indicated in the following tables
Gold and Dollar Holdings, January 31st. 1942
Millions
465
55
Gold
Dollars
520
Lean:
Scattered Gold
Reserve against
52
immediate
liabilities
10
62
=
458
3.
This leaves us with an estimated current dollar deficit
at the rate of 8220 millions per annum, and with the non-recurrent
liabilities of the British Purchasing Missions amounting to about
8415 millions as at February 1st, 1942. This last figure allows
for take-outs already agreed and can be reduced to 8340 millions
479
-4-
by the non-recurrent receipts of 875 millions in respect of the
balance of the R.F.C. Loan. This gives a total doller deficit of
about $560 millions in the coming twelve months, and a probable
dollar deficit thereafter the sise of which cannot well be estimated
at present. In the three months from February 1st to April 30th, 1942
the estimated dollar deficit, assuring the receipt in that period of
the balance of the R.F.C. Loan, is 8165 millions made up as follows
(negleeting minor items):
PAYMENTS
Net Current Deficit
B.P.M. Contracts
S.M.
55
185
240
Washington, D. C.
February 10, 1942.
RECEIPTS
R.F.C. Loan
Deficit
she
75
165
240
TREASURY DEPARTMENT
480
INTER-OFFICE COMMUNICATION
DATE
TO
Secretary Morgenthau
FROM
Mr. Dietrich
February 11. 1942
STRICTLY CONFIDENTIAL
Official sales of British-owned dollar securities under the vesting order
effective February 19, 1940:
Shares Sold
-
Jan. 19
$ Proceeds of Nominal Value $ Proceeds of
-
of Bonds Sold
Bonds Sold
-
Sold
-
No. of Shares
-
-
-
20
-
-
-
21
-
-
22
-
-
-
-
-
23
-
-
24
-
-
-
-
-
-
Sales from
Feb.22,1940
to Jen.17,1942 9,847,595-1/6
281,858,230
Sales from
Feb.22,1940
to Jan.24,1942 9,847,595-1/6
281,858,230
45,610,016
37,437,648
45,610,016
37,437,648
A
For Miss Chauncey
481
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
February 11, 1942
Secretary Morgenthau
FROM Mr. Dietrich
STRICTLY CONFIDENTIAL
Official sales of British-owned dollar securities under the vesting order
effective February 19, 1940:
$ Proceeds of
Shares Sold
$ Proceeds of
Bonds Sold
Total
-
Jan. 19
-
-
-
-
20
-
-
-
21
-
-
22
-
-
-
23
-
-
24
-
-
Sales from
Feb.22,1940 to
Jan.17,1942
281,858,230
37,437,648
319,295,878
281,858,230
37,437,648
319,295,878
Sales from
Feb.22,1940 to
Jan.24,1942
$ proceeds of non-vested securities sold
Jan. 12, 1942 to Jan. 17. 1942
$ proceeds of non-vested securities sold
Sept. 1, 1939 - Jan. 10. 1942
$ proceeds of non-vested securities sold
Sept. 1, 1939 - Jan. 17. 1942
319.295.878
300,000
241,300,000
241,600,000
241,600,000
560,895,878
GRAND TOTAL
$
Jan. 7. 1942 - Cash Dividend on 156 shares
61
125
Jan. 9. 1942 - Partial Liquidating Dividend
9 Units sold from Aug. 18, 1941 - Jan. 24, 1942 for
11 Shares Stock Dividend sold Aug. 18, 1941 - Jan. 24, 1942 for
56,007 Rights sold from July 24, 1941 - Jan. 24, 1942 for
A
42
123
102,938
Wiss Chauncey
482
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE
February 11, 1942
Secretary Morgenthan
TO
FROM
Mr. Dietrich
STRICTLY CONFIDENTIAL
Official sales of British-owned dollar securities under the vesting order
effective February 19, 1940:
No. of Shares $ Proceeds
of Nominal
Bonds Sold of
of BondsValue
Sold $ Proceeds
Shares Sold
Sold
-
-
4
2/5
-
Jan. 26
-
27
-
28
-
-
525
-
29
5
-
30
-
-
31
-
529
-
5-2/5
Sales from
Feb. 22, 1940
to Jan.24,1942
Sales from
Feb.22,1940
to Jan. 31, 1942
9.847.595-1/6
281,858,230
9,847,600-17/30 281,858,759
45,610,016
37,437,648
45,610,016
37,437,648
So :
Miss Chauncey
483
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE February 11, 1942
TO
Secretary Morgenthau
FROM Mr. Dietrich
STRICTLY CONFIDENTIAL
Official sales of British-owned dollar securities under the vesting order
effective February 19, 1940:
$ Proceeds of
$ Proceeds of
Shares Sold
Bonds Sold
4
-
4
-
Jan. 26
Total
-
27
-
-
28
-
-
-
29
525
30
525
-
-
-
-
31
529
-
Sales from
Feb.22,1940 to
Jan.24,1942
529
281,858,230
37,437,648
319,295,878
281,858,759
37,437,648
319,296,407
Sales from
Feb.22,1940 to
Jan. 31,1942
$ proceeds of non-vested securities sold
Jan. 19, 1942 - Jan. 24, 1942
$ proceeds of non-vested securities sold
Sept. 1, 1939 - Jan. 17. 1942
$ proceeds of non-vested securities sold
Sept. 1, 1939 - Jan. 24, 1942
319,296,407
300,000
241,600,000
241,900,000
GRAND TOTAL
241,900,000
561,196,407
61
$
Jan. 7. 1942 - Cash Dividend on 156 shares
Jan. 9, 1942 - Partial Liquidating Dividend
9 Units sold from Aug. 18, 1941 - Jan. 31, 1942 for
11 Shares Stock Dividend sold Aug. 18, 1941 - Jan. 31, 1942 for
56,007 Rights sold from July 24, 1941 - Jan. 31. 1942 for
125
42
123
102,938
A
HIGH Chauncey
TREASURY DEPARTMENT
484
INTER OFFICE COMMUNICATION
February 11. 1942
DATE
Secretary Morgenthau
TO
FROM Mr. Dietrich
STRICTLY CONFIDENTIAL
Official sales of British-owned dollar securities under the vesting order
effective February 19, 1940:
$ Proceeds of
$ Proceeds of
Bonds Sold
Shares Sold
Total
-
-
Feb. 2
-
-
-
3
-
4
31,004
31,000
4
-
5
-
6
-
or
-
7
31,000
31,004
281,858,759
37,437,648
319,296,407
281,858,763
37,468,648
319,327,411
4
Sales from
Feb.22,1940 to
Jan.31,1942
Sales from
Feb.22,1940 to
Feb. 7,1942
$ proceeds of non-vested securities sold
Jan. 26, 1942 - Jan. 31, 1942
$ proceeds of non-vested securities sold
Sept. 1, 1939 - Jan. 24, 1942
$ proceeds of non-vested securities sold
Sept. 1, 1939 - Jan. 31, 1942
319,327,411
300,000
241,900,000
242,200,000
242,200,000
561,527,411
GRAND TOTAL
$
61
125
Jan. 7, 1942 - Cash Dividend on 156 Shares
Jan. 9, 1942 - Partial Liquidating Dividend
9 Units sold from Aug. 18, 1941 - Feb. 7. 1942
11 Shares Stock Dividend sold Aug. 18, 1941 - Feb. 7. 1942 for
56,007 Rights sold from July 24, 1941 - Feb. 7. 1942 for
A
42
123
102,938
Miss Chauncey
485
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE February 11, 1942
Secretary Morgenthau
TO
FROM Mr. Dietrich
STRICTLY CONFIDENTIAL
Official sales of British-owned dollar securities under the vesting order
effective February 19. 1940:
No. of Shares
$ Proceeds of
Sold
Shares Sold
-
$ Proceeds of
Bonds Sold
-
-
-
Feb. 2
Nominal Value
of Bonds Sold
-
-
-
3
-
-
4
10-3/5
5
-
31,000
31,000
4
-
-
-
b
-
-
-
7
31,000
31,000
9.847.600-17/30 281,858,759
45,610,016
37,437,648
9,847,610-1/6 281,858,763
45,641,016
37,468,648
10-3/5
Sales from
Feb.22,1940
to Jan.31,1942
Sales from
Feb.22,1940
to Feb.7,1942
4
A
486
February 11, 1942
My dear Sir Arthur:
Thank you for your letter of Febru-
ary 5 and your memorandum on the shipping
position.
I appreciate your summary of the
present situation and should be glad to
have you keep me informed of future developments.
Yours sincerely,
Sir Arthur Salter,
British Merchant Shipping Mission,
Box 165, Benj. Franklin Station,
Washington, D. C.
Jilanim.C.
487 &
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE February 10, 1942
Secretary Morgenthau
TO
Mr. Kamarck
FROM
Subject:
1.
Summary of Memorandum on the Allied Shipping Position
(Excluding oil Tankers)
Transport capacity available in 1942 will be at best roughly
equivalent to that available in 1941.
Million Gross Tons
Shipping tonnage available now
is less than it was at the
beginning of 1941 by
2
Shipping losses in 1942 due to
the extension of the war are
likely, at a minimum, to be
as large as those of 1941, or
Total potential subtraction
4-1/2
6-1/2
The construction program for
1942 contemplates:
5-1/2
U.S. production of
U.K. and Canadian production of 2
Total potential addition
7-1/2
Potential change in 1942 is
a net addition of
1
2. New demands in 1942 are likely to require 3 to 4 million
tons of shipping more than was needed in 1941.
The Russian program will need 1 million tons of shipping
continuously. Other new 1942 demands for shipping result
from the Pacific War, the dispatch of U.S. forces abroad,
and the increased naval demands for auxiliaries.
-3.
488
To meet the new 1942 requirements, it will be necessary
to cut other demands (U.S. imports, the most likely candidate) and, probably to restrict or reject military movements otherwise practicable.
(a) The transport of supplies to the Middle East Armies
has to be maintained or even increased.
(b) Imports into the United Kingdom in 1941 were already greatly restricted. (30 million tons arrived
in 1941, while the original program was 43 million
tons. In 1917, the worst year of the last war,
imports totaled 34 million tons.)
(c) The amount of shipping used for maintaining essential services of the British Empire and other areas
or diverted to use as naval auxiliaries was severely
curtailed in 1941.
(d) 25 million tons of imports were carried into the
U.S. in 1941. (This was not compressed in 1941 and
by inference is, therefore, the most likely candidate for restriction in 1942.)
489
Box 165
TELEPHONE REPUBLIC 7955
BENJAMIN FRANKLIN STATION
WASHINGTON D. C.
Kanark
BRITISH MERCHANT SHIPPING MISSION
L
withing
February 5, 1942.
Dear Mr. Secretary:
In the Spring and early Summer of last year, when
the heavy shipping losses necessitated a compression of British supply
services and an urgent appearl for American assistance, you showed a
keen personal interest in the month-to-month developments; and I used
to sumarize the main shipping facts for you, both in writing and in
personal talks.
Later, as the losses declined and an adjustment,wos
worked out, though upon a much lower level of imports for the U. K.
than in the previous year, these periodical reports to you were dis-
continued.
It has occurred to me that now that the shipping
problem has been transformed by the Pacific Wer, the intensified enemy
attack, and the increased demands for transport for Russia and for the
conveyance of American troops and stores, you might be interested to
have a summary of the situation from time to time.
I enclose, for your personal and confidential use,
a note sumarizing the principal facts. This should be regarded as a
purely personal (and provisional) appreciation. Admiral Land and it
myself will doubtless be producing a combined picture soon, but and will in
take a little time for our combined organization to get going, without
the meantime I thought you might care to see what is available
waiting.
It is, I think, already clear that we shall feel the the
shortage of shipping this year more seriously than we did even operation in
last war. For grave as the situation was in 1917, no military in its
I think, rejected, or seriously restricted or impaired But this
was, lack of transport for sea=borne supplies. will have year to
efficiency military movements, by otherwise practicable and discirable, be
rejected - or at least restricted - for this reason.
Yours sincerely,
Citi Sales
Arthur Salter.
Hon. Henry Margenthan,
U. S. Treasury,
Washington, D. C.
490
Pecret
MERCHANT SHIPPING IN 1942
###########
Leases in 1941 and since
Losses in 1941 (British, Allied and Neutral) were 4 million gross tons. Since
about two-thirds of this loss occurred in the first half of the year, we might
have expected a lower total for 1942 but for the extension of the war.
with this extension we must expect losses to be at least equal to 1941 and
probably greater.
The notified losses in the last four completed weeks (Jen. 11 to Feb. 1) amounted
to 477,000 gross tons, or an annual rate of 6t million gross tons.
The U. S. building programme for 1942 is 8 million d.w. tons or about 5) million
gross tons, the British programme (including Canada) about 2 million gross tons.
Output should, therefore, exteeed current losses in the year. But the new ships
will only become gradually available, and a large proportion will make only one
completed voyage in the year. And we start 1942 with 2 million tons less than
1941.
Taking this into adcount one fact emerges clearly: even if losses are only 4
million gross tons the total transporting capacity in 1942 cannot exceed that of 1941.
The Record of 1941 and the Prospects for 19/2.
It follows that new demands in 1942 on tonnage can only be net by a corresponding
reduction of services carried out in 1941.
The shipping at the disposal of theAllies and the U. S. A. in 1941 (excluding
tankers)
1. imported 30 mil. tons (excluding oil) into the U. K.
2. maintained the Middle East Campaigns
3. furnished naval auxiliaries (including about 50 armed merchant cruisers)
4. imported about 25 mil. tons into the U. S. A.
5. maintained essential supplies of the British Empire and certain other areas.
(The Russian programme came too late to affect other imports seriously in 1941).
The extra demands in 1942 are
a. The Russian programme, requiring for its full execution at least 1 mil.
tone of shipping continuously employed.
b. The needs of the Pacific War.
c. The transport and maintenance of additional U. S. forces.
d. Naval demands for additional merchant ships (as air carriers, etc.).
The extra demands cannot yet be evaluated exactly. They can hardly amount 12 mil. to
less that 3 - 4 mil. tons - equal to the shipping needed to transport tons of the
the Atlantic. So far as they can be net, it can only be at the expense tending to
across enumerated above. Of these five the second is compressed
increase. five existing All services the others except the fourth have already been severely 194
position.
The The best U. K. measure imports of the stringency of shipping is to be found in the volume of
U. K. imports.
The U. K. imported (excluding oil) 52 mil. .44tons . in in 1938 the 1st year of the war.
in 1941
30
.
.
.
.
.
. . . . . . . 34 . in 1917, the
worst completed
year of the last war.
.
Theprospects
for 1942 are much
the first quarter
now at
their disposal,
withworse.
the Inshipping
of the
year
the
Ministry of War Transport
mil. 5%
tons.
Thisrate
is
U. K.estimate
from all that,
sources
lower
they equivalent can only to load an annual tHer rate the of only 21 mil. tons - and a still of importa,
since some cargoes will be lost enroute.
491
This note does not deal with the special problems of passenger-type
vessels for troopers, and of tankers and oil supplies, which need
separate discussion.
Its purpose is to indicate, in broad outline, the magnitude of the
problem of reallocation and compression that confronts the tooy-the
departments in each of the two Governments conserned with the management of shipping, with production and supply dependent upon sea-borne
imports, and with military operations - and the corresponding new
"Combined Boards now being established in Washington and London.
7.8.5,4r
February 11, 1942.
492
The Secretary of the Treasury
To:
From:
A. Manuel Fox
Subject: Possible Uses of the Loan to China
A rough sketch of the uses to which a loan can be put in China are briefly:
(1) Reserve against note issue.
Currency regulations in China require the legal tender to have a backing of
100 percent, 60 percent in cash and 40 percent in securities. At the end of
December 1941 the note issue amounted to a little over 15 billion Chinese dollars,
the cash reserve consisting of about 50 per cent of the note issue. Under the
best of conditions prevailing the note issue at the end of 1942 will probably
amount to CN$22 to 24 billion. To maintain an adequate reserve of foreign exchange
for this large note issue will require a fund of 300 to 350 million U. S. dollars.
(2) Guaranteed loan and saving certificates to absorp fapi
The Chinese Government could issue U.S. dollar-backed or preferably gold bonds
and saving certificates redeemable through the Stabilization Board of China to be
sold to the people. About 100 to 200 million U.S. dollars could be used for this
purpose. To the extent that it becomes popular and is effective, the Government
would have to print less currency and borrow less from banks to finance its internal deficit and the people who now find goods the most attractive hoarding medium
will be encouraged to disgorge their hoards, thus increasing the supply of goods
on the merket.
(3) Loans to finance small-scale industrial production and also agricultural
production. With respect to small-scale industrial production, the very fact that
China is cut off to such an extent from her former supply bases makes it the more
imperative to stimulate internal production. Some 50 million dollars could be used
for this purpose.
(4) From 50 to 100 million dollars could effectively be utilized for miscellaneous purposes such as the readjustment of the land tenure and to ensure flow of
essentials from India and Russia,
493
C
0
P
Y
FEDERAL RESERVE BANK
OF NEW YORK
Fiscal Agent of the United States
February 11, 1942.
Sir:
Attention: Mr. Frank Dietrich
We enclose for your information copy of cable
No. 1 dated February 3, 1942, received by us from the
Stabilization Board of China, Chungking, China. You will
note that the cable instructs us to delete the names of
William H. Taylor and Wei Yin Lin from the list of those
authorized to operate the accounts of the Stabilization
Board of China.
In this connection we wish to mention that we
had not previously been informed of the designation of
Wei Yin Lin as an alternate member of the Stabilization
Board of China, and that the letter dated August 14, 1941,
addressed to the Secretary, Federal Reserve Bank of New
York by the Stabilization Board of China, transmitting
autographed specimen signatures of the members of the
Board, which was received by us with your letter of January 16, 1942, did not contain autographed specimen signatures of either Mr. Taylor or Mr. Lin. Accordingly, we
would not have been in a position to honor any instructions bearing the signatures of those gentlemen.
We also enclose for your files a copy of the
cable we dispatched to the Stabilization Board of China,
Chungking.
Respectfully,
(s) D. J. Cameron,
D. J. Cameron,
Manager, Foreign Department.
The Honorable,
The Secretary of the Treasury,
Washington, D. C.
Enc.
494
COPY
INCOMING CABLEGRAM
February 3, 1942
Chungking, February 3, 1942
Federal Reserve Bank of New York
New York
No. 1
William H Taylor and Wei Yin Lin, alternate
members of the Stabilization Board of China, are detained by enemy action in Hong Kong. We hereby request
you to delete their names from the list of those authorized to operate the accounts of the Board. Any cheques,
letters or instructions bearing these gentlemen's signatures dated after December 7, 1941 should not be
honored without reference to the Board.
Stabilization Board of China.
495
COPY
OUTGOING CABLEGRAM
February 3, 1942
Stabilization Board of China,
Chungking
No. 2
Your No. 1 received.
Federal Reserve Bank of New York
Copy : bj 1:2-12-42
Treasury Department
Division of Monetary Research 496
Date February 13,
142
Secretary Morgenthau
From: Mr. White
To:
Subject: Proposed Cuban currency issue
against gold from United States
Stabilization Fund.
You may be interested in the attached
telegram indicating that the Cuban Government
has decided to adopt a recommendation of our
Technical Mission providing for the issue of
Cuban currency against gold to be purchased
from the United States Stabilization Fund on
credit.
I spoke to you before I went to Cuba
about the possibility of the Stabilization
Fund making such a sale of gold. At a meeting with Under Secretary Bell on November 24-before the Mission's first report was transmit d to Cuba--he approved this proposal and
11 was later presented to you orally.
All that will be involved is for the Fund
to stand ready to sell up to $5,000,000 in
gold to the Cuban Government on credit.
Agai nst this gold the Cuban Government will
issue fully-backed peso currency with which
its Stabilization Fund can buy dollars. These
dollars will immediately be used to pay us
for the gold.
MR. WHITE
Branch 2058 - 2141
497
TRB
This telegram must be
being
paraphrosed communicated before to anyone
other than a Governmental
agency. (BR)
Habana
Dated February 11, 1942
REC'D 6:15 p.m.
Secretary of State,
Washington.
52, February 11, noon.
Department's telegram no. 66, February 10, 7 p.m.
Cuban Government's proposed issue of silver
certificates is based upon alternative proposal B
and involves action by United States stabilization
fund in conjunction with purchase of gold. Embassy's airmail despatch no. 3439 of February 10
contains copy and translation of presidential message
of February 7 giving full details of proposed operation.
Dollar today at per. One of the American banks
here informs ME that our Treasury intends to ship
(without deduction of transportation costs) dollar
currency to Cubc in liquidation of nolasses shipments;
this should of course materially EASE currency
stringency situation.
BRIGGS
GT
498
SECRETARY OF STATE
in waterland Minin
DEPARTMENT OF STATE
WASHINGTON
February 11. 1942
My dear Mr. Secretary:
With reference to your letter of February 6,
1942, concerning the continued shipment of gold
from French North Africa to Germany, I enclose a
copy of a communication which I am sending to the
President in this respect.
Sincerely yours,
Fo the Secretary of State:
Ajch
Under Secretary
Enclosure:
Copy of communi-
cation to the Presi-
dent as stated above.
The Honorable
Henry Morgenthau, Jr.,
Secretary of the Treasury.
PORDEFENSE
BUY
WATER
MANGA
ADDRESS
They
to
81
499
Department of State
Eu
BUREAU
DIVISION
ENCLOSURE
TO
Letter drafted
2/10/42
ADDRESSED TO
Secretary of Treasury
1-1033
500
February 11, 1942
STRICTLY CONFIDENTIAL
My deer Mr. President:
Reference is made to your memorandum of
February 9, 1942, transmitting A letter and its
enclosures from the Secretary of the Treasury,
dated February 6. 1942, relating to the continued
shipment of gold from French North Africa to Oermany.
You will recall that verious shipments have
taken place over 8 period of more then 9 year and
in the past we have indicated to the French Government our opposition to these shipments and have trens-
mitted protests from the Belgians in regard to the
movement of their gold.
I agree that it would be desirable to stop, in
so far as possible, the delivery of this gold to Germany.
The President,
The White House.
501
2-
A copy of Murphy's telegram from Algiers, dated
January 20, 1942, with the suggestion that the con-
traband traffic night be stopped if one of the planes
were to be intercepted, has already been communicated
to the British, and I shall make a copy of the further
memorandum from the Secretary of the Treasury available
to them with the same suggestion.
Faithfully yours,
Sumner Welles
502
TELEGRAM SENT
HRL
This telegran must be
peraphrosed before being
consunicated to anyone
other than a Governmental
February 11, 1942
à p.m.
agency. (BR)
AMEMBASSY,
LIMA (PERU). .
TRIPLE PRIORITY.
122
Your 129. February 10, 10 a.m.
In VIEW of the assurances of Minister of Encienca
Dasso and of other statements MADE in cobles received
here to the Effect that the gold was received for
completion of commercial transactions mode prior to
December 7. 1941. you may certify consular invoices
covering the amount of gold referred to in your 129.
HULL
(FL)
FD:FL:ME
503
CABLE
To:
Federal Reserve Bank of
New York, N.Y.
From: Ankara
Date: February 10, 1942
Rec'd: February 11, 1942
No. 13
Please buy for our account 145,000 ounces fine
gold to be held with you earmarked for the purpose of
increasing our reserves. Debit our dollar account with
the equivalent and cable result.
(Signed) Banque Centrale de la Republique
de Turquie
(Rec'd by phone from F.R.B., N.Y. Feb. 11, 1942, 11:20 a.m. - imc)
Note: At $35 per ounce. 145,000 ounces equals $5,075,000.
504
TREASURY DEPARTMENT
INTER-OFFICE COMMUNICATION
DATE February 11, 1942
TO
Secretary Morgenthau
FROM Mr. Dietrich
CONFIDENTIAL
Registered sterling transactions of the reporting banks were as follows:
Sold to commercial concerns
Purchased from commercial concerns
£109,000
£ 13,000
Open market sterling remained at 4.03-3/4, with no reported transactions.
The Cuban peso continued to decline. At today's close it was offered at a
premium of 1/4% as compared with the high of 7/8% reached on February 9.
The Uruguayan free peso moved off 15 points to close at .5295.
In New York, closing quotations for the foreign currencies listed below were
as follows:
Canadian dollar
11-5/8% discount
Argentine peso (free)
.2364
Colombian peso
Mexican peso
.0516
.5775
.2065
.2800
Brazilian milreis (free)
Venezuelan bolivar
Upon instructions from the National Bank of Iceland, the Federal Reserve Bank
of New York purchased 30,000 Swiss francs at .2332 from the Manufacturers Trust
Company. The latter made its sale conditional upon the Swiss franc transfer being
approved by the Swiss authorities. The National Bank of Iceland needs this exchange
to cover Swiss watch shipments to Iceland.
We sold $5,075,000 in gold to the Central Bank of Turkey and $4,389,000 in
gold to the Bank of Portugal. These amounts were added to the earmarked accounts
of the banks named.
In order to increase the Stabilization Fund's gold balance, we purchased
$350,000 in gold from the General Fund through the New York Assay Office.
The Federal Reserve Bank of New York reported that the Bank of Canada was
shipping $3,277,000 in gold from Canada to the Federal for account of the Government
of Canada, for sale to the New York Assay Office.
505
-2-
In London, spot and forward silver remained at 23-1/2d and 23-9/16d
respectively, equivalent to 42.67 and 42.784.
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 35-1/80.
We made no purchases of silver today.
CONFIDENTIAL
A
506
BRITISH EMBASSY
WASHINGTON, D.C.
PERSONAL
AND SECRET
11th February, 1942.
Dear Mr. Secretary,
I enclose herein for your personal
and secret information a copy of the latest
report received from London on the military
situation.
Believe me,
Dear Mr. Secretary,
Very sincerely yours,
(For the Ambassador)
R.J. Campbell
The Honourable
Henry Morgenthau, Jr.,
United States Treasury,
Washington, D.C.
507
Copy No. 13
BRITISH MOST SECRET
(U.S. SECRET)
OPTEL No 48
Information received up to 7 A.M., 10th February, 1942.
1, NAVAL
Photographic reconnaissances on the ninth showed the three German
ships still at BREST with four destroyers and TIRPITZ at TRONDHEIM.
The Free French corvette yesterday reported sunk is still afloat
and in tow,
A 9,000 ton Norwegian tanker was torpedoed on the morning of the
9th off North West SCOTLAND but is still afloat.
2. MILITARY
LIBYA. A column which moved out to attack the enemy on the 7th
reached a point 13 miles south of TIDII on the 8th. Progress was slow owing to
the nature of the ground and well-concealed enemy artillery. A South African
Patrol encountered the enemy nine miles west of GAZALA and another patrol reached
a point 18 miles south-east of MEXILI without making contact.
SINGAPORE. During the night 8th/9th, enomy landed at several
points on the north-west coast of SINGAPORE ISLAND under cover of very heavy
artillery fire. Considerable infiltration was made before darm and strong enemy
parties had reached the neighborhood TENGAH-BULIM (four miles inland from north-
mest shore) by mid-day 9th. A counter-attack at TENGAH by A.I.F. is thought to
have been unsuccessful. Our troops are withdrawing under pressure to a general
north-south line SUNGEI KRANJI-SUNGEI JURONG, about three miles west of BUKIT
TIMAH on the SINGAPORE-JOHORE BAHRU road, The enemy attack is supported by con-
stant dive-bombing and machine-gunning, Both coast defence guns at PASIR LABA on
the west coast were put out of action by enemy dive-bombing and were later demolished by our own troops. Northern area has been comparatively quiet with
intermittent enemy artillery fire, particularly directed on PAYA LEBAR and the
the west end of the naval base. Damage and casualties slight.
3. AIR OPERATIONS
LIBYA. 7th/8th. 11 Wellingtons bombed BENGHAZI and BERCA aero-
dromes and covered successful mine laying by other Wellingtons,
8th. Blenheims destroyed one aircraft on the ground at DERNA
aerodrome and Kittyhanks acting as escort destroyed three German fighters in the
air. Four Kittyhawks lost, one pilot safe.
2-
MALTA. During the 8th and 9th a total of seven Junkers 88 and
32 Messerschmidts 109 bombed TAKALI. Anti-aircraft damaged one Junkers 88,
SINGAPORE. 8th. Enemy aircraft made three heavy attacks in the
CHANGI and TENGAH area but caused no serious damage. Hurricanes probably destroyed one bomber and damaged two more.
9th. Our fighters were in the air almost continually throughout
the day against greatly superior numbers. They destroyed two enemy bombers and
probably destroyed three fighters and damaged nine others. Two Hurricanes were
lost, Enemy landings necessitated evacuation of TENGAH aerodrome and the des-
truction of some Swordfish aircraft.
508
TREASURY DEPARTMENT
509
INTER OFFICE COMMUNICATION
DATE February 11,1942
TO
FROM
Secretary Morgenthau
Mr. Kamarck
Subject: Highlights of Report on German Casualties in Russia
to the end of the German offensive on December 8.
1. So far as it can be determined from making A number of
independent estimates, the Germans suffered at least 2,000,000
to 2,400,000 casualties in Russia to December 8. The consensus
of opinion of our military attaches on Germen casualties is
that they total around 2,000,000. According to these figures,
the German casualties, at a minimum, amount to 25 to 30 percent of the total German armed forces.
2. German figures of their casualties are certainly false.
According to Hitler's figures covering the war to December 1,
they were experiencing a lower rate of casualties than they
had in the campaign against the ill-equipped, poorly led, and
demoralized French army. The first Nazi casualty report issued
for the Russian campaign to August 31, clearly appears to be
based on Russian figures of Russian casualties. The Russians
had admitted a casualty rate of 11,500 per day, 80 the German
rate was taken as one-half of this or 5,750 per day.
3. In the second official casualty list, there seems to
be a clue as to the true German casualties which may have been
planted there to reveal how the figures were concocted. which appears The
"missing" are given as totalling 33,334 - a number
to be an arbitrary third. If, acting on this belief, the official
German casualty figures are multiplied by three, the result is
total German casualties of 2,400,000, a figure which corresponds
to our other estimates.
tain
4. Russian estimates of German casualties generally main-
a fixed ratio with Russian casualties: the estimates of
Germen casualties are usually 2.8 times the Russian casualties.
TREASURY DEPARTMENT
510
INTER OFFICE COMMUNICATION
DATE February 11,1942
TO
Secretary Morgenthau
FROM
Mr. Kamarck
German casualties in the Russian Campaign to the end
of the German offensive on December 8.
Subject:
Summary
So far as it can be determined, the Germans suffered
at least 2,000,000 to 2,400,000 casualties, or a rate of
12,000 to 14,000 a day, in their great offensive against
the Russian army which ended on December 8. The range of
2,000,000 to 2,400,000 is derived from making a number of
independent attempts at estimating the German casualties.
This estimate agrees fairly closely with the consensus of
opinion of the U.S. Military Attaches in Europe, (12,500
German casualties a day.)
According to the official German figures of their
casualties in Russia, they experienced a lower casualty
rate than in the Battle of France. There is a strong presumption, therefore, that the German figures for casualties
in Russia are inaccurate. By examination of these figures,
it would seem that they were concocted by applying arbi-
trary ratios to the Russian figures.
Based on the experience of the Battle of France, the
German casualties in the Russian campaign must have been
at least 12,000 a day, or a minimum of 2,000,000 to Decem-
ber 8. Using Russian figures of Russian casualties as an
approximation of German casualties would give a rate of
14,000 per day, or a total of 2,400,000 to December 8. The
justification for this method of estimation might be based
on either one of two arguments, either that the Russians
would not admit higher casualties than they were convinced
the Germans had suffered, or that in view of the probable
reciprocal character of the Russo-German War, casualties
on both sides would be roughly equal.
-2-
511
Starting from a possible clue in the German official
casualty figures, it can be inferred that the correct
German casualties were triple the official figures, or
14,000 per day, giving a total of 2,400,000 to December 8.
Russian figures of German casualties appear to be
mainly based on an estimate of 25,000 German casualties per
day, resulting in a total of 4,000,000 to December 8. This
gives us the most probable maximum estimate for German
casualties. Working from two poor samples based on inadequate
data, we secure two minimal estimates. According to the
available data on German generals killed in Russia, a partial
total of German casualties to December 8 would be 970,000.
Based on the available Romanian figures on Romanian casualties, German casualties to December 8 would have been at
least 1,290,000. Both of the last two estimates, it is
to be noted, are greater than the official German figures
of 774,000.
1. The figures given by German official
sources of their casualties in the
Russian campaign can be re jected as
inaccurate.
Chancellor Hitler announced that the total German casualties in the Russian campaign to December 1 were 773,515. Not
knowing the correct figures, we cannot definitely prove that
these figures are incorrect. However, it can be shown that
there is a strong presumption that these figures are wrong.
It cannot be argued that the Germans are too truthful
to put out false figures. One hardly needs to refer to
Hitler's well-known dictum about making a lie big. Even
if the German army wished to deny the doctrines of its
supreme commander, there is good basis for such action being
in the stream of the German military tradition itself.
Admiral Scheer, for example, said, in commenting on
the British concealment of the loss of the battleship
Audacious in the last World War: "In the case of the Audacious
we can but approve the English attitude of not revealing a
weakness to the enemy, because accurate information about
the other side's strength has a decisive effect on the decisions taken. W (My emphasis, quoted in Churchill, The World
Crisis, Volume I, p. 431.)
3-
512
According to the German figures covering the period
to December 1, the average casualty rate in Russia, from
June 22 to December 1, was 4,775 per day. The Germans
had announced previously their casualties in the Battle
of France. In this battle, casualties were low enough
and the victory great enough to lead to the conclusion
that the casual ty figures announced were most probably
accurate. In the Battle of France, from June 5 to June
25, the German daily casualty rate averaged 4,813 - or
a figure greater than that now announced as the casualty
rate for Russia. This is manifestly absurd. In the Battle
of France, the Germans were opposed by a force of 65 divisions at most, which already felt whipped. The Germans
had command of the air and crushing superiority in equipment, fighting ability, and morale. As opposed to this
in Russia, the Germans have encountered a force several
times larger than the French army, much better equipped,
much better led, and fighting with unbreakable morale.
Therefore, the German figures must be regarded, it would
seem, as inaccurate.
If we assume that the German statement of their
casualties is a fabrication, it is likely that the figures
were built up on some logical basis. We will not know
definitely until after the war how this was done, but we
might be able to make some plausible deductions even now.
The first German casualty figures for the Russian
campaign were not issued until September 19. The Russians
already had announced their casual ties up to August 22.
On September 19, the Germans announced that they had cap-
tured 1,800,000 Russian prisoners to August 31 and that
the number of dead Russians was at least as high. If one
takes a conservative estimate of two wounded for every man
killed, according to the German figures, the Russian
casualties must have amounted to at least 7 million. Now,
even if the Germans sincerely believed that the Russians
had had 7 million casualties, they would not have announced
their own true casualties if these were higher than the
casualties the Russians had announced for the Russian army.
A propagandist as astute and unscrupulous as Hitler would
reason: "The Russians announce they have 700,000 casual-
ties. We know they have had more. But if we announce our
casualties as, say, 800,000, most people are just stupid
enough to believe both us and the Russians. For these
people, we must announce our casualties as lower than the
Russian figures of their casualties.
-4-
513
Now, if one places himself in the position of the
German who had the job of concocting the casualty figures
to be issued, one can imagine his thoughts running somewhat as follows: "We are being taunted with having enemy
suffered huge losses." (The communique stated
propaganda, intended to weaken the importance of German
successes, which the enemy is unable to deny, has invented
German losses in the field alone at from 1,500,000 to
2,000,000.") "The Russians have admitted casual ties of
700,000, so we must announce casualties a great deal leas.
How much less? A good convenient fraction would be onehalf. According to the Russian figures, they have been
experiencing casualties averaging 11,500 per day. The
figures to be announced on the German casualties must
be, therefore, at a rate of 5,750 per day."
No sooner said than done. At a rate of 5,750 per
day for the seventy days to August 31, total German casualties would come to 402,500. The actual total announced by
the German High Command for this period was 402,960. As
far as the breakdown between dead, wounded and missing is
concerned, the actual ratios experienced in the campaigns
could be applied, or the experience of earlier campaigns
could be used. What was done, we do not know. In any
case, it might be noted that the ratio between dead and
wounded in the figures announced, 1 to 3.5, coincides
with the ratio of dead and wounded in the German casualty
table summing up the experience of all the preceding campaigns of the war.
The Germans did not issue any more German casualty
figures until December, when Hitler stated that the German
casualties to December 1 amounted to 773,515. The question
comes up: Is it possible to figure out how the Germans
derived these figures?
First of all, the Germans did not continue to use the
daily casual ty rate of 5,750 used in September. For the
period from June 22 to December 1, a rate of 5,750 would
have resulted in a total casualty figure of 930,000. This
may have been regarded as too high. The Russians had issued their own casual ty figures to November 22 which gave
them a casualty rate of 13,900 a day. If the method of
taking a rate which was half of the Russian rate had been
used, this would have given the Germans total casualties
of 1,126,000 to December 1. Again, this may have been
rejected as too high. The Germans may have actually adopted
-5-
514
one of two methods. First, they may have simply adopted
the rough casualty rate they e experienced in the Battle of
France, 1.e., 4,800 a day. At this rate, they would have
had 777,600 casualties to December 1. The figure that
was issued was 773,515 (if one uses 161 days, rather than
162 days, the total, at a rate of 4,800 a day, becomes
773,800.)
The other possible procedure may have involved using
the Russian figures as a starting point again. The Russians,
at the time they announced their own casualties to November
22, also announced their estimate of the German casualties.
According to the Russian figures, the German casualties were
2.8 times greater than the Russian casualties. In concocting
the German figures, the German concerned may simply have ar-
gued that he would follow suit and make the Russian figure
of Russian casualties that many times greater than the German
figures of German casualties, and gild the lily a bit by
raising the Russians by one-tenth. In any case, the ratio
works out that after the Russians published their figures
and then Hitler issued his: the Russian figures of Russian
casualties are 2.9 times greater than the German figures of
German casualties while the Russian figures of German
casualties are 2.8 times Russian figures of Russian casualties. This relationship may or may not be significant;
it is somewhat curious.
2. Based on the casualty experience of the
Battle of France, the Germans must have
experienced as a minimum, a casualty rate
of 12,000 a day, or a total of 2,000,000
casualties in the Russian campaign to
December 8.
In only one campaign prior to June 22 did the Germans
encounter an enemy organized to meet the German attack in
the slightest degree similar to the Russian methods of
defense: that is, the French army in the Battle of France
partly so organized its defenses. The so-called Weygand Line,
so far as it can be ascertained, was the only attempt made
by any of Germany's opponents before the Russian campaign,
to meet the threat of the German armored forces by organiz-
ing a defense position in depth for anti-tank defense. The
job was not well done: the French had only a few days to
prepare the Weygand defense in depth, very little anti-tank
515
-6
armament was available, tank forces were insufficient for
counter-attacks, the army's morale was crumbling, and air
support was lacking. After five days of hard fighting,
from June 5 to June 10, the Germans broke through the Wey-
gand Line and after that, operations were mainly of the
character of a pursuit of a beaten enemy, although some
hard fighting did take place in this latter period. As
it happens, the Germans had carried through two campaigns
previously, similar in character to the fighting that took
place from.Jun 10 to June 25. These were the Campaign in
Poland and the Battle of Flanders, May 10 to June 4. In
both of these two campaigns, the results were similar:
German casualties averaged 2,460 per day in Poland and
2,500 per day in Flanders. So far as the forces involved
which actually participated in the Battle of France, there
is not enough difference to rule out the use of this casualty
rate as a guide.
We might, then, assume that the German casualties from
June 10 to June 25 averaged 2,500 per day, according to the
foregoing argument. Then, since casualties averaged 4,800
per day for the entire campaign, German casualties from
June 5 to June 10 must have averaged 11,750 per day. That
is to say, German casualties in the Battle of France, when
conditions bore most resemblance to those on the Russian
front, were roughly 12,000 a day.
There is good reason to believe that the German casualties in Russia would average actually much higher than this
figure. As pointed out earlier, the opposition of the
French was far below the opposition offered by the Russians
to the Germans. The same is true of the fortifications the
Germans had to overcome. The Russians converted every city
into a fort to be taken. The French declared theirs to be
open cities and did not make use of the natural obstacles
that cities offer. The quantity of troops and equipment
involved, the quality of troops and equipment, all indicate
much greater opposition on the part of the Russians. The
very character of the warfare in Russia is naturally more
costly. The Germans have never been able to win complete
command of the air in Russia. As a result, obstacles and
troops which in France could be destroyed or neutralized
from the air, often have had to be taken the hard and
costly way by ground troops in Russia. The guerrilla warfare on the German flanks, the planting of thousands of
land-mines, all must make the Russian war more bloody than
the French campaign.
-7-
516
Note, for example, the description of Russian resistance even after encircled, in the Field Artillery Journal,
based on German sources: "Due to the tenacity of the Russian
defense and the way their troops preferred to fight and die
rather than to surrender, every encircled area became a
bloody battlefield. If it is remembered that the Russians
are very skilled in the construction of field works, that
they are masters of camouflage and know how to exploit to
the full the possibilities of every terrain feature, then
it can be understood that the desperate masses in the encircled areas utilized the areas for defense in a manner
that was most effective."
Considering the greater number of German troops used
in Russia, the greater number of Russian troops encountered
compared to the French; the fiercer fighting in Russia, and
the superior equipment, training and morale of the Russians,
it would seem safe to say that the German rate of casualties
in Russia would be much greater than that experienced in the
opening days of the Battle of France.
3. Russian figures of Russian casualties
might be taken as an approximation of
German casualties. This would give a
casualty rate of 14,000 a day, or a
total of 2,400,000 to December 8. The
justification of this procedure could be
either that the Russians would not admit
higher casualties than the Germans had
suffered, or that in view of the probable
reciprocal character of the Russo-German
War, casualties on both sides would be
roughly equal.
The Russians state that their casualties to November 22,
after five months of war totalled 2,122,000. This is a
casualty rate of 14,000 a day. If this rate continued to the
end of the German offensive on December 8, total Russian casual-
ties would have been 2,370,000. For a true appreciation of
the magnitude of these casualties, it is only necessary to
observe that this is 600,000 larger than the size of the whole
army of the United States at that date.
It has been suggested by an eminent American army officer
that the Russians must be convinced that the German casualties
are higher than the figures they are giving of their own
losses. Otherwise, the Russians would be providing the enemy
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517
with valuable information on their own weakness. There is
considerable merit to this idea. This argument justifies
use
of the Russian casualty figures as one estimate of German
casualties.
Russian casualty figures might be taken as a measure
of German casualties in still another sense. From the
descriptions of the Russo-German War reaching this country,
it is obvious that the Germans were constantly running up
against Russian prepared positions - either temporary or
permanent works. The Russians fought for and in every
important city. They laid anti-tank traps, mined roads,
prepared booby-traps, sprang ambuscades, and used every
device of defensive warfare open to them. It seems fair
to assume that the advantages of the defense were exploited
by the Russians to the fullest and - that the Germans had
to pay the price. Based on the previous campaigns of the
Germans, when they were able to win a complete victory over
grossly inferior foes, there is a tendency unconsciously to
swing to the opposite extreme from the Liddell Hart glorification of the advantages of the defensive and to assume
that the defensive is necessarily more costly than the offensive. This is, of course, a manifest absurdity, if erected
as a general rule. So far as it can be ascertained, the
strategy pursued by the Russians in the campaign to December
8 was to gain time by selling space to the enemy. The Germans
countered this by attempting to cut out sections of the front
by constant encirclements and so destroy the Russian army
piecemeal. The Russian active defense policy attempted to
offset this policy by counter-attacks. on balance, it is
difficult to gauge which side would necessarily suffer the
most casualties. The advantages the Germans gained by advanc-
ing and collecting their wounded and stragglers were offset
by the losses experienced from ambuscades and storming pre-
pared positions. Under these circumstances, where neither
side has yet won a decisive victory over the other, it may
well be that casualties on both sides may have approached
equality. Such a development has been pointed out as having
occurred in some of the last battles of the First World War.
Actually this cannot be regarded as a mysterious result.
Where neither side achieves a decisive victory and the combined
resultants of armaments, training, morale, position, and
leadership are fairly equally matched, in the c ourse of a
long battle, it is likely that casualties will be fairly equal.
The result arises out of the reciprocal nature of warfare a matter which was outlined even by Clausewitz over a century
ago. In a modern battle, the reciprocal action of war is
particularly evident. So far as the tactical units are con-
cerned, they may alternate between defense or offense, he ther
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518
their side is on strategic offensive or defensive. Units of
the side on the strategical defensive are, at times, forced
to maintain their position by counter-attacks, or to attack
to break out of an encirclement. Units of the side on the
strategical offensive likewise often find themselves on the
tactical defensive, trying to hold positions won against
counter-attacks.
Although numerous estimates or guesses have been made
as to the relative ratio between casualties suffered by the
Germans and the Russians, an assumption probably more tenable
than any other advanced based'on the description of the fighting, is that the casualties were probably fairly equal on
both sides during the German offensive to December 8.
Assuming that the losses of the Russians and Germans
are approximately equal, the Rus sian figures of their own
losses would give us an indication of the German losses. If
the published official figures of the Rus sian losses understate Russian losses, the indication they give of German losses
would then be too low. In any case, if the assumption of
approximately equal losses is correct, the Russian figures
would give us a lower limit of estimate of German losses.
The Russians gave out their casualty figures fairly frequently for the first five months of the war. An analysis
of these figures shows that the Russians averaged 14,000 casualties per day over the whole campaign. In the first weeks of
the great German offensive which began on October 2, the rate
of casual ties rose to 40,000 per day.
The Russian figures appear to be, on the whole, inter-
nally consistent. Their casualty rates appear to rise in
periods of great battles and sink during relatively quiet
periods. For example, in the second two weeks in August, the
Russian casualty rate, by derivation, is seen to be 7,000 a
day. This is to be contrasted to the 40,000 a day in October.
The Russians have a higher ratio of dead to wounded than
the Germans do according to their figures. The Russians state
that they have one man killed for every 2.6 men wounded. The
German rate was one man killed for every 3.5 wounded in all
the campaigns up to the Russian campaign. The German figures
of their casualties up to August 31 in Russia maintained the
same ratio. The German ratio for their casualties in the
Russian campaign from August 31 to December 1 was 1:3.7. This
519
- 10 -
is the same ratio that was developed in the Battle of France.
The higher Russian ratio of killed soldiers might be due to
their mode of fighting. All the German accounts emphasize
that the encircled Rus sian soldiers seldom surrender but
fight until killed. Since the Russians were generally retreating to December 8, the wounded who were not evacuated, either
died fighting or were taken prisoner and became "missing".
4. Based on a possible clue in the German
official casualty figures, it can be inferred that the correct German casualties
are triple the official figures, or 4,000
per day, giving a total of 2,400,000 to
December 8.
There is one method of deriving German casualty figures
which seems fantastic, but which might still be of value.
In this war, the fantastic has so often become the actual
(for example, the flight of Hess to England) that even the
fantastic must be considered. What is being argued here is
that there may be a clue in the casualty figures put out by
the Germans which may tell us how to derive the true figures.
In other words, somebody who had a hand in the concocting of
the published casualty figures may have slipped in a clue
which would help those on the outside to un-concoct them.
Now, as it happens, there is one number in the casualty
tabulation issued by the Nazis which may provide this clue.
That is, the number of German soldiers missing to December 1
was announced as totalling 33,334. This number clearly
suggests that the figures given are a third of the correct
total, or that the correct casualties are three times as
great as the ones published. If this is true, it would make
the correct German casualties to December 8 total 2,370,000
or an average of 14,000 per day.
This idea that some one connected with the creation of
the figures wished to betray the secret, may not be wholly
erroneous if a number of circumstances are remembered. First,
in spite of the facade of complete unity, there are undoubtedly
numerous Germans opposed to Hitler. One needs only to remember
that the Nazis were never able to win a majority of votes at
a free election. Opposition to the Nazis in the army is not
unknown. The murder of General von Schleicher, the German
Chancellor preceding Hitler, in the Nazi-blood purge of June
30, 1934 scarcely needs to be cited. Have General von Schleicher's
friends in the army completely forgotten and forgiven? The
death of Colonel-General von Fritsch, commander-in-chief of the
German army to 1938, in front of Warsaw may or may not be a part
of this pattern.
520
- 11 -
So far as the Nazi regime is concerned, there have been
several similar instances of this type of hint in official
releases. There was, for example, the incident of the news
release given out at the time of the Reichstag fire on February 27, 1933 which implied that the Nazis were the ones who
had set fire to the building. The Vossische Zeitung of March
1 gave a long account of the setting of the fire, based on
information it had secured from government sources. In the
midst of a long passage giving the official Nazi version of
the fire, there occurred the follow ng sentences:
"It is added that the other criminals may have
been able to escape through the subterranean
passages which, in connection with the heating
arrangements of the Reichstag, link the Reichstag
building itself with the building occupied by
the President of the Reichstag. In this connection, reference is made to the arrest of two
persons who telephoned from the Reichstag build-
ing asserting that the President of the Reichstag,
Goering, was the instigator of the incendiary
act, and stress is laid on the fact that the
people concerned were connected with the Social
Democratic Party and press."
These lines were undoubtedly inspired by the German Nationalists
in the Cabinet. (It will be remembered that at this time the
the Chancellor). Prior to this hint, not one person in a
Nazis were in a minority in the Cabinet, although Hitler was
million knew about the tunnel from the Reichstag to Goering's
home as President of the Reichstag. (The mysterious "two
persons" who are alleged to have accused Goering by phoning
from the burning Reichstag (1), never appeared again.) The
source of the official news pointed the finger at Goering as
the incendiary as obviously as he dared.
*
*
The whole report from which this section is taken is quoted in
The Brown Book of the Hitler Terror, "Prepared by the World
Committee for the Victims of German Fascism (President:
Einstein)", London, 1933, p. 73. The compilers of this book
overlooked the significance of the passage quoted in the text.
521
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Then, there is the naval communique of December 1939 on
the suicide of the captain of the Graf Spee in a hotel room
in Buenos Aires, cited by Shirer: "The High Command of the
Navy announces: The Commander of the Graf Spee, Captain Hans
Langsdorff, did not want to survive the sinking of his ship,
Having brought his crew to safety he considered his duty
fulfilled, and followed his ship. The navy understands and
praises this step. Cap tain Langsdorff has in this way fulfilled like a fighter and a hero the expectations of his
Fuhrer, the German people, and the navy." As Shirer points
out, the author of the communique does his best to hint that
Captain Langsdorff killed himself because of direct orders
to do so.
5. The public Russian estimate of German
casualties issued after five months of
war was 40,000 per day. 25,000 per day
appears to be the most used figure, how-
ever. At the latter rate, German casualties to December 8 would total 4, 200,000
In the course of the campaign, the Russians have, from
time to time, issued their estimates of German casualties.
In analyzing these estimates, we find the following casualty
rates used for different periods.
Period
Casualty Rate per Day
June 22 - July 5
July 6 - July 13
July 14 - August 2
August 3- August 22
August 23 - September 24
September 25 - October 5
October 6 - November 6
November 7 - November 22
54,000
38,000
25,000
25,000
9,000
64,000
42,000
94,000
Arithmetic Average-June 22-November 22 40,000
Median -June 22-November 22
40,000
After the initial impact of the invasion, by July 14, it
will be noted that the Russians seem to have settled on an
estimate of 25,000 casualties per day. The derived figure
of 9,000 casualties per day in the period August 23 to September
24 may have resulted from the Russians correcting their too high
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522
estimates for the first weeks of the invasion. This might be
inferred from the fact that the Russian estimate of total German
casualties for the war up to September 24, gave a daily average
of 25,000 a day.
On October 2, the great German offensive directed against
the Donetz and Moscow began. Under the emotional impact of
this danger, Russian published estimates of German casualties
increased after October 2, compared to the preceding months.
In view of the fierce fighting before that date, when both
armies were comparatively much stronger, it is not likely
that casualties increased as much as the figures indicate
(i.e., from 25,000 per day for the period before September 24,
to 64,000 per day during the next two months.) It is to be
noted, also, that the latest Russian figures available for the
campaign to December 8 are those of Russian journalists and
not of the army spokesman.
In view of this reasoning, it would seem that one might
recognize the true Russian estimate to be 25,000 per day, rather
than the 40,000 per day that is derived from the final Russian
figures.
At a rate of 25,000 per day, German total casualties to
December 8 would have amounted to over 4,000,000 men. Since
the total German army is estimated to number 7,500,000 in
ground troops and another 1,000,000 in the air force, the objection has been made that any casualties above 3,000,000 would
be incommensurate with the effort made by the German army. This
may well be so.
Nevertheless, it seems that there are certain considera-
tions which might modify this judgment. In the first place,
there is the unquestioned fact that the Germans have accomplished a number of things which had been earlier deemed to be
most improbable. The sweeping victories the Germans won, there
is reason to believe, were even beyond German expectations.
*
* Note, for example, the revealing remarks of General Metzsch.
"One could have guessed that the fifty-odd Polish divisions
would be so wretchedly led; but it was not to be expected.
To dare to occupy the Norwegian coast under the guns of the
superior British navy was a leap in the dark. No one could
be quite certain that it was possible, within a few days, to
penetrate into the heart of Netherlands fortifications, against
the obstacles in the country. Even in Belgium, a stronger
defense was thinkable than was actually offered at certain
points. The most modern border fortifications were reduced
in a matter of hours. In France, finally, the inferiority of
the enemy fell to almost fantastic proportions. (Rheinischfor the World,p. 228.)
Westfalische Zeitung,Sept 1,1940. Quoted in Max Werner, Battle
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523
In view of the ability shown by the Germans to solve the
difficulties of transport to the Eastern Front, they might likeimpact of such terrific casualties.
wise have the ability to keep their army going even under the
In the first World War, France suffered 6,200,000 casual-
ties or 73 percent of her total mobilized forces. Sixty-five
percent of the total mobilized German forces were casualties,
and 76 percent of the Russian army. If the figure based on
the Russian estimate of 25,000 German casualties a day were
accurate, Germany up to December 8 would have suffered casualties which were somewhat less than 50 percent of her total
mobilized forces, or much less than the losses suffered in
the First World War, which did not prevent the German army in
1918 from mounting the biggest offensive of the whole war.
If one, in addition, considers that more than three-fourths
of the casualties are wounded, who may return to duty, the
credibility of the 25,000 rate is further enhanced. In the
last war, accordin to Colonel Ayres in The War With Germany,
five-sixths of the wounded in the American army were cured
and returned to duty. Since 1918, the progress in medicine,
particularly in the field of anti-tetanus prevention and in
blood transfusion techniques should result in an even higher
proportion of complete cures.
Still, in spite of the foregoing discussion, it is quite
probable that the Rus sian figures may represent over-estimates
of German casualties. There are several reasons for this. One
is obviously the desire to make propaganda capital in the Axis
and occupied countries. Also, even though the Russians are in
a better position than any of the United Nations to make an
estimate of German losses, it is still quite true that prior
to their recent advances, even the Russian estimates could be
scarcely more than informed guesses. The Russians were al-
most constantly forced to give up territory and did not have
the check on their estimates that gaining the battlefield
affords. Casualties that were caused by the extensive Soviet
mining of abandoned positions and towns can only be guessed
at. That casualties from this source were fairly large can
be inferred from the German rage, several times publicly
expressed, at this practice. The Germans did announce the
death of one general, Major-General Braun, by a Soviet mine
on December 1, but they have not been cooperative enough to
give the complete total of their casualties due to this c ause.
524
- 15 -
Another drawback to the Russian figures is that they
may have been influenced by the natural psychological tendency
to overestimate the losses which one has inflicted on the
enemy.
The submarine sinkings of shipping in the last World War
provide a similar situation, where accurate knowledge of
the losses in question was vitally necessary for the knowledge
of how a decisive struggle was progressing. The German figures
over-stated actual British losses considerably, but the
Germans honestly and sincerely believed their figures were
correct, and bitterly accused the British of deliberately
lying. On the other side, the published British figures were
accurate, but since coastal and overseas traffic were lumped
together, they gave the misleading impression that losses
were much lower than they actually were. (This is clearly
pointed out by Sir Arthur Salter, in his book, the Allied
Shipping Control.)
On the whole, it would seem that the Russian figures of
German losses cannot be lightly discarded without consideration.
In studying the Rus sian figures of casualties issued at
various times during the war, we find that after the first
estimate, there is a fairly uniform ratio between Russian
losses and German losses. According to the first Russian
estimate, they were putting out of action four Germans for
every Rus sian. After this first estimate, however, all the
figures giving total German and total Russian casualties since
the beginning of the war maintain a fairly consistent ratio
of one Russian to every 2.8 Germans. The detailed table
follows:
Table
Ratio between Total Rus sian Casual ties
and Total German Casualties
at Various Dates.
July 13
August 2
August 22
October 5
November 22
1:4
1:2.8
1:2.9
1:2.7
1:2.8
(Russian Source)
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525
There are several possible explanations for the con-
sistency of the ratio used. It may be that the Russians,
based on experience, believe they are inflicting 2.8
casualties for every one they suffer and, therefore, get
their figures for German casualties based on their own.
Such a relationship cannot be set aside as al together impossible. If one is not dazzled by the results of the
decisive German victories in the west and reverts to the
experience of the last war, one can find numerous examples
of this. Churchill, for example, points out that, "The
Anglo-French offensives of 1915, 1916, and 1917 were in
nearly every instance, and certainly in the aggregate, far
more costly to the attack than to the German defense. It
was not even a case of exchanging a life for a life. Two,
and even three, British or French lives were repeatedly
paid for the killing of one enemy (The World Crisis,
Vol. 2, N.Y., 1923, p.4.) The German comment that the
Russians utilized the ground for defense "in a manner that
was most effective" is to be recalled in this connection.
Another possible reason for the existence of the ratio
is that it exists in practice and that Russian methods of
estimating German casualties independent of their own
casualty figures are accurate enough to show final results
which demonstrate the ratio.
A third possibility is that the Russians are fabricating
ures as a basis with a multiplier of 2.8.
the German casualty figures and using their own casual ty fig6. Working from an inadequate and incomplete
sample, 11 casualties of German generals
were perfectly representative of the whole
army, then, a partial total of the German
casualties to December 8 would come to
970,000.
One possible method of estimating German casualties might
be to base the estimate on the number of generals killed,since
we have more data available on the deaths of these gentry than
on the deaths of privates. There are several drawbacks to this
method. In the first place, it has been pointed out by the
British magazine, Aeroplane, that the Germans often deliberately
withhold the news of the loss of officers: the deaths of some
- 17-
526
German officers in the Norwegian campaign were not made public
for a year and a half. Secondly, American newspapers, which
were used as the source, may not report a German announcement
of the loss of a general officer. In November, for instance,
the New York Times carried a story of the death in action of
General von Briesen. General von Briesen's death was news
because, the account stated, he was the fifth general killed
in Russia whose death had been announced during the preceding
two weeks period. The deaths of the preceding four were not
individually reported. In other words, the death of a single
general was not news. There is also the difficulty that a
casualty due to the war may be reported by the Germans as a
natural death, or as due to an accident. Is it a mere coin-
cidence that the deaths of some of the most prominent German
military personnel have nearly all occurred during the Russian
war - but were not caused by the war? Colonel-General Ernst
Udet died in an accident in November; Colonel Werner Moelders,
Germany's most successful air ace, was killed in another accident in November; Field Marshal General Walther von Reichenau
died of apoplexy in January; near the first of February, Major
General Hans Georg Hofmann died of a heart attack; on February
8, Major General Fritz Todt, Reich Minister for Armament and
Ammunition was killed in an airplane crash "while carrying out
an official mission to the East." Finally, the assumption that
casualties among generals are representative of the whole army
is a dubious one. It is obvious in surveying the objections
to this mode of procedure, that all of the above points
would give a downward bias to the results. Therefore, the
casualty estimate derived in this way must be regarded as
considerably understating actual casualties.
According to the information available, the Germans have
announced the death of five specific division commanders.
Lieutenant General Arthur Muelverstedt, Major General Kurt
Kalmukoff, Major General Ritter von Webber, and Major General
Otto Lan celle, all commanders of divisions, were killed during
the summer. The death in action of Lieutenant General Frederich
Bergmann, commander of an infantry division, was announced in
December. There were also seven other generals killed whose
command was unspecified. Lieutenant General Joseph Leopold
was killed during the summer. General Kurt von Briesen
(commander of an army corps in France) was killed in action on
November 20, 1941 on the Eastern Front. The deaths of four
other generals announced around this time were not specifically
reported. On December 1, Major General Braun was killed by a
Soviet mine. In early September, Colonel General Ritter von
Schobert, commander of the German-Romanian Moldau Army was
killed in action.
The latest death in action of a general included in the
foregoing list, occurred on December 1.
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527
From examination of the information available on each
of the generals listed above, one can assume that it is
probable that they were divisional commanders or higher-ranking
officers. If we assume that they were all divisional commanders,
it would seem that in so far as these casualtics are used as
a sample, this assumption would create a downward, rather than
an upward bias. This is because one can fairly assume that
the chances of death of a corps commander or an army commander
would be smaller than those of a division commander.
On this assumption, then, the Germans suffered the loss
of 13 division commanders killed on the Russian front to
December 1. Using the German ratio of 1 killed to 3.6 wounded
and 1 missing to every 5 killed, this would mean that the total
casualties of German division commanders totalled 62.
If casualties of division generals represented a fair
sample of the casual ties of all ranks and figuring a division
as 15,000 men, German total casualties to December 8 would
have been 970,000 men. Nearly all the objections to the procedure of using the casualties among generals as a method
of estimating total German casualties are such as to give a
downward bias to the final results. Under the circumstances,
one can assume that the estimate erived, probably gives only
a partial total of German casualties. It is of interest to
note that the total so secured, 970,000, is still considerably above the German figure of 774,000.
7. German casualties, estimated on the basis
of admitted Romanian casualties and on the
weak assumption that these were representative of the whole Axis army, totalled at
least 1,290,000 by December 8.
Early in the autumn, the Romanian Government made an
announcement of their casualties in the war to October 6.
In view of the uncertain political situation in the country,
the government had very strong reasons to understate its
casualties. There are grounds for believing that casualties
may have been considerably higher than the figures announced.
As one indication of the punishment taken by this anmy, the
Chief of Staff of the army, General Jonescu, was killed.
figures are correct.
However, we will proceed on the assumption that the Romanian
According to the Romanian Government, the Romanian army
suffered 111,000 casualties up to October 6. So far as it is
divisions, or at 20,000 men to a division, a first-line strength
of 360,000 men. The 111,000 casualties represent, therefore,
a little more than 30 percent of the first-line strength.
possible to estimate, the Romanian army in Russia totalled 18
- 19 -
528
The Romanian soldiers, not being as good as the Germans,
would, for this reason, all other things being equal, have
greater casualties than the Germans would. On the other hand,
comparable German forces did considerably more fighting and
more of the harder fighting in a given period of time than
the Romanians did. On balance, it would seem that the Romanian
losses would be proportionately less than the German losses.
However, to be on the conservative side, it is assumed that
the Romanian casualties are representative of the German army.
The Germans are estimated to have used about 180 divisions
in the Russian campaign. Since they are believed to have had
300 divisions at the start of the campaign, they could main-
tain this force easily as far as considerations of numerical
strength available go. At 15,000 men per division, the total
number of German combatants involved in the Rus sian campaign
at one time would be around 2,700,000 combatants. Using the
Romanian rate of 30 percent casual ties up to October 6, the
Germans would have experienced 810,000 casualties - a rate
of 7,640 per day. Since the Germans started a new drive on
October 2, reinforcements would have kept the German army at
least at the level of 180 divisions. Carrying forward the
7,640 rate to December 8, based on these figures, the Germans
would have suffered 1,290,000 casualties. This, again, is more
than the admitted casualty total of 774,000.
529
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G-2/2657-220:
No. 628
M.I.D., W.D.
11:00 A.M., February 11, 1942.
SITUATION REPORT
I.
Pacific Theater.
Philippines: The fighting of the past week has somewhat sub-
sided. Against the Cavite shore line , counter battery firing was
effective. No reported changes in Mindanao. Propaganda broadcasts from
several temporary Army radio stations are reported to be having the
desired effect, and have resulted in Japanese counter propaganda efforts.
Hawaii: No further reports of enemy activity. Malaya: Japanese pressure increases as bitter fighting rages in the center of Singapore Island.
Press dispatches report the evacuation of women and children from the
city. The imminent loss of Singapore is conceded by allied opinion.
Burma: The Japanese have crossed the Salween River north of Houlmein,
and claim the occupation of Martaban. Australasia: An attacking force
of Japanese bombers was driven off by allied fighters at Surabaya
February 10. A Melbourne communique states four-engine Japanese bombers
raided Samarai in southeastern New Guinea on February 10. New landings
on New Britain are reported. West Coast: No reports of enemy activity
have been received.
II.
Eastern Theater.
There is no reported change in the situation. (A situation
map will not be issued this date.)
III. Western Theater.
No major activity reported. British aircraft raided Bremen
and Brest on February 10.
IV.
Middle Eastern Theater.
Ground: An official British communique announces that the
North African fighting front remains stabilized west of Tobruk. No
general change in the situation.
Air: Axis air activity directed jointly at ground troops cruiser and
lanes. Berlin reports bombers attacked a light British reconsupply in the Mediterranean on February 11. R.A.F. activities largely
naissance and raids against supply ports.
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