The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
195
Conference in Secretary Morgenthau's Office
Tuesday, May 19, 1942
10:40 A. M.
Present: Secretary Morgenthau
Mr. Breckenridge Long
Mr. White
The conference was held in Secretary Morgenthau's office at
the request of Mr. Breckenridge Long, Assistant Secretary of State.
Mr. White was called in after they had been apparently talking
for a few minutes.
Mr. Long stated that he was making inquiry about the progress
of the discussions between Mr. Hays and the Secretary. He stated
that inasmuch as the State Department had arranged the interview
through Mr. Early, he thought he ought to follow it up.
Mr. Long reviewed very briefly the situation, stating that the
State Department had made presentations to England a year ago on
behalf of the moving picture industry because it was a question
of some contractual obligations between an American firm and the
British Government which apparently was not being lived up to. It
was therefore a State Department matter and they had seen the thing
through, but that Mr. Hull had stated that this time the matter was
wholly financial and therefore should be taken up with the Treasury.
Secretary Morgenthau said that when the last arrangement was
made which provided dollars to the moving picture industry out of
British assets that he had not been conversant with the arrangements
and knew nothing about it until after it had happened and he was
informed of some of the details by the British Treasury. He said
he could not understand why it was a State Department matter then
at a time when the Treasury was considering how to maintain the
British dollar balances and why it should be a financial matter
now. Mr. Long explained that then it was merely a question of protecting the interests of an American concern on a contractual arrangement; whereas now there was no such question involved, it was
now a question of foreign exchange and wholly a Treasury matter.
Mr. White asked whether the State Department felt that the
moving picture industry had any special status which entitled it
to treatment different than that given other concerns that had
sterling blocked in England. Mr. Long responded that the State
Department did not feel it had a special status and that the mov-
ing picture industry was like any other industry. Mr. White asked
the same question in a different way to make certain there was no
misunderstanding on that point and received the same answer.
196
-
The Secretary said in that event there was nothing that
the Treasury could do because the Treasury never had and never
would give special favored treatment to one business as against
another. Furthermore, the Secretary said, if the State Department should come to feel that the moving picture industry did
have a special status, then it seemed to him that it was up to
the State Department to conduct the negotiations and not the
Treasury. The Secretary said that this did not refer to R.K.O.
which claimed it was in a serious financial situation. The
S.E.C. was studying that case and would report its views to the
Treasury.
Mr. Long said that he had asked Early to make the appointment with Secretary Morgenthau because Mr. Hays did not know
whether the Secretary would see him. Mr. Early was a little
reluctant but made the appointment when Mr. Long explained the
circumstances.
Secretary Morgenthau then went on to talk of the Argentine
situation. He urged the State Department to have men better
equipped to report the situation in South America with reference
to financial transactions having possible Axis interests. He
said that the Treasury had been engaged in a study and that el ther
Mr. Hull or Mr. Welles had seen the President. He went on to say
he also saw the President subsequently and that the President
told him to continue the study and he hoped the State Department
would make it possible for the Treasury to have the facts so that
the Treasury could present them to the State Department and the
President. The Secretary emphasized he had no desire to make
the decision, he merely wanted to make the facts available to
the President and to the State Department inasmuch as he felt it
was a dangerous situation.
After Mr. Long left it was decided that Mr. Hays should be
notified of the status of the negotiations inasmuch as Mr. White
had promised to keep Mr. Hays informed of the Treasury action.
Mr. White telephoned Mr. Hays in New York and explained to him
that the State Department did not feel the moving picture industry
was in a special status and that therefore the Treasury obviously
could not take any action in the matter. He also explained that
the sterling that might be needed for troop expenditures would
probably be supplied by the British.
197
-Mr. Hays seemed disturbed at the position the State
Department took and said they had informed him that they were
going to have a discussion with the Treasury that day and he
had planned to come down the next day to learn the results of
the discussion. He said he was coming down to discuss the
matter further.
now
H.D.White
198
May 19, 1942
3:14 p.m.
HMJr:
Hello.
Operator:
Secretary Wickard.
HMJr:
Hello.
Operator:
Go ahead.
HMJr:
Hello.
Secretary
lickard:
Henry?
Yes.
The other afternoon after I had lunch with you,
W:
when I came back from Cabinet meeting
10/Jr:
Yes.
.....I
HMJr:
started to send Paul Appleby a cable
Yeah.
and found one on my desk from him saying
that he would arrive here Saturday.
HMJr:
I see.
He arrived Saturday.
Mr.
W:
Yes.
He - I think it's almost unbelievable, but
before I left the office Saturday evening he
came in.
HMJr:
For heeven's sake.
W:
He had been in Iceland that morning, and in
HMJr:
Unbelievable.
Scotland at one-thirty the afternoon before.
It just doeen't quite seem believable, and I
199
2-
asked him about this report that you had about
the oatmeal and meat
HMJr:
Yeah.
and he said that's not true. Now, what
I think - and listen, he has some very interesting
information - not - I don't want to take your
time to hear it in detail, but it's on the atti-
tude of the people, and the change of viewooint
that the English people have encourages me very
much. Now, do you know the fellow, Schubart,
that went with him?
HMJr:
No, I don't.
He's with one of the New York banks
HMJr:
Yesh - oh, Schubart - yes, I know Schubart. Yes.
Yeah. I think he knows Harry White. I believe
he has an appointment with him this afternoon.
HMJr:
I know him.
I think you might be interested, and I told him
that you might be interested in seeing him. How
about us being - how about you coming over to
lunch tomorrow?
HMJr:
Well, I - let me just see a minute - no, I Knox and King are lunching with me tomorrow.
Hello.
:
Yes. Well, now you - I won't - I've got to 6°
up to New York on Thursday. You can have lunch
with him then. I won't be present, but you'll
get along better anyway.
HMJr:
No, no, that isn't so.
Yes.
HMJr:
No, I - it just so happens I'm booked - how
about Friday?
All right. I think perhape that'11 be all right.
200
-3-
I'll - if it isn't, I'll let you know very
shortly. And you'll come over here, or are we don't have too good facilities over
HMJr:
Well, why don't you come to my place, then?
Ye're SO much nearer for Cabinet.
Well, now, Henry, I don't want to eat with
you every Friday. Can't you make it every
other Friday? (Laughs)
HMJr:
Well, you
Well, I have been over there two successive
Fridays.
HMJr:
Well, what's the difference?
HMJr:
Well, there's a lot of difference.
Well, it's convenient for you.
I can't argue with you except just on principle.
Well, we - none of us can afford principles these
days.
We can't afford principles. (Laughs)
HMJr:
I'11 give you something to eat, and
W:
I know you'll give me something to eat. It's
HMJr:
just the temotations involved.
And we'll square it out some other way some
time. And you bring Appleby with you.
%:
And Schubart?
HMJr:
Hobert? Schubart.
Schubart.
Fine.
He has some slants on the financial thing which
I thought you'd be interested in.
201
4
Wr:
Shell we say quarter of one? That won't rush
us too much then. Friday.
No - whatever time you say.
HMJr:
Twelve forty-five.
Okay.
HMJr:
On Friday.
All right.
HRJr:
And that'11 be you and Schubart and
Appleby.
Appleby.
HMJr:
Yeah.
HMJr:
And that'11 be
And - I don't know - you can have - do you
want anybody else there? That's uo to you,
of course.
HMJr:
Oh, yes. Well, I'll
W:
Harry White or anybody. Just whatever you say
HMJr:
about that, but the three of us will be over.
I'll have Harry.
At twelve forty-five Friday. This looks like
a way of inviting myself to luncheon every
Friday. I don t like that.
HMJr:
That's all right. Just as long 8.8 you eat with -
use some of those silver nose ringe that - for
your
Y:
(Laughs)
HMJr:
.....
what did you get for your hogs?
202
-5What?
HMJr:
Did you get any copper nose rings for them?
Oh, yes. I finally found some.
HMJr:
Ah hah.
Yeah.
HMJr:
What do you get, a priority on them?
No. I found a fellow that had some put away,
and I bought twelve hundred of them and he
almost died. I seid - he said, "What are you
going to do with all these?" Well, " I said,
I've got six hundred head of pige.
il
HMJr:
I see.
(Laughs) He finally caved in and let me have
them. I felt a little guilty.
HMJr:
(Laughs) Okay.
All right.
HMJr:
Thank you.
203
May 19, 1942
3:19 p.m.
HMJr:
Hello.
Operator:
Leon Henderson.
HMJr:
Hello.
Leon
Henderson:
Hello.
HMJr:
Leon.
H:
Yee, Henry.
HMJr:
I got your letter on that question of that
publicity, see.
H:
Yeah.
HMJr:
And what I'm doing is just on my own. I'm
going to forget about it.
Uh huh.
So if the President ever says anything to me,
I'11 just say, "I forgot about it."
H:
I see. Well, we're - the newspapers just
hammered on this "X" card thing with the
Senators, and I've been having enough trouble
down there on our appointments - our state
appointments.
HMJr:
H:
Yeah.
We run into about the same thing you did, I
guess, on - only in a greatly megnified degree and I just - I'm trying to get along - I've
been seeing Phil Murray and his fellows and
so forth, and I just don't want to get any
further along.
HMJr:
H:
Well, you tell your boys to keep their mouths
closed, you see. I mean that
Yeah.
204
-2 HMJr:
Ithis
mean,
in otherrequest.
words, that - you know, on
particular
Yeah. Yeah.
HMJr:
H:
HMJr:
And the chances are nine out of ten that the
President will forget about it.
Yeah.
If he should call me and say, "Well, why didn't
you do it?" I won't say - I won't bring you in.
I'll say, "Well, it just slipped my mind."
H:
HMJr:
Uh huh.
But I know just how you feel, and to be used
as a guinea pig at this time, my sympathy is
with you.
H:
We've got plenty of battles, but we're going
to win them.
HMJr:
Well, my sympathy is with you, and I'm willing
to absorb that much.
Well, thanks very much, Henry.
HMr
H:
HMJr:
H:
HMJr:
Yeah. Well, you're doing all right.
(Laughs) Well
You got a good press today, I think, on your
price ceilings 88 of yesterday.
Yes. Yes, things went very well.
Yeah. And I'm trying to find out what that
deal was on these shipbuilders in connection
with bonds. I haven't - no one's told me A
darned thing.
H:
Well
HMJr:
I've told our people to get in touch with the
Department of Labor and see if they can't find
205
-3-
out what it's all about.
H:
HMJr:
Well, it's the eight cents extra, I think.
I know, but no one has told us, and from
reading the press release, I don't think
anybody's thought through how they're going
to handle it with bonds.
I don't think they have either.
HMJr:
Yeah. But
It's a big job.
What's that?
It would be 9 big job trying to piece that
out.
Yeah. Well, keep up the good work, Leon.
All right.
Good-bye.
206
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
MAY 19 1942
TO
Secretary Morgenthau
FROM
Mr. Hase
Subject: Price trends for commodities not subject to
general ceiling order.
In response to your request, I am submitting the following data on commodities exempt from the OPA ceiling order.
List of exempted commodities.
The general OPA price ceiling order, which imposes retail
and wholesale price ceilings on most commodities at the highest
March sale price, specifically exempts the following commodities
and groups of commodities:
(1) Raw and unprocessed agricultural commodities,
except bananas.
(2) Eggs and poultry.
(3) All milk products, including butter, cheese,
condensed and evaporated milk.
(4) Plain flour.
(5) Mutton and lamb.
(6) Fresh fish and seafood, and game.
(7) Dried prunes, dry edible beans, leaf tobacco,
nuts (except peanuts), linseed oil, linseed cake and
linseed meal, mixed feed for animals, and manure.
(8) Living animals, wild and domestic.
(9) Books, magazines, motion pictures, periodicals,
newspapers and materials furnished for publication by
any press association or feature service.
(10) Domestic ores and ore concentrates.
(11) Stumpage, logs and pulpwood.
-2-
207
(12) Stamps and coins; precious stones; antiques
and knotted oriental rugs; paintings; etchings,
sculptures and other objects of art.
(13) Used automobiles.
(14) Wood and gum for naval stores, and naval stores
prior to sale to industrial consumers, or prior to the
first sale to a distributor.
(15) Securities.
(16) Sales by a farmer of commodities grown and pro-
cessed on his farm, if the total of such sales or deliveries does not exceed $75 in any one calendar month.
(17) Used household and personal effects sold by owner.
(18) Food and beverages sold for consumption on the
premises.
(19) Sales by a breeder, trapper, or hunter of
pelts, furs or other parts of wild animals raised, shot
or killed by him, if the total does not exceed $75 in any
one month.
(20) Non-profit sales by religious, charitable or
philanthropic organizations, if the sale is conducted
for not more than 15 days.
Price movements for 19 exempted commodities.
The attached table shows wholesale price movements during
two significant periods for 19 important commodities exempt
from the ceiling order. Wholesale prices were holding
generally stable during the first week of December, prior to
the Pearl Harbor attack. We have therefore taken that week's
prices as a base and calculated the percentage change for each
commodity to the week prior to that in which the general price
ceiling order of April 28 was announced. These percentage
changes are shown in Column A of the table. Commodities show-
ing the largest advances in this period, it will be noted,
were rice, linseed oil, hogs, flaxseed, and poultry, in the
order named.
Price changes from the week before the ceiling announcement to the latest date available are shown in Column B of
the table. It will be noted that in this period lamb prices
showed the outstanding increase, rising 27.8 percent, but
in the earlier period they had shown no advance. of the other
-3-
208
18 commodities, 7 have risen since the week before the ceiling
announcement, 6 have declined, and 5 have held unchanged.
Price movements for 8 of the more important commodities
in the above group are shown graphically in the attached chart,
which shows weekly prices since the beginning of 1941 and
daily prices since April 1, 1942.
Attachments
209
Wholesale prices of selected commodities
not covered by price ceiling
Percent change
week ending
Prices,
April 25, May 16,
over
over
Dec. 6, April 25, May 16, Dec.
6
April 25
1942
1942
1941
week ending
Commodity
Unit
(In dollars)
Rice
Wheat
Corn
Oats
Barley
Rye
Flour
Flaxseed
Linseed oil
Beans, dried
Butter
Cheese
ggs
Poultry, dressed
Hogs
Steers
Lamb
Condensed milk
Cotton
1b.
bu.
bu.
bu.
bu.
bu.
bbl.
bu.
1b.
100 lbs.
1b.
1b.
doz.
1b.
100 lbs.
100 lbs.
.053
.083
.083 1 56.6
1.129
1.171
- 4.0
.836
.565
.885
.744
.849
.573
.905
.743
13.9
11.2
10.6
12.2
6.075
1.905
5.850
2.625
5.950
2.600
.100
.141
.143
5.700
5.250
.373
.258
5.250
.375
.258
.296
.280
13.950
13.375
.230
5.900
.202
1.176
.734
.508
.800
.663
.345
.273
.354
.225
10.100
11.825
.305
.285
14.000
14.175
1b.
.180
.180
case
5.900
5.900
1b.
(A)
.171
.202
1 Week ending May 9; none available for May 16.
Source: Bureau of Labor Statistics.
- 3.7
37.8
41.0
- 7.9
8.1
5.5
-13.8
26.7
38.6
19.9
0.0
0.0
18.1
(B)
0.0
3.7
1.6
1.4
2.3
- 0.1
1.7
- 1.0
1.4
0.0
0.5
0.0
- 3.0
- 1.8
- 0.4
- 5.6
27.8
0.0
0.0
PRICE MOVEMENTS OF SELECTED COMMODITIES NOT COVERED BY GENERAL PRICE CEILING
DAILY
WEEKLY
1941
PER BU
CORN
1941
CENTS
PER LA
CORN
No 3. Chicado
No 3, Chicago
1942
1942
CENTS
DOLLARS
PER BU.
DOLLARS
DAILY
WEEKLY
1942
1942
PER LA
HOGS
Good Choice Chicago
15
HOGS
Good to Choice Chicago
86
14.8
90
M
14
84
Vur
80
82
14.4
13
12
14.3
70
80
11
MAY
APRIL
JUNE
1.23
1.35
WHEAT
WHEAT
No.: Hard,Kenses City
No. H Hard, Kanses City
.
1.45
13.6
10
78
60
13.2
1.20
12.8
7
1.25
LIT
MAY
APRIL
1.15
STEERS
n
1.14
JUNE
14.4
15
STEERS
14.4
Good to Choice
Good Chicago
mm
4
Chicago
1.05
LU
2
95
1.08
85
10
14.2
14.0
13.8
134
134
APRIL
JUNE
MAY
BUTTER
BUTTER
38.4
40
WHEAT FLOUR
PER
PER BAL
WHEAT FLOUR
Std Patents Minneapolis
7.00
Score
92 Score, Chicago
Chicago
Std Patents
6.30
JUNE
39.0
42
DOLLARS
DOLLARS
MAY
APRIL
1.05
75
18
37.8
31
marring
620
6.50
34
6.10
32
37.2
36.6
360
6.00
30
6.00
35.4
28
5.50
5.90
MAY
APRIL
JUNE
215
22
5.00
580
COTTON
COTTON
10 Seot Markets
10 Seet Markets
21.0
5.70
4.50
20
5.60
4.00
20.5
20
APRIL
MAY
JUNE
DOLLARS
PER #
2.70
PER BU.
FLAXSEED
FLAXSEED
200
2.75
Minneapolis
/v
un
18
DOLLARS
16
2.70
195
250
245
14
2.30
190
260
1.90
1.70
anner
255
12
185
250
180
10
as
2.45
.
APRIL
1942
MAY
JUNE
APRIL
1941
1942
MAY
JUNE
1942
1942
Source ALS extent wheet flour date which - USDA
nge effective
..
210
Delly and weekly office not entirely comparable
One day week. except cotton which date average
P-241
211
May 19, 1942
4:29 p.m.
HMJr:
Hello.
Operator:
Miss Tully is out of the office for the
HMJr:
Miss
Operator:
Miss Brady is there.
moment.
Operator:
All right. Let me talk to her.
All right. Miss Brady.
HMJr:
Hello.
HMJr:
Miss
Brady:
Hello, Mr. Secretary.
HMJr:
How are you?
B:
Fine.
HMJr:
Good. Would you tell Grace when she comes
back to see if - I know it's only Tuesday,
but I've got some more financing to do, and
I'd like to be put down if I could for eleven
o'clock Friday.
B:
Eleven o'clock Friday.
HMJr:
Yes.
B:
All right. I'11 have her call you.
HMJr:
Would you do that please?
B:
Yes, sir.
HMJr:
I thank you.
cc - Dr. White
212
May 19, 1942
4:33 p.m.
HMJr:
Hello.
Operator:
Mr. Berle. Go ahead.
HMJr:
Hello.
Mr. Adolf
Berle:
Hello, Henry.
HMJr:
Yes.
B:
HMJr:
B:
HMJr:
I suppose the time is pretty rapidly approaching
when we're going to have to do something in the
way of financing some of these governments in
exile who are also maintaining guerilla warfare
and resistance in their own countries. For our
own minds here, we're running out a small edition
of the China Act, with power in the President to
do the financing that night be needed. How does
that strike you for an idea, and how might we
best go at it?
Well.....
You're familiar with the problems, 80 I won't
go into it at length.
No. Well, I tell you, it sort of catches me
unprepared. I haven't been thinking about it
because so far no one - none of these countries
have needed any money. They all had plenty
of money.
B:
Well, there's one of them that has already.
HMJr:
Which ie that?
B:
Poland.
HMJr:
Poland. Well, I don't know, but I'll tell you
what I'd like you to do. I'd like you to have
a preliminary talk with White about it.
B:
All right. I rather feel that - I'll do that.
I rather feel that probably some sort of an
213
-2arrangement that worked out in the China Act
might serve as a guide here, except that there
HMJr:
B:
HMJr:
has to be some liberty to allocate.
I see. Well, would you talk with White about
it preliminarily?
I'll do that with pleasure.
And then I'd be glad to sit down with the two
of you after that.
B:
Just whenever you like.
HMJr:
Yes. Just as soon as the two of you are ready.
B:
All right.
HMJr:
Thank you.
B:
Good bye.
214
May 19, 1942
4:45 p.m.
WAR SAVINGS BONDS
Present:
Mr. Graves
Mr. Bell
Mr. Buffington
Mr. Gamble
Mr. Haas
Mr. Tickton
H.M.JR: What I want to ask is, which is all the
more important we have this meeting, when I see these
figures today - the F and G are down to 83.3 of the
quota, and Mr. Gamble walking me over to lunch yesterday
merrily told me of some plans that he had, how he was
going to get the quota, and I think he said have twenty-
five million plus in the vest pocket besides.
MR. GAMBLE: I said I thought twenty-five million
dollars might be the difference between our making or
missing our quota. Mr. Graves has suggested that we
should do something about it, and out of the conversation
he had us call Mr. Young in Chicago. Mr. Sparks was
talking to him, and we visited with Mr. Manning in New
Jersey, Mr. Pope and Mr. Ford, Mr. Patterson in New York.
We had a special meeting with them about this F and
G matter, and a S a result of it Manning, for example, has
called together some twenty, twenty-five of his leading
bankers. He fortunately caught them in convention in
Atlantic City and arranged this meeting for yesterday,
some of his county treasurers and persons who have had
access to trust funds, trustee officers of banks, to give
them this problem of raising several millions of dollars
of extra money in the next few days. We told them it
J
215
-2-
couldn't go until the last few days or it might not get
credit in the May sales. We had a similar meeting in New
York. Mr. Young in Chicago headed it - formed the committee, headed by Mr. Stuart of Halsey-Stuart Company,
and he says that it is a very simple matter for them to
go out and sell some five to seven million dollars' worth
of bonds, money that would probably trickle in some time
during the year; but they will concentrate on the next
ten days, and they will keep us advised of their progress.
H.M.JR: We have to get from the eighteenth through
the twenty-ninth, F and G, a hundred million dollars.
MR. GRAVES: To make the quota?
H.M.JR: Yes.
MR. GRAVES: That's right.
H.M.JR: We have taken in a hundred and fifty, and
the quota calls for two hundred and fifty.
MR. GRAVES: Have we taken in that?
H.M.JR: Yes.
MR. BELL: If it keeps that up, it is all right.
MR. GRAVES: Here (indicating on chart) is the sale,
one twenty-three. That is the amount of the sale against
this quota.
H.M.JR: Yes, you have a difference between - you
have got to practically get one hundred and twenty-five million.
MR. GRAVES: Except that we are substantially over
the quota on E.
MR. BELL: We have to sell eight million a day.
H.M.JR: Yes, but that--
216
3-
MR. GRAVES: At any rate, our point is that we want
to make this May quota. It would be very bad if we didn't.
H.M.JR: You have got to make the two fifty. Well,
supposing something should go wrong on the E, supposing
we do something, I do something, that gets the people,
like this Donald Duck thing - God forbid - or we have an
OCD incident, or something like that, where the people
slow up.
. MR. GRAVES: Well, I think we are going to be well
over on the E bonds; not much of anything is going to
happen to prevent that.
H.M.JR: Yes, but you are short a hundred twentyfive million.
MR. GRAVES: I think we are over as much on the E
as under on the F and G.
H.M.JR: Ted Gamble said - what were you promising
me yesterday?
MR. GAMBLE: I told you we thought we should make
an additional drive to get twenty, twenty-five million to
be safe on this quota.
H.M.JR: That isn't what you told me. You told me
it was in the bag.
MR. GAMBLE: I told you this, as Mr. Graves just
stated, that we believed, and in talking to these bankers
and from the information they gave us on the F and G sales
on all these months, that we don't have any concern about
making a hundred percent; we may as well have an additional
twenty-five million, not be worrying about the last few
days of the month.
H.M.JR: But the quota thing is arranged to allow
for the increase.
MR. GRAVES: No, it hasn't allowed for any monthly
217
-4increase. It is all weekly. The mid-point of the month
there is the mid-point of the quota, which I think is
probably wrong.
MR. BELL: It hasn't been running that way?
MR. GRAVES: No, the sales are usually improved in
the latter days of the month.
MR. BELL: That's right.
MR. GAMBLE: Our heaviest F and G sales come the
last ten days of the month.
H.M.JR: Let me start all over again, because yesterday you gave me the impression it was in the bag. Now, I
don't get that feeling. There can't be any slip-up on
this thing.
What can you do, Buffington, to help on this F and
G business?
MR. BUFFINGTON: The committees in New York,
Philadelphia, Chicago, and Cleveland would be the most
effective committees to work with on short notice. I
think that if we went to Young and got him to go beyond
Stuart - as I understood it, talking to him on another
matter this morning--
H.M.JR: Excuse me, did you have a preliminary
meeting on this, as I suggested?
MR. GRAVES: Yes, we did.
MR. BUFFINGTON: I was talking to Mr. Stuart, and
he called together a hundred important people for lunch.
I think we ought to go beyond that, get the committees
to function fully beyond Stuart and not put that responsibility on him alone. I believe that Cleveland,
Chicago, Philadelphia, and New York are well enough
218
-5organized so if we work with them as straight committees
and put all these people in the State on it it would be
a very good likelihood of reaching that goal.
that.
MR. GRAVES: The trouble is I don't want to overdo
MR. BUFFINGTON: You spoke of that this morning.
H.M. JR: Who is Stuart in Chicago?
MR. BUFFINGTON: He will probably be, subject to
your approval, executive manager in Chicago in that
district. He is working now as an individual on this.
I think it would be more effective, unless Harold is
afraid it will overrun it, to put the committees on
fully. You want that as insurance, to be sure that you
get what you are after. Those centers, I think, should
be able to produce it.
H.M.JR: What do you think, Mr. Bell?
MR. BELL: We had this conference this morning, and,
as I understood Mr. Gamble's conferences with the bankers
he was pretty sure of getting an additional twenty-five
million dollars in F and G, which would be sufficient to
carry over the quota for the month of May, which is
important; and that after that, and beginning at the end
of the month and carrying through into June, the committees which Mr. Buffington is talking about should then
begin to concentrate on series F and G and carry through
June.
MR. BUFFINGTON The only reservation is you are
counting on this man in New Jersey and New York and one
man in Chicago to do the job.
MR. GAMBLE: No, Pennsylvania, Ohio, Connecticut,
and Massachusetts, New York.
MR. BUFFINGTON: Who was contacted in Ohio?
219
-6MR. GAMBLE: Mr. Moore.
MR. BUFFINGTON: Well, I just don't know how much
insurance you are getting from working on it as an:
individual in those territories. I question whether
Harry Stuart, as good as he is, in Chicago, can produce
his share of the quota just as Harry Stuart. I don't
know that.
MR. GAMBLE: It wasn't the idea that he would. Mr.
Young called him in his prospective capacity as head of
this committee.
MR. BUFFINGTON: I don't think he did because he
hasn't actually been appointed to that position.
H.M.JR: Stuart in Chicago did what? What did he
do?
MR. GAMBLE: He is heading up this special com-
mittee at our instigation.
H.M.JR: He has called in a hundred people?
MR. BUFFINGTON: I was told by Young he had a hundred
people at lunch, trust officers.
H.M.JR: You say he has done that. What is the
next place where something has happened? What has
happened in New York.
MR. GAMBLE: New Jersey, the next place; they called
together these twenty-five bankers, several county
treasurers of the important counties of New Jersey.
H.M.JR: They have done that?
MR. GAMBLE: Yes, sir, given the same assignments.
H.M.JR: That has been done?
MR. GAMBLE: That has been done.
220
7
H.M.JR: Where else has something been done?
MR. GAMBLE: In New York.
H.M.JR: What has been done there?
MR. GAMBLE: Fortunately in New York these people
are ready to go. They have a rather large F and G
committee up there and have been doing some work. They
have one project taking place by which they expect to
raise five million dollars. They have had a number of
checks come in in a day for twenty-five thousand dollars
for this theater party, which they are using to sell
five million dollars worth for the F and G bonds. That
is to take place this coming week.
H.M.JR: Where else?
MR. GAMBLE: Mr. Sparks is in Connecticut meeting
with those people, is meeting wi th Massachusetts in the
morning.
H.M.JR: On F and G's?
MR. GAMBLE: Yes, and I have talked to Mr. Ludlow
and Mr. Moore in Ohio and Pennsylvania, pointing out to
them how necessary it was going to be to do this job.
I also had a meeting with Iseby, and he has personally pledged and will report to us the sale of F
and G bonds in the next eight days' time.
We have pointed out to them they are not going to
do that individually, Mr. Secretary. They know the
problem; they are going to have to go back and probably
avail themselves of a few of Mr. Buffington's men,
because we have pointed out to them what a dangerous
thing it would be in this whole program to miss this
May quota.
MR. BELL: If they produce what they think they
can, your May quota is assured.
221
8-
MR. GAMBLE: That is right. We didn't know of any
better way or more direct way to do it.
I think Mr. Buffington's suggestion is a very good
one, but I agree with Mr. Graves that we don't want to
go too far because our big problem is going to be June.
MR. BUFFINGTON: Except this is a selected sale;
in other words, there are a lot of people to see to get
the twenty-five's and fifty's you are looking for. I
wonder if depending on one man like Harry Stuart--
MR. GRAVES: Didn't he have a meeting with a hundred
men?
MR. BUFFINGTON: Those are people, likely prospects
for these bonds, but I am not sure that is getting all
the insurance you need. I didn't know when I was in
this meeting in Dan's office how he was going to function.
I got the impression in talking with Mr. Young since that
meeting in Dan's office that he is pretty much function-
ing as an individual. I am not sure that will carry
through.
H.M.JR: Got to do about thirteen million a day
in F and G.
MR. GRAVES: No, because we are way over on E.
H.M.JR: I want that to stand out.
(Mr. Haas and Mr. Tickton entered the conference.)
H.M.JR: George, what I want you and Tickton to
do for me - let me show you - is this. What Graves tells
me is that the last of each month on the F and G's wait until the end of the month and then the F's and
G's come in in greater quantities; that this thing here
is not weighted that way (indicating chart). You have
evidently just taken two fifty and divided it by twenty-
nine.
222
-9MR. HAAS: Just weighted for the weekly fluctuations
and the reports.
H.M.JR: What I want Tickton to do is to weight it,
go back - what is the quota based on, how many months?
MR. TICKTON: Since July 1.
H.M.JR: Go back to July 1 and make a study for each
month and see how much it increases in the last week, and
then weight this thing over again, and basing it - you
see, after all, they do weight because-MR. TICKTON: They wait until the end.
H.M.JR: But w-e-i-g-h-t, will you please; weight,
because I can't wait, w-a-i-t. I want it in the morning.
I don't mind my saying I think you boys slipped on this.
You should have weighted that differently; I mean, the
fact that always at the end of the month on the F and G,
that doesn't hold true of the E's.
MR. TICKTON: No.
H.M.JR: I think you overlooked something, which is
unusual for you but makes you human like me.
MR. HAAS: We figured it would be so far over that a
little technicality like that wouldn't make any difference.
H.M.JR: You figured wrong. I want this in the morning. You boys will have to work tonight.
MR. GRAVES: Our quota is not, as far as the public
knows, divided between E's on the one hand, and F and G.
We have made public a quota of six hundred million dollars.
I think it would be bad for everybody if we pushed ahead
hard enough on the F and G bonds that we anticipate, sales,
and get them in May, which we would otherwise get in June,
because our trouble is going to come in June. Making an
223
- 10 -
eight
million dollar quota in June is going to
be
ourhundred
difficulty.
H.M.JR: That is being very difficult, and I like
it, but, on the other hand, I want to make - if I don't
get six hundred twenty-five million dollars this month,
see, I will be a disappointed man.
MR. GRAVES: If you get six hundred twenty-five
million dollars, my fear is that you are going to get
some fraction of that at the expense of June sales.
H.M.JR: What do you want to do? Do you want to
run
a race
of getting six hundred ten, want to figure
it that
short?
MR. GRAVES: I think we ought to watch that as we
have been doing.
H.M.JR: But you can't put the pressure on the last
minute. All I am asking for is a hundred and four percent.
MR. GRAVES: On the total quota, that is right. It
is now one hundred and one.
H.M.JR: Yes, but that is too close, and it is
going down hill. All I am asking is for four percent
over. You want something over.
MR. GRAVES: I would agree with that, you're right.
A margin of one or two percent is too thin; you can wipe
that out in a day, and that is very dangerous.
H.M.JR: All I am saying is - all I am asking, which
I think is a very measly request, is a hundred and five too measly, five percent over.
MR. HAAS: I think there is another fundamental
reason for getting a hundred five; that is that the quota
of six hundred and eight hundred is not a logical growth
curve;unless you get more than six hundred, quite substantially,
are
slim. your chances of getting eight hundred in June
224
- 11 -
MR. GRAVES: You don't help if you tamper with that
June quota artificially. That is what we are doing, in
thinking of going out and pressing people to buy these
bonds in May who otherwise would be there to buy them in
June; and you certainly don't add to your chances of
making your June quota.. By that kind of pressure you
increase your May sales.
H.M.JR: Let me just tell you something that you
want to watch on this thing. What you want to watch is,
don't forget that the last four or five days in April,
as a result of the President's speech, the thing began
to pick up; and the last four or five days in April on
E bonds was particularly good.
MR. GRAVES: Yes, that's right.
H.M.JR: And that is the hump that you have got
to go over, so you had better put a little pressure on
for six thirty million.
MR. GAMBLE: That is really what we are doing, Mr.
Secretary, when we are going out after this twenty to
twenty-five million.
H.M.JR: Twenty-five to thirty million.
MR. BELL: That hump in April won't affect this
month.
MR. GRAVES: This is not compared with April. That
is standing on its own legs; the theoretical quota from
day to day is based on our quota for May.
H.M.JR: Well, my worries may be over. This ought
not to be a big mathematical job to be able to give me
tomorrow morning, to refigure this thing on the question
of weighting it by days.
MR. TICKTON: We will have it.
H.M.JR: That isn't very difficult.
225
- 12 MR. T ICKTON: We can have it.
H.M.JR: We may find that after you re-weight this
thing we may be all in the_olear; and if we are, we are
all right.
those.
MR. TICKTON: There is not that much leeway in
MR. GRAVES: No. I am afraid what we are going to
find when that is re-weighted is that there is a heavy
period at the beginning of the month that isn't here,
which offsets the heavy at the end.
H.M.JR: Anyway, let's do a little - ina smuch as
there is a seasonal factor in each month let's get it,
see what it is, and then I will take another look and
then we will see whether this fellow is doing well
enough, because, as I say, your attitude that we mustn't
eat into next month's fat may be all right, but, on the
other hand--
MR. GRAVES: --shouldn't go too thin.
H.M.JR: You can't risk it because if you do it
will begin to break the thing down a little bit, and
the people say - don't forget another thing, this man
Bell comes in this morning and hits me over the head
and says that between now and Friday we have to make up
our mind on, how big a refunding?
MR. BELL: Either a billion one or a billion five,
take your choice.
H.M.JR: Which is to be announced next Monday.
There that goes against your F and G's; did you know
that was coming?
MR. BELL: No, I don't believe that will hit
your F and G's.
H.M.JR: It is another disturbing factor in the
market; here the Treasury is in with a billion-dollar
226
- 13 -
financing next Monday.
MR. BELL: You ought to have a two percent over, three
percent over, to take care of your redemptions.
MR. GRAVES: That isn't in the quota.
MR. BELL: It is in mine. I am looking at it from
a net standpoint. They will run about twenty, twentytwo million now.
H.M.JR: Harold, don't be too cocky on this thing.
MR. GRAVES: I am not cocky - anything but.
H.M.JR: Another thing, don't be too stingy. When
I was up there yesterday - I don't know how much - I
would be interested to know how much Mr. Henderson takes
to run his show, his field organization. Those figures
can't be secret; I would like to have them. Will you make
a note of that.
And when you go out to organize two hundred thousand
door knockers, let Congress tell you that you are spendthrifts rather than every time I go up to New York have
them tell me.
MR. GRAVES: Congress took two hundred fifty thousand
dollars away from me, and in taking it away said they
thought we were paying too many people on this job.
H.M.JR: When did they tell you that?
MR. BELL: In your deficiency in February.
H.M.JR: You didn't have a quota and all the rest
of that thing.
MR. GRAVES: That is the last chance Congress has
had to speak about this thing.
227
- 14 -
H.M.JR: Yes, but you don't stop talking - when you
get knocked down once, get up again.
to.
MR. GRAVES: I stopped some of this spending; we had
H.M.JR: Yes, but I told you, remember, that thirty
days after that I said we would take it up again.
MR. GRAVES: We did; we went over, as you said,
asked for a million dollars a month.
H.M.JR: You got it?
MR. GRAVES: We don't know. It is pending.
H.M.JR: But that is beginning July 1. I am talking
about between now and July.
MR. GRAVES: We are not in the market; we have ample
money between now and then.
MR. BELL: Enough to June 30.
MR. GRAVES: Ample. It is just a question, Mr.
Secretary, of whether with that other hearing coming
along now any day it would be safe for us to go up, in
the face of a written prohibition against hiring people,
and confess that we have gone ahead and hired them.
H.M.JR: I wouldn't do that; I wouldn't do that.
If you decide you don't have enough money to get enough
people to put this thing across between now and the
first of July, I would ask he Secretary of the Treasury
to go up there and ask for it; and I am ready to go up.
MR. GRAVES: That isn't the point. We have funds,
ample funds - of course not to pay two hundred thousand
people in New York City, nor do we want to pay any such
force as that, but we have ample funds to carry on that
New York program.
228
- 15 -
The trouble is, Mr. Morgenthau, it seems that a
banker is congenitally unable to get down to details in
a budget program, because I have never gotten those New
York people down to the point where they could give me
anything that would add up. You apparently talked with
Nevil Ford up there, I would guess.
H.M.JR: No, I was completely surrounded by your
spies all the time, one side of me a man by the name of
Gamble and on the other side of me - Stevens?
MR. GRAVES: I hope Odegard.
H.M.JR: Yes, but Gamble was right next to me.
Stevens was the one that was complaining, not me. Stevens
said that he was spending as much of his firm's money in
what he was doing as the combined pay roll of the New
York organization.
MR. GRAVES: I never heard of Mr. Stevens.
H.M.JR: I only know of him as Bob Stevens - whether
now lieutenant colonel or lieutenant general. What is
Stevens doing?
MR. BELL: He is the head of that cotton brokerage
firm in New York. He was a director of the Federal
Reserve in New York.
MR. GAMBLE: He just recently has come in. Bruce
Smith was in charge of it; he is still there; and a man
from the Telephone Company, Bob Bruce, that Mr. Gifford
had lent to us, and he has recently been replaced by
Stevens.
H.M.JR: Stevens had as many people from Stevens
and Company there as on Stevens and Company pay roll not as much, but the number of people of Stevens and
Company and the dollars that they represented were
equal to the dollars of our entire pay roll.
MR. GAMBLE: They were complaining a little. I took
that matter up with Mr. Ford in the afternoon. He
229
- 16 -
suggested we do nothing about it until he comes up for
1943 budget, needed no money.now.
MR. BELL: Was Bob including his own salary?
H.M.JR: I imagine this man was, yes.
MR. BELL: Which takes care of about twenty-five.
MR. GRAVES: Not to prolong this discussion-H.M.JR: Why not?
MR. GRAVES: I didn't want to press it further than
would be effective. We have a lot of trouble in some States
because people think that we are over-staffed and overpaying, and we get letters of protest and newspaper editor-
ials and objections of all sorts and kinds. So today - you
ought to talk with John Sullivan about what is going on in
his State where we had a small insurrection because we were
going to pay one man forty-six hundred dollars to promote
bond sales in New Hampshire. We have had it in New Hampshire,
Alaska, North Dakota, North Carolina, South Carolina. There
are a lot of people who feel that this program of all pro-
grams ought to be a voluntary program, and they resent it
when they see a lot of, or think they see, because there was
little foundation to what they said.
H.M.JR: Twenty-four hundred dollars in Alaska, wasn't
it, one man?
MR. GRAVES: Twenty-six hundred, and we had letters
and letters and letters and protests.
H.M.JR: Well, my dear Harold, being the Secretary of
the Treasury, I can have the last word with you.
MR. GRAVES: Yes, sir.
H.M.JR: Maybe.
MR. GRAVES: No, you can always have the last word.
230
= 17 -
H.M.JR: I would rather go down - or rather, put it
this way, I would rather succeed with a criticism of the
press that I was extravagant than to go down with failure
because I was too stingy.
MR. GRAVES: Not to claim the last word now, but I
think the opposite of that would be true, too, and I think
at least in these States where we had that trouble-H.M.JR: You are all witnesses.
it would have been bad for our
MR. GRAVES:
program to have gone ahead with any large orders. I think
we would have sold fewer bonds.
I have a real disagreeable thing to mention, if you
will let me. Mr. Frank Iseby and General Motors are down
in the projection room, wanting to show you for five
minutes some posters, exhibit material.
MR. BELL: I have got some good news. Pennsylvania,
Bethlehem, Philadelphia Electric, Reading, and one other
company that I can't remember are all coming in as issuing
agents in Philadelphia.
H.M.JR: Did you take care of our friend on the
West Coast, send him a telegram Saturday?
MR. BELL: Yes, I took care of that, sent that
Saturday.
H.M.JR: Heard anything more?
MR. BELL: No, I haven't heard anything. He was
going to take a week's leave, wasn't he?
H.M.JR: I don't know.
Posters or motion pictures?
MR. GRAVES: It is some animated posters that
General Motors is preparing to promote.
H.M.JR: What would happen if I - I have got to see
Paul first.
231
- 18 MR. GRAVES: We will wait.
H.M.JR: Can't I see you tomorrow?
MR. GRAVES: Iseby has these people only today.
H.M.JR: Doesn't his train leave at five-forty?
It is quarter past five; does Iseby go back on the five-
forty?
MR. GRAVES: He will wait. These are very crazy
things he wants you to see.
MR. GAMBLE: Something they expect to spend a
million six hundred thousand dollars promoting.
MR. GRAVES: He is downstairs with his General Motors
people.
H.M.JR: You have this, and Paul says we will lose
two hundred and fifty million or more. I will come down.
MR. GRAVES: We will go down.
H.M.JR: I will go down. I am not sold yet that
you have got that extra F and G's, I want to go on record.
You haven't convinced me.
MR. GAMBLE: When we need help, we will holler.
H.M.JR: Well, you are going to holler after the
horse is gone.
MR. GAMBLE: That was the point I was trying to
make to you, that we had anticipated this and didn't
want to holler too late.
We had another suggestion, if I may take a minute
and tell you about it. I agree we have had a lot of help
from this program. We had a great deal from your program,
the motion picture subject, and all that that gave us an
impetus. This program we had planned with the Secretary
of War and Navy and yourself, I would like to see that
232
- 19 -
done in the next two or three days if we can do it.
H.M.JR: What was that?
MR. GAMPLE: We talked about having the Secretary of
the Navy and yourself and the Secretary of War on a radio
program to the Nation.
H.M.JR: You have enough radio stuff.
MR. GAMBLE: It might give us a push.
H.M.JR: No, no radio talk. Anyway, it is a bad
time to sell me anything.
MR. GAMBLE: It was one of the things we discussed
in trying to take inventory to see what we could do.
H.M.JR: See me later on it.
233
May 19, 1942
FOLLOW-UP FOR THE SECRETARY:
Is the attached memo to Mr. Graves and Mr.
Gamble finished?
bee letter to
amn Bu
5/30/82-
234
May 13, 1942
Harold Graves
Ted Gamble
Secretary Morgenthau
Please speak to me today about the following sug-
gestion: If we are not already doing so, I suggest
that that through the American Bar Association we
contact all its members with the idea that it is the
lawyers who either control or advise the trust funds
how to invest money, and we might get the lawyers to
help us put their olients' money into either F or G
Bonds.
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
photostal tocagn 235
member 19:30 group
DATE May 19, 1942
TO
The Secretary of the Treasury
FROM Mr. Houghteling
There has just been concluded in Chicago a negotiation sponsored by
the Shipbuilding Stabilization Committee of the War Production Board, the
Navy Department and the U. S. Maritime Commission, between the management of
all the shipbuilding companies in the four coastal zones of the U.S. and all
the shipbuilding labor organizations including the Metal Trades Division of
the A.F. of L. and the Industrial Union of Marine and Shipbuilding Workers,
C.I.O. This agreement provides for the stabilisation of shipbuilding wages
on a uniform basis for all parts of the country and includes a substantial
increase in pay. It is agreed that this entire increase shall be used to
purchase War Bonds and that such purchases shall be over and above the present
commitments of the workers under existing Pay Roll Savings and other plans.
Since most of the coastal states have laws requiring that all wages
must be paid in cash, it is agreed that as soon as these increases in pay
shall go into effect the union members will immediately go to the pay offices
of their companies and sign additional pay roll authorization cards for the
entire amount of the increase ("except in cases of extreme emergency or for
good cause shown). The unions undertake that their officials will enforce
these obligations so that the full amount will be alloted by every one of
their members. It is agreed that the workers shall not convert these bonds
into cash except in emergencies such as death, illness or accident.
This agreement, as negotiated by representatives, must be ratified
by the companies and the unions before it becomes effective. It is estimated
that these wage increases may total $125,000,000 to $150,000,000 in the next
twelve months; and that they may bring Pay Roll Savings in this industry up
to 15% of pay rolls.
The U. S. Maritime Commission is also conducting negotiations between the shipping companies and eight operating unions of the Pacific coast:
Marine Firemen's Union (Independent); Sailors Union (A.F. of L.); Seafarers'
Union (A.F. of L.), Masters, Mates & Pilots (A.F. of L.); National Maritime
Union (C.I.O.); Marine Engineers (C.I.O.); American Communications Association (C.I.O.) and Marine Cooks & Stewards (C.I.O.). These unions have agreed
to accept all overtime and 50% of their war bonuses in War Bonds. These
negotiations have not yet been closed. The bond purchase involved is estimated
at $10,000,000 per month.
236
THE SECRETARY OF THE TREASURY
WASHINGTON
May 19, 1942
Mr. John A. Jones,
10056 A Avenue,
Melbourne, New York.
Dear Mr. Jones:
I have been advised of your willingness to
serve as a member of the Victory Fund Committee in
your district.
In order that committees may function
effectively and promptly, I hope you will do everything possible to assist your Chairman in designating
Regional Committees and in completing your organization.
Your cooperation will be very much
appreciated.
Very truly yours,
Hmagenthan J.
Secretary of the Treasury.
FOR DEFENSE
BUY
UNITED
reasons
(LETTER TO BE SENT TO MEMBERS OF VICTORY FUND DISTRICT COMMITTEES)
THE SECRETARY OF THE TREASURY
WASHINGTON
I have been advised of your willingness to
serve as a member of the Victory Fund Committee in
your district.
In order that committees may function
effectively and promptly, I hope you will do everything possible to assist your Chairman in designating
Regional Committees and in completing your organization.
Your cooperation will be very much
appreciated.
Very truly yours,
own, GTS.
237
238
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE
TO
FROM
May 19, 1942.
Secretary Morgenthau
Harold Graves
As you were out of the city and may not have had them
brought to your attention, I am attaching two advertisements
which appeared in the Washington Post on Sunday.
I
an
am
AMERICAN
An American Is a Guy
Willing to Go to Bat for
Uncle Sam in the Pinches!
Not everyone can fly a plane,
drive a tank or shoulder a gun;
but every American can and will
U.S. PAIR BONDS
AND
STAMPS
Every citizen has a DUTY to help in America's all-out war effort! We must
tighten our belts, save all we can, and invest to the limit of our abilities in
United States War Savings Securities! Going over the top is a cinch for civilians
we are asked to do is LEND our savings to Uncle Sam.
all
Let's start NOW to buy as though our very lives depended upon it-for indeed they do!
Pledge yourself to invest at least 10% of your income in War Bonds every payday-
VOLUNTARILY THIS IS THE AMERICAN WAY
Buy Defense Stamps on our Street
and Sixth Floors Bonds on Sixth:
Lansburgh's
7th, 8th and Sts.
NAtional 98
240
THE WASHINGTON POST SUNDAY MAY 17. 1942
A MESSAGE TO THE
PRESIDENT
of THE UNITED STATES
*
*
*
*
*
Dear Commander-in-Chief:
. This is a splendid beginning and Indicative of the im
. In your masterly address to your people recently you said
that we must put more billions into War Bonds. You also said:
"all of us are used to spending money for things we want but
which are not absolutely essential We will have to forego
that spending. because we must put every dime and every
dollar we can possibly spare out of our earnings into War
Savings Bonds and Stamps."
pressive results which will be achieved when every citizen
and every man and woman every American swings into
line.
Your Secretary of the Treasury has published a "Yordstick"
by which citizens may gauge their purchases of War Savings
Bonds and Stamps. He suggested an average of one-lenth of
every income certainly little enough to invest in retaining
our Liberty and Freedom for the Future.
We agree with you. Mr. President
We're also sure that this "Yardstick" will not be misunder-
stood and that everyone will recognize It as the very. very
There are now than 225 organizations in Washington
VERY MINIMUM need of our country at this critical time.
.
employing nearly 80,000 men and omen-exclusive of Fed
eral Employees are investing systematically in War
May
Bonds through the Payroll Savings Plan.
also
this
voib
to
to
our
hearty
aside
this
con
Sun
day. May 17th as AM AMERICAN DAY thus giving
. A flying squadron of Business Men and other patriotic citizens have been enlisted to expand such investments to the
to every citizen an to pledge himbers anew to his
limit. as speedily as possible.
Savings Bonds and Stamps.
country's call in regular. continuing purchase of War
Our employes are participating earnestly in the Payroll
Savings Plan. We have established a Victory Booth on our
All this has been done under the direction of your War Sav-
ings Committee. for the District of Columbia and we Join in
commending the efforts of your District Chairman Mr. H.L.
main floor for the day-to-day selling of United States WarSavisgs Bonds Every Service Desk In the store is making Stamps
Rust Jr. and Clifford Folger. your Vice Chairman
available to the public. And thousands of other patriotic
stores throughout the country are co-operating with equal
interest and vigor.
We believe our fellow-citizens throughout the land will respond with characteristic generosity to your urgent message
and will faithfully fulfill their for the duration of the
war.
"I AM AN AMERICAN" DAY
MAY 17th 1942
"In appreciation of the most precious civic.gift
on earth today. that of American Citizenship.
"LAM AN AMERICAN
which carries with it privileges that are the
MAKE THIS
envy of uncounted millions. will take part in
YOUR
the War Savings Bond Drive of T Am An
American Day and will regularly invest in
PLEDGE
cortially invited
U.S. War Savings Stamps and Bonds."
THE HECHT Co.
F Street 7th Street
NAtional
States
From May 1 through May 18, 1942
Compared with Sales Quote for Same Period
(At issue price in millions of dollars)
7
8
9
11
12
13
14
15
16
18
20
21
22
23
25
26
27
28
29
Date
Date
Quota
to
to
to Date
as & of
Date
Date
Quota
May 1
Daily
:
6
to Date
as % of
May 1
Total
Actual Sales
Sales
to
to
to Date
as % of
Date
Date
Quota
May 1
Daily
Quota,
May 1
$ 7.3
$ 7.3
$ 9.0
$ 20.0
$ 20.0
$ 23.0
25.7
7.9
15.2
16.0
95.0
19.4
39.4
41.7
94.5
47.8
57.8
70.5
84.0
98.0
109.7
97.3
96.0
104.7
115.5
116.5
117.3
10.3
25.5
33.1
48.8
86.4
89.2
98.0
100.8
97.0
95.4
72.0
88.6
60.8
67.2
72.8
29.5
37.1
49.8
60.3
69.3
76.3
32.6
16.6
18.4
23.2
17.2
14.5
46.5
55.5
73.8
97.0
114.2
128.7
34.0
35.3
23.6
20.0
122.6
157.9
181.4
201.5
77.3
94.9
120.3
144.3
167.3
186.0
93.1
93.4
101.9
109.4
108.4
108.3
23.3
9.4
15.8
16.9
14.9
14.3
152.0
161.3
177.1
194.0
208.9
223.2
131.8
141.8
154.5
168.0
182.0
193.7
115.3
113.8
114.6
115.5
114.8
115.2
8.1
4.6
9.0
7.7
6.8
5.2
80.8
85.4
94.4
102.1
108.9
114.1
89.8
97.4
110.1
120.6
129.6
136.6
90.0
87.7
85.7
84.7
84.0
83.5
31.3
14.0
24.8
24.6
21.7
19.5
232.8
246.8
271.5
296.2
317.9
337.4
221.6
239.2
264.6
288.6
311.6
330.3
105.1
103.2
102.6
102.6
102.0
102.1
24.3
247.5
215.8
225.8
238.5
252.0
266.0
277.7
114.7
9.4
123.5
150.1
157.7
170.3
180.8
189.8
196.8
82.3
33.7
371.1
365.9
383.5
408.8
432.8
455.8
474.5
101.4
$ 12.7
11.6
24.3
22.3
8.9
5
:
4
to
Sales
94.6
$ 12.7
1
2
to
:
Daily
May 1
Quota,
May 1
Series F and G
Actual Sales
Quota,
:
Date
Sales
:
Series E
Actual Sales
$ 14.0
299.8
309.8
322.5
336.0
350.0
90.7%
7.6
15.6
12.1
6.4
5.6
81.1%
210.3
217.9
230.5
241.0
250.0
Office of the Secretary of the Treasury, Division of Research and Statistics.
Source: Actual sales figures are deposits with the Treasurer of the United States on account of proceeds of sales of
United States savings bonds. Figures have been rounded and will not necessarily add to totals.
87.0%
510.1
527.7
553.0
577.0
600.0
May 19, 1942.
CONFIDENTIAL
242
UNITED STATES SAVINGS BONDS - SERIES E
Sales and Percent of Dollar Volume
by Denominations and by Months
May 1941 - March 1942
Denomination
:
$500
:
:
:
:
$100
:
$50
:
:
$25
:
:
Month
$1,000
Total
:
Sales at issue price in thousands of dollars
$
May
June
July
August
September
October
November
December
21,950
29,084
26,627
48,613
44,801
65,795
48,944
9,218
10,002
9,823
39,813
26,339
28,453
26,989
96,285
22,032
24,059
21,369
81,040
44,034
46,315
39.594
135,564
121,961
111,370
402,585
72,114
52,633
66,172
55,081
32,988
33.788
135,178
86,371
79,230
138,887
68,771
56,508
266,112
125,211
91,832
667,372
365,974
327,531
$313,382
$221,867
$575,953
$507,588
$956,813
$2,575,604
6,065
7,188
8,976
8,925
$ 19,448
11,159
13,131
13,595
49,884
6,293
8,086
9.938
10,376
$
1942
January
February
March
Total
$ 100,581
20,162
20,492
30,313
23,954
941
102,517
144,105
118,825
112,782
Percent of Dollar Volume
1941
June
7.9
July
6.9
6.0%
7.0
6.2
August
8.7
7.5
9.9
10.8
12.2
12.4
8.2
8.2
10.8
14.4
20.2
8.2
6.3%
May
September
October
November
December
8.8
9.9
1942
January
February
March
Total
12.2%
9.0
10.3
8.6%
Office of the Secretary of the Treasury,
Division of Research and Statistics.
20.1%
48.3%
100.0
21.4
20.2
22.4
20.0
21.0
20.2
43.7
45.7
41.2
100.0
100.0
100.0
23.4
23.3
24.2
23.9
19.5
19.7
19.2
39.0
38.0
35.6
33.7
100.0
100.0
100.0
100.0
20.3
23.6
24.2
20.8
18.8
17.3
39.9
34.2
28.0
100.0
100.0
100.0
22.4%
19.7%
37.1%
100.0%
19.3%
20.1
May 18, 1942.
Source: Reports of sales by post offices and Federal Reserve Banks.
Note: Dollar figures have been rounded to nearest thousand and will not necessarily
add to totals.
243
STRICTLY CONFIDENTIAL
Ownership of Securities to be Refunded in May 1942
Based on Treasury Survey of Ownership of Government Securities,
March 31, 1942
(Amounts are par values in millions of dollars)
Details for each issue
Sept. 15, 1942
Amount I Percent
1. Commercial banks:
a. New York City
b. Other
C. Total commercial banks
377.8
588.0
965.8
2. Mutual savings banks
49.0
3. Insurance companies
59.7
4. Federal Reserve Banks
68.2
5. U. S. Government agencies and
trust funds
20.8
6. Total for which ownership data
are available
7. All other investors
8. Total amount outstanding
39
22.3
73.0
65
95.3
25
14.3
3
27.1
4
5
66.2
..
Amount
Percent
45
21
123.7
92.0
28
215.7
78
7
33
654.7
4.9
4
19
.
29.8
2
11.2
8
21.4
4
-
.2
Amount I Percent
231.8
423.0
.
Amount 1 Percent
July
1942-44
1942
-
three issues
July 1,
:
Class of investor
HOLC 2-1/4's of
RFC 1's of
2% Treasury
notes due
Total all
2.0
20.6
26
48
75
3
2
.
2
1
1,163.3
202.8
59
232.0
84
728.5
83
78
330.1
139.3
41
43.9
16
146.9
17
22
100
342.1
100
275.9
100
875.4
100
1,493.4
Office of the Secretary of the Treasury, Division of Research and Statistics.
. Less than 5 percent.
.. Less than $50,000 held by U. S Government agencies and trust funds
Note: Percentage figures are rounded and will not necessarily add to totals.
May 19, 1942.
244
STRICTLY CONFIDENTIAL
HOLC 2-1/4's of July 1, 1942-44
Amount Owned by the Twenty Largest Holders Reporting
To the Treasury as of April 30, 1942
(In millions of dollars)
National City Bank, New York, N. Y
$ 74.5
Guaranty Trust Company of New York, N. Y
59.6
25.0
24.8
17.9
First National Bank, Baltimore, Md
National Bank of Detroit, Detroit, Mich
Chemical Bank & Trust Company, New York, N. Y
Banker's Trust Company, New York, N. Y.
16.9
15.8
11.5
10.1
10.0
First National Bank, Jersey City, N. J.
Public National Bank & Trust Company, New York, N. Y
Security-First National Bank, Los Angeles, Calif
Irving Trust Company, New York, N. Y
Toledo Trust Company, Toledo Ohio
Bank of New York, New York, N. Y.
Girard Trust Company, Philadelphia, Pa
9.0
7.7
6.8
6.0
5.3
Whitney National Bank, New Orleans, La
The Northern Trust Company, Chicago, I11
National Bank of Commerce, Norfolk, Va
J. P. Morgan & Company, Inc., New York, N. Y
J. Henry Schroder Banking Corp., New York, N. Y
5.0
5.0
5.0
5.0
4.5
Philadelphia National Bank, Philadelphia, Pa.
Citizens National Trust & Savings Bank, Los Angeles, Cal.
Total amount owned by 20 largest holders
Total amount outstanding
Percent of total owned by 20 largest holders
Office of the Secretary of the Treasury,
Division of Research and Statistics.
$325.4
$875.4
37.2%
May 19, 1942
245
STRICTLY CONFIDENTIAL
RFO 1's of July 1, 1942
Amount Owned by the Twenty Largest Holders Reporting
To the Treasury as of April 30, 1942
(In millions of dollars)
$ 81.4
Guaranty Trust Company of New York, N. Y
13.0
7.5
National City Bank, New York, N. Y.
Irving-Trust Company, New York, N. Y
J. P. Morgan & Co., Inc. New York, N. Y
Bankers Trust Co., New York, N. Y.
5.6
5.3
5.3
The Northern Trust Company, Chicago, I11
4.8
4.5
4.4
4.3
First National Bank, New York, N. Y
National Bank of Detroit, Detroit, Michigan
City National Bank & Trust Co., Chicago, I11
National City Bank, Cleveland, Ohio
3.1
Union Trust Co. of Pittsburgh, Pittsburgh, Pa
2.5
2.0
2.0
2.0
First National Bank of Boston, Boston, Mass
First National Bank, Atlanta, Georgia
Camden Trust Company, Camden, N. J.
Brown Brothers Harriman & Co., New York, N. Y.
Security National Bank & Trust Company, St. Louis, Mo.
The Prudential Insurance Company of America, Newark,
New Jersey
First National Bank, Portland, Oregon
Northwestern National Bank & Trust Company,
Minneapolis, Minn
New York Life Insurance Company, New York, N. Y
Total amount held by 20 largest holders
Total amount outstanding
Percent of total owned by 20 largest holders
Office of the Secretary of the Treasury,
Division of Research and Statistics.
1.9
1.9
1.9
1.8
1.5
$156.7
$275.9
56.8%
May 19, 1942
STRICTLY CONFIDENTIAL 246
2% Treasury Notes of September 15. 1942
Amount Owned by the Twenty Largest Holders Reporting
to the Treasury as of April 30, 1942
(In millions of dollars)
Hetropolitan Life Insurance Co., New York, N. Y
The Prudential Insurance Co. of America, Newark, N. J
Mellon National Bank, Pittsburgh, Pa
Commerce Trust Co., Kansas City No
First National Bank, New York, N. Y
Bank of New York, New York, N. Y
$ 10.0
9.0
8.0
7.0
6.0
National Bank of Detroit, Detroit, Mich
Harris Trust & Savings Bank, Chicago, I11
5.4
5.0
5.0
Bregawich Savings Bank, New York, N. Y
Union Trust Co. of Pittsburgh, Pittsburgh, Ps
4.2
3.5
First National Bank of Chicago, Chicago, I11
3.5
3.0
2.5
2.0
2.0
Seamen's Bank for Savings, New York, N. I
National City Bank, New York, N. Y
Empire Trust Co., New York, N. Y
Frost National Bank, San Antonio, Texas
Fidelity Union Trust Co. Newark, N. J
Wilmington Trust Co., Wilmington, Delaware
First National Bank & Trust Co. Minneapolis, Minn
Bankers Life Co., Des Moines, Is
The New York Trust Co., New York, N. Y
Total amount owned by 20 largest holders
Total amount outstanding
Percent of total owned by 20 largest holders
Percent of privately held supply owned by
20 largest holders
Office of the Secretary of the Treasury,
Division of Research and Statistics.
1.8
1.5
1.5
1.5
1.4
83.8
$342.1
24.5%
30.4%
May 19, 1942
247
May 19, 1942
Dear Marriner:
In an examination of the Continental
Illinois National Bank and Trust Company
of Chicago, a situation has come to light
about which I think you should be advised.
I am enclosing herewith excerpts from the
examination report, from which you will
note that Mr. Frank J. Lewis, Chairman of
the Board of the Federal Reserve Bank of
Chicago, has been placing large subscriptions
to Government securities, borrowing a part
or all of the ten per cent down payment required of the Continental Bank, and then
selling his securities received on allotment
to that bank for a substantial profit.
I shall welcome an expression relative
thereto from the Board of Governors.
Sincerely yours,
(Signed) H. Morgenthau, Jr.
Honorable Marriner S. Eccles,
Chairman, Board of Governors
of the Federal Reserve System,
Washington, D. C.
DWB:NLE
248
C
Y
"As you know, borrowings by Mr. Frenk J. Lewis,
Chairman of the Board of the Federal Reserve Bank, Chicago,
Ill., have, since probably 1939 at least, been along the
lines discussed. Generally speaking, the bank would loan
dollars to create, in part, the required 10% cash balance
of the proposed subscription; the collateral would be
merely the subscription to the new offering with a reservation on the balance. The loan would be cleared by the
sale of the allotted bonds -- usually, but not always,
approximately 10% of the subscription -- and the borrower
would gain the profit on the sale.
"I might cite a specific instance:
"An offering was made in July 1940 of Treasury bonds,
228 56/54. Mr. Lewis subscribed for $5,000,000.00 In order
to complete the required 10% cash balance, the bank loaned
Mr. Lewis, on July 12, 1940, $800, 000.00; his balance as of
July 12, 1940, including the proceeds of this loan, was
$586,004.04. The collateral was the subscription only, with
the reservation on the balance. Mr. Lewis was allotted
$450,000.00 of the bonds. The allotment was sold to the bank
July 15, 1940 for $460,125.00. The note was paid and the
profit of $10,125.00 was made by Mr. Lewis.
"Since April 1941 the Continental Illinois National Bank
& Trust Co., has, from the standpoint of policy, ceased making
such type loans when the security offered is only an assignment
of subscription and reservation on the balance; and since that
date loans to Mr. Lewis have been trea ted accordingly by obtaining such additional security as may, in the bank's judgment,
be adequate for any proposed loan. At the date of the recent
examination of this bank, December 12, 1941, Mr. Lewis' loan
of $2,425,000.00 was secured by stocks and bonds having a value
of $3,000,000.00, including $1,000,000.00 of U.S. Treasury Bonds.
"On the issue offered October 20, 1941, Treasury
67/72, Mr. Lewis subscribed for $10,000,000.00; his allotment
was $1,250,000.00. Since the allotment was probably a surprise -- in that it exceeded 10% -- Mr. Lewis borrowed
$300,000.00 on October 24, 1941 from the bank to enable him
249
-2to buy the bonds. That advance, however, was based on security
already pledged. The allotment was sold to the bank on
November
6, 1941 for $1,293,772.24 or at a profit to Mr. Lewis
of $43,772.24.
"In the offering of December 15, 1941, 28 51/55, Mr.
Lewis subscribed for $5,000,000.00 Undoubtedly to curb
speculation of this nature, the Treasury at that time ruled
or stipulated that corporations organized for profit and/or
individuals should be permitted to subscribe for an amount
of these bonds not greater than 50% of their net worth;
should the subscriber's cash balance exceed 50% of the net
worth, an amount equal to that deposit could be subscribed.
On that particular issue Mr. Lewis subscribed for $5,000,000.00
The bank is without financial statements indicating Mr. Lewis'
net worth. Mr. Lewis received an allotment of 11$ or $550,000.00.
In this instance, since the allotment exceeded 10%, the bank
loaned Mr. Lewis $50,000.00 additional monies to effect the
purchase of the allotment. This loan also was financed through
other collateral pledged. Those particular bonds were never
lodged with the bank for collateral purposes and the length
of time they may have been held and the profit that may have
been gained from them is not known.
"Loans to Mr. Lewis in the Continental Illinois National
Bank & Trust Co., from the latter part of 1939 through June
1941 carried a rate of 18% Since June 1941 the rate has
been 15%
250
May 19. 1942.
My dear Mr. President:
I have your letter of May 16, appointing a member of the Committee which will meet with the
Executive Committee of the Governors' Conference
in order to discuss cooperation between the States
and the Federal Governments in certain phases of the
war effort.
of course I shall be very glad to serve as a
member of the Committee representing the Federal
Government.
Faithfully yours,
(Signed) H. Morgenthan. Jhe
The President,
The White House.
GEF/dbe
S.S. agent 4715
251
THE WHITE HOUSE
WASHINGTON
May 16, 1942
My dear Mr. Secretary:
As you know, divergent state laws and regulations are
impeding many phases of the war effort. These impediments
to full production were discussed at a conference last week
between representatives of the state governments and Federal
war agencies. Specific solutions must be developed.
The Council of State Governments has suggested that I
appoint a committee from the war agencies to meet with the
Executive Committee of the Governors' Conference and form-
late these solutions.
I am appointing you as a member of the committee from
the Federal Government. The Secretary of Commerce will be
chairman, and the Attorney General, the Under Secretary of
Var, the Assistant Secretary of the Navy, the Chairman of
the Var Production Board, the Director of the Office of
Price Administration, the Director of the Office of Defense
Transportation and the Chairman of the Mar Manpower Commission are the other members.
Your chairman will arrange to have a joint meeting with
the Executive Committee of the Governors' Conference early
next week.
Sincerely yours,
The Honorable
The Secretary of the Treasury
252
MEMORANDUM
May 19, 1942.
TO:
Miss Chauncey
FROM:
Mr. Sullivan
ThS
At the meeting of the 9:30 Group on Tuesday, May
12th, I referred to Commissioner Helvering's memorandum of
April 20th opposing a withholding tax on the ground that the
administrative cost would exceed the loss of revenue which
would be prevented by a withholding tax. Subsequently, you
delivered this memorandum to me with the request that I take
it up with the Secretary, When I did this on Tuesday, May 12th,
I advised the Secretary that Mr. Paul and I were in accord that
the real reason for a withholding tax was not to prevent a loss
of revenue but rather to combat inflation. I further advised
the Secretary that I had discussed this with Commissioner
Helvering and that hewas familiar with Mr. Paul's views and mine.
Commissioner Helvering stated that he felt obliged to send this
memorandum to the Secretary lest the Secretary approved with-
holding tax in the erroneous belief that it would produce net
revenues we would not otherwise receive.
25
The Commissiour of Internal Revenue
April 20, 1942
To:
Mr. Fitzgerald
From: Mr. Helvering
Please deliver the attached memorandum
to the Secretary.
Copies have been furnished Mr. Sullivan
and Mr. Randolph Paul.
9MH
caselook
of this to
and
to take
V
254
TREASURY DEPARTMENT
WASHINGTON
OFFICE OF
COMMISSIONER OF INTERNAL REVENUE
ADORESSREPLYTO
OF INTERNAL REVENUE
April 20, 1942.
AND REFER TO
Memorandum for
Secretary Morgenthau:
A withholding tax on incomes such as is now being
considered by the Ways and Means Committee will necessitate
additional operating costs.
The annual additional cost to administer this method
of tax collection is estimated to be $16,700,000. The
number of additional employees required is 8,330.
To ascertain the tax collection benefits which might
result in consequence of the expenditure of this $16,700,000,
I have had determined the amount of income tax assessed
against individuals which had to be charged off as uncol-
lectible during the past 21 years. The total amount of
the loss over the 21-year period was $242,979,283, a part
of which might have been saved if a withholding tax had
been in effect. The annual average loss amounted to
$11,570,442.
But of course all of this loss would not have been
prevented by a withholding tax because a substantial part
of the tax eliminated over the 21 years was tax levied
upon busi ness income of individuals which would not have
255
-2-
been subject to withholding and another part of it was
in the high surtax brackets which the proposed withholding
rate of 10% would not have protected.
The information developed the amount of the annual loss
in revenue owed by taxpayers in the low income groups, using
as a basis those individuals who owed less than $100. The
annual average loss in this group for the four years tabulated was $684,288. It is probable that withholding is considered most necessary to insure collection in respect of
those in this lower group.
A summary of the tabulation of uncollectible taxes follows:
Individuals who failed to save sufficiently
out of current earnings to meet their taxes
Year in
which
taxes
were
charged
off as
uncol-
lectible
1926
1928
1940
1941
when due
Tax liabilities
of under $100
Tax liabilities
of $100 and over
Amount of
Number of
persons
Amount of
Number of
persons
36,686
13,631
11,398
10,466
$1,407,842
388,049
6,290
4,960
1,997
2,077
$15,693,514
24,413,265
6,756,823
11,028,256
$2,737,154
15,324
$57,891,858
$10,987,058
61,406
$231,992,225
$523,193
2,924
$11,047,249
Total for
four years 72,181
tax lost
470,132
471,131
tax lost
Estimated
total for
years 1921
through 1941-289,133
Yearly
average
13,768
256
-3-
The direct cost for the Bureau, as stated above, is
estimated to be $16,700,000. Withholding will require other
expenditures by all Federal Government agencies as well as
by State and local governmental agencies since it is to be
applicable to all salaries and wages.
It has been estimated, based upon five years of experience
with the operation of the employment (social security) taxes,
that expenditures by private employers, essential to a with-
holding tax plan, will be not less than $75,000,000 annually.
This will in part be an indirect charge against the Government because such costs are proper deductions in arriving at
taxable net income. Most of these deductions will be taken
by corporations whose income is taxable at a rate of not less
than 24%, resulting in a tax loss to the Government of not
less than $15,000,000. A negligible part of this loss will
be recovered in the form of tax at a much lower rate upon
the income of the several thousand low-cost clerical workers
hired for this job by public and private employers requiring
additional pay-roll clerks.
There will also be other costs to be paid by the
Government and the banks in withholding from all the small
interest payments on taxable obligations of the United
States, and added costs to corporations in withholding
from dividend and interest payments. They will be most
257
-4-
substantial. Owing to the extensive nature of the withholding operations affecting this type of income, I have
not obtained an estimate of the cost involved in this phase
of the project.
Paper stock that will be consumed in providing hundreds
of millions of forms essential to the management of a with-
holding plan will be very considerable.
Of importance to the problem of withholding is the
ratio of those individuals who voluntarily filed their tax
returns and paid their taxes to those who have for one reason
or another failed to file returns and pay their taxes until
prodded by the collectors through use of the information-atthe-source system and from other leads. Withholding will
be most effective for this latter group.
Our record covers the taxable years 1925 through 1940.
During these sixteen years, the total number of delinquent
taxable returns secured by the collectors was 1,714,402, or
2.05% of the total voluntarily and timely filed. The tax
liability reported on these returns aggregated $72,296,697,
or 0.66% of that voluntarily declared and paid. The annual
average tax liability secured from delinquent tax returns
over this period was $4,518,543.
This is a record of almost complete voluntary disclosure
of income and payment of income taxes by individuals, due,
no doubt, to a large extent, to the fact that for 26 years
258
-5-
they have been trained to file income tax returns.
New taxpayers coming into the field for the first time
know people who have been filing for years and they seek
assistance when necessary. Ours has been a self-perpetuating
process and I believe it accounts for the remarkable response
to changes in filing requirements as evidenced by the
doubling in number of returns voluntarily filed for 1940 when
the base was broadened. Again the filings for 1941 when the
exemptions were even lower indicated clearly that the low
income groups file and pay voluntarily.
For each of these years the tax rates were materially
increased over those effective for the preceding year.
The Government is now reaping the benefits in a time of
stress of a well-grounded education acquired over the years
by the American public in the matter of filing tax returns.
It has been suggested to me that a withholding tax superimposed
upon the present filing system may create some confusion
,
among the 22,000,000 people now filing.
No doubt tax rates for future years will be appreciably
higher than those applicable over the years of our experience.
The response of the people under the greatly increased tax
rates imposed by the 1941 Act, which multiplied the taxes
of those in the lower income groups by two to three times
that of the preceding year (which preceding year had doubled
the taxes of the year before) was most revealing. The 1941
-6-
259
Act also reduced the exemption levels and required the
filing of returns and payment of tax by several million
persons who never before were required to do so.
The record shows that out of the first 4,483,483 returns counted for 1941, 2,347,730 were taxable; and that
of the 2,347,730 individuals filing taxable returns, 82%
paid the tax in full. Eighty-two per cent did not even
take advantage of the quarterly installment privilege.
Eighty-eight per cent of the returns filed during the same
period for the preceding year were full paid.
I note an illustration of the taxes for 1942 proposed
in your statement of March 3rd. The total tax for a
married man with two dependents, whose net income is $2400,
will equal $16. He has the privilege of paying this in
installments of $4 per quarter during 1943. If 1,043,750
such people could not or would not pay any part of their
tax, we would have a tax loss equal to the additional appropriation estimated as necessary for the Bureau to ad-
minister withholding for one year. Experience proves conclusively that much better than 95% of them would file returns and pay their tax.
For years the ratio of collection cost to revenue
produced has ranged around $1 to collect $100. Under the
present system permitting self-declaration and with respon-
260
-7-
sibility left with the citizen to pay his own taxes, these
costs in the years immediately ahead should be much less
than $1 for each $100. If we are to spend $16,700,000 for
withholding, then under our present standards, we should
collect $1,670,000,000 in revenue which would not otherwise
be collected. The tax which withholding might bring in,
which would not otherwise be collected, will on the basis
of past experience not even equal the Bureau ap propriations.
In view of the significance which I attach to the information cited herein, I shall appreciate an opportunity
to discuss this subject with you from the standpoint of
costs in relation to taxes to be collected.
Commissioner
<<< Comunday
This was given to the Secretary on
Key 19. and he referred it to
Mr. Bullivan, who returned it to us.
From: MISS MORTON
262
May 19, 1942
MEMORANDUM FOR THE SECRETARY
Congressman Wesley E. Disney this morning told the Ways and
Means Committee in Executive session that while the Bureau of
Internal Revenue might not be willing to say so to either the
Treasury or the Committee, he believed that the Bureau thought
that collection of income taxes at source was "a box of monkeys,"
and that it would be very difficult to administer. Since then
Congressman Harold Knudsen and others indicated that they had
been talking with people from the Bureau and had been given to
understand that the Bureau opposed collection at source on
administrative grounds.
We have had several conferences with technical people in the
Bureau about collection at source. They are opposed to it, but
they agree that if Congress will make available the needed personnel and equipment, it can be done. We think not only that
collection at source can be administered on the basis of a plan
already developed but that with the application of somewhat more
imagination, an entirely practicable plan can be devised.
We believe that the future of the income tax as a substitute
for the sales tax in reaching large groups of people depends on
successful collection at the source. Such collection at the source
is important also for its anti-inflationary effect and its convenience
-2-
263
to the taxpayer. We believe also that it would diminish delinquency
in filing returns and paying the tax.
For these reasons we think it imperative that collection at
the source be introduced and be made to work whatever new blood
may be necessary and whatever revision of machinery may be neces-
sary. It would be very regrettable if an adverse position on the
part of the Bureau of Internal Revenue were to cause Congress to
abandon collection at source, particularly since in such event a
sales tax would be an almost certain substitute.
RST
WH 264
MEMORANDUM
To:
Secretary Morgenthau
From: Mr. Paul
May 19, 1942
You are no doubt aware of the fact that Representative
McKeough of the Ways and Means Committee won the Democratic
is primaries this year and received the nomination for Senator
from Illinois. He is running against Senator Brooks, who is
backed by the Chicago Tribune and the McCormick group. McKeough
has the backing of the United Democratic Organization of the
State, as well as considerable support from labor and other
independent groups. He has a good chance of winning the
election.
Toward the end of last week McKeough called me at my home
and said that a lot of heat was being put on him to come out
to Illinois at this time to work on his campaign. McKeough
feels that he should stay in Washington through the delibera-
tions of the Ways and Means Committee and would like to get a
letter from the President urging him to remain in Washington.
He thinks a letter of this kind will satisfy the politicians
in Illinois who are backing him in the election.
not
Acc
the
McKeough is one of the administration's most valuable
supporters in the Committee. He has favored higher corporatecong 06/5/27
taxes than the Committee was willing to impose, is for high
individual taxation, and has been one of our few staunch sup-
porters in respect to the elimination of loopholes. There is
no more valuable member of the Committee from our standpoint
and Pat Boland's death yesterday emphasizes the need of
retaining the slender support in the Committee for the administration's measures.
I wish you would request the President to do whatever he
can on behalf of McKeough. Certainly, we need McKeough in the
Committee and, certainly, he deserves the very best help he
can get.
R.S.T
265
TO:
Miss Chauncey:
Mr. Gaston now has a copy of
- minutes so an returning this
- for the Secretary's files.
P. Mannen
FROM: MR. GASTON
266
CONFIDENTIAL
PROCEDINOS OF THE CENSORSHIP POLICY BOARD
Meeting of May 19, 1942
A meeting of the Board was held in the Office of the Postmaster
General at 4:00 P.M. Those present were:
The Postmaster General, Chairman
The Attorney General
The Director of Censorship
The Director of the Office of Government Reports
The Director of the Office of Facts and Figures
The Chairman of the Federal Communications Commission
Herbert E. Gaston, Assistant Secretary of the Treasury, and
Hantington Cairna, Assistant General Counsel
(representing the Secretary of the Treasury)
Harvey H. Bundy, Special Assistant to the Secretary of War
(representing the Secretary of War)
Adlai Stevenson, Special Assistant to the Secretary of the Navy
(representing the Secretary of the Navy)
Francis A. Jamieson, Press Division
(representing Nelson A. Rockefeller, Coordinator of
Inter-American Affairs)
Fred A. Ironside, Jr., Secretary for the Board
The Director of Censorship discussed a nemorandum relating to the
censorship of domestic broadcasting stations, which he had previously
prepared and circulated to those present. He stated that complaints
had been received from the public concerning radio commentators and
opinions expressed ever certain radio stations, and that the complainants had suggested the radio stations either be taken over or their
activities suspended. The Director of Censorship stated that he did
not believe it was necessary to take such steps as the broadcasters were
doing very well under the voluntary oods.
the Director of the Office of Facts and Figures stated he had received few, 1f any, complaints about domestic foreign language broad-
casts and that there was very little matter of a subversive character
in any of the broadcasts.
CONFIDENTIAL
12
J 267
CONFIDENTIAL
May 20, 1942
VII
MEMORANDUM FOR
The Vice President of the United States
The Secretary of the Treasury
The Secretary of War
The Attorney General
The Secretary of the Herry
The Director of the office of Government Reports
The Director of the Office of Facts and Figures
The Director of Consorship
FROM: The Postmaster General
Attached are the minutes of the meeting of the Generahip
Policy Board, May 19, 1942. will you examine then and advise
- promptly of any corrections you wish made, otherwise, the
minutes will stand as accurately reflecting the proceedings of
the mosting.
(Signed) Frank C. Walker
Postmisster General.
CONFIDENTIAL
268
FIDENTIAL
15
Mr. Gaston was of the opinion that the Government ought to eise surveillance of such donestic stations as my be necessary, and
that there be no censership until necessary, and then only as to particular stations, with such cansorship to be effected under existing
Governmental powers. He suggested further the advisability of informing
broadcasters, by circular, that the Government, under opinion of the
Attorney General, has the right to exercise consorship, but there was no
intention to use these powers at the present times that the Government
would continue to rely on self-policing, and also rely upon the broadeastere conforming to the standards previously promilgated by the
Director of Censorship.
The Director of Censorship stated that of all the radio stations,
there was only one that sight be suspected of untoward activities and that
was a radio station in Alaska which was under surveillance.
The Director of the Office of Government Reports was of the opinion
that donestic redio should be as free as the donestic press. He stated
that a problem giving concern was that broadcasting through the medium
wave bands of deneatic stations reached very distant points and that the
stations night innocently and unwittingly be the medium through which
the many was gaining knowLedge of the affairs of the United States.
The Chairman of the Federal Communications Commission discussed the
scope of the donestic stations' reception and stated that it was most
unlikely that any small donestic stations would be heard outside the
continental United States) yet, it was a fast that radio was unpredict
able, and that the larger and more powerful stations might be heard
anymore in the world at any time, and it could not be assumed that radio
CONFIDENTIAL
269
CONFIDENTIAL
did run true to form. He stated, however, that the chances of getting a
particular message over a particular station at a particular time was very
remote. He said that anything carried on a network could be heard at
many places throughout the world and that a large domestic station could
be heard outside the country in almost any case.
The Director of the Office of Government Reports was of the opinion
that broadoasters should be subjected to voluntary consorship only, unless
the station was being used to send messages to the may.
The Chairman of the Federal Communications Commission stated that the
Commission was checking stations and wherever a complaint was received
the Commission was getting a transcript of the matter and was installing
monitoring) and that the Commission was being very vigilant in monitoring
domestic broadcasts. He stated that the results of monitoring service
were being proptly reported by the Commission to other Governmental
agencies. He was of the opinion that if the Government required a slightly
coereive power, it would find that the broadcasters were very sensitive and
that if any untoward conduct of any character was pointed out to them, they
promptly corrected it.
The Director of Censorship stated that his office had made very clear
to the brondcasters the responsibility of station managers who must control
the sterophone. He said it was always possible for an unauthorised person
to use the aiorephone, but that such a possibility would be present even
if the Government was conducting full consorship.
The Chairman of the Federal Communications Commission stated that,
in his opinion, the Commission was doing a very complete job of monitoring
but if the Director of Censorship wished anything further, the Commission
would be glad to cooperate. He stated that in the monitoring and compling
of foreign language donestic broadcasts, the Commission had very complete
CONFIDENTIAL
14
270
15
CONFIDENTIAL
coverage.
It was the sense of the meeting that the broadcasters were doing a
very fine job for the Government, and were cooperating extremely well in
the war effort.
The Chairman of the Federal Communications Commission stated that
the broadcasters were approaching a difficult economic situation and that
unquestionably in the course of a for months' time, the broadcasters would
be operating at a loss. a stated further that under authority of the
Communications Act whonever a station was broadcasting subversive propa-
ganda, there was power in the Government to close the station. He stated
that whenever a station entered the field of violation of the law, the
Communications Consission could revoke the license and take the station
off the air.
The Director of Genearship discussed the opinion of the Attorney
General dealing with the power of Government to cansor domestic stations,
and inquired as to whether that opinion should be made public and whether
at the same time there should be released a statement of the Office of
Censorship that such Governmental power would not be used as the radio
industry was cooperating in the war effort.
The Attorney General inquired whether the announcement of such -
opinion would disturb the industry and the Chairman of the Federal
Commications Commission was of the opinion that it would be very disturbing.
The Postmaster General inquired what advantages would come from
publicising the matter when it appeared that the Government was receiving
such fine opoperation from the broadcasters.
CONFIDENTIAL
CONFIDENTIAL
271
16
The Chairman of the Federal Commissions Commission was of the
opinion that publicising the matter would be definitely spectting. a
stated that the point-to-point stations on the cost lines have been
generally alound.
The Atterney General stated that the opinion could not be referred
to unless is was made public.
It was the sense of the mosting that, at this time, no announcement
be made of the opinion.
The Director of Geneorship stated that there was strenendous leakage
of dangerous information over the Mexican border, and that there appeared
to be no way of preventing this leakage as a person could obtain valuable
information in the United States, phone it to a person near the border
who could go across the border and transmit it. The only possible way of
dealing with the problem would be to close the border and the Director of
Censorship was of the opinion that such an action was not advisable. He
stated that when the Mexican Imbassador was here, the State Department
had discussed the matter fully with him and that the Ambassador had pro-
mised cooperation, but that, so far, nothing definite had been done.
He said that be had received a suggestion that a consorship belt, 250
miles wide, be established at the border, by Legislation, but that this
suggestion was imprectical.
The Chairman of the Federal Communications Commission stated that the
monitoring service of the Commission would catch all transatiantie stations
which had been monitored, and that the short were point-to-point stations
were also under surveillance. However, be pointed out that the most
serious method of communication was by the use of small portable trans-
sitters which were easy to obtain and effective for 25 miles distance, and
were not detected unless the monitoring service was right on the site.
CONFIDENTIAL
272
CONFIDENTIAL
29
The Attorney General withirow from the mosting.
The Director of Censership stated that is - not possible to bottle
up the country when there was Leckage of information over the bondow. a
said he had consulted with the State Department repeatedly about 10 and
that there did not seem to be anything fossible to prevent such
Mr. Bandy stated that the War Department recognised the danger, but
also was concerned about the question of how far it was possible to go to
prevent the possibility of information going over the border.
The Postmaster General asked the Director of Consership if he had
heard any discussion or facts indicating that the denoutic press was in
any wise increasingly discountingting subversive setter or whether he had
received any suggestions of any further shops that the Government should
undertake. The Director of Genearship stated that in all discussions he
had heard, it appeared that the activities of the Government were entisfactory.
The Postmaster General stated that a number of complaints had been
received concerning the Negro press which appeared to be a most delicate
matter. He asked if any other agencies had received similar complaints.
The Director of Censorship stated that it was a very serious sites
tion and it looked as if 10 sight load to trouble.
Mr. Bundy stated that the matter was of grave concern to the General
Staff on account of the Negro personal in the Armed Forces. He said
General Marshall had been giving thought to the possibility of bringing
to the attention of the Negro press the parallelism of its editorial
line with the Tokyo and Berlin propaganda and editorial line because is
appeared to be such a direct parallel.
CONFIDENTIAL
273
CONFIDENTIAL
The Director of the Office of Facts and Figures stated that, some
time past, he had discussed the matter with the Attorney General.
The Postmaster General inquired of the Director of Censorship whether
the time had been reached when it might be necessary to discuss the matter
with the Negro press, and he further inquired whether the Negro press had
come to the point where they were violating the voluntary code of censor-
ship. The Director of Censorship replied that the voluntary code did
not cover this situation.
The Director of the Office of Facts and Figures withdrew from the
meeting.
Mr. Jamieson suggested the advisability of discussing the matter with
representatives of Negro foundations and with those advising the Negro
press on public relations.
Mr. Bundy stated that the War Department had been scrutinising the
Negro press and that the tension was not diminishing, but was increasing.
The Chairman of the Federal Communications Commission stated that
he could not see how this matter could be disregarded and that, at some
point it unquestionably would become very serious.
Mr. Bundy was of the opinion that there was a very distinct possibility
of race riots near Army camps.
The Director of Censorship stated that the matter could not be controlled on the voluntary censorship basis.
The meeting thereupon adjourned at 4:55 P.M., subject to call.
CONFIDENTIAL
18
Received 5/19. Copy the
White 5/19/42.
AGENDA
FOR THE BOARD OF ECONOMIC WARFARE MEETING
TO BE HELD MAY 21. 1942, AT 10:00 A. Mar
IN THE OFFICE OF THE VICE PRESIDENT
IN THE CAPITOL
1. Exports to Sweden - See Report Attached.
2. Argentine Funds.
275
BOARD OF ECONOMIC HARFARE
WASHINGTON, D. C.
To:
Members of the Board of Economic Warfare
From:
Milo Perkins, Executive Director
Subject:
Exports of Strategic Materials to Sweden
SECRET
I
QUESTION AT ISSUE
On May 4 the Swedish Minister presented to the Department of State
and the Board of Economic Warfare a memorandum urging in the
strongest terms that the United States should allocate considerable
quantities of strategic materials for export to Sweden. Most of
this material would be used, directly or indirectly, to maintain
and strengthen the Swedish armed forces.
For reusonsoutlined below it is felt that a decision on the licensing of these proposed exports should be based primarily on military
and diplomatic grounds, rather than on economic considerations.
Fundamentally, the question is whether a considerable tonnage of
rubber, toluol, chromium compounds, machinery, sisal and other stratogic materials would be of more service to the United Nations in
Sweden, or behind our own battle fronts. consequently, it is suggested that the matter either be considered by the Board as a whole,
or be referred to a subconsittee including appropriate representstion from the Departments of State, War and Navy.
II
BACKGROUND OF THE SWEDISH REQUEST
The United States' export policy toward Sweden has been, within the
limits of our supply possibilities, to license foodstuffs solely
for Swedish consumption,Materiala essential to Swedish agriculture,
and industrial materials and consumers goods which would not consti-
tute a substantial contribution to the German war effort. SwedishAmerican trade has also been limited by lack of shipping space,
since by arrangement with the British and German authorities only
five Swedish shipe each month and four tankers a year are allowed.
through the blockado.
276
-
Exports to Sweden in 1941 were valued at $22.4 million, or slightly
over one-third the average for prewar years. During that year we
supplied Sweden with over 87 million of raw cotton and cotton textiles, over $1 million of petroleum products (including 88,000
barrels of aviation fuel), $1.6 million of automobiles, tractors,
and industrial machinery, $600,000 of rubber and manufactures, and
$252,000 of aircraft and parts. Sweden agreed not to re-export
any of these goods to the Axis.
Swedish exports to the United States virtually ceased, amounting to
only 84.4 million for the year 1941, and dropping to only $172,000
during December. This reduction in Swedish exports has been forced
upon Sweden by Germany, which has prohibited shipments of strategic
materials. After the entry of the United States into the war,
Germany informed Sweden that no exports would be permitted to the
United States or any other countries in this hemisphere except
Argentina and Chile.
Thus, the United States finds itself confronted with a demand by
Sweden that we continue and even increase our exports, while at the
same time Sweden is unable because of German pressure to furnish us
with any significant quantities of goods in return.
III
ARGUMENTS ADVANCED BY THE SWEDISH MINISTER
The Swedish Government claims consideration for its case on the following grounds
a. About one-third of the Swedish merchant marine is directly or
indirectly engaged in shipping for the United Nations.
b. It is in the interest of the United Nations to furnish the
supplies needed to keep the Swedish economy operating, and in
particular to permit the maintenance of a strong military
force.
The Swedish Government asks, therefore, that the United States permit Sweden to obtain the maximum quantities of goods fixed by the
navicert quotas agreed to in the War Trade Agreement with Great
Britain. This assistance, it is argued, will help Sweden to main-
tain its policy of vigilant and active neutrality.
IV
OTHER DIPLOMATIC AND MILITARY CONSIDERATIONS
Although the Swedish Government has not in this instance referred
to various services performed on behalf of Great Britain in the
military and diplomatic spheres, it is understood that such benefits
-3-
277
have been received. Sweden has not given the United Nations an
explicit undertaking to resist German aggression, but public
statements by responsible Swedish officials are said to have
committed the Government to a policy of armed neutrality. Moreover, in the event of Allied military action in the Scandinavian
region, it is suggested that the cooperation of Sweden may be obtained. The British have testified to the willingness of Swedish
authorities to cooperate with the war effort of the United Nations
whenever this could be done without an obvious compronise of
Sweden's neutrality.
W
ECONOMIC CONTRIBUTIONS OF SEEDEN TO THE
GERMAN WAR MACHINE
These considerations, however, must be weighed in the light of
Sweden's economic assistance to Germany and her subservience, in
many cases involuntary, to the enemy.
Swedish shipments to Germany now comprise about 70 percent of her
total exports as compared with an average of 15 percent during the
prewar period; and at least 90 percent of Sweden's foreign trade is
now confined to the enemy and occupied area. Although the Swedish
Government has sought to limit credits granted Germany, concessions
have been made which now place Germany in debt to Sweden in the
amount of about 150 million crowns as compared with Sweden's debt.
to Germany in 1940 of 140 million crowns.
In 1941 Sweden exported to Germany not only 9.5 million metric tons
of high-grade iron ore, which the enemy urgently required, but also
large amounts of lumber, pulp and paper, machinery, feedstuffs and
special steels. In addition, a large part of the Swedish merchant
marine is lending valuable assistance to Germany in the Baltic.
To Germany's ally, Finland, Sweden is furnishing considerable economic and financial aid. Finnish imports from Sweden amounted to
$24 million in 1941, and included large quantities of electrical
apparatus, machinery, chemicals, iron and steel, and foodstuffs.
VI
CONCLUSION
There appears to be little economic reason for allocating strategic
materials to Sweden. Consequently, guidance on the military and
diplomatic considerations involved is requested from the competent
authorities. If a decision cannot be reached expeditiously by the
Board as a whole, it is suggested that the question be referred to
an appropriate sub-committee, for the earliest possible consideration.
278
May 19, 1942,
My dear Senator:
Please accept my sincere thanks for
presenting to the Senate yesterday my
letter to you of May 1, 1942, explaining
my position with reference to the Farm
Security Administration program and reductions in agricultural expenditures.
Yours very truly,
(Signed) H. Morgenthau, Jr.
Secretary of the Treasury.
Honorable Richard B. Russell,
United States Senate.
11-m.m.c.
LJB:ims
5/19/42
Copies thoupson
279
United States
of America
Congressional Record
PROCEEDINGS AND DEBATES OF THE
77th
CONGRESS, SECOND SESSION
WASHINGTON, MONDAY, MAY 18, 1942
Vol. 88
No. 95
Senate
(Legislative day of Friday May 15, 1942)
Rev. Frederick Brown Harris, D. D.
minister, Foundry Methodist Church,
Washington, D. C., offered the following
prayer:
Our Father God. Thy life is the breath
of our being: Thy love is the light of our
homes: Thy righteousness alone is the
glory of our Nation: Thou hast taught
us to love truth and beauty and goodness. May Thy truth make us free-free
from pettiness and prejudice and pride
d from the ugly sins that doth so
illy beset us. Lift us above the mud
and seum of mere things to the beauty of
Thy holiness where even daily drudgery
may be edged with crimson and gold.
Lead us in the paths of righteousness for
Thy name's sake.
Enrich us with those durable satisfactions of life so that the multiplying years
may not find us bankrupt in those things
that matter most-the golden currency
of faith and hope and love. In these
times that try our souls, our faith, our
loyalty as we gird the might of the Nation to defend the things we hold nearest
our hearts, may we take care to
strengthen the spiritual roots of our de-
mocracy. Give us eyes to see that all
the values we have solemnly vowed to
preserve at any cost are rooted in the
eternal realm. So in a torn and troubled
day may we toil in these fields of time in
the sense of the Eternal In the name
that is above every name we ask It.
Amen.
AMENDMENT OF NATIONAL SERVICE LIFE
INSURANCE ACT
The VICE PRESIDENT laid before the
Senate a letter from the Administrator of
(Veterans' Affairs. transmitting a draft of
proposed legislation to amend subsection
(3) of section 602 (d) of the National
Service Life Insurance Act, as amended,
and for other purposes, which, with the
accompanying paper, was referred to the
Committee on Military Affairs.
PETITIONS AND MEMORIALS
Petitions, etc., were laid before the
Senate or presented and referred as
indicated:
By the VICE PRESIDENT:
Petitions of sundry citizens of the States
of Alabama, Iowa, and New York. praying for
the enactment of the bill (B. 860) to provide
for the common defense in relation to the
sale of alcoholic liquors to the members of
the land and naval forces of the United
States and to provide for the suppression of
vice in the vicinity of military camps and
naval establishments; ordered to lie on the
table
By Mr. CAPPER:
A petition. numerously signed. of members
of Trinity Methodist Church of Iola, Kans
praying for the enactment of the bill (S. 860)
to provide for the common defense in rela-
tion to the sale of alcoholic liquors to the
ston of vice in the vicinity of military camps
and naval establishments; ordered to lie on
the table
Petitions signed by 89 citizens of Stanis-
laus County, and 45 members of the Em-
pensed with, and the Journal was ap-
members of the land and naval forces of the
at of the United States were communihis secretaries who also announced that
on May 16. 1942, the President had ap-
proved and signed the act (S. 210) to
amend the Interstate Commerce Act, as
amended, to provide for the regulation of
freight forwarders.
of the land and naval forces of the United
States and to provide for the suppression of
vice in the vicinity of military camps and
naval establishments; ordered to lie on the
table
REPORTS OF COMMITTEES
The following reports of committees
were submitted:
By Mr. McCARRAN from the Committee
on Appropriations:
H R. 6599 A bill making appropriations
for the Department of State the Department
of Justice the Department of Commerce
ending June 30. 1943. and for other pur-
poses; with amendments (Rept. No. 1347).
By Mr. GREEN from the Committee on
Privileges and Elections:
5.2471 A bill to amend the act entitled
"An act to prevent pernicious political ac-
tivities," approved August 2. 1939. as
praying for the enactment of the bill (S 860)
to provide for the common defense in rela-
ed to the Senate by Mr. Miller, one of
tions all to the State of New York praying
for the enactment of the bill (8.860) to provide for the common defense in relation to
the sale of alcoholic liquors to the members
amended, with respect to its application to
officers and employees of educational, re-
Journal of the proceedings of the calendar day Friday, May 15, 1942, was dis-
Messages in writing from the Prest-
Petitions numerously signed, of
citizens and members of religious organiza
United States and to provide for the suppres-
of Oakland, all in the State of California
MESSAGES FROM THE PRESIDENT
APPROVAL OF A BILL
man to the Committee on
Agriculture and Forestry
members of the land and naval forces of the
On request of Mr. BARKLEY, and by
unanimous consent, the reading of the
proved
Supervisors of Broome County N Y. favoring the use of portion of excess grain now
in storage for the making of alcohol for war
Industries to place of sugar needed for hu-
and the Federal judiciary, for the fiscal year
By Mr. PEPPER (for Mr. DOWNEY)
THE JOURNAL
By Mr. WAGNER:
A resolution adopted by the Board of
manual Bible class, First Methodist Church,
ligious. eleemosynary. philanthropic, and
cultural institutions, establishments and
agencies, commonly known as the Hatch
amendment (Rept. No. 1348)
By Mr. HOLMAN, from the Committee on
Military Affairs
S 2310 A bill for the relief of Roy Chandler: without amendment (Rept. No. 1349).
By Mr. REYNOLDS from the Committee
tion to the sale of alcoholic liquors to the
on Military Affairs:
United States and to provide for the sup-
act of August 18. 1941 (Public No. 213, 77th
pression of vice in the vicinity of military
camps and naval establishments; ordered to
lie on the table
By Mr TYDINGS
Petitions of sundry citizens of the State of
Maryland, praying for the enactment of the
S. 2437. A bill to amend section 9 of the
Cong.) by striking out the proviso thereto
which requires monthly report by the Secretary of War to the Congress of the number
of men in active training and service: without amendment (Rept. No. 1350):
S. 2488 A bill to authorize the exchange
bill (S. 860) to provide for the common de-
of lands in the city of Philadelphia, Pa.
liquors to the members of the land and naval
of Philadelphia, trustee under the will of
fense in relation to the sale of alcoholic
between the War Department and the city
for the suppression of vice in the vicinity of
Stephen Girard, deceased: without amendment (Rept. No. 1351): and
military camps and naval establishments; ordered to lie on the table.
of the number of cadets at the United States
forces of the United States and to provide
H 6979 A bill to authorize an increase
4399
280
CONGRESSIONAL RECORD-SENATE
4400
CONGRESSIONAL RECORD-SENATE
MAY
The
bill (8. 2527) to expedite the war effort
4401
OF
by officers and men for duty at
and their bs women
1352).
Utah
of
United
vital
ALCOHOL
MEAD
the
have
the
ACT.
letter
RECORD
will
Mr
WILLIS
received
printed
continuous
and In the RECORD and, together
President,
amend-
ment which intend to propose to the
with the letter. will be referred to
Committee on Naval Affairs.
the
unique.
took
had.
for
where
in
all
raw
281
CONGRESSIONAL RECORD-SENATE
4402
CONGRESSIONAL RECORD -SENATE
1942
4403
regard
finished wrought alumiand
should
grateful
the
of
Mr.
the
of
played
Iceland,
hap-
and
the
given
birth
rela-
provided
100
armed
active
requires
May
for
played
282
CONGRESSIONAL RECORD-SENATE
4404
MAY
by those who would
CONGRESSIONAL RECORD SENATE
of
which
HOUSE
me
4407
there
obligation
to
have
what
be
provided
that
our
Repre.
of
$150,-
farm
in
The
given
clerk
for
the
Mr.
(Mr.
New
from
the
simply
(Mr.
and
favor
business
Ameri-
of
sac
this war: but fall to see the
"secrifice for the sake of sacri-
Virginia
around
better think
for
The
Senators to their names
A quorum
were
and
which
will
State
be
prob-
Agriculture
expenses in the
of
13,000,000
approximately
A great deal of traveling can be done
283
CONGRESSIONAL RECORD-SENATE
CONGRESSIONAL RECORD-SENATE
4408
Senator from Utah (Mr. THOMAS the
with $13,000,000 Much of the traveling
automo-
by
which
think
mile,
the
is
$13.
OFFICER
The
Senator from Maryland (Mr TYSTONS
many
WALLGREN
from
in
Senate
the
absent
Agriculture
Farm
are
California
from
continuously, and the
on
CLERK
amount
the
Security
that
of
they
to
it
be
$4,000.
On
$1,000
of
may
be
submitted
(Mr.
official
should
think
ations
farm
requested of me that the
not
NUYS) and the Senstor from Washing.
Mr.
4411
, hope $2,500 will be sufficient:
there, helped to
the Sension from Indiana (Mr VAN
sufficient
will
for period of or 6 years
should
The
It
traveling
and
of
Florida
will
There
(Mr.
for
that
from New Jersey (Mr.
in
under
Senator from Connecticut (Mr.
Mr. BYRD asked for
DATE were and
clerk proceeded the
(when
general
Mr
from
MALONEY is paired with the Senator
from Pennsylvania (Mr. Gurray): and
the
asured that
what
the Senator from Maryland (Mr. TYP.
the
much
is
of the
Farm
INGS) paired with the Senator from
which
Jersey (Mr. SMATHERS). I am adIf present and voting the Sen-
his
(Mr.
to
farmers
the
enable
and
The
25,
with from
Idaho (Mr
understand
and other
Mr.
to put them back
the
should
my State
(Mr REED which transfer
one
made
Mr. OILLETTE
by
increase
the
in
farmers
into
them
thank
over
the
raising
the
Mr.
Sension
amount.
particular section the
referred
have
poor farmer
detained
the
industrial
the fact that, frankly
the
of Agriculture to the
Senator
Mr.RUSSELL I am glad
is
that If he were present
The
from the Senator
"DAY
tana
Mr AUSTIN The
President
Mr.
Jersey (Mr. BARBOUR) is
of illness
ber
from
The
of
increased
be
do and shall
NATS
Senator
throughout
life
committee has increased
$2,500. which is probably
relate
the
GREEN)
for
where they not only do not
limit.
500
the
negative)
home
but
think that the
Mr. WAGNER (after having
nior
draw
farmers
such
Mr.
there-
the
ment
If
that
that
country That much better
have
THOMAS
and
the
of homes and the enjoy-
other
the
of
President
on 85 does
farms eventually there follows the
building schools and churches
loans
For
farm farmers live upon their
The
or
was
of
that he may live
that
from Maryland would vote "yea." and
Mr.HAYDEN (after having voted
the negative)
making
to help
homes
ator from Connecticut and the Senator
that the Senator from Pennsylvania and
the Senator from New Jersey would vote
vote,
the
of
killed
and
"Day.
with
in
Act.
the
a
detained
The
Tenant
the
of
called
pending
the
Vote!
SENATORS
The
of
years
the
The
000,000
(Mr.
The
VOTING
(Mr.
from
(Mr
The from
(Mr
The
Davis
$25,000,000
been
The
the
is
Mr
REED)
from
Senator
Senator
Senato
from
The
highest
(Mr. the New
THOMAS
the
(Mr
BYRD'S
in the United
the
Swedes
early days
tor from Ohio (Mr.
North Dakota
of the Middle West. took
The
absent.
developed
The Senator from Nebraska (Mr. BUT-
LEE) detained on official
only
along.
102
for from (Mr the
Mr. HILL
Mr
Senator from Rhode Island (Mr. OREEN)
the Senator from (Mr.
(Mr. ALONEY). the Sension from Mon.
tana (Mr. MURRAY the Senator from
North Carolina (Mr. RETHOLDS). the
forced
sur-
found
over rarily and that we
next the remaining amend-
ments under the Farm Security Admin-
istration provisions
be
Mr. TAFT Purely for the purpose
not
making
matter
Senator explain the
clear.
between
the appropriation found on page 83 that on page 87 and how the program
section
that
find
to
that
the
For
them
them
are
of
Sension from Idaho (Mr. CLARK the
OUTTEY) Senstor from Coop
which
the
(Mr. TORKY)
arrily
type
to
capital
the
out
driven
go
sections,
into
many
the
of
with
them
family
the
and frequently to go on
the A with their entire
WAS
The
California
hearings
larger
thought
was
that
justified
the
The
or
TO
beef
cattle if they only had the capital to
284
CONGRESSIONAL RECORDSENATE
4412
words
GRESSIONAL RECORD-SENATE
949
that
4413
the Benator from
submitted
preparing
the
the
be
too,
is
but
In
spending
that
confronted with the most cotos-
sale xxenditures in the history of this
who
transfer
we
that
to
part
to
the
agri-
occurred
disrented
respect
the
dations concerning agriculture.
recommen-
285
4414
CONGRESSIONAL RECORD SENATE
CONGRESSIONAL RECORD SENATE
4415
286
CONGRESSIONAL RECORD SENATE
4416
MAY
House of Representatives
$125.
MONDAY, MAY 18, 1942
Marine Corps, Coast Guard
obter-
years
Mr.
of
the
and
and
this
14
of
for
of the following title:
BYRD
PATRICK
JOURNAL
The
Chair
results
(Mr.
Mr.
that
Speaker,
by
483
the
and
question in but
death
National
part
by
the
during
the
tasks
the
he
funds
grants
But
the
to
of
and
the Army. Navy.
1942
me-half million dollars in
balances
Senate Committee
the funds for expenses and
the
run
through
my
mind. and the other members of our col4450
BYRD
day are $564,000
the
when send Mrs Boland
1943
CONGRESSIONAL RECORD-HOUSE
4460
with
country
devotion
MAY
CONGRESSIONAL RECORD-HOUSE
1942
287
4463
adjourned until tomorrow
loyalty
May 19,1942 at 12 o'clock
came
and
COMMITTEE HEARINGS
whin
Special
PUBLIC
Mr
of
Bo-
the
bills
Mr.
Mr.
PATRICK
Mr
country
and
Mr.
that
Mr
GILLETTE
Mr.
Mr
yield
from California
Mr.ENGLEBRIGHT
of
and
that
and
his people and sincerity.
He was unitiring in efforts and served
Provi-
Committee
House
Ways
district
add
-
gisle,
the
in
m.)
4464
CONGRESSIONAL RECORD HOUSE
MAY
288
18,
1942
Appendix
Help Win the War
EXTENSION OF REMARKS
HON JOSH LEE
A1941
289
TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE May 19, 1942
TO
Secretary Morgenthau
FROM
Mr. White
1.
Sir Frederick Phillips and Mr. Bewley called on me yesterday
at their request to discuss matters relating to China. Sir
Frederick raised the following two questions:
(a) Regarding the British Agreement with China granting
£50 million, do you have any objection to the
Agreement being limited to "approved" purchases of
goods from the sterling area during the war only,
with an expressed prohibition against use of the
funds to meet any previous sterling commitments?
(b) What is your attitude on the Stabilization Board
of China and its Fund now that the sterling assets
of the Fund total only about L2 million while the
current sterling liabilities of the Fund total
nearly E6 million?
2. Sir Frederick said that he would call on you this week to
discuss these matters with you.
3. At a meeting of Treasury people to discuss the above matters,
it was unanimously concluded that:
(a) with reference to the first query, an appropriate
answer might be that this was a matter on which the
Secretary would rather not comment since it concerns
only Great Britain and China, and
(b) with reference to the question regarding the Stabili-
zation Board, the Treasury has already instructed the
Board that it was prepared to see the dollar assets
of the Fund used for the purchase of sterling after
the present sterling fund has been exhausted. (In this
connection you will be interested to know that the
British object to the use of the proposed £50 million
for such purpose.)
TREASURY DEPARTMENT
MA990
INTER OFFICE COMMUNICATION
DATE May 19, 1942
Secretary Morgenthau
TO
Mr. Kamarck
FROM
Subject: The Shipping Situation
(Charts attached) returned
1. Shipping losses of the United Nations in the
last three months have been very serious. Losses
during each of these months have totalled more than
600,000 gross tons, while the yearly rate attained has
been around 7,500,000 tons a year.
2. The rate of sinkings in the last quarter of
the year is comparable only to the worst quarter of
the first World War. In the three months, April -
June, 1917, 2,100,000gross tons of shipping were sunk.
In the three months, February - April, 1942, the total
was only 200,000 tons below the 1917 figure or 1,900,000
tons.
3. Launchings have increased rapidly, but are still
running below losses. The United States increased its
rate of launching in April, 1942 by six times over April,
1941.
291
May 19. 1942.
Dear Lew:
Thank you for your letter of today's date.
I an glad that you have found the port reports
interesting, and that you wish to have further
work done on them in cooperation with the Treasury.
I believe that your Mr. Marks should talk
the matter over with Assistant Secretary Herbert E.
Gaston. These reports have been prepared under Mr.
Gaston's supervision, and he has a thorough knowledge
of the sources of information, system used in preparing the abstract, etc.
I an turning over your letter to Mr. Gaston in
order that he may get in touch with Mr. Marks in
regard to this matter.
Sincerely,
(Signed) Henry
Honorable L. W. Douglas,
War Shipping Administration,
Washington, D.C.
ozz/ave
by Messenger Bunny 4:35
Original file reference Gaston
Photo file n.m.c.
WAR SHIPPING ADMINISTRATION
WASHINGTON
May 19, 1942.
The Honorable Henry Morgenthau, Jr.,
Secretary of the Treasury,
Treasury Department,
Washington, D. C.
Dear henry:
In regard to the port reports you have been sending me--
which, I should interpolate, are interesting and useful-I wonder
whether Lr. Daniel Marks, who is working on such matters here, and
particularly on the form of reports and the analysis of reports,
could see the appropriate person in your Department.
for
If this makes sense to you, would you mind asking whoever it
is in the Treasury who is responsible and who has been doing this
work to call Mr. Marks, so that they can get together?
Ever faithfully,
L. W. Douglas.
TOKY
UY
AMPS
293
TREASURY DEPARTMENT
PROCUREMENT DIVISION
OFFICE OF THE DIRECTOR
WASHINGTON
May 19, 1942
MEMORANDUM TO THE SECRETARY:
There is submitted herewith the operating report
of Lend-Lease purchases for the week ended May 16, 1942.
Due to the limited shipping available, warehous-
ing facilities are being extended and a plan is being
developed whereby goods may be stored at the most stra-
tegic locations and prompt forwarding arranged accord-
ing to order of priority based upon urgency of need.
give
Clifton'l of E. Procurement Mack
Director
BUY
LEND-LEASE
TREASURY DEPARTMENT, PROCUREMENT DIVISION
STATEMENT OF ALLOCATIONS, OBLIGATIONS (PURCHASES) AND
DELIVERIES TO FOREIGN GOVERNMENTS AT U. S. PORTS
AS OF MAY 16, 1942
(In Millions of Dollars)
Purchase Authoriza-
tions (Requisitions)
Requisitions Cleared
for Purchase
Obligations (Purchases)
Deliveries to Foreign Governments
at U. S. Ports
China
$1707.4
$704.1
Russia
$262.2
(1402.4)
(692.6)
(253.5)
( 55.2)
$963.3
$637.4
$275.3
$ 44.1
-
(946.3)
(633.9)
(263.3)
( 44.1)
-
$904.5
$619.9
$238.0
$ 41.7
-
(888.5)
(612.9)
(229.6)
( 41.7)
$880.2
$605.5
$231.9
$ 39.0
(860.4)
(595.2)
(222.3)
( 39.0)
$362.6
$287.3
$ 55.0
$ 19.0
Total
Allocations
Administrative
(346.1)
U. K.
(274.5)
( 51.7)
$ 55.2
( 18.6)
Expenses
$ 1.6
( 1.6)
Undistributed &
Miscellaneous
$ 684.3
( 399.5)
$ 6.5
( 5.0)
$ 4.9
{ 4.3)
-
$ 1.0
2.8
$
2.9)
( 1.0)
-
-
$
1.3
1.3)
Deliveries to foreign governments at U. S. Ports do not include the tonnage that is either in
storage, "in-transit" storage, or in the port area for which actual receipts have not been received from the foreign governments.
Note: Figures in parentheses are those shown on report of May 9, 1942.
295
May 19, 1942
MEMORANDUM TO THE SECRETARY:
There is submitted herewith the operating report
of Lend-Lease purchases for the week ended May 16, 1942.
Due to the limited shipping available, warehous-
ing facilities are being extended and a plan is being
developed whereby goods may be stored at the most stra-
tegic locations and prompt forwarding arranged accord-
ing to order of priority based upon urgency of need.
Chiften E. Mack
your Director of Procurement
LEND-LEASE
TREASURY DEPARTMENT, PROCUREMENT DIVISION
STATEMENT OF ALLOCATIONS, OBLIGATIONS (PURCHASES) AND
DELIVERIES TO FOREIGN GOVERNMENTS AT U. S. PORTS
AS OF MAY 16, 1942
(In Millions of Dollars)
Allocations
Purchase Authorisa-
tions (Requisitions)
Requisitions Cleared
for Purchase
Obligations (Purchases)
*Deliveries to For-
Total
U. K.
$1707.4
Administrative
Undistributed &
China
$704.1
Russia
$262.2
(1402.4)
(692.6)
(253.5)
( 55.2)
$968.3
$637.4
$275.3
44.1
-
(946.3)
(683.9)
(263.3)
44.1)
-
$904.5
$619.9
$238.0
41.7
-
(888.5)
(612.9)
(229.6)
41.7)
4.9
-
4.3)
$880.2
$605.5
$231.9
89.0
(860.4)
(595.2)
(222.3)
39.0)
$362.6
$287.3
(346.1)
(274.5)
$ 55.0
51.7)
$ 19.0
18.6)
$ 55.2
Expenses
$ 1.6
( 1.6)
$ 1.0
( 1.0)
Miscellaneous
$ 684.8
( 399.5)
6.5
5.0)
2.8
2.9)
eign Governments
at U. S. Ports
-
1.3
-
1.3)
*Deliveries to foreign governments at U. S. Ports do not include the tonnage that is either in
storage, "in-transit" storage, or in the port area for which actual receipts have not been received from the foreign governments.
Note: Figures in parentheses are those shown on report of May 9, 1942.
297
C
OUTGOING CABLEGRAM
May 19. 1942
The Central Bank of China
Chungking
Your No. 12 We are of the opinion that United States
Treasury certificates of indebtedness or United States Treasury
bills are best suited for investment of funds of the type in the
two new accounts referred to by you and shall be glad to act upon
your instructions STOP We do not now suggest the purchase of
government issues other than those mentioned above, firstly because we assume that you wish to keep these funds in the most
liquid form possible and, secondly, because the yield of notes
and bonds maturing or callable during the next two to three years
is adversely affected in that the prices currently quoted allow
for possible future conversion privileges STOP United States
Treasury 1/2% interest bearing certificates of indebtedness
presently outstanding and maturing on November 1, 1942 could pro-
bably be purchased in the market at prices to yield about .45 to
.50% per annum STOP United States Treasury three-months bills
now offered by the Treasury Department every Monday can probably
be obtained by tender or at times also by purchase in the Market
on a discount basis to yield about .25 to 37% per annum STOP
If you wish us to tender on your behalf we will do so as your
agent; prices of any such tenders must be fixed by you and be
expressed on the basis of 100 with not more than three decimals
e.g. 99.908 STOP Fractions may not be used.
Copytime:6/3/42
FEDERAL RESERVE BANK OF NEW YORK
298
LSH
This telegram must be
paraphrased before being
communicated to anyone
other than a Governmental
agency. (BR)
Chungking
Dated May 19. 1942
REC'D 11:27 p.m.
Secretary of State.
Washington,
573, May 19. 1 p.m.
FOR SECRETARY OF THE TREASURY FROM ADLER
"TF38
One. In accordance with Article II of SinoBritish agreement of April 1, 1941, board on May 15,
unanimously resolved to take OVER management and control
of sterling fund 1939, board having received assurances
that operations on sterling fund 1939's accounts with
Bank of England had been suspended since November 29.
1941. NET foreign Exchange assets of sterling fund
1939 coming under board's control are approximately
pounds sterling 266,000.
Two. National City Shenghei employee, recently
arrived in Chungking, informs ME that on outbreak of
the war there was no time to destroy board's Chinese
currency notes held in National City Shenghai vaults and
that Yokohoma Specie Bank took over these notes soon
after Japanese occupation. Amount involved roughly is
(128,000,000.
GAUSS
EMB
299
DEPARTMENT OF STATE
WASHINGTON
In reply refer to
May 19, 1942
Le 351.115/109
The Secretary of State presents his compliments
to the Honorable the Secretary of the Treasury and informs
the Secretary that the American Embassy at Vichy, on
May 13, 1942, reported that the Guaranty Trust Company
states that safe deposit boxes in Paris belonging to
American citizens will be opened beginning May 13.
eh:copy
5-20-42
300
COPY NO.
13
BRITISH MOST SECRET
(U.S. secret)
OPTIL No. 164
Information received up to 7 A.M., 19th May, 1942.
1. NAVAL
17th/18th. Four E-Boats were engaged off MALTA by shore batteries and
Hurricanes. At least two of them were sunk. Shipping casualties - by mine.
Two Greek ships, one sunk and the other beached or'f PORT SAID on 14th.
2. MILITARY
BURMA. It is reported that the Japanese have occupied FORT HERZ in
the northeast corner of BURMA.
RUSSIA. On the KHARKCV Front Russian attacks are meeting stubborn
German resistance. Northeast of the town the Germans are counter attacking. South
of the town the Russians have gained ground
3. AIR OPERATIONS
MALTA. Between 1540/17th and 1400/13th about 70 German and an un-
specified number of Italian fighters attacked. Cur fighters, two of which are
missing, destroyed nine, probably destroyed five and damaged two. On 18th after
noon a further reinforcement of 17 Spitfires reached the Island.
MEDITERRANEAN On the 18th, 3 Catalina on anti-submarine patrol was
attacked by a French fighter and WILS forced to elight on the sea 20 miles north
of ALGIERS. A British Destroyer rescued the crow, two of whom were wounded.
Later, two French fighters shot down one of our Fulmars which were protecting
Naval units.
BURMA. 16th. Our aircraft bombed the aerodromus at AKYAB and
MYITKYINA and on 17th boabed warehouses and barges at KALEWA.
301
TREASURY DEPARTMENT
AM
INTER OFFICE COMMUNICATION
DATE May 19, 1942
Secretary Morgenthau
TO
FROM
Mr. Kamarck
Subject:
Summary of Intelligenee2Reports
German Air Force
German bomber activity in the first five months of 1942
was only one-fifth of the effort made in the same period in
1941. During the two weeks, April 25-May 9, in which so-
called "reprisal" raids took place, about a quarter of the
attacks were made by reserve training unit aircraft.
(U.K. Operations Report, May 15, 1942)
The Germans are believed now to have between 40 and 50
Focke-Wulf 200's (4 engine bombers) in operation.
(U.K. Operations Report, May 17, 1942)
Germany
Confirmation of the serious locomotive situation which
Hitler referred to in his latest speech is provided by a
recent intelligence report. According to this report, the
construction and repair of locomotives and wagons in Germany
are to be given a priority equal to those of planes, tanks,
and submarines.
(U.K. Operations Report, May 17, 1942)
(Hitler said in his April 27 speech: "Neither the German
soldiers nor the German tanks nor the German railway engines
were prepared for spells of such intense cold as we encountered.
The existence or annihilation of our army depended on the main-
tenance of our supply lines.
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"The German national railways will during the next winter
wherever it may find us do even more justice to their task than
the winter before. Beginning with locomotives to tanks, tractors, and trucks, our army in the East will be better equipped.
For the individual soldier, however, should such severe climate
conditions repeat themselves, he will not have to experience
similar difficulties to those of last winter, as our past
experience and work will avoid such problems.")
British Home Morale
There has been a definite rise in British home morale as a
result of Madagascar, the American victory in the Coral Sea and
the continued R.A.F. offensive. Many people are still puzzled
by the United States continued "willingness to negotiate with
Vichy about Martinique. "
The German proposal of a bombing truce met with very strong
opposition from all classes, both in raided and non-raided areas.
One region reported that "any weakness of the Air Ministry
towards Germany might result in the Government's being turned
out of office.
(British Home Intelligence Report, C.O.I., May 11, 1942)
New Caledonia
The political situation in New Caledonia is very delicate.
The people suspect D'Argenlieu, the High Commissioner, as a
possible traitor. Governor Sautot had been called to London
by General DeGaulle, but he refused to leave at popular demand.
He was then arrested by the High Commissioner. The workers
thereupon carried out a general strike. Now the High Commissioner
himself has been arrested. The status of Governor Sautot remains
in doubt.
(C.O.I., "The War This Week", May 7 - 14, 1942)
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Supply Routes to Russia
The Russians have nearly completed double-tracking the railroad running to Archangel as far north as the junction with the
line from Murmansk. As a result, by using the railroads from
Archangel and Murmansk, coupled with the river facilities of the
northern Dvina, the Russians will probably be able to keep their
ports clear of imports. The chief limiting factor on the volume
of supplies going to Russia, therefore, is not the capacity of
the Soviet ports and railways, but the amount of shipping which
Britain and the United States makes available for the northern
route.
(C.O.I., "The War This Week", May 7 - 14, 1942)
Voice of the Chief Broadcasts
'Defensive'is breaking German spirit
"Our compatriots in Luebeck and Rostock, in Essen and Cologne,
who had their homes made into rubble perhaps should be consoled
by the fact that the gentlemen in Berlin are still getting along
all right. But that doesn't go. The few bombs which have been
dropped over a few English towns made a good beginning, but
you've got to hit them in the pit of the stomach. Bomb London,
I say, without a let-up, night after night, just as we did in
1940!
"The defensive spirit, which for some time has been infecting certain of our boys, is as contagious as the grippe.
"As long as we were attacking and conquering, things went
well with us. But at that time, those party Kommune officials
didn't have much to say in the matter. But now they are fighting their great defensive war, those honorable S.S. Marshals
and their following, and the stupid party Generals, and the
army supply bootleggers. Now they have established themselves
at the front in the West, after quietly and without much compunction managing to get out of serving on the Eastern front.
"In order to give a name to the war in the West so that
everybody can see how important these gentlemen are over there
in France, Belgium, Holland, and Norway, they have invented that
baloney about a British invasion.
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"This dishonorable defensive spirit is also responsible
for the fact that our troops instead of being trained for an
invasion of England are taught only how to defend themselves
against an invasion and are becoming nervous and jittery as a
result of all those continuous alarms and precautionary measures.
"After all, there still is such a thing as air reconnaissance,
and our air reconnaissance has not noticed a single indication of
an English landing attempt; no ship concentrations, no troop
concentrations, no armored landing barges, nothing, absolutely
nothing.
(Federal Communications Commission, May 15, 1942)
Nazi loafers make women work for them
"Now the gang from the (obscenity) brigade wants to chase
the women into the factories-- German mothers, women, girls and
expectant mothers. All of them have to work at the punching
machines, lathes and explosives factories and spoil their
youth and fertility while four and a half million men who call
themselves leaders and caretakers of the German people are pro-
tected against any military service. Each of them carries his
official slacker certificate in his pocket.
"And not even now, when every compatriot has to hand over
his very last, and willingly does so, not even now are they to
be had for Germany's struggle. On the contrary, for the protection of these sacrosanct slacker hyenas, who are not
ashamed to have women work for them, the clique has now decreed
a whole series of secret regulations. I am not making myself
guilty of treason, when I make public a few of these pretty docu-
ments, in spite of the fact that 'confidential' is written all
over them. For this expression 'confidential' doesn't mean-not on your life--that what is contained therein is to remain
hidden from the enemy, but it does mean, in the last analysis,
that the German people is not to find out anything about it.
"Nearly all these secret documents begin with the same
baloney. In each is stated: The N.S.D.A.P. (National Socialist
German Workers Party), its organizations and attached formations,
has the task in wartime of providing political leadership and
guidance for the German people. Secondly, in the fulfillment
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305
of this task, the N.S.D.A.P. requires the services of a considerable portion of its politically employed personnel, in
wartime also. Hence 'O.K.' jobs become necessary.
"But it can be well said that this urgent necessity has
been taken care of to a really considerable extent. Thus,
today in May of the third year of the war, there are two and
a half times as many clique officials and clicue employes as
before the war. There are four and a half million, who--poor
things--can neither fight nor work, because the people can't
survive without their guidance, their nose-poking and without
getting (obscenity) by them.
"but when one listens to these supporters of the home
front, how indispensable they make themselves at home, how they
fish ration cards out of the canal, and save them from certain
death by drowning, how they risk their own lives, just to im-
prove the food situation, when one sees how they even have them-
selves 'exchanged' in order to last through a few 'adventures'
behind the front for a few months and then are 'exchanged
back' again all covered with medals and decorations, when one
looks at this whole hocus pocus that the propaganda clique is
making with their marionettes on the home front, then one can
only wonder why they aren't even good enough for our war
factories and why our women have to go to work in their places.'
(Federal Communications Commission, May 18, 1942)