The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
217 June 22, 1942 Dear Mrs. Fors I was greatly shocked to learn of the untimely death of your husband. In OUR contacts with Mr. Fox he impressed us as an exemplary public servant who placed the interests of his country before all. He has left a secord of highest achievement and an outstanding reputation for personal integrity, courage and wisdom. His passing is an irreparable loss to us all and to his life. DIS Government, to whose service he devoted with sincerest sympathies, I remain Respectfully yours, (Signed) H. Morgentbau, Jr. Mrs. A. M. Fox, 3002 P Street,N.W., Washington, D. C. HDW/efs 6/22/42 n.m.c cc-on.co Little offer Return to Sec'y office 218 June 22, 1942 My dear Mr. President: I thought you would be interested in seeing two newspapers from Milwaukee and how they treated the visit of the War Heroes. Yours sincerely, (Signed) B. Morgantham, JRJ The President, The White House. n.m.c. S. S. agent 6/23/42 9:30 219 MEMORANDUM June 22, 1942. TO: The Secretary FROM: Mr. Sullivan ILS Conference called by Mr. Paul V. McNutt. Present: Administrator McNutt, Governor Lehman, Mayor LaGuardia, Donald Nelson, Chairman War Production Board, Administrator Henderson, Mr. Knudsen, Under Secretary Patterson, Under Secretary Forrestal, Chairman Land of the Maritime Commission, Under Secretary Taylor of Commerce, and Mr. Sullivan. Governor Lehman stated that there were 350,000 unemployed laborers registered with the Unemployment Registration Commission in New York City and there were 50,000 others who had failed to register. He talked of the unused manufacturing facilities of the city and stated that a smaller amount of war work per capita had been awarded to New York City than to any other large city in the country. Mayor LaGuardia stated that there were 10,000,000 square feet of vacant factory space, 77,000 vacant apartments, 3,800,000 square feet of vacant office space. He stated that almost 25 percent of all the unemployed employables in the country were in New York City and he joined Governor Lehman in pleading with the various government agencies to award war contracts to New York City to alleviate this condition. Judge Lynch, leader of the New York City Congressional Delegation, substantiated the arguments of the Governor and the Mayor. There ensued two hours of discussion of the ways and means of helping New York and it was decided that the group should meet again one month from today to review what had been done meanwhile. Since there was no discussion about any manner in which the Treasury could be helpful, I doubt if it will be profitable for the Treasury to be represented at future meetings. 4/42 220 NYC 350 ,000 unemployed labor registered with unemploye trageter (Another unregistered 50 000 Unused mfg facilities Smaller. per capita was work than any other large city. is guardia 10,000,000 eff vecant actory space. 77, 000 vacant apartments 3,854,000 sg for office apper Antiapated unemployment 400,000 780,000 JudgeLych - leader membt. me hutt (membrouse Common ) india NJC has larget unemployed wanter labor pool in USA At least 500, 00 in early bloon lundson Patterson fed Togler model is 1943 221 June 15. 1942 Dear Mr. McNutt: Thank you for your letter of June 12th, inviting me to attend the conference to be held in your office at ten o'clock, Friday, June 19th. I shall make every effort to be present on that date, but, if for any unforeseen reason I find it impossible to attend, I shall see that the Treasury is represented. Sincerely yours, (Signed) s. Mergenthau, Jane Honorable Paul V. Malust, Administrator, The Federal Security Administration, Washington, D. C. GEF:- Filen.m.c. By Messenger Hamm5:00 6/14/22 222 TREASURY DEPARTMENT Washington Press Service FOR IMMEDIATE RELEASE Monday - June 22, 1942 Secretary Morgenthau today announced that the Foreign Funds Control had uncovered assets in various New York banks amounting to over $10 million in securities and cash accounts, all owned by Henry M. Blackmer. Henry M. blackmer fied from the United States to France when the Government initiated investigation of the Teapot Dome oil fraud in which he was wanted as a principal witness. During the next few years his passport was revoked and he was indicted on various counts including income tax evasion and perjury in connection with his income tax returns, and a warrant was issued for his arrest. Numerous attempts to extradite him from France were unsuccessful and at various times between 1927 and 1932 substantial fines for contempt of court were levied against his American assets. Indictments against Blackmer are still outstanding and he is regarded as & fugitive from justice. Blackmer is now believed to be in Switzerland. Included in the assets uncovered by the Foreign Funds Control are 63,865,000 United States of America Treasury Notes Series A due June 15, 1943, $3,250,000 United States of America Treasury Notes Series B due March 15, 1944, and several million dollars in municipul issues. Blackmer was not holding his assuts in his own name but had such assets concealed in "numbered" accounts and in the accounts of foreign banks. All of these millions of dollars of assets owned by Blackmer have been effectively frozen by the Foreign Funds Control and the Government agencies having a possible claim against Blackmer have been advised of the existence of such assuts in New York. 00 ó 223 June 22, 1942 11:55 a.m. WAR BONDS Present: Mr. Gaston Mr. Graves Mr. Kuhn Mr. Gamble Mr. Odegard Mr. Haas Mr. Bell Mrs. Klotz Mr. Tickton H.M.JR: What I wanted to ask you gentlemen first is one particular segment. I gave a suggestion to Gamble Saturday morning about - you see, Harold, we sent Tickton and - what is his name? MR. ODEGARD: Coyne. H.M.JR: And Coyne up to New York, and we found out that for about thirty or thirty-five percent of these pledges the post office was being designated, and there was no follow-up on them. So I brought Bell in, and the Post Office wouldn't accept his suggestion, as I understand it. So then I was lying there with nothing to do but perspire, and I got an idea, which may or may not be any good, but I called up Gamble to tell it to him Saturday morning. The idea was to either have a little glass bank which you can put on your bureau, in which you can put the coins in that amount, or have an envelope for the Treasury, giving the post-office address, then just drop this at the post office. It will come to you in our envelope, Treasury envelope, with a good big inscription on the front, "Five Dollars Will Buy" so and so. 224 2- I was saying in private industry they never would have thought of that because they couldn't afford the expense of it because the postage would kill it, but we could furnish these people with an envelope, or a glass bank, or something, which would be on the person's bureau, and they would drop their pennies and dimes, and so forth, in the thing. At the right time they could just drop it in the mail, and the risk involved, and so forth and so on - seal it, and then it can be checked off - a very simple matter - against their pledge time. I don't know what has happened since Saturday. That is the suggestion I offered. MR. GAMBLE: I took it up with Mr. Ironsides at the Post Office, the spokesman at our meeting here on Friday, and they turned it down, which means if we were to do it it would have to become a Treasury operation. The thing to determine is whether or not it would justify setting up a department to handle it in the Treasury. As you suggested, we might experiment with something. H.M.JR: Well, we have got I don't know how many hundreds of thousands of pledges coming in, and there is nobody to check them for the post offices. We are licked as of this moment, aren't we, on the follow-up? MR. GAMBLE: No. We asked the Post Office for one thing, and they are advising us some time today as to whether or not they will make one follow-up for us. H.M.JR: That isn't enough. I would like this envelope thing very definitely to be tried out. You remember, I first said New York was a little bit too big, but something which could be done very rapidly I don't want to sit around here waiting for weeks. I mean, I would like something, even if it is crude. We will have to take the risk, I know, about the money being lost, and all that, but I would like to try it anyway. 225 -3MR. GAMBLE: I would rather try it in New York. H.M.JR: I don't want to wait. MR. GAMBLE: That is it. I say we can try it immediately. H.M.JR: I have got another suggestion, an alternative suggestion. I would take a block, two blocks, an area - take one block and ask the Boy Scouts, if we would give them a group of pledge cards, and the boys will go in pairs, and we will give them all of this stuff. It will shock the regular Treasury people, but you have to shock them in order to get the thing through. I mean, give these boys, if necessary, the two of them, a hundred dollars' worth of stamps. They would have these bunches of postal cards, and they would call on and Mrs. and so say, your card. You two dollars a week," or the advance postal card can come Mrs. and Smith "Look, and Mrs. here Jones is pledge Myers, pledged for th, to them, if you wanted, that on such and such a date "two Boy Scouts will come and call on you to see whether you have your money, and they will have the stamps and deliver them." Now, they could do - I know New York City - they could do an apartment house - where it might take a man two weeks to see everybody, those two boys could pretty nearly run through and do twenty families a night - they could do twenty families in a night and they have the stamps and deliver them. MR. GAMBLE : Your idea would be to consign the stamps-H.M.JR: to the boys. They would come back that same night, check in, go in pairs, for their own protection against the cash and the stamps. That is one thing on one block. 226 -4The alternative would be to take some of the Minute Men volunteers, let them go back, give them another section, do the same thing; let them go in pairs. Now, there are three suggestions for you as a follow-up: Mail the cash in; two Boy Scouts go back with the stamps with them, with the pledge card; or the Minute Man go back and try the things out. But the thing ought to be done awfully fast. Now, the regular Treasury personnel are going to give you all the red-tape reasons why - loss of stamps, and money - you are just going to have to brush them aside. I will, if necessary, take the personal responsibility. If they say it can't be done, I will take it myself, just as a try-out. But I am just reading their minds; they will all tell you it can't be done. Now, there are three suggestions, three different ways to try - New York City, a block square, which is two hundred feet - I don't know, whatever it is - certainly go back and visit the people this week who made the pledge last week. That ought to take - the idea is you have your wares and you are coming back; that is what I call selling. The other thing is - I am very quiet this morning, you can't excite me - the other thing is just pledging. Banks, I hope, will do the follow-up, but we will send Tickton up to check up on the banks some time this week. MR. TICKTON: The follow-up the banks are going to do is going to be a very quiet follow-up. All the banks propose to do is send these postal cards, one at the end of the thirty - at the end of the month, then thirty days and thirty days. These are very quiet postal cards, on the voluntary level. 227 -5H.M.JR: If this thing works - maybe, we will see, but what do you say, Harold? MR. GRAVES: Well, I see no particular lack of safety in the second and third suggestions you made, if I understood them, that we send people with stamps to pledgors to deliver the stamps to them, take their money. I think that those things are practical from the standpoint of possible objections from we bureaucrats in the Treasury; I think that can be worked out. I am just wondering whether we aren't putting a relatively unimportant thing ahead of something that is a great deal more important in New York. For example, I have in mind that what New York ought to do, and I am out of date somewhat because I really have not known what the results of this pledge campaign are in New York, but what I think we ought to do in New York is to focus on pay-roll allotment, which has been superficially done only. I think that the returns that we would get out of any given amount of energy devoted to pushing pay-roll allotment, trying to push up participation in pay-roll allotment, would be many times greater than any return you could get by following up people. H.M.JR: May I interrupt you? I told you, what ever the date was, that pay-roll allotment should come first. Now, what percentage is pay-roll-- MR. TICKTON: That is a third, a third of the returns and a third of the money. H.M.JR: All right, granted-MR. GRAVES: But it isn't nearly what it might be or will ultimately be. H.M.JR: All right, Harold, but right or wrong, let's say it is all my fault, see, for not understanding Mr. Madden when I was supposed to be understanding some- thing and I was trying to think what I was going to say 228 -6in answer to him. Anyway, I didn't understand him, and even if I had it doesn't make any difference. I am not getting what I want. See? Now, certainly you nor I have I don't want to argue about it, see, with all the drive and pay-roll allotment, you have got two-thirds of the population. Let's say they are successful when they sign up seven million people, whatever it is - let's say they sign a million. MR. GAMBLE: Two million is the estimate. H.M.JR: All right, let's say two million, and six hurd red thousand of those at the post office, and then you have got the same thing happening, which I won't stand for, that the Government starts out on something and the people sit back and then nothing happens. See? So I mean, we do that so often - they start so many things and nothing happens. Now, Harold, I would like to have my way, see. I would like to try the thing that I am talking about first, with those people who have talked about the post offices, and all I am suggesting - certainly in the next twenty-four or forty-eight hours that will be tried out, two different blocks. See, Harold? MR. GRAVES: Yes. H.M.JR: That has nothing to do with the other third on the pay-roll allotment plan, what your plans are on that. You can tell me what you can do with the pay-roll allotment in New York; I would be interested in listening to you. But in the meantime this stuff is pouring in and the people sit back and say, "That is Washington. It isn't Washington; it is New York. Let me just go around. Bell, do you see any objections to trying my thing out? MR. BELL: No, I don't see any objections to it. I am wondering - I see some difficulties in it. I 229 -7don't believe we have the authority to use a franked envelope for return, do we? MR. GRAVES: No. MR. BELL: That is one, and two-MR. GRAVES: That wouldn't be involved in the second and third proposals. MR. BELL: It would be in one. Two, we have no means of getting postal savings stamps. I don't know whether the post offices would consign them or not to the Boy Scout organization. MR. GRAVES: I think we could work that out on an experimental basis. I am sure we could. MR. BELL: You think they could put up the money for that experiment? MR. GRAVES: We will find the way to finance an experiment, either on the second or third suggestion. MR. BELL: No harm in experimenting. I expect to spend the rest of my days after the drive is over unraveling these accounts anyway. MR. GASTON: Apparently your problem is on these general pledge cards, people that are not on any definite pay roll. They agree to make a certain purchase at a certain time. It seems to me highly advantageous if you could designate some particular spot where they could go to make those payments. I am wondering if you had thought about the possibility of using the drug stores. They are open at night. If you could take a group of cards in a community, have them in the drug store, and have the people agree to go there and make their payments, and you could use your follow-up afterwards. 230 -8H.M.JR: No good. I know your New York people. I am thinking largely of the foreign born, first generation, who are sitting up on the second, third and fourth floors of a walk-up. Will they go out to the corner to any place - I mean the inertia of the people. MRS. KLOTZ: Even if you have an elevator you still don't go. H.M.JR: I know my New York. I know that people won't go. MR. GASTON : I think that it is a good thing to try, but it seems to me you ought to give consideration to this plan of having some particular place designated. H.M.JR: They can. MR. GAMBLE: They are all designated. MR. HAAS: From Woolworth's to a drug store. MR. TICKTON: Woolworth's, Joe's Fish Market, all over. I brought a bunch - I picked out a bunch just to show some of the various places that they have desig- nated, to make this a little more realistic. They have picked out, a great many of them - the kids designate their public school and they give it a number, and the teacher's name, so they get them from those places. MR. GASTON: You are thinking of something particularly for New York? H.M.JR: I am thinking of the se pledges rolling in, and I am afraid nothing is going to happen. I am taking an awful lot of time just for a little experiment. What do you think? MR. TICKTON: I like the prospect of the going back somewhat better than the Boy Scouts. I am impressed 231 -9by the fact that Mr. Madden does have a hundred thousand Minute Men going out every night. If he gets two million pledges in ten days, that means he has got these fellows working for him, and if he has got these fellows working for him you might well take advantage of their activities. This is a public school on here (displaying cards). Here is a post office. H.M.JR: And nothing happens. MR. TICKTON: That must be a store some place; there is the grocery store; there is 120th Street; there is the school. The industrial insurance agents are carrying stamps, and they will buy them from the industrial agents. There is the Metropolitan Life Insurance Company. Here is Bonwit-Teller. A lot of people are buying them at the department stores. There is public school number one hundred and fifteen. H.M.JR: Well, let me ask you this. You don't want to - do you mind if Ted carries this for you? MR. GRAVES: Not a bit. H.M.JR: As long as I started with him. MR. GRAVES: That is fine. I think he should. H.M.JR: That is, consulting with you. All right? MR. GRAVES: Perfectly. H.M.JR: All right, consulting with Graves, and keeping me informed, and anybody else. You don't feel badly if I don't take - do you want to say something? MR. ODEGARD: No. My speech would take too long. 232 - 10 - H.M.JR: Well then, I would like - I say I am not getting from the pledge campaign what I expected. It isn't what I expected. It is too late to change it. I am willing to take the blame, so therefore it would make me very happy if this week you could testa couple of blocks of people who started last week, and give them every pledge in this whole block and let's see what, if anything, has happened. You see, let's get enough so that - I mean, you go right through the whole thing. I don't care-- MR. GAMBLE: You don't care if we take five hundred? H.M.JR: I don't care if you take five hundred blocks. I think what Tickton said, if the same Minute Men could go back I think that would be-MR. GAMBLE: I don't agree wi th that. H.M.JR: You mean call them off? I don't care, but I would like to go back in exactly the same blocks. Now, we all sat here, and you have heard me make speeches, have written me memoranda, starting with the smallest campaig to the New York campaign. I am talking about selling now. This is a conference, and maybe the only way Ted can convince me is through a thing like this, so let's quit arguing and do it. At least this will settle the argument, and ninety percent of the people - if when you go back and seventyfive after one week mean business I will say you are right. MR. GAMBLE: That is fair enough, Mr. Secretary. H.M.JR: If seventy-five percent of them have lived up to the pledge I will say that they are right, but if it is anything-MR. GAMBLE : short of that, I understand. 233 - 11 H.M.JR: Short of that I would say we have to reexamine the whole thing. Is that fair? MR. GAMBLE: That is fair enough. We estimate sixty percent, but I will settle at seventy-five. H.M.JR: That sixty would? MR. GAMBLE: Yes, sir. H.M.JR: Is that all right with you, Harold? MR. GRAVES: Yes, sir. H.M.JR: Don't let's fool around because this is terribly important, and this is why I am laying so much stress on it. I want George Haas and Tickton to be thinking what I am going to show the President after the fourth of July, and the leaders on the Hill, the members of the committee - why we should continue. I want, beginning tomorrow, you to feed me, and the next day, different kinds of graphs, George, on why should this thing continue. What I want to do is - I don't want to be on a month-to-month basis. It mak es me too nervous. What I want to do is go to the President and say, "Look, this is what we have accomplished", and keep feeding them. "I want you to say publicly that you are willing to have me continue this thing for the balance of this calendar year and get of this month-to-month basis." I mean, it is too nerve-racking, but I want a picture statistically. If anybody has got any ideas, feed them to George and Tickton, so that I can go to him and say, "This is the story." I have to examine it; I first have got to be sold so that I believe in it. "Now I recommend, Mr. President, that you say that this is good enough, that we continue for the balance of the calendar year", and that is one of the reasons I am so anxious. 234 - 12 - If he says to me, which he will, "Don't forget I was in insurance; what about your New York pledge campaign? How about it?" I am not going to kid him, or myself. So that is what I want to know. There is a tremendous amount of water going over the dam, but I don't know whether it is making any power or not. MR. HAAS: That is one thing. I went over that batch of pledges there. They are too small. I don't think the public recognizes the magnitude. The other day - I don't know if you saw it or not - on the front page of the New York Times it said, "LaGuardia begins show in New York with one hundred dollars. I think that did more harm; there is not a recognition of the magnitude. Then they gave his salary, twenty-five thousand dollars, and he pledged a hundred dollars. Now, these pledges here - they are just too small. It is chicken feed, you see, and even if it is a hundred percent it is not enough money. H.M.JR: Well, George, you and Tickton have got to look at this thing from a cold, analytical, statistical standpoint and try to sell it to me or un-sell it. Let me have the facts; you point out the strength and weaknesses. MR. GAMBLE: May I say a word? H.M.JR: Excuse me. When I go to the President I am going to either be able to sell him, say, "Look, I believe in this, let's continue for the rest of this year", but month to month - the story I read yesterday, whoever gave this out, explaining why I was running behind - it sounded like you. It was good. Somebody gave the AP story story explaining why we are going-MR. GAMBLE: No, I didn't. H.M.JR: Somebody gave it; it was a good explana- tion; I thought it was you. 235 - 13 - MR. KUHN: Perlmeter came in to see me about it, and he said he would like to write this story. He has the statistics and the daily statement, but he said he wanted to make quite sure it wasn't going to do any harm to write a story. I said, "No, I don't see how itI think couldhe dodid. any harm so long as you slant it correctly." H.M.JR: It was a good story. You might tell him I said so. MR. GAMBLE: So that you don't think that the results of this New York pledge campaign really are a small amount, I would like to point out to you that in this memorandum we submitted to you on this whole pledge campaign change that we suggested, it was only designed to reach sixteen and a half million out of fifty million of people with income. When we organized to go into New York we decided to make it an all-out effort. We are canvassing people in New York from the standpoint of sale. It is an information-gathering program so far as those who are on pay-roll savings are concerned. It may increase interest. We could easily have confined - I should say if we confined this campaign in New York to just those people we can't reach any other way we then could have guided the agency that they designated they were going to purchase these stamps or bonds from and follow it up through the bank, but because we were canvassing all seven million of them we made a little different kind of campaign. I want Mr. Tickton and Mr. Haas to g et that thought. H.M.JR: You had better work on them because they have got ice water in their veins. MR. GAMBLE: I understand, but I just want them to get the thought. 236 - 14 - H.M.JR: We are in this thing now, and I want to find out in New York what it means in terms of those people who are not already buying stamps. MR. GAMBLE: The results of campaigns in other States that were not as tight as this one would indi- cate that we are on safe ground to expose ourselves to such follow-up. H.M.JR: Well, let's do it. MR. BELL: Don't you want to experiment with a few more blocks on a mail request for information as to what the people are doing? MR. GAMBLE: I thought the best way to do it, Mr. Bell, after the Secretary's talk to us, is that we wouldn't take one or two blocks but prepare to do all of those blocks in the next two or three weeks. Maybe we could take on five hundred. We have the people to organize five hundred; I would rather organize all of them. H.M.JR: Don't forget this, that right after the fourth of July the figures will be in for the month, and don't think the President doesn't read the New York Times and the Tribune and see all this stuff. The fourth of July is a Saturday, so I mean some time along about the sixth, I suppose-MR. TICKTON: That is right, we are committed to Mr. Graves on the seventh day after the close. MR. GRAVES: By States we will have the total. MR. GAMBLE: I think the New York program is all on the plus side. I sent you a memorandum pointing out the differences, what we agreed to and what is being done. MR. ODEGARD: Mr. Secretary, I would just like to add a word, that when this pledge campaign was discussed 237 - 15 I thought then - I have thought ever since and I haven't changed - that the proper way to do this job was to organize the pledge campaign not on a house-to-house basis but upon an occupational basis. It is at the point where people are employed and receive pay that you can not only get a pledge - that means something, but you can get a follow-up which is continuous and constant at the time the people receive pay. I am not optimistic about the results of the house-to-house canvass on any other than just a general promotional basis. I still believe that if this pledge campaign were organized on the basis of occupations, concentrating upon those occupations where you do not have, for various reasons, pay-roll savings, that you would have much better results with much less difficulty and much fewer headaches. I think the New York experience is going to show that. You wouldn't have to fool with all these banks and all the rest of it. MR. GAMBLE: You still would, Peter, but the occupational approach is the one that is recommended in this memorandum. This whole program was developed with the idea that we were going to do just that; but in New York, because they were organized to do this all-out job, we thought that there was much more to be gained this way than any other way. I still think there is. I think the fact that Madden has created this great organization puts a bonfire under all the rest of these people working on the War Savings Bonds. I think they handed this to Madden because th ey thought it was a hot potato. I think he has done wonders for the whole War Savings operation in New York as a re- sult of this program. H.M.JR: Well, I know I am repeating myself from the other day, but the thing - the only way to measure a thing is how many dollars comes into the till. 238 - 16 - MR. GAMBLE: It will stand that kind of a test. H.M.JR: That is the only measure of success. Of course I can't go out myself. I haven't got the time, so I will have to have Haas and Tickton do it, and let's just see; but I don It want to be sitting here, waiting for you to organize five hundred blocks when I disagree with you. You could do a couple as a pilot run. MR. GAMBLE: We can do those, Mr. Secretary, in the next seventy-two hours. H.M.JR: I would like a pilot run. Give me a pilot run on this. Let these fellows sit in with you. The other thing, the New York thing, took two or three months to get ready, and I think you could do the other thing - you say seventy-two hours? MR. GAMBLE: Yes. H.M.JR: I would say I would like it done within this week. MR. GAMBLE: All right, sir. I was thinking of the offer we had from the "Y" executives to do some work. I thought it would be easy to organize them. H.M.JR: My Mrs. is in town. Have you got anything for her this afternoon, Peter? MR. ODEGARD: Not this afternoon. Norman Thompson has a report on space, this problem of space for that division. H.M.JR: But nothing else? How about one of the editorial boards? MR. KUHN: I have a few ads and things to be looked at. I don't know how important they are. I haven't seen them myself. 239 - 17 - H.M.JR: She will be available this afternoon. Why don't you call her up when you leave here? MR. KUHN: It is a drudgery job rather than a real policy job. H.M.JR: Well, she is here. MR. KUHN: All right, I will call her up. I would like her to see them. MR. ODEGARD: Miss Elliott will be in tomorrow. H.M.JR: What about this space, do I have to get in on that? MR. ODEGARD: Not necessarily, unless you want to. H.M.JR: What is that? MR. ODEGARD: It was decided that the best place was to arrange space in the DeMoll Building where they are now instead of moving into the Sloane Building where there is limited space. Norman is going to go ahead with those arrangements. I think that will be quite satisfactory. He say S he can get air-conditioning units there. H.M.JR: Are you handling that with him, or is he handling that? MR. ODEGARD: I talked with him this morning. H.M.JR: Is that in his hands? MR. ODEGARD: Yes. 240 June 22, 1942 3:49 p.m. HMJr: Ted. Ted Gamble: Yes, sir. HMJr: I was - I've got your memo here to me analyzing your own memo. Wasn't there one from Peter odegard at the same time? G: Yes. HMJr: What happened to that memo? G: I'll have to find it for you, sir. HMJr: Would you mind finding it? In view of what he said this morning, I was a little surprised. I don't know whether you were or not. G: Well, yes and no. I was and I wasn't. HMJr: What? G: HMJr: I wasn't entirely, no, because Well, could you find it and give it to Miss Chauncey for me? G: Yes, sir. HMJr: And you might take a look at it yourself. G: Fine. HMJr: But I'd like to have it tonight. G: All right, sir. I'11 try to locate it by then. HM Jr: G: And then give it to her. Yes, sir. HMJr: Do you know the one, because G: I know the one you mean. 241 -2HMJr: you each wrote one. G: Yes. I know the one you mean, sir. HMJr: Right. Thank you. G: Good-bye. checked- June 22, 1942 4:19 p.m. Ted Gamble: Hello. HMJr: Was it you that asked me about Bishop Sheil for labor meetings in Kansas City or was it somebody else? No, sir. It was Mr. Duffus that asked you about it. G: HMJr: G: HMJr: G: HMJr: G: Duffus? Yes, sir. What did I tell him? I think you told him that you didn't know anything about it. No, no, I told him to back up Ch, oh Bishop Sheil. I'11 tell you what I think you told him. I think he said something about you telling him the - at that time that - this is from Mr. Duffus to ne - that he had mentioned it in your presence and that you had told him. Duffus stated to you that he thought you and the President were behind this thing, and that you mentioned to him that you hedn't heard about this particular affair. HMJr: No. G: He didn't say that you did not tell him to HMJr: Well, somebody else and it wasn't Duffus somebody much higher up G: Yes, well it was not me, sir. HMJr: Well, who could it be? Would it be Graves? Somebody came to me and said "What about Bishop Sheil in Kansas City?" and I said, "Back him to the limit. it G: Yes, yes. Well, it could have been. I don't know, sir. 242 -2HMJr: Well, I'll find out from the Bishop who he G: Yes. Well, I can tell you who the Bishop HMJr: Yes, who? G: He contacted Mr. Graves and Mr. Duffue. HMJr: Well, I'll speak to - I'll speak to Harold 243 contacted here. contacted here. Graves. G: All right, sir. However, I inherited some of it and we straightened it out as best as we could. But Mr. Foley contacted me about it and we had about 48 hours time and did succeed in getting Carole Landis for him. We got her through Mr. Skouras. We couldn't get Ameche, whom he wanted. HMJr: G: Well, who did he work through here? I mean, if he comes in tomorrow to see me, which is.. On Ameche, he worked with Mr. Graves and through Mr. Duffus. But on Ameche, that was something of his own. HMJr: No, but on the thing for us backing him up? G: He worked with Mr. Graves. HMJr: Mr. Graves? O.K. G: He started with him. Now, whether he ever got where they ever crystallized a program or not I couldn't say, sir. HMJr: Well, I'11 talk to him tomorrow. G: All right, sir. HMJr: Thank you. G: You bet. 244 June 22, 1942 5:39 p.m. Operator: Go ahead. HMJr: Hello. Elmer Davis: HMJr: :- Hello. Mr. Davis. D: Yes, sir. HMJr: Henry Morgenthau. D: Yes, sir. HMJr: Mr. Davis, I haven't had the pleasure of meeting you, but I would like to. D: Well, it would be a great pleasure, sir. HMJr: And I'm one of these many people that think D: (Laughs) he has ideas which most likely aren't worth a damn. HMJr: D: You seem to have them, I must say. HMJr: I wondered if you'd be - I eat lunch in the Treasury. I wondered if by any chance you'd be free on Wednesday. D: Wednesday, I'm afraid not. HMJr: All right. D: I seem to be pretty well filled up this week, but I shall hope to - look here, I might be able to call on you sometime soon. HMJr: Supposing you do that when you feel you can. D: What times would normally be best for you? HMJr: Well 245 -2D: Look, I'm paying a call down the street HMJr: You are. D: And perhaps by ten-thirty - would that be HMJr: Let me just see. Are you fairly punctual tomorrow morning. convenient? D: HMJr: D: HMJr: D: HMJr: on yours - I mean No, I'm not. I mean, I'm like everybody in Washington. I figure ten minutes or thirty minutes less than it runs. No, I meant as to - if you say ten-thirty, I mean, do you get here at ten-thirty. Not necessarily, I'm afraid. I'11 do my damedest; but perhaps we'd better leave it over, Mr. Secretary. Well, the reason I put it is, I am free at ten-thirty, but from eleven o'clock on, I'm not. That's the point. All right. We'11 make it ten-thirty, and I'll be there at ten-thirty. That'll be very fine. D: Fine. Thank you. HMJr: And it's up to me to be punctual. Thank you. D: Right. HMJr: Ten-thirty tomorrow. D: Yes, sir. HMJr: All right. D: Thank you. 246 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE TO FROM June 22, 1942 Secretary Morgenthau Ferdinand Kuhn, Jr. Raymond Swing's broadcast of Saturday night made good use of the material you gave me on Friday about the war situation. You might want to have a talk with him soon, or perhaps ask him to lunch one day next week. 7. IC 247 TREASURY BILLS Amount offered Bids tendered June 24 June 17 June 10 June 3 $ 300 M $ 300 M $ 300 M $ 250 M 710 801 690 497 02 Low rate .275% High rate .368 .368% .372 .372% Average rate .362 .365 .367 .365 Amount in Chicago Amount in San Francisco $ 157 M 79 13 $ 151 M $ 144 M 23 55 16 20 110 81 01 $ 122 M 90 8 Amount in New York .297% Amount in balance of country 51 1 $2,000 bid at 99.950, $10,000 at 99.937: next low rate 0.297% $10,000 bid at 99.975: next low rate 0.277% 2 DWB June 22, 1942 30 248 6 12242 Cost-of-living index as of 15th of month June 1939 = 100 Month 1939 1940 January February 100.5 101.2 100.0 101.9 August September October 102.0 November December 101.0 101.8 101.6 101.5 102.1 March April May June July 1941 1942 102.2 102.2 102.6 103.7 104.4 106.1 106.8 107.7 109.6 111.0 111.8 112.1 113.6 114.5 115.9 116.7 117.6 117.5 1 1/ June 2. Source: Bureau of Labor Statistics. Quarterly figures only available prior to September 1940. 249 COST OF LIVING AND SELECTED ITEMS JUNE 1939 100 19 June 2 2 1940 PER PER CENT CENT 112 112 108 108 COST OF LIVING 104 104 128 100 124 124 120 120 FOOD 116 116 112 112 108 106 CLOTHING 104 104 100 100 HOUSEHOLD FURNISHINGS AND MISCELLANEOUS RENT. LIGHT AND HEAT 96 96 1941 J D $ J 1939 1940 1942 SOURCE: B.L.S. -/- Office of the Secretary of the Treasury c 413 Bus memo or clear 4 June IS 250 6/22/42 General index of wholesale commodity prices - 1942, by weeks 1926 = 100 Week Jan. Feb. Mar. Apr. May June First 94.3 95.7 96.9 97.9 98.7 98.7₽ Second 95.0 96.2 97.1 98.1 98.6 98.4p Third 95.6 96.5 97.2 98.3 98.5₽ Fourth 95.5 96.8 97.4 98.6 98.7P Fifth 95.9 Source: Bureau of Labor Statistics 98.8₽ 251 899 June 2 3 1942 61221x2 252 It is recommended that, in all States where the Pledge Campaign has not been started we abandon this activity as such; that we utilize the organizations that have been conceived for this work wherever practical to solicit all of the remaining 16,500,000 people (except in the a rmed forces) for signature to an agreement tantamount to a firm purchase of Bonds on a regular basis. In instances where these persons have bank accounts, this purchase agreement could amount to an order on their bank for the purchase of "X" bonds. In other instances, and it is believed that the higher percentage of them will not have bank accounts, it is suggested that these persons indicate the issuing agency that they prefer to use for the purchase of their Bonds. This would be any one of the following: banks, post offices, building and loan and savings and loan associations, investment banks, insurance companies, pay stations, etc. These orders would be signed in trip- licate; the original going to the issuing agency so designated by the signed order, a copy remaining with the signer, and the third copy to the War Savings Staff. Arrangements would be made with the issuing agency to follow up the purchase agreement. In cases where this did not result in a consummation, a report would be received by the local War Savings office and a call-back would be made. Where the pledge organization as such would not be available or practical for this work or where the Pledge Campaign had been completd, our War Savings Committees would be extended for/this solicitation. Such extension would provide for workers representative of these groups to take care of the actual contact. The farmers would be reached through the U. S. Department of Agriculture Local War Boards, AAA, Dairy Associations, etc.; professional groups through medical associations, teachers' unions, dental associations, etc.; self employed-and small firms through retailer groups, commercial clubs, salesmen, delivery men, etc.; 253 dividend groups through American Institute of Banking, e tc. 254 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE June 20, 1942 TO Secretary Morgenthau FROM Mr. Gamble Attached are excerpts from memorandum referring specifical- ly to changes necessary to convert our so-called pledge campaigns to more effective solicitation. You asked me to point out to you how the New York program differs from this suggested memorandum. In the first place, and this is all in favor of the New York program, it was the intention that this solicitation would be from the 16 million people not available to payroll savings. However, because the New York pledge campaign was getting underway, we decided to canvass all the people not just that portion not reached by payroll savings, an attempt thereby to get a definite commitment from everyone. This means that we are getting some excellent results from about one-third of the people contacted regarding participation in the payroll savings plan. The biggest case in point would be that portion of the original memorandum which said "arrangements would be made with the issuing agency to follow up the pledge or purchase agreement As you know we have made arrangements to do this through 147 savings banks, the majority of the 540 odd banks, as well as the savings and loan associations. In the original memorandum it was stated that where an acknowledgment by the bank did not result in a sale that the local War Savings office would receive a report on this and a call-back to the pledgor would be made. Again this varies in a way that I think is to the advantage of the New York operation, and that is that three follow-ups will be made, and it is believed by all those in this program that this will bring about maximum realization on these agreements to invest in War Savings Bonds. Personally, I believe that the New York program is in many respects much better than our suggested plan of procedure and while I recognize the difficulty presented by the high percentage of persons selecting post offices as the issuing agency through which they intend to purchase, this is not an obstacle that we can't overcome. As you pointed out, we have the spirit, the work is being done, and when this detail is taken care of think we can be well pleased with what is going on in New York, I I am attaching hereto two ads. One of these is typical of the type of ad being used by many of the New York banks. Their copy deals largely with the establishment of Victory Clubs for small payments as low as fifty cents to be made regularly for the purchase of a bond. -2- 255 The other ad is one sponsored by the savings banks of New York State, of which there are 147. They have been running these ads daily since the start of the campaign. I am attaching also a copy of our original pledge blank and a copy of the one we are using in New York. The big difference in this program, and I think all evidence supports that difference, is that in our original pledge campaign the public was told that they were not signing an order for a bond, and we printed across the top of this form a statement to the effect - "This is not an order form. " In the New York campaign all publicity, promotion, and advertising has been designed to create the impression that they were signing a firm purchase agreement. I am sure that a perusal of all the material used in this program will leave no doubts in your mind regarding this latter point. 256 War Bond Pledges Made Easy Are You a The Savings Banks offer a Special Free Service to help you carry out your War Bond Pledge. Consult your Savings Bank now! "Minute Man"? If you are one of the volunteer Army of War Bond "Minute Men," you can do a real service for the people you visit by calling T From coast to coast millions of patri- make the regular savings necessary to otic citizens are signing War Bond Pledges For example, you may deposit regu- HE American people have awakened! -are offering their wholehearted financial aid to help America win the war. If you have signed a War Bond Pledge (and are not on a Payroll Savings Plan with your employer) you will want to know the easiest way of fulfilling that pledge. Your Savings Bank now offers you a special free service to help you carry out your pledge. their attention to the special War Bond Savings Plan now being offered by the Sav- ings Banks. People will be glad to learn about this simple and easy way to carry out their War Bond Pledges. It's the Savings larly in your Savings Bank, and each time Banks' way of helping America. the deposits total $18.75, the Bank will purchase a War Bond for you, in your Banks Payroll Savings Plan an easy way to Employers, too, will find the Savings enroll their personnel in the "Save for Vic. name. There is no expense to you for this service. Your Savings Bank wants to help tory" Parade. you help America! Visit your Savings Bank now for complete information about this servicel WAR BOND BUYING HEADQUARTERSE MAKE YOUR SAVINGS BANK YOUR SAVE FOR VICTORY SAVINGS SAVINGS BANKS of New York State THE OF MAY Sponsored by the Savings Banks of Manhattan, Bronx and Westchester YORK 257 Here's a simple plan to help you keep your War Bond Pledge JOIN OUR Victory Club BUY YOUR WAR BONDS REGULARLY You make regular pay- Here's how it works ments of 50 $1, $2, $4, or $10, either weekly, semimonthly, or even monthly, whichever you prefer. You will receive a coupon book which will always show accurately how much you have saved toward your War Bond. When the final payment is made, we will issue the bond to you. United States War Bonds of $25, $50, $100, or $500 become yours in this easy and systematic way. Your next club may be started immediately, and if you wish you can have several clubs operating at the same time. WAR 14 INVESTMENT Be prepared when FOR the Minute Man" REGULAR PLEDGE calls on you Determine New exactly how much you can save regularly to the purchase of War Bonds Company Victory Club The Victory Club is offered by Manufacturers Trust Company as public service with charge of remuneration Our help you War Bonds DO YOUR SHARE-START NOW We shall be gied to accept orders for any series of United States War Bonds or Stamps. MANUFACTURERS TRUST COMPANY PRINCIPAL OFFICE " BROAD STREET, NEW YORK. N.Y. 68 COMPLETE BANKING OFFICES IN MANHATTAN BROOKLYN, BRONX, AND QUEENS Member Federal Deposit Insurance Corporation June 15.42 n.y. Times TREASURY DEPARTMENT c 258 INTER OFFICE COMMUNICATION DATE June 22, 1942 TO Secretary Morgenthau FROM Mr. Gamble With further reference to Mr. Witherow's press release, I am enclosing a copy which I obtained from their local office. Also I obtained a full report on the Conference Board meeting that you asked about and am attaching same. Attachments. PRESS 259 SERVICE National Association of Manufacturers Investment Building General Offices: 14 West 49th Street, New York City 111 Sutter Street San Francisco, California Washington, D. C. FOR RELEASE TO NEWSPAPERS OF SUNDAY, JUNE 14, 1942 N.A.M. REPORTS NINETY PERCENT MEMBER PARTICIPATION IN WAR BOND AND STAMP PLANS NEW YORK, N.Y., June 14: -More than ninety percent of the member plants of the National Association of Manufacturers are participating in War Bond and Stamp purchase plane, William P. Witherow, N.A.M. President reported today. Basing his statement on preliminary information from 55 percent of the Aesoclation's eight thousand members, Mr. Witherow indicated that latest tabulations continue to show "impressive" support for the war financing campaign. The report, tendered to Treasury Secretary Morgenthau, was coupled with an appeal to all Association members for 100 percent support of the government's voluntary payroll deduction plan, which 1e now being used by 75 percent of the reporting companies. The other 16 percent of the reporting companies are using a varioty of plans other than voluntary payroll deductions. Lauding the Secretary's efforts, Mr. Witherow said: "It is good personal finance because it provides a safe investment which holps to curb the inflationary tendency of wartime operations; it is good patriotism because the money thus invested goee for war equipment to uphold our magnificent fighting forces on the far flung battle lines; it ie good democracy because you have wicely placed it on a voluntary basic and the voluntary assumption of responsibilities is a hallmark of democracy." Predicting an oven moro impressive record for the future, Mr. Witherow's lettor of transmittal read in part: "I believe you will also be gratified by the deduction drawn by our statis- ticians from the comments accompanying the returne from many companiee -- namely, that the payroll deduction plan is just on the throchold of even more spectacular success; that the extent of employee participation 1e just now gathering real momentum. Those trained statisticione are unanimous in thinking that the future months will eec a far more impressivo record." The full text of the report to Secretary Morgenthau follows: Preliminary Report 260 SURVEY OF VOLUNTARY PAYROLL SAVINGS PLAN FOR WAR SAVINGS BONDS Conducted by the NATIONAL ASSOCIATION OF MANUFACTURERS May, 1942 At the request of Mr. Henry Morgenthau, Jr., Secretary of the Treasury, the NAM undertook to ascertain the extent to which voluntary payroll plans for the purchase of war savings bonds were in operation among its active membership. Out of the 7,924 questionnaires which were mailed to our members on May 7, ,407 replies, or 55.6% of the total were received in time to be included in this report. There 18 every indication from the rate at which replies have been received that a large proportion of the remaining 3,517 companies will reply in the near future. The companies which reported operative payroll savings plane comprised the largest proportion of replice. Of the total of 4,407 replies, 3992 or 90.6% have such plans, while 415, or 9.4% do not. Of the companies with operative plans: 2,798 reported both the percentage of employees participating and the authorized deductions as a percentage of gross payrolls. 774 reported only the percentage of employees participating. 39 reported only the authorized deductions as a percentage of gross payrolls. 164 reported that the newness of the plan prevented a statistical analysis of participation. 217 reported the plan in progress but gave no details. Accompanying Tables 1 and 2 ehow the distribution of companies with payroll savings plane according to percentage of employee participation and percentage of authorize payroll deductions. Of the 3,572 companiee which reported percentages of employee participation, the average (median) percentage was computed to be 75% It is interesting to report that 545 componies, or 15%, of the 3,572 included in this table have 100% employee participation. The average (median) percentage of authorized deductions from the gross payroll of 2,857 reporting companies was computed to be 4%. Table 2 indicates the distribution of companies reporting percentagos of authorized payroll deduction. From the nature of the replies by the companies which have payroll savinge plans, it is obvious that the plan is like a anowball which growe and growe as it rolle along the ground. Campaigne are in effect in a large majority of these companies to increase employee participation and at the same time the percentage of authorized doductions from the gross payroll. Many of the plans have only been in effect for a very short time, but it was indicated that they were being received with growing enthusinem by the employees. There ie little doubt that two or three months hence much larger percentages would be reported both for employee participation and payroll deductions by a greater majority of the companies. -2- 261 A few employers who had installed plane in their companies expressed a roluctance to put on campaigns for increasing participation. They felt that they had performed their duty in installing a plan and did not wish to impose on the privacy of their employees whose privilege it was to do what they pleased with their pay envelopes. There were 415 replies, or 9.4% of the total of 4,407 replice which did not have payroll savings plans in operation. Of these 415, there were 145, or 35% which considered the plan feasible for their companies. Many of these already had the plan under consideration by their board of directors; a number were canvassing their employees to discover whether such a plan would meet with their approval; and numerous others wore interested and requested literature and sample plans which they could place before their employees for approval. The Association's Industrial Relations Department prepared a special memorandum on this subject which was sent to all companios requesting assistance. The plan was not considered fonsible by 270, or 65%, of the 415 companies which did not have plane in operation. Table 3 indicates the various reasons why euch a plan is deemed impracticable in these companies. The moet important reason offered for not introducing the plnn was the existence of eare other voluntary plan which wne working out very entisfactorily, and in many instances had been approved by the Secretary of the Treasury. These companies, which comprised 35.6% of the total number which considered the plan unfeasible, had plans ranging from systematic purchases of bonds and etampe from employees savinge funde or by plant credit unione or similar organizations, to morely having stampe on sale on the company promiece. Declining business due to curtailed civilian production or inability to obtain war ordere was the reason offered by 17.4% of the companies which considered the plan unfeasible. Many of those were on the verge of closing down completely. 262 TABLE I DISTRIBUTION OF REPLIES HAVING PAYROLL SAVINGS PLANS ACCORDING TO PERCENTAGE OF EMPLOYEES PARTICIPATING Percentage of Employees Participating (Class Interval) 1% 10% Number of Per Cent Replice of Total 55 1.5 118 3.3 192 5.4 256 7.2 351 9.8 294 8.2 383 10.7 394 11.1 483 13.5 91 100 1,046 29.3 Total 3,572* 11 20 21 30 31 40 41 50 51 60 61 70 71 80 81 90 100.0 * 39 companies which reported authorized deductions from payroll failed to report the corresponding percentage of employees. 263 TABLE II DISTRIBUTION OF REPLIES HAVING PAYROLL SAVINGS PLANS, ACCORDING TO PERCENTAGE OF AUTHORIZED DEDUCTIONS FROM GROSS PAYROLL Percentage of Authorized Deductions from Gross Payroll (Class Interval) Under 1% 1% and under 2% Number of Replies Per Cent of Total 30 1.0 228 8.0 2% 3% 452 15.9 3% 4% 572 20.2 4% 5% 467 16.5 5% 6% 487 17.2 6% 7% 213 7.5 8% 131 4.6 7% 9% 79 10% 30 " " " " 8% " " 9% 10% and over Total 148 2,837* 2.8 1.1 5.2 100.0 * 774 companies which reported the percentage of employees par- ticipating failed to report corresponding percentages of payroll deductions. 264 TABLE III DISTRIBUTION OF REASONS FOR NOT INSTALLING PAYROLL SAVINGS PLAN Reason Number of Repliee Other plan in operation and successful of Total 96 35.6 47 17.4 32 11.9 30 11.1 13 4.8 Business declining due to pri- orities or "freezing" orders Per Cent Employees making satisfactory voluntary purchases of bonde and stampe Object to plan as method of 'check off" Too much employee turnover, irrogular working conditions, etc. Plant being converted to war work, will consider plan in future 4.8 13 Firm too small to bother with 4.4 12 plan Can't spare clerical facilities for operating plan 3.0 8 Expect and/or approve a compul- aory savinge plan Wage level too low to suggest 1.9 5 plan 1.5 0.7 0.7 4 Labor Trouble Plan is a union matter 2 2 Waiting for new income tax law before considering plan 0.7 1.5 2 Total 4 No reason reported 270 100.0 . IN RESPONSE TO YOUR RECENT REQUEST WE ARE PLEASED TO SEND YOU THE ENCLOSED MATERIAL NATIONAL ASSOCIATION OF MANUFACTURERS 265 CONFERENCE BOARD REPORTS EMPLOYEE THRIFT PLANS IN WARTIME OF JUN 15 1942 Studies in Personnel Policy, No. 42 NATIONAL INDUSTRIAL CONFERENCE BOARD, Inc. 247 PARK AVENUE NEW YORK COPTRIGHT 1942, BY NATIONAL INDUSTRIAL CONFERENCE BOARD, INC. Printed in the United States of America No part of this publication may be quoted, reprinted, or reproduced without specific written permission of THE CONFERENCE BOARD TABLE OF CONTENTS Page GOVERNMENT SECURITIES SOLD 4 Sale of United States War Bonds to Employees 4 TYPES OF SAVINGS PLANS S Introduction 3 Chapter Series E Savings Bonds 5 FEATURES OF PATROLL-ALLOTMENT PLANS Payroll Allotment Authorization Changes in Payroll Deductions Purchase and Delivery of Bonds Responsibility 9 9 9 Dividends Deposits 9 MEMBERSHIP SHARES AND DEPOSITS Shares 8 INCORPORATION 8 Structure of a Credit Union 7 HISTORY OF CREDIT UNIONS OTHER TYPES OF SAVINGS AND LOAN PLANS 8 DEFINITION OF A CREDIT UNION 6 Credit Unions and Other Savings and Loan Plans 7 PROMOTING THE SALE OF SAVINGS BONDS BONUSES AND GIFTS OF WAR BONDS AND STAMPS 10 LOANS Regulation of Loans under Regulation W 11 RESERVES Administration of Credit Unions BOARD OF DIRECTORS CREDIT COMMITTEE SUPERVISORY COMMITTEE 12 13 13 18 18 OFFICERS President Vice President Clerk (Secretary) Treasurer EDUCATIONAL COMMITTEE COMPANY PARTICIPATION 14 14 14 Experience with Credit Unions 14 ADVANTAGES TO EMPLOYEES 15 ADVANTAGES TO EMPLOYER 16 CRITICISM OF CREDIT UNIONS 17 LIQUIDATED CREDIT UNIONS Discontinued Credit Unions, Conference Board Study 17 COMPETITION WITH OTHER SOURCES OF CREDIT 18 Savings Plans in Cooperation with Banks PAYROLL DEDUCTION PLANS CHRISTMAS AND VACATION CLUBS OTHER PLANS IN COOPERATION WITH BANKS BONUS FOR SAVINGS RECENT EXPERIENCE 18 18 19 19 19 TABLE OF CONTENTS (continued) Page Chapter Company Savings Plans 19 DESCRIPTION OF PLANS 19 EXPERIENCE WITH COMPANY SAVINGS PLANS 20 Pooled Savings and Investment Plans 20 DESCRIPTION OF PLANS 20 EXPERIENCE WITH SAVINGS AND INVESTMENT PLANS 21 Employee Stock-Purchase Plans 21 STRUCTURE OF PLANS 22 Eligibility Sale of Securities Employer Concessions Guarantees and Refunds RECENT EXPERIENCE WITH EMPLOYEE STOCK-PURCHASE PLANS 23 General Experience and Conclusions EXPERIENCE-1997 TO 1941 24 24 EMPLOYEE PARTICIPATION IN THRIFT PLANS 25 SECURITIES EXCHANGE COMMISSION AND SAVINGS PLANS 26 COMPANY CONTRIBUTIONS AND THE WAGE AND HOUR ACT SOCIAL SECURITY ACT AND SAVINGS PLANS 26 27 APPENDIX A: Suggested Letter and Plan for Payroll-Allotment Sale of United States Savings Bonds Prepared by Treasury Department APPENDIX B: Federal Credit Union, By-laws-Specimen Copy APPENDIX C-1: Company A Payroll Deduction Plan in Cooperation with Bank APPENDIX C-2: Employee's Authorization Card, Plan in Cooperation with Bank APPENDIX D-1: Employees' Stock Plan APPENDIX D-2: Stock Purchase Agreement 27 29 35 35 36 38 APPENDIX E: Selected List of Companies with Employee Thrift Plans, by Type of Savings Plan LIST OF TABLES AND CHARTS 1. Employee Thrift Plans, Classified by Type and Size of Establishment Minimum Periodic Savings Permitted under Payroll Allotment Plans, United States Savings Bonds 3. Rate of Dividends Paid on Shares by 66 Industrial Credit Unions 4. Rate of Interest Charged on Loans by 71 Industrial Credit Unions 5. Participation of Employees in Thrift Plans, by Type of Plan, 1936 and 1941 Page 4 Table 38 2. Average Weekly Savings per Regular Saver 5 6. Number of Regular Savers, Weekly Payroll Deduction for Savings and 10 11 25 26 Chart Organization of a Federal Credit Union 12 CONFERENCE BOARD REPORTS Employee Thrift Plans in Wartime INTRODUCTION through the sacrifice entailed by saving he is doing his bit to help his country through a critical period. The employer can materially aid the worker to become thrifty by making available to him a convenient and safe depository for his savings. Many different types of plans have been established by industry to AMERICAN WORKERS are making more money Atoday than ever before. The program of national defense and the declaration of war have been a tremendous stimulus to industrial activity. Union demands and competitive bidding for skilled workers have forced rates which had already reached record heights to still higher levels. The urgent need for vastly augmented war production has brought de- encourage the habit of thrift. TYPES OF SAVINGS PLANS mands for the operation of defense plants twenty-four hours a day, seven days a week. Many companies that would normally work forty hours a week are working their employees fifty, sixty and even seventy hours. Work beyond forty hours per week, however, must be So many industrial relations policies are intended directly or indirectly, to stimulate employee thrift that it is somewhat difficult to limit the discussion. Surely a pension program which provides for systematic employee contributions over many years fulfills the ultimate purpose of a thrift plan, the provision of a competence for old age. Life insurance, home ownership, profit sharing combined with employee savings, all have for their aim the promotion of thrift. This study has been somewhat arbitrarily restricted to the discussion of certain types of savings plans. paid at the rate of time and one-half to comply with the Wage and Hour Act. With the highest income in the history of the country in the hands of the American worker and a limited supply of many civilian goods which will be still further reduced as war progresses, the danger of inflation is great and is causing much concern. Many proposals have been advanced to avert this threat In general, the thrift plans studied fall into six main classifications, based upon the disposition of the employees' savings. The first group includes the payroll-allotment plans adopted by companies for the sale of United States War Bonds to their employees. The second classification covers all plans under which the workers' savings are pooled and loaned out to fellow employees in need of funds. The most important of this type is the credit union. In the third classification are all plans which provide for depositing savings in an independent banking institution. In the fourth, are included plans under which the employees' savings are deposited in the company's business, to be used as the management sees fit. The fifth group consists of plans providing for the pooling of employees' savings in a common fund which is utilized to purchase securities of various kinds. The sixth includes plans under which the company by various financial arrangements makes it possible for its employees to buy its securities on an instalment basis. Table 1 shows the distribution of the 252 companies included in the study, by type of plan and size of establishment. Over 1.5 million persons are employed in which would menace the living standards of the entire population and would seriously interfere with the war effort. Among the measures proposed to reduce the amount of funds available for civilian expenditures and thus check inflation are enforced savings, a sharp increase in Social Security taxes, heavier income taxes, the payment of overtime in War Bonds, the revocation of the overtime provisions of the Wage and Hour Act, and the freezing of wages. If American workers voluntarily save substantial amounts of their present high incomes, the threat of inflation may be appreciably lessened and the dimensions of the postwar problem can be considerably reduced. It should be obvious that a serious period of readjustment lies ahead when the war ends. A major source of industrial orders will be exhausted. In addition, the expanded plant facilities geared to war production may be far in excess of those required to meet peacetime civilian needs, with the result that the volume of total and partial unemployment will probably large. By accumulating a reserve for the anticipated emergency, the American worker is serving his own self interest, and has the satisfaction of knowing that these concerns. 3 CONFERENCE BOARD REPORTS 4 TABLE 1: EMPLOYEE THRIFT PLANS, CLASSIFIED BY TYPE AND SIZE OF ESTABLISHMENT Size of Establishment Total Under aso 950-000 1,000-4.000 Employees Employees Employees 8,000 and One Employee Type Plan % 13 No employment given is eleven companies No employment given in three companies . No employment given in two companies. THE CONFERENCE BOARD had previously made two studies on employee thrift plans, one in 1927 and one in 1936. By comparing experience with thrift plans at these three intervals, it is possible to trace the relative success or failure of a given type of plan during a period of severe economic upheaval. Certain types might have continued to operate successfully under normal conditions, but were unable successfully to withstand the effects of the depression and were largely discontinued. Other types have become in- 305 7 1,641,618 30 1,723 73 Employees Com panica 17 36,048 39 81,499 25 19,851 4,895 43,597 53,982 28 1,250 10,757 2,090 14,756 98 Number 199,062 Employee 1,045,088 89,990 69,888 1,459 9 252 50,045 8,371 Number of 57,087 18,000 110,500 8 8 112,590 2 6 181 2 TOTAL 110,581 50,007 69d 21 70,791 panies 18,271 26 8 Stock purchase plans 60 183 1,104 Com- 2 185,084 8 1,082,580 844 1 58a Credit unions 6 United States Savings Bonds of of Employees panice panice panies Other savings and loan plans Plan in cooperation with bank Savings deposited with company Pooled savings and investment Com- s of of 5 Employees Number 1 Com- Number 5 Employees Number g Number Com- Number Number 8 Number Number 30,089 45 1,397,956 4 No employment given is six companies. . No employment given is one company creasingly popular because they seem better fitted to current economic conditions and meet the need of workers more satisfactorily than other agencies for savings. Most important of all, the drive for all-out worker participation in United States Savings Bond campaigns may cause the temporary suspension of some types of employee thrift plans for the duration The underlying principles of each type of savings plan and experience with it are described in the follow ing pages. SALE OF UNITED STATES WAR BONDS TO EMPLOYEES SALE of United States Defense Savings Bonds through payroll deductions has become the most important medium for encouraging employee thrift in American industry at the present time. On January 15, the United States Treasury estimated that more than 8,200 companies with approximately 9,750,000 employees have adopted such plans or are making arrangements to start them. GOVERNMENT SECURITIES SOLD The government is offering three types of Defense Savings Bonds for sale to aid in the financing of the war effort. These are Series E, F and G. Only the Series E Bond is sold under most of the payroll deduc- for cash at convenient places throughout the plant or at the credit union offices. Series E Savings Bonds Series E Savings Bonds are the successors of the so called Baby Bonds. They have been issued to meet the needs of the small investor, as they can be purchased in as small a denomination as 825, and are therefore best fitted to the savings program of the average worker. This is an appreciation type of bond, in that it increases in value with time. Bonds are dated from the first of the month in which payment is received by the issuing agent and they mature ten years from date of tion plans so far received by THE CONFERENCE BOARD, issue. If held to maturity they will return a yield of although all three types are sold under a few plans. Comparatively few of the concerns included in the present survey, 25% provided for the sale of Defense Stamps as well as for payroll deduction for Savings Bonds, In these companies Defense Stamps are sold 2.9% compounded semi-annually. They are issued in denominations of 825, 850, $100, $500 and $1,000 (maturity value) and the issue price is 75% of the maturity value. For example, a unit purchased for $18.75 would have a maturity value of 825 in ten years. EMPLOYEE THRIFT PLANS IN WARTIME usually in multiples of that specified for 825 denomina. tion bonds. TABLE 2: MINIMUM PERIODIC SAVINGS PERMITTED UNDER PAYROLL ALLOTMENT PLANS, UNITED STATES SAVINGS BONDS loan. 1.00 per pay period 1.25 per month 2.00 per month Miscellaneous No Minimum $ Reproduced in Appendix; see page 27. 18.8 $ Companies usually specify the minimum amount that an employee may save under the plan, in order that the purchase of a bond may be completed within a reasonable period. The minimum payroll deductions permitted under the payroll allotment plans analyzed are shown in Table 2. These minimum payroll deductions are specified for the instalment purchase of a Series E bond, 825 denomination. For bonds of higher denominations the minimum required is proportionately higher. This tabulation indicates a wide variation in company policies. In some instances the deductions are made weekly, while in others the savings are deducted only once a month. If the pay-periods for salaried employees are different from those of wage earners, the minimums are usually adjusted to take this factor into account. For example, if the minimum 1.7 6.9 * canceled. 1.7 15.5 3 Payroll Allotment Authorization Through payroll deductions the company offers its employees a convenient, easy and systematic method of purchasing the Savings Bonds. To participate, the employee is required to sign an authorization card on which he writes his name and address, the amount of savings to be deducted, the denomination of the bond to be purchased, the name of the person in which the bond should be delivered. Thereafter payroll deductions continue until the authorization is changed or .75 semi-monthly 1.00 per week 1.00 semi-monthly 1.00 per month 19.0 4 The payroll allotment plans adopted by industry to facilitate the sale of United States Savings Bonds to employees are very similar. An analysis of the plans received in connection with this investigation reveals that with minor exceptions they follow the provisions of the recommended plan that has been prepared by the United States Treasury. .75 per week 10.3 11 3 FEATURES OF PAYROLL-ALLOTMENT PLANS 8.25 per week .50 per week .50 semi-monthly Per Cest 4 excise taxes. Number 8 It is subject to estate, inheritance, gift and other Companies Type of Plan 9 Ownership of those.bonds is restricted to individuals in their own right, with a limit upon holdings of 85,000 maturity value of bonds issued in any one calendar year. The bond is taxable as to income by the Federal Government only, and not by states or municipalities. 1 (1) in the name of an individual; or (2) in the name of two persons as co-owners; or (3) in the name of one person with another person as beneficiary. They may not be sold, nor may they be used as collateral for a the minimum for salaried employees paid monthly would be $1.50 per month. If more than one bond is being purchased at one time, or if a bond of higher denomination is purchased, the minimum required is 1 bonds are not transferable and may be registered only: for wage earners is 8.75 for a semi-monthly pay period, 6 These bonds may not be called for redemption by the Secretary of the Treasury prior to maturity, but they may be redeemed by the owner after sixty days from the issue date at fixed redemption rates. The 5 58 6.9 5.2 5.4 5.9 5.2 5.2 100.0 For the purchase of Series E Savings Bond, ⑉ maturity value All money accumulated for the purchase of bonds is held in a separate account by the company. No interest is paid on the funds so held, and for this reason employees are urged to specify bonds of a denomination which can be paid for in the shortest time. Changes in Payroll Deductions Payroll deductions continue indefinitely, and are not discontinued when a single bond has been purchased. The employee may, however, increase or decrease his savings by executing another authorization, and forwarding it to the proper department within a specified time, from one to two weeks, prior to the close of the payroll period in which the change is to be made. If the deductions cannot be made in full because the pay due is insufficient, the savings instalment is suspended until the next pay-period. A number of companies have made the provision that if an employee cancels his payroll deduction he may not reenter the plan for a specified period, as for example three months, but this restriction has not been widely adopted. If the employee's services are terminated, the payroll authorization is automatically canceled, and any amount to his credit in the fund is returned to him, unless he directs otherwise. In case of death, any sayings of the deceased in the funds are returned. CONFERENCE BOARD REPORTS 6 Purchase and Delivery of Bonds had prepared the booklets. Some of the pamphlets dis As soon as sufficient money has accumulated to the credit of an employee to buy a bond of the denomination requested, a check is sent to a Federal Reserve tributed were attractively decorated with fings other patriotic emblems in color. As part of the paign, letters signed by the president or other Bank or other issuing agent. The company usually makes up the list monthly, sending a check for all the bonds to be purchased during that period, together with information on the purchasing, registering and executives were frequently sent to employees, either top delivery of the bonds. The United States Treasury has authorized corporations to act as issuing agents of defense bonds in sales to their employees. The American Telephone and Telegraph Company was among the first to make these arrangements. The bonds may be delivered either directly or by mail. At the time of purchase, the company notifies the employee, who is requested to notify the proper official if the bond is not delivered within two weeks, in order that a check-up may be made. Responsibility The company assumes no responsibility for the bonds after they have been purchased and delivered to the employee. All matters relating to the bonds after their receipt in a form acceptable to the employee are handled directly by the owner with the government. Upon request, the company will advise the employee of the amounts to his credit in the account, but periodic statements showing amounts deducted and amounts to the credit of the individual in the fund are not issued to employees. PROMOTING THE SALE OF SAVINGS BONDS Until war was declared, little effort was made by companies to promote the sale of Defense Savings Bonds to employees. It was believed that the company had performed its patriotic duty by offering the convenience of payroll deduction facilities, which were provided at considerable expense. The United States Treasury, as well, held that high-pressure methods should not be employed to secure a large percentage of employee participation, but on January 15 it was announced that the Treasury was preparing a more intensive campaign to secure wider participation among wage earners under payroll deduction plans. In its survey of payroll-allotment plans made in December, 1941, THE CONFERENCE BOARD inquired of cooperating companies what measures they had instituted to interest employees in the purchase of Defense Bonds. The most common method employed was the distribution of descriptive literature and application blanks. In some instances, literature supplied by the government was used while in others the company 'New York Herald Tribune, January 16, 1942. through the company mailing system or to their homes. Some of the larger concerns have provided specialists to answer employees' questions regarding the purchase of bonds. The employee magazine also has been used extes sively to bring the plan to the attention of the workers by such means as patriotic pictures or slogans on the cover, editorials and messages from high executives cartoons, pictures of employees purchasing bonds or signing application blanks, and items showing the progress of the bond sale campaign. The United States Treasury Department is conduct ing a promotional campaign among the editors of em ployee magazines throughout the United States in the interest of the sale of Defense Bonds and Stamps. In connection with this drive it is issuing a periodic pub lication News Bulletin for House Magazine Editors indicate the various ways in which the employee publication can be used to promote the sale of these gov. ernment securities. The following suggestions were made to employee magazine editors in the January issue: Editorializing employee patriotism in participating in America's defense effort by loaning money to the govern ment; telling him what a sound investment he is making 331/3 per cent increase of his original investment, or an annual interest rate of 2.9 per cent compounded semi- annually; setting up the advantage to the employee in having a sure way to save through use of the plan; tell ing him what to do and whom to see to get started on immediately. First headline news can be followed up with such editorial tricks as a personal -interview story with employee readers who believe in and participate in the plan. Candid-camera shots can highlight the personal stories. In another feature, employees can be taken behind the cashier's booth, or into the treasurer's office to point out how the plan is operated behind the scenes.' As part of the campaign, many companies have set quotas to be reached in a specified time, and progress in the drive is displayed prominently throughout the organization. In the Botany Worsted Mills, large red, white and blue posters, showing the sales to date in the form of a thermometer, are placed on the bulle- tin boards in all departments. In this company also the program of music which entertains employees over a loud speaker system during working hours is frequently interrupted to inform employees regarding Defense Bonds. United States Treasury Department. Defense Savings Staff News Bulletin for House Magazine Editors, January, 1948 EMPLOYEE THRIFT PLANS IN WARTIME The RCA Manufacturing Company displays on the front of a building two four-story thermometers which record in percentages the progress of employees participating and the dollar volume of quota reached. Posters are displayed in each department of the company, indicating its progress in reaching the goal. The Marshall-Wells Company in Duluth, Minnesota has a mural which originally showed hordes of black Japanese airplanes over Pearl Harbor. For each 8500 worth of bonds purchased or pledged, a Japanese plane is taken out of the sky and replaced by a white American plane. Inter-department contests have also been instituted by a number of companies to stimulate bond sales. The Edison Industries use large colored posters which show the progress of each department, by number of airplanes; another company pictures tanks in much the same manner. companies in which 90% or more of the employees are participating in a payroll deduction plan for the purchase of Defense Savings Bonds. These companies are also authorized to purchase from designated manufacturers, the Defense Savings flag, which shows the silhouette of the Minute Man, surrounded by thirteen stars. In many industrial establishments, the credit union is cooperating with the management and with labor organizations in achieving 100% participation in the payroll-allotment plan for the sale of war bonds. Over 2,500 federal credit unions and hundreds of statechartered credit unions have become issuing agents for the bonds, and can, therefore, issue these government securities as soon as the funds collected through pay- roll deductions are turned over to them. By having bonds on hand at all times for immediate sale, the credit union is able to sell them directly to employees through the payroll deduction plan and to outsiders Congoleum-Nairn, Inc., in an unusual inter-department contest, achieved 100% participation of all departments. At the plant's main entrance, circular indicators, one for each department, were set in a "V" as well. formation. At the point of the "V" was an indicator vestigation a to employees summarizing progress throughout the plant. As each department increased its bond subscriptions, the indicator was advanced. When a department reached 100% participation, the insignia "V" was painted on its indicator. Only a ineither to or The BONUSES AND OF STAMPS General 10% of the custody of the are withdrawn before year in company cost maturity, Time buy few offered of to Instruments the companies maturity. GIFTS hold it bonds monetary pays their remaining replying WAR If 1% Corporation the government incentive for BONDS bonds in each in the AND the is full paying bonds. present Inter-department campaigns usually provide for department committees to solicit employees indivi- custody. The Tide Water Associated Oil Company dually. One company issued a mimeographed set of instructions to these committees to show them what to do and what not to do in soliciting subscriptions. The Sonoco Products Company conducted a contest paign. for the best essay of not more than fifty words on "Why We Should Buy United States Defense Bonds," with ten prizes ranging from 85 in Defense Savings Stamps to a 8100 Defense Savings Bond. The United States Treasury issues certificates to gave each employee a $100 Defense Bond Album with the first 81 stamp affixed, at the beginning of its cam- The Kellogg Switchboard and Supply Company of Chicago contributes 81 toward the cost price of each 825 Defense Bond purchased by its employees. Merck and Company gave each of its employees a 81 Defense Savings Stamp. A number of companies gave the 1941 Christmas and year-end bonuses in Defense Bonds and Stamps. CREDIT UNIONS AND OTHER SAVINGS AND LOAN PLANS M° TYPES of savings plans take no cognizance of the worker's need for credit, as they are based on the theory that savings accumulated over an extended period will be sufficient to meet the ordinary emergencies and that funds for large expenditures, such as clothing, household equipment and the like, should be saved in advance. Many workers, however, never amass reserve funds to finance emergencies or large expenditures, because of poor management or low family income. Accordingly, a plan which provides for savings alone does not meet the needs of all types of workers, although it undoubtedly performs a useful function for the thrifty employee. The lack of adequate, low-cost credit facilities for wage earners has proved a troublesome problem for many employers. Requests for loans and wage advances, wage assignments and garnishments are all familiar difficulties which the employing company has sought to solve with varying degrees of success. To satisfy the employees' demands for credit as well as 7 CONFERENCE BOARD REPORTS 8 to provide a convenient method of saving, various types of combined savings and loan plans have been devised under which the pooled savings of thrifty employees are loaned out on a businesslike basis at a reasonable rate of interest to other employees in need of credit. The most popular and successful of this type is the credit union. This discussion of savings and loan plans is confined largely to these cooperative societies. The present investigation is restricted to a study of credit unions which have had a background of operating experience of five years or more. By evalua- ting the results, based on actual experience over a fairly long period, it is possible to gain a better understanding of the advantages and defects of industrial credit unions. The oldest union included was organized in 1915, while the majority were established between 1930 and 1935. This study of credit unions is based upon the experience of eighty-four companies, engaged in widely di- vergent lines of enterprise. More than eighty-four credit unions are covered, as in most large concerns there is at least one union, and perhaps more, for each operating unit. Included also is the experience of five credit unions which have been discontinued during the past five years. DEFINITION OF A CREDIT UNION The credit union is a cooperative society organized to promote thrift among its members and to create for them a source of credit on terms considerably lower than those offered by most small loan finance companies. A credit union is an organization of persons, preferably having some common interest or bond, such as employees of a single company, or it may be a professional group, a church, a country community, a lodge or similar group with a certain amount of acquaintanceship among its members. The credit union is based upon the principle of co- operation and mutual aid, and this principle is reflected in all its operations. Since the members conduct the business on their own time, there is little overhead expense. Poor risks are materially reduced because the administrators of the credit union possess personal knowledge of the character of members applying for loans. It is a small-scale banking venture conducted under almost ideal conditions. The credit union is essentially a democratic institu- tion as each member is entitled to one vote. The holder of one share, therefore, exerts as much influence in shaping the policies of the union as the largest share holder. HISTORY OF CREDIT UNIONS The first credit unions were organized among the farmers this movement did not acceptance in United States a Massachusetts was that credit Until in the the first pass Since union Uniteda inbut next decade these 00operative credit union an imtime, laws. legislation until witnessed States in 1929, gain state societies. 1909, Germany nearly widespread to the increased all in The but number 1934 remarkable century about five credit enactment especially very states 1850, of later. union slowly, credit growth of but have served legislation. the unions enacted federal the as the petus to a more rapid development of this movement Each year the federal-chartered credit unions form an increasing proportion of the total number of unions organized. By the end of 1940, there were 9,510 credit unions in the United States of which 5,300 had been incorporated under state laws and 4,210 under the federal act. Their total membership exceeded 2.8 million, while their assets amounted to more than 8250 mil- lion.2 About two-thirds of all federal credit unions are organized among employees of business concerns OTHER TYPES OF SAVINGS AND LOAN PLANS Three other savings and loan plans which were received in connection with this study were based upon the same general principle as the credit union. It is unlikely that plans of this character will ever become popular in the face of competition with the credit union movement which has been sponsored by the Federal Government and private organizations. Information on three building and loan associations was also received. These associations require system- atic savings over a long period. The accumulated savings are invested in first mortgages on members homes, which are repaid in instalments over a period of from ten to fourteen years. The individual loans run into thousands of dollars and accordingly the building and loan association requires a large membership, which is possible only in large corporations. Delaware, Nevada, New Mexico. South Dakota, and Wyoming *United States Bureau of Labor Statistics, Operations of D.C. Credit Unions in 1940," Monthly Labor Review, Washington, August, 1941, pp. 489-436. EMPLOYEE THRIFT PLANS IN WARTIME 9 STRUCTURE OF A CREDIT UNION THE is closely supervised either by CREDIT the state UNION or the federal authorities, because it is a banking business involving the handling of its mem- bers' funds. The organizers of a credit union may choose between incorporation under the state credit union law or the federal act. If the latter is chosen, the Credit Union Section of the Farm Credit Administration will issue the charter and supervise operation. Under the provisions of the federal act, it is possible to organize a credit union anywhere in the number of persons required by law, usually seven, and notarized. These papers, together with the organization fees, are forwarded to the proper government agency having authority to grant or reject the charter. The federal credit union by-laws are reproduced in the Appendix. In the following discussion of the structure of credit unions, the federal credit union law is cited, not because it is superior to state laws, but because it is uniform in its application throughout the United States. MEMBERSHIP United States. The state and federal laws are drawn on the same general lines, but the laws of some states which were enacted many years ago do not embody practices which experience has shown to be desirable. In some states the law has, at times, been enforced by officials All employees in the company or plant are usually eligible for membership, but each application for mem bership must be approved by the Board of Directors. This permits the rejection of an applicant whose reputation is open to question. The only requirement membership is that the applicant subscribe for at least one share and pay an initiation fee, usually twenty- who were not in sympathy with the credit union five cents. INCORPORATION movement were a to with- holding new or by Before to or the credit federal state with seems best making suited charter, to comparison the powers may a apply- granted to Organizers should type obtain the union act, oppressive charters the a federal and and the be final assistance the needs is made credit cost to organizers decision sought law rules. of be of in of union the the in to chartered supervision, position setting by proposed discover is fees under should made charged up each under associations as compare which union. retard and union law. for the whether the the A it by the by state ing to the Credit Union Section of the Farm Credit Administration, Washington, D. C., or to the Credit Union National Association, Raiffeisen House, Madison, Wisconsin, or to the Managing Directors of the State Credit Union Leagues. When the decision has been made as to whether the credit union is to be chartered under the state or federal act, the preliminary application for a charter sent to the proper authorities. Under the federal act, this application is sent without fees, and is merely a petition for a federal organizer to meet with the group to explain how the credit union works. Afterward, a Certificate of Organization and Bylaws are executed on forms provided by the state or federal government. On all points on which the organizers may exercise their own judgment, these forms contain blank spaces. The certificate is signed by the United States Bureau of Labor Statistics, "Operation of Credit Unions in 1940," Ibid, P. 429. For a list of these Directors see Roy F. Bergengren. "Credit Union North America," Southern Publishers, Inc., New York, 1940, p.305. SHARES AND DEPOSITS The cultivation of the habit of thrift is the first objective of the credit union. The principal method of savings under this system is the purchase of shares. Deposit accounts are also permitted under the majority of the state laws but not under the federal act. Definitions and comparison of these two forms of savings are discussed below. Shares The shares of a credit union are not the same as corporate shares. They are sold only to members and may be transferred only between members. All transactions relating to the purchase of shares are posted in a pass book which is retained by the member. In fact, the shares of a credit union are comparable to a savings account in a bank. The member may withdraw his savings at any time, except that in cases of emergency the credit union reserves the right to require notice of withdrawal. Under the federal law. the credit union may require two months' notice, although this provision is seldom evoked. The share of the credit union usually has a par value of 85. In order to facilitate its purchase, the member is permitted to pay for the share in small regular instalments, usually in units of twenty-five cents per month. By providing for systematic small savings over a period of time, the member is taught the habit of thrift and borrowers are frequently transformed into savers. Some credit unions impose a small fine if the members fall behind in their share payments. See page 29. CONFERENCE BOARD REPORTS Limitations are usually placed upon the number of shares that an individual may purchase. It is held that a member who owns a large block of the association's shares may unduly influence the management of the TABLE 3: RATE OF DIVIDENDS PAID ON SHARES 66 INDUSTRIAL CREDIT UNIONS Rate of Dividends Per Annum credit union by sheer weight of his holdings even though he has but one vote. Also, if an individual's Companies Under 1 1 3. $ 8 4.8 9 21 4.4 11.8 18.2 30.9 8 2.0 6. 16 6.5 23.5 1 7.5 1.5 1 1.5 1 1.8 8 ized by a majority of the members voting at the an- 1.5 5.0 5. 5.5 Total nual meeting, upon the recommendation of the board of 1.5 4 68 Dividends fiscal year have been set aside as a reserve for possible bad debts. Under the federal act, dividends are author- Companies 1.4 mine. Dividends on shares may be paid from the balance of earnings remaining after expenses have been paid and a specified percentage of the net earnings for the Per Ceat S. 4 savings constitute & large percentage of the union's assets, the financial structure of the organization is in constant danger of insolvency because its assets are largely invested in member loans which cannot be liquidated at one time to meet this obligation. Under the federal and many state laws the maximum holdings permitted are left to the board of directors to deter- Number of (Per Cent) 1 10 100.0 It has been suggested by one authority that the newly organized credit union operate at first exclusively on a share basis, as this policy reduces the work of the inexperienced treasurer. Later on deposit accounts may be permitted if desired by the members, provided this form of savings is legally permissible and directors, and are paid only on fully paid-up shares to the credit of the member at the end of the fiscal year for the full months during which the shares have is provided for in the credit union's by-laws. been held. The second main objective of the credit union is to make loans at a reasonable rate of interest. Only members of the credit union may borrow, but this requirement is not a serious obstacle to the employee in need The dividend rates paid by sixty-six industrial credit unions are shown in Table 3. Over two-thirds of these unions paid an annual dividend of 5% or less, while a quarter paid 6% High dividend rates are considered to run counter to the underlying principle of credit unions, which should be operated primarily for the mutual benefit of their members rather than for profit. The Federal Credit Union Standard By-laws limit dividends to 6% per annum. Deposits In addition to the purchase of shares, the majority of the state laws permit the members to deposit irregular amounts in a special account. These deposit accounts are not permitted under the federal act. The interest rates on deposits are lower than dividends on shares, and are computed on a monthly, rather than annual, basis. If the credit union is liquidated, deposits take precedence over shares. These accounts are somewhat comparable to a checking account in a bank. Recently there has been a tendency to do away with these accounts, as being unnecessary, for the member has the same withdrawal rights under the LOANS of credit. In fact, many loyal members have made their first contact with the credit union when they were in need of a loan. The requirements for membership are relatively simple. Upon the payment of the initiation fee, usually twenty-five cents, and the first payment on a share, another twenty-five cents, the employee, if approved by the board, becomes member of the credit union and is eligible to make application for a loan. This application is sent to the treasurer, who passes it on to the credit committee for final action.2 Officers, directors, and committee members may not borrow, except to the amount of fully paid-up shares to their credit under the federal and many state laws. Neither may they act as endorsers for borrowers. Loans may be made for provident or productive purposes only. A provident purpose is generally regarded as one which would be of service to the member borrower and his family. Purposes for which loans are most frequently made include the cost of medical share account. The elimination of the deposit account also simplifies the operation of the credit union. Then, too, this type of savings does not educate the mem- or surgical treatment, purchase of clothing, housefurnishings, the year's coal supply, cost of repair of houses and payment of taxes. bers in the habit of thrift as do the share accounts with their small regular instalment payments. the credit committee. 'Roy F. Bergengren, op. cit., p. so. See page 13 for a discussion of the composition and functions EMPLOYEE THRIFT PLANS IN WARTIME On small loans no security is required, as they are granted solely on the credit committee's judgment of the applicant's character and ability to repay. Recently there has been a tendency to increase the legal limit for unsecured loans, as it has been found that unsecured loans may be made quite as safely at the larger limit as for the smaller. The federal act recently raised the limit on unsecured loans from 850 to 8100. Loans for larger amounts may be secured by endorsement, assignment of shares, chattel mortgages, assignment of wages (forbidden under some laws) or any other usual form of security. The security most frequently used in credit unions is the endorsement of notes, usually by fellow members. The number of endorsers required is dependent to some extent upon the size of the loan. The federal act specifies that a loan to a member may not exceed 8200, or 10% of the credit union's paid-in and unimpaired capital and surplus, whichever is greater. Loan protection insurance is a form of supplementary security as it protects the credit union and the endorsers in the event of the death of the borrower. The rate of interest charged on loans is fixed by the board of directors subject to statutory restrictions. The federal act specifies that the interest rate, together with all costs of making the loan. must not exceed 1% per month on unpaid balances. An analysis of the interest rates charged by seventy-one credit unions included in the present study, Table 4, indicates wide variations in credit union policies. A third TABLE 4: RATE OF INTEREST CHARGED ON LOANS BY 71 INDUSTRIAL CREDIT UNIONS Number Per Cent Companies Companies Rate of Interest Charged 12.7 5.6 $5.9 25 5 7.0 11 15.6 15 18.5 4 TOTAL 9 or amount of loan Miscellaneous provisions 4 1/ of 1% per month on unpaid balances 4/5 of 1% per month on unpaid balances 1% per month on unpaid balances 8% per annum, discounted in advance 6% per annum, discounted in advance Varies according to type of security offered 11 5% and for automobile loans, 6% In several credit unions, the interest rate was 1% per month on unpaid balances on loans up to 8200 and 2/3 of 1% on loans in excess of 8200. Repayment of loans is usually on the instalment basis, but the length of time allowed for repayment is usually decided by the credit committee, within legal limitations. Factors taken into account in fixing the duration of the loan include the nature of the applicant's employment, his ability to pay and the purpose of the loan. The federal act specifies that the maturity of the loan may not exceed two years. To insure regular repayment of loans, the defaulting borrower may be penalized by the imposition of a small fine, if, without good cause, he fails to make his instalment payments on his note when due. Regulation of Loans under Regulation W To control instalment buying in the interests national defense, the President on August 9, 1941 issued Executive Order No. 8843 which provided for the regulation of practically all forms of instalment credit by the Board of Governors of the Federal Reserve System. Acting under this order, the Board of Governors on August 21 published Regulation W, which applies to all persons and firms, including credit unions, engaged in the business of extending instalment credit, and outlines the conditions under which articles may be sold on the instalment plan. This regulation, together with its amendments, should be carefully studied by the managing staff of the credit union. Little difficulty is anticipated by federal credit unions in complying with Regulation W. The legal limitation on credit union loans has never exceeded twenty-four months, and few credit unions have made it a practice to allow terms in excess of fifteen months, which is the maximum maturity of loans for specified purposes under Amendment Number Two of Regula- tion W which became effective March 23, 1942. In actual practice a very small percentage of federal credit union loans has been secured by mortgages or loans on articles covered by Regulation W. 5.6 RESERVES 71 100.0 To protect the credit union against losses due to bad loans, a reserve is created which usually consists of the unions covered charged an interest rate of 1% per month on unpaid balances, a quarter charged less than this amount and over a fifth charged interest rates of 5% or 6% per annum, discounted in advance. A comparatively large proportion of these credit unions, 18% varied the interest rate according to the character of the loan. For example, in one the interest rate for unsecured loans was 5% per annum; for secured loans, 21/2% per annum; for real estate loans, of 20% of the net earnings plus initiation fees, and fines. The reserves make it possible for the credit committee to take a lenient attitude in cases where the Board of Governors of the Federal Reserve System, Consumer Credit, Regulation W. as adopted August #1. 1941. See also releases of United States Department of Agriculture, Farm Credit Adminis- tration Nos sore. 5029 and 3050 Letter of Credit Union Section, Farm Credit Administration dated December 24, 1941. CONFERENCE BOARD REPORTS 12 charged off denial would cause hardship. As one authority has stated: It is a stout surplus which should agethe credit committees to decide all close cases in encour. favor of borrower.' There is & false conception that special merit attaches to a record which fails to disclose a bad loan 'Roy F. Bergengren, op. cit., p. 45. ADMINISTRATION OF CREDIT UNIONS federal act, officers, directors and committee members may not borrow from the credit union, except to the amount of full paid-up shares to their credit. Neither may they act as endorsers for borrowers. THE of the credit union committee is vested in MANAGEMENT a board of directors, a supervisory and a credit committee, all of whom are elected by the members. From its own ranks, the board of directors chooses a president, a vice president, a treasurer and a clerk. The organization of a federal credit union is shown in chart below. Members of the various committees, directors, and officers serve without pay with the exception of the treasurer who performs most of the routine work in connection with the credit union. In the more prosperous unions this officer receives some compensation for his services. Under most state laws as well as the The powers vested in the various administrators are defined in credit union legislation, although the direc. tors may exercise their discretion in deciding upon certain details, provided that they do not exceed the limits imposed by law. The responsibilities and duties of the various officers and committee members, as defined by the Federal Credit Union Section, are reproduced on the following page. ORGANIZATION OF A FEDERAL CREDIT UNION MEMBERS SUPERVISORY COMMITTEE L THREE MEMBERS (NOT DIRECTORS) 2.ONE YEAR TERMS. CHAIRMAN,SECRETARY ELECTED FROM OWN NUMBER CREDIT COMMITTEE BOARD OF EDUCATIONAL COMMITTEE DIRECTORS I.USUALLY OR 5 .USUALLY 5,7 OR 9 MEMBERS. MEMBERS. 1. SIZE DEPENDS UPON NUMBER 2.STAGGERED TERMS OF 2 YEARS 3.FOUR OFFICERS ELECTED FROM 2.STAGGERED TERMS OF YEARS WHICH WILL FUNCTION MOST EFFECTIVELY. OWN NUMBER. 1 CHAIRMAN,SECRETARY ELECTED FROM OWN NUMBER 2.MAY BE ELECTED Br MEMBERSHIP OR APPOINTED BY BOARD LINDEFINITE TERMS BUT OFTEN FOR ONE YEAR. 4. MAJORITY USUALLY MEMBERS WHO DO NOT HOLD OTHER CREDIT UNION OFFICES. S.FREQUENTLY CREDIT COMMITTEE AND BOARD REPRESENTED PRESIDENT VICE CLERK PRESIDENT TREASURER EMPLOYEES ASSISTANT TREASURER NOTE: DOTTED BOXES AND LINES INDICATE OPTIONAL FUNCTIONS. OTHER THAN ASSISTANT TREASURER * OFFICES MAY or HELD BY SAME PERSON EMPLOYEE THRIFT PLANS IN WARTIME BOARD OF DIRECTORS The board of directors consists of an uneven number of five or more members elected by the credit union members for two-year terms, which are staggered. The responsibilities and duties of the board of directors are as follows: 1. The general direction of the credit union accord- 1. Pass on individual loans in accordance with the Act, by-laws and instructions of the board of directors. No loan shall be made unless approved by a majority of the entire committee and by all committee members present at the meeting at which the application is considered. 2. Meet as often as necessary, at least once a month. It may require frequent emergency meetings. ing to the act and the by-laws. 2. Meet once a month or oftener. S. Approve applications for membership. 4. Periodically fix amount of surety bonds on treasurer and employees. 8. Give sympathetic and intelligent understanding to the borrowers' problems. 4. Maintain confidential relations with members. 5. Determine if loans are for provident or productive purpose. 5. Periodically fix maximum individual share limit. 6. Periodically set up loan policy, including interest rate (maximum 1% per month) and maximum loan, 6. Determine if security, when required, is adequate. 7. Approve borrowers' share withdrawals. 8. Grant extensions on loans or refinance them. with and without security. 9. Keep minutes of meetings. 7. May waive fines on delinquent share and loan 10. Prepare annual report to members. payments, and authorize charge-off of uncollectible loans. 8. Designate depository for funds. 9. Maintain confidential relations with members. 10. Fill vacancies in board and credit committee and appoint temporary officials. 11. May hire employees (of the credit union) and fix duties and compensation 13 SUPERVISORY COMMITTEE The supervisory committee consists of three mem- bers who are not directors. They are elected at the annual election for a one-year term. The chairman and secretary are chosen by their fellow committee members. 13. Plan for annual meeting: make annual report to The supervisory committee occupies an important place in the successful operation of a credit union and is invested with extraordinary powers. Not only does members; operating budget; recommend treasurers' com- this committee have the authority to see that the 12. Authorize and supervise investments and credit union borrowing. pensation, educational and other special expenditures and dividends. 14. May appoint education committee, if not elected by members. 15. May amend by-laws with approval of Governor of Farm Credit Administration CREDIT COMMITTEE A primary purpose of a credit union is to make loans to its members. The credit committee administers the loan policy of the credit union, and, therefore, assumes a grave responsibility for its financial condition. If it is too conservative in extending credit, it may force members to borrow from other agencies, especially the loan shark, and eventually may cause the liquidation of the credit union. If, in contrast, it makes careless loans which cannot be repaid or if by reckless extension of credit it encourages members to make extravagant purchases, the credit committee also fails to carry out the purpose of the credit union and may jeopardize its financial structure. The credit committee usually consists of from three to five members who are elected for staggered terms of two years. From its membership it chooses a chairman and a clerk. The responsibilities of the credit committee are as follows: credit union is properly run in accordance with the law, and that the books are accurately kept, but it also has authority to suspend officers, directors or credit committee members for cause. The detailed responsibilities of the supervisory committee are as follows: 1. Examine constructively and critically credit union affairs, including audit of books, according to law, bylaws and accounting manual. 2. Prepare quarterly audit report to board of directors and send copy to Farm Credit Administration semiannually. S. Verify passbooks with treasurer's records. 4. Maintain confidential relations with members. 5. Suspend officers, directors or members of credit committee for cause. 6. Call special meetings of members for cause. 7. Fill vacancies in committee. 8. See that record of all actions is kept. 9. Prepare annual report to members. OFFICERS President The president of the credit union is elected by the board of directors after the annual meeting. He should possess capacities for leadership and the confidence of the members. His responsibilities are as follows: CONFERENCE BOARD REPORTS 14 1. Preside at meetings of the board of directors and members. 2. Countersign checks, notes and obligations of credit unions. 8. Carry out with treasurer, instructions of board of directors on investments and credit union borrowing. 4. Call special meetings of board of directors and members. 7. Sympathetic member's problems. and intelligent understanding of 8. Maintain confidential relations with members. 9. Prepare monthly financial report. 10. Carry out, usually with president, instructions of board on investments, credit union borrowing. 11. Prepare annual financial report to members. 5. Appoint nominating committee. 6. Present annual report of board to members. 7. Customary duties of president and others assigned by board. Vice President His responsibilities are: 1. Act in place of president during his absence or disability. 2. Other duties assigned by board. The purpose of the Education Committee is to develop methods of teaching members about thrift and the use of family budgets, to develop active member ship participation in the credit union and to arouse the interest of non-members in the credit union. The creation of an educational committee is optional. It may be elected by the membership or ap pointed by the board of directors for an indefinite period although the term of office is often fixed at one year. Clerk (Secretary) His responsibilities are: 1. Keep minutes of board and members' meetings. 2. Prepare notice of meetings of members. 8. Prepare and send annual election report and notice of any change in the managing staff to Farm Credit Administration Treasurer The treasurer is the most important single individual in the credit union. As a rule, he is also its manager. He must be scrupulously honest and, because he is usually the point of contact between the members and the union, he should be the kind of person who makes a favorable impression. His duties are as fol- lows: 1. General manager of credit union. 2. Custody of funds, securities, and other assets. 3. Keep books of accounts according to accounting manual. 4. Sign checks, notes, obligations of credit union. 5. Receive share and loan payments. 6. Transmit received. EDUCATIONAL COMMITTEE to credit committee loan applications COMPANY PARTICIPATION The credit union is the workers' own organization, and the employer exercises little direct influence over its internal operation. By sympathetic understanding and cooperation, however, the employing company may greatly further the successful operation of the credit union and, conversely, may retard its growth by a spirit of non-cooperation or of domination. It is held that the employing company should limit its participation in the operation of the credit union to giving advice when requested and to lending moral support and encouragement. The companies reporting have given material as sistance to the credit union in a number of ways. Practically all have allotted space for the transaction of the union's business. About two-fifths have provided clerical help when needed. Approximately 40% of the concerns included paid credit union officials their regular rate for time spent on union business during working hours, while two companies paid the salary of full-time assistants. A comparatively large proportion permitted payroll deductions for savings (60%) and for repayment of loans (70%). EXPERIENCE WITH CREDIT UNIONS THE CHIEF OBJECTIVES of a credit union are (1) to provide a convenient and safe medium for savings and thus promote thrift and (2) to furnish its members with a readily available source of credit at a reasonable rate of interest. By and large these objectives have been attained. to the satisfaction of both employer and employee, according to replies received in connection with this investigation. ADVANTAGES TO EMPLOYEES The companies surveyed were asked what the chief contribution of the credit union was from the stand- EMPLOYEE THRIFT PLANS IN WARTIME point of the employee members. The tabulation of their replies follows: Chief Advantage to Employee Promotion of thrift Number of Companies 44 Source of credit at lower rates than obtainable elsewhere Relief from worry, financial security Avoidance of illegal money lender 44 41 16 Handle financial problems without Total Companies 7 embarrassment 78 It is significant that these companies should emphasize the savings aspects of the credit union as much as its credit facilities. By systematic instalment purchase of shares, members are taught to be thrifty, and by instalment repayment of loans, borrowers may be converted into savers. The credit facilities of the credit union are equally valuable. There are times when either the worker finds that his accumulated savings are insufficient to tide him over an emergency, or he sees an opportunity to make a substantial savings through the use of credit. However, he often cannot obtain the necessary loan through the available legitimate credit channels because he possesses neither property nor other satisfactory collateral. Through the credit union the employee may secure a loan quickly and without embarrassment, with only his own character as security on small loans. Many replies stressed the friendly treatment extended by credit union officials to members request- ing credit. If the credit union is operated properly, the member is met with sympathetic understanding by officials who are acquainted with him and his problems, and the terms of repayment are determined by his particular circumstances; also these officials may give him valuable advice regarding the solution of his financial problems. An example of this friendly and helpful service is cited by the president of a railroad: The credit union has developed considerable experience in the disposal of employee money problems by its practical contact with these varied problems in the past fifteen years. The average employee has confidence in the ability of the credit union to solve any money trouble that might confront him. It has acted in an ad. visory capacity that no other lending institute would find practical or profitable. It has taken over personnel work relating to employees in financial difficulties. Credit union members borrow chiefly to improve their health or to relieve their minds of worry. Loans to meet medical, hospital and dental expenses are among the purposes most frequently given as a reason for borrowing. Members also borrow to pay off accumulated bills or to satisfy an insistent creditor. Many borrow to liquidate other loans on which the excessive interest charges have made it impossible to reduce the principal. 15 An employee who is harassed by debts and is being pressed for repayment of loans is in an unfortunate state of mind which is reflected in his attitude toward fellow employees, the company, and his work. One company cited several instances "where employees seriously contemplated suicide as a release from the mental torture brought on by financial troubles." By offering credit to meet emergencies and by taking over outstanding debts and providing for their liquidation on a business-like basis, the credit union provides peace of mind and thus promotes a sense of security among its members. It is significant that so large a proportion of the companies reporting should list "relief from worry" as one of the chief contributions that the members derived from the credit union. Another advantage of the credit union is that the rate of interest charged on loans is generally lower than that charged by other agencies because there is practically no administrative expense. The maximum interest rate that a federal credit union may charge 1% per month on unpaid balances, while the personal finance companies may charge a legal maximum of from %% to 31/2% per month. depending on the state law. A loan shark may charge 10% per month, or more if the borrower's need is urgent. The difference in interest rates represents a considerable savings to the employee in need of a loan. ADVANTAGES TO EMPLOYER The advantages derived from a credit union by the employer are better employee morale, improved industrial relations, greater employee efficiency, elimination of requests for company loans and wage advances, and material reduction in wage assignments and garnishments, according to the replies received. Improvement in Employee Morale. In answer to the question as to the influence of the credit union upon employee morale, over 90% believed that it had a beneficial effect. Many of the replies were enthusiastic. "Excellent," "splendid," "deserves much praise for high morale," "best agency for promoting morale," were typical of these employers' evaluation of the credit union as a builder of employee morale. Freedom from worry, the security of financial independence, the availability of credit on a friendly and dignified basis to which the employee had recourse without embarrassment were all factors contributing to a higher level of employee morale. Employer-Employee Relations. Three-fourths of the concerns included believed that employer-employee relations had been definitely strengthened by the presence of the credit union. This was in part due to the improvement in employee morale mentioned above. 'Pollak Foundation for Economic Research, "Small Loan Laws of the United States," Newton, Massachusetts, December 10. 1941. CONFERENCE BOARD REPORTS 16 In addition, many concerns pointed out that the credit union offered an excellent point of contact between the company management and the workers through which they might become better acquainted and thus understand each other better. One of the union is that it transfers solution of the financial problems from to the officials, with resultant in relations. company refuses a or deductions are made an repayment of loans may be charged with the personal finances of an creditors. As Disagreements important loan from or the the or advances. paternalism betterment company a advantage employee's wage employee may Also, advance, if arise it wages employer-employee interferes the worker's beset when credit credit company for when by the the union with an official in a company employing 25,000 persons wrote: We feel that it is better for the employees to get their ideas by the pooling of personal experiences rather than in a paternalistic manner from the company or from outside sources not interested in the employees' welfare. Substitution of the credit union for a company loan program has been of great value to the company. The reduction in wage assignments due to the loan facilities of the credit union also has in many instances relieved the company of considerable legal and clerical work and annoyance in handling these claims. Another factor in improved employer-employee re- lationship due to the credit union, as reported in the present survey, is the gratitude of the employees toward the company for its support of this activity. By furnishing office space and clerical assistance, as well as sympathetic encouragement, the company con- tributes materially to its success. The workers who have benefited are appreciative of the management's assistance and this evidence of its interest in their welfare. As expressed by one company official: The credit union has demonstrated that our company is interested in the financial problems of our employees By insisting that the employees manage their own credit union, any taint of paternalistic influence by our company has been removed It has served to draw our employees closer together and cement feelings of loyalty to the company and to fellow employees. Employee Efficiency. A considerable group of con- cerns reported that employee efficiency had been noticeably improved because their workers' minds were on their tasks and not on their financial problems. One company wrote: It has improved the working efficiency of employees who were formerly hounded by creditors and personal finance companies. It has improved the morale of our entire working force and has increased working efficiency due to the removal of financial worries. Development of Managerial Material A few com- panies reported that the credit union had developed a number of potential foremen and leaders among credit union officials who were given an opportunity to show initiative and leadership. CRITICISM OF CREDIT UNIONS The success of the credit union rests with its officials. These officers are elected by the members from the ranks of fellow employees who may never have had any experience with banking or auditing. The credit union is a banking institution on . small state and in the hands of inexperienced leaders it might easily fail, even though it is closely supervised by state or federal authorities. The fact that so many of these credit unions have succeeded is evidence of the intelligence and good common sense of the American worker. In three-fourths of the companies reporting the credit union functioned so smoothly that the company had no adverse criticism to make. The officers elected to run the credit union had proved capable leaders, and the credit union had fulfilled its objectives to the satisfaction of all. Approximately a quarter of the concerns included criticized the credit union for some of its policies, but its faults were not of sufficiently serious nature to offset the good work accomplished by it. The chief complaint made was that the credit committee was too lenient in its loan policies. In some instances, the ease of borrowing had tended to get the employee into more debt, to his detriment. In other instances, the committee had been lax in letting members become delinquent on loans. As one official said, "Sympathy often makes the credit committee soft-hearted when they should be tough." Although the management of the credit union is entirely outside the jurisdiction of the company, in some concerns the workers held it responsible for the safe conduct of the union, and consequently the company felt obligated to supervise its activities. A smaller group of employers felt that the credit union was too conservative in its loan policy. In a few instances, officers who had never borrowed were elected and consequently could not sympathize with and advise members in need of credit. Several concerns reported that the credit committee was more conserva- tive in making loans than a bank would be. With other people's money at stake, however, persons who take their responsibility seriously are not to be blamed for refusing doubtful loans, although probably these cases are the ones where the need is most pressing As has been pointed out, the reserves of a credit union have been created for the express purpose of covering losses due to the charge-off of uncollectible loans, and permit the credit committee to take a chance in doubt- EMPLOYEE THRIFT PLANS IN WARTIME ful cases where denial of a loan might cause hardship. Another criticism made of the credit union by several companies was the amount of clerical work necessary and the time spent by union officials on credit union business during working hours. LIQUIDATED CREDIT UNIONS The Farm Credit Administration made a study of 165 liquidated credit unions, to determine the reasons for their failure. The causes for liquidation may be summarized as follows: 1. The difficulty of securing interested and competent officers and committeemen during the early years of operation was the principal or contributing factor in approximately one-third of the liquidations. 2. Unemployment, or fear of unemployment, shutdowns, and labor troubles were the major causes of liquidation in a third of these credit unions. 3. The primary cause of nearly 20% of the liquidations was a membership too small for successful operation. Unless a membership of approximately 100 can be developed in a year or two, the credit union probably will not be successful. 4. Hostility or domination on the part of company management contributed to the failure in about 10% of the total cases. Decision to liquidate came after a fairly short period of operation in these discontinued credit unions, as their average life was one year and six months. The mortality among residential credit unions was higher than among occupational groups. It is significant that only one of these credit unions was liquidated because of a shortage in accounts. Discontinued Credit Unions, Conference Board Survey Five credit unions were reported to have been discontinued in the present investigation. The reasons for their liquidation were very similar to the criticisms made of active credit unions, mentioned above. Lack of capable leadership, the burden of responsibility on company management, the onerous clerical work, un- employment with its resultant difficulty in securing repayment of loans, were given as the principal reasons for liquidation, as illustrated by the following digest of several letters explaining why the credit union had been discontinued. COMPANY No. 1. Did not have experienced help to run a credit union, and books got in rather bad shape. The "dead beats" got in on the ground floor See page 18. Farm Credit Administration, "A Study of One Hundred SixtyFive Liquidated Federal Credit Unions," Washington, October, 1939, mimeographed, 8 pages. 17 and borrowed before their qualifications were checked. A lot of red tape; every few weeks there was a state or federal auditor. The force was reduced by half and consequently some loans were lost and difficulty was experienced in collecting others. Believe credit union encroaches on banking business. Relief to executives not to have to worry over the credit union. COMPANY No. 2. When credit union first started no other sources for borrowing money at reasonable rates were available. Now there are plenty, especially the commercial banks. Responsibility and load of clerical work increased to extent that it interfered with regular duties. Encouraged people to borrow; many were habitual borrowers. Vastly relieved when credit union liquidated. COMPANY No. Too much emphasis upon borrowing. Outstanding loans way out of proportion to assets During severe depression, loans were uncollectible. Liquidation came on demand of State Banking Department. All loans have been repaid with exception of less than 850. The credit union experience cited above is the exception rather than the rule, however. Of the 4,210 credit unions chartered under the federal law from 1934 to the end of 1940, only 375, or 8.9% were liquidated, while during the same period only .07 of 1% of the total loans made have been charged off as uncollectible. COMPETITION WITH OTHER SOURCES OF CREDIT Even though there is a credit union in the plant, members may borrow from other agencies. In a study made by the Farm Credit Administration of 2,460 members of fourteen credit unions, it was discovered that 16% of the members patronized commercial lending institutions after joining the credit union, although before joining the credit union, 44% had used other credit sources. A number of reasons was given for using commercial credit agencies. Many had already borrowed all the funds that the credit union was willing to loan and were forced to obtain additional credit from other sources. Others preferred the outside credit agency because its requirements were less strict or because it afforded greater convenience, promptness or privacy, or because the member wanted a larger amount of money than the credit union would grant. In about 10% of these loans, the private agency offered lower interest rates. Other credit agencies may be better suited to the 'Farm Credit Administration "Federal Credit Unions, Annual Report on Operations, December 31, 1940," Washington, April, 1941. "Quoted in Maxwell S. Stewart, "Credit Unions-The People's Bank," Public Affairs Pamphlets, No. 50, New York, N. Y. 1940. CONFERENCE BOARD REPORTS 18 particular needs of an individual, as, for example, if he wishes to purchase a house or a car. As one letter quoted above pointed out, there are now more agencies through which the reputable worker may borrow, especially through the commercial banks, which are now making a drive for small loans through their personal loan departments. In a study made in Massachusetts, it was found that the loans of the personal finance companies showed a greater growth since 1926 and also much less decline during the depression years than credit union loans. The personal finance companies, industrial banks and commercial banks will probably continue to service Joseph L. Snider, "Credit Unions In Massachusetta," Harvard University Press, Cambridge, Massachusetts, 1939. Publications of the Pollak Foundation for Economic Research No. 14. employees in small establishments and in establish ments subject to seasonal or chronic unemployment, in concerns where management is definitely hostile the idea of the credit union. The credit union, however, provides for credit personal and friendly basis not possible under commercial credit agencies and it is advantageous from the worker's standpoint in that it encourages thrift. The indications are that it will continue to grow, although if past experience is any criterion, it will not seriously interfere with the business of other credit agencies as the fields of operation are ordinarily different. The credit union serves a group of borrowers usually in need of small loans which are unprofitable for other agencies to handle. SAVINGS PLANS IN COOPERATION WITH BANKS FOR MANY YEARS savings plans in cooperation with banks have been a popular method of encouraging thrift, for they offer a maximum of safety for the worker's funds with a minimum of responsibility and effort on the employer's part. Before 1929, the banks contributed to the growth of this type of savings by soliciting these accounts, in the belief that they were a profitable field of investment. Sixty-nine of the thrift plans received in connection with the present survey belong in this classification, but the provision of these plans are not uniform, as will be seen from the following discussion. PAYROLL DEDUCTION PLANS The most common and simplest type of savings plan in cooperation with banks is the straight payroll-deduction plan. The worker signs a card authorizing the company to deduct a specified amount of savings from his regular earnings. Each pay period the company deducts the authorized savings before the employee's earnings are made available to him and transmits to the bank a list of the depositors, the amount of their savings and the money so deducted. The employee may increase, decrease or suspend his savings under the plan upon notification to the proper department. In over two-thirds of these payroll-deduction plans, the bank retains possession of the employees' passbooks and they must go to the bank to withdraw their savings. Many question the wisdom of the company's holding the workers' bank books and cashing with- drawals. If the company keeps a record of all the workers' banking transactions, as it must do if it Typical authorisation card and copy of payroll deduction plan in cooperation with bank in Appendix; see page 35. cashes withdrawals, certain types of workers may SUSpect the company of prying into their personal affairs Others may believe that if the company is in a position to discover the amount of their total savings, their wages will be cut. To avoid any possibility of this unwarranted suspicion, many concerns keep only the essential records on the savings plans, and all other transactions must be between the bank and the worker. Another question that arises in connection with these savings plans is whether the worker should be permitted to select his own bank. Before bank deposits were insured by law, there was some feeling that if the company selected the bank, it assumed a moral obligation for the safety of the employees' funds, and that consequently it was a wiser policy to permit each worker to make the selection, even though the clerical work for the company was considerably increased by this procedure. If the funds are deposited in a bank whose deposits are insured, the objection against the use of a single depository is largely invalidated. Most of the companies surveyed selected the cooperating bank, although in a number of plans the employee was given an opportunity to choose from a list of several banks. CHRISTMAS AND VACATION CLUBS Next in popularity among savings plans in cooperstion with the banks are Christmas and vacation clubs. They may be conducted by either the employer or the employee; savings may be collected by club representatives or through a payroll-deduction plan. They differ from the regular savings plan in that at the end of an annual or semi-annual period, the accumulated fund is returned to the employee, with or without interest. EMPLOYEE THRIFT PLANS IN WARTIME While these plans may educate the worker to be thrifty by requiring systematic savings over a prolonged period, at the same time they may encourage extravagance by putting fairly large sums of money at their disposal which may be wasted in useless expenditures. the Personnel Department. No partial withdrawals are permitted. If the employee wishes to withdraw savings from his account, he must either borrow on the deposit or close out the account. At the end of the club year, the company gives 10% of the amount saved during the period, in addition to interest paid by the bank. OTHER PLANS IN COOPERATION WITH BANKS None of the other types of savings plans in cooperation with banks is widely used. In several companies, a bank teller has a desk near the exit to accept de- posits; in two other plants, bank representatives collect the savings on pay day. In one company, a representative from the savings bank solicits accounts twice a year, and the employees drop their bank books and deposits in a locked box in the restaurant. BONUS FOR SAVINGS Four concerns included, encourage thrift by offering supplemental interest on savings deposited under the plan. One company matches the bank interest on the first 81,000 bank deposits. An interesting plan has been adopted by a farm implement company in Wisconsin. An individual savings fund is created for each employee who will authorize payroll deductions of 4% of earnings. Interest at the rate of 4% per annum is paid on these accounts, of which 3% is given by the company. The funds are deposited in a single bank. These accounts may be drawn against only in case of unemployment or special emergencies such as payment on a home or cost of an operation. To pass on these special cases and to assist in the operation of the plan, a special committee is appointed. Another company has established a savings club, under which the employee may save from 8.50 to 810 per week. The employee is limited to one increase and one decrease in the amount of savings during the year, provided the change is justified in the opinion of 19 RECENT EXPERIENCE The companies with savings plans in cooperation with banks are on the whole satisfied with the operation of the plan. Its chief advantage has been that it offers a convenient way for the employees to save periodically. Through these small systematic savings, the employees have accumulated reserves to tide them over periods of curtailed employment, lay-offs, and other emergencies. There was some dissatisfaction regarding the extent of participation in these savings plans in some concerns. In thirty-two companies employing 64,473 sons, 16,782 workers, or 26% were saving periodically. The number of plans in cooperation with banks has grown very slowly during the last decade. Of the sixty-nine plans of this type received in the survey, only twelve, or 17% were established since 1930. One reason for this retarded growth can be attributed to the changing attitude of the banks toward these accounts. With a superabundance of credit and funds, and lack of profitable security offerings, the banks have experienced great difficulty in discovering investments which would yield a fair return. Accordingly many banks have lost interest in these small accounts which entailed considerable clerical work and on which they earned so little profit. The rise of the credit union also undoubtedly impeded the development of the savings bank plans. The payroll-allotment plans for the sale of United States Savings Bonds will probably curtail this activity still further. COMPANY SAVINGS PLANS SAVINGS PLANS under which the workers' funds are deposited with the company were at one time quite popular. The earliest of these company savings plans were the outcome of the limited banking facilities available to the worker and his inability to make his deposits during banking hours because of the ten- and twelve-hour day prevalent at that time. With the adoption of savings plans in cooperation with the banks and the widespread adoption of credit unions, this type of plan has lost its principal reason for existence. DESCRIPTIONS OF PLANS Eight plans of this character have been received in this survey. While the funds accumulated under them are deposited with the company, their provisions vary greatly, as is illustrated by the following brief description of several plans. The Edison Savings Fund of the Boston Edison Company, which was adopted in 1917, provides for systematic savings of its members which are deposited with the company. The plan is administered by a CONFERENCE BOARD REPORTS 20 Savings Fund Committee. Each subscriber is required to agree to continue regular savings, until he has accumulated at least 825. The maximum savings permitted under the Fund is 82,000. If the Savings Fund Com- mittee is of the opinion that the subscriber is not using the Fund for the purposes of thrift, it may require him to withdraw all savings to his account. Interest of 31/2% is paid on deposits. The mutual savings association of the employees of a pharmaceutical company, which was established forty years ago, also provides for the investment of the employees' savings in the company business. The association is administered by a board of directors elected by the members, and a president, vice president, and secretary-treasurer who are elected by the board of directors. Another unusual plan adopted by a shoe manufacturing company provides for the issuing of non-negotiable promissory notes for each payroll deduction and other employee savings deposited with the company. At infrequent intervals the company requests the employee to bring in all these notes and exchange them for a single note for the total amount on deposit. The rate of interest on these notes at present is 11/2% per annum. The remainder of the company savings plans are simpler in their provisions. Savings may either be deposited by the employee personally or he may request payroll deduction of stipulated amounts. Withdrawals are ordinarily permitted at any time, but to avoid embarrassment in financial emergencies, the company may require notice of withdrawal. The employee is generally given a pass book similar to a bank book in which all entries and withdrawals are entered. Because the element of risk is greater in plans of this character than in those conducted in cooperation with banks, the interest rate is usually somewhat higher than that given on bank deposits, although in recent years, there has been a tendency to lower it In more than half the companies it is now 4% or less, with a range of from 11/2% to 6% among these eight concerns. EXPERIENCE WITH COMPANY SAVINGS PLANS The company savings plans have certain disadvan- tages which have interfered with their more wide spread acceptance. It may be somewhat embarrassing for the company to urge the employees to save when the funds are to be used for its exclusive benefit. Another defect of this type of savings is that all the employees' eggs are in one basket and in the event of bankruptcy or serious financial reverses, the worker may be unable to obtain possession of his savings when they are most needed. Another obstacle to the further development of company savings plans is the state banking laws. A number of these statutes provide that no person or corporation shall keep on deposit or pay interest on sums beyond a limited amount unless incorporated under the banking law. Two concerns reporting in this survey had discontinued their savings plans because they "were not fully in accord with the state banking laws." For the reasons listed above, the number of active plans of this character has been decreasing steadily in recent years. The 1936 survey of THE CONFERENCE BOARD revealed a distinct trend away from this type, and according to the results of the present survey this trend has continued unchanged. POOLED SAVINGS AND INVESTMENT PLANS U [NDER THE investment-trust type of savings plan, the savings of the employees are pooled and invested in securities. In most of these plans, the group investors accept the risks and share in the profits of their joint endeavor according to their respective contributions, although in one or two plans the company guarantees the principal and interest. DESCRIPTION OF PLANS Only six active savings and investment plans were found in the present investigation. Their provisions vary widely, but in general they fall into two classifications. Under the one, the plans permit the employee to terminate his participation at any time and withdraw his proportional share of the fund. Two active plans were found to belong in this category. The other types of savings and investment plans are distinguished from the ordinary savings plans, first, because they require regular employee savings over a period of years and, second, because the employer contributes to the fund, the amount of his contributions being based upon the savings of the employee. The participating employee shares in the com- pany's contributions in proportion to the amount of his savings, but if he withdraws from the fund before its maturity he forfeits his share. The funds accumulated are usually under the control of a trustee and may be invested in the company stock, or in other securities. To insure the safety of EMPLOYEE THRIFT PLANS IN WARTIME the principal, it may be specified that only securities legal for savings banks or insurance companies shall 21 tinued. Two other plans of this type have recently been dropped because the "pre-depression plan offers be purchased. little of constructive application under changed conditions," while another concern is now considering the EXPERIENCE WITH SAVINGS AND INVESTMENT PLANS credit union as a substitute for its investment plan because of the fluctuations in the market value of The 1936 survey of THE CONFERENCE BOARD noted a serious defect in this type of savings plan. A quarter of the plans of this character previously active were at that time found to have been discontinued. The factor responsible for their abandonment was the falling stock market. Securities bought at boom-year levels dropped many points, with the result that the value of the stocks held in the fund fell far below their purchase price. Laid-off employees who were most in need of financial assistance were obliged to withdraw from the plan and accept their proportional share of the depreciated fund. The trend away from this type of plan has con- the company's stock. The General Electric Company plan has been temporarily suspended in order not to interfere with the sale of United States Savings Bonds. The plan of the General Motors Corporation was suspended on December 31, 1935, but the unmatured classes formed prior to that date were allowed to mature, and the last distribution was made in 1941. A recent ruling of the Securities Exchange Commission may have an unfavorable effect upon these invest- ment savings plans, because a sale of securities is involved. See page 20 for more complete discussion EMPLOYEE STOCK-PURCHASE PLANS URING THE DECADE ending in 1929, employee stock purchase plans assumed great significance. It was estimated in 1927 that more than a million employees owned or had subscribed for over one billion dollars' worth of securities of their employing companies. The outstanding reason for the widespread development in employee stock-purchase plans at that time was to promote the habit of saving among employees. Other reasons for their adoption were the desire to reward employees for faithful service, to secure their good will and to stimulate them to greater efficiency by making them part owners of the business through ownership of shares. Finally, some companies, notably public utility corporations, sold stock to their employees as a means to raising new capital or to secure local political advantage through having their securities widely distributed. Most of these plans were introduced in a period of remarkable business activity, with a rising level of security prices, steady employment, and high wages. Since 1929, many employee stock-purchase plans have been discontinued because of adverse economic conditions. With few exceptions, the shares bought at relatively high prices dropped far below their purchase price. A study of the Industrial Relations Section of Princeton University illustrates graphically the losses THE CONFERENCE BOARD, "Employee Stock Purchase Plans in the United States," New York, 1928, p. 8. "Ibid., page 157. in market value of thirty-five stocks sold to employees in thirty-one companies. The quotations, which are expressed as indexes with the median quotations for the first of July, 1926, as a base, increased from 983/8 in 1926, to 107 in 1927, 1087 in 1928, and to 115 in 1929. From then on, the index of these stocks dropped rapidly to 107 in 1930, 72 in 1931, and 1478 in 1932, or a decrease of a hundred points from the high in 1929.1 At the same time that stock prices were falling most rapidly, lay-offs, part-time employment and lower wage rates made it necessary for the employee investors to draw upon their savings. It is probable that many were forced to sell their holdings at or near the low point and thus sacrificed a substantial portion of their accumulated savings. As a result of these unfavorable circumstances, employee stock-purchase plans have been largely discredited as a safe form of savings for workers whose reserves should not be subject to serious depreciation and should be readily available to them in the event of an emergency. Only twenty-one active stockpurchase plans were found in connection with this investigation, even though a comparatively large sampling was made. All but two of the active plans surveyed were established before 1930, indicating the lack of interest in this type of savings at the present time. "Princeton University. Industrial Relations Section, "Employee Stock Ownership and the Depression," Princeton, N. 1953, p. 7. CONFERENCE BOARD REPORTS 22 STRUCTURE OF PLANS A number of companies included emphasized the informal nature of their stock-purchase arrangements. Employees desiring to purchase stock were given an opportunity to secure a company loan for it, and the stock was purchased in the open market at the market price. These arrangements were not advertised to employees, but the details were available to all requesting them. This type of plan is in marked contrast to many stock-purchase plans of the Twenties, with their drives for employee participation and various inducements offered to workers to encourage the sale of company securities. Eligibility A majority of the employee stock-purchase plans (twelve) permit all employees to purchase stock, while three limit participation to employees with one year's service; two plans, two years' service; while four re- quire that the worker's application to participate be passed on by some designated member of the managerial or supervisory force. Sale of Securities Three types of securities are sold under the plans studied. The common stock is most frequently sold (ten plans) Preferred stock may be more suitable to wage earners because it is given preferred rights over the common stock, and thus eight plans limit the sale to this class of security. Two concerns offer special employee stock. This type is used if the company has no other stock for sale or does not wish to subject the employees to the risk inherent in common stock. Stocks may be offered to employees under a variety of circumstances. The simplest plan is one in which the company issues new stock or is able to make an advantageous purchase of stock already issued. Such offerings may be made only at irregular intervals. Three plans in the present survey are of this nature. Stocks may be taken from the treasury (nine plans) or purchased in the open market (nine plans) The terms on which securities are sold to employees vary greatly under the plans analyzed. A few sell only for cash; some require a substantial initial payment and the remainder of the purchase price is loaned by the company, and liquidated by regular payroll-deduction payments. The majority permit the workers to pay the entire amount through payroll deductions. The stock is held as collateral and the worker is usually required to pay interest on the loan. The period allowed for repayment under these plans varies from a few months to three years. Several plans provide for the accumulation of funds in a bank until an two seeTexts pages of 36-38. active stock purchase plans reproduced in Appendix; amount sufficient to purchase one or more shares has been saved. The officials in several companies warned against an unduly prolonged period of repayment. One concern cited an arrangement which had been made at least twelve years before for a large number of employees to purchase stock, with money borrowed from a bank Many of the loans are still unpaid, and at least half the purchasers are not working for the company. As this official stated: Some day the stock may well be worth what the employee paid for it but in the meantime it is not simply a question of their holding something which they paid for long ago and which is not currently worth the money they paid for it, but if they continued their payments, it has been a case of their paying for something which has ceased to appear to have any value and every pay- ment is a disruption of the relations between employer and employee. Two-thirds of the plans studied restrict in some manner the number of shares an employee may purchase at one time by such methods as setting a maximum upon the number of shares that he may purchase, restricting purchases to a definite percentage of his salary, or requiring that repayments be sufficient to complete the purchase within a definite period. These restrictions are so varied that no prevailing policy is apparent. If a company sells its stock below the market price or makes some contribution to its cost, it is more apt to place limitations on the amount of stock that an employee may purchase at one time. Employer Concessions Only two of the twenty-one plans studied provided for the sale of securities below the price offered to other purchasers. Approximately half provided that the securities be purchased at the market price and the other half, at par value. Four of the twenty-one companies studied make some contribution to employee stockholders under the plan. In one company, an extra dividend of 50 per share is given on the first, second and third anniversary of each subscription, which is to be used toward the repayment of the stock. A fourth bonus of 50 per share is paid in cash one year from the date of issuance of stock. An oil company contributes an amount equal to the employees' payments. An electrical appliance company pays an extra dividend of 81 per share after the stock has been held one year, and 82 after five years. Guarantees and Refunds During depressions, when an employee's income has been seriously reduced, it is frequently difficult for him to hold his stock for better prices, and in selling it he loses a considerable part of his funds invested in EMPLOYEE THRIFT PLANS IN WARTIME company stock, unless the company makes provision for this contingency and safeguards the employees' savings. If the company guarantees to repurchase employee stock at the purchase price, the employee is completely protected, but the company may face the danger of having to repurchase a large number of shares at one time. If, as has been the case during the last decade, the stock does not again reach the original selling price, it may suffer a considerable loss. Conse- quently few plans contain this full guarantee. The employee is partially protected against loss if the stock is sold to him below the market price or if the company contributes toward its purchase. If the employee cannot continue his payments because of reduced earnings, there are several ways in which he may be protected; instalments may be temporarily suspended, or the company may lend money to make the payments or the employee may be permitted to cancel his subscription. Of the companies answering the question on cancellation privileges, eight refunded the employees' contributions with or without interest, while five reported that in case of cancellation, the employees' stock was sold, and the total selling price less the unpaid balance due the company was refunded. Some company stock is closely held, and in order to prevent it from falling into the hands of outsiders, the employee is required to give the company the first opportunity to repurchase it. In answer to the question as to whether stock must be sold back to the company, eight of the twenty-one concerns replied that this was a requirement of their employee stock purchase plan. 23 ficient reserves so that they were not forced to dispose of their investments at a loss. With the exception of these few successful plans, the adverse economic conditions during the past decade have proved extremely unsatisfactory to the successful operation of employee stock purchase plans. Most of the well-known companies with these plans have dropped them in favor of other forms of employeesecurity programs. Even those plans adopted since 1933 have not proved entirely satisfactory because of the wide fluctuations in stock prices. The chief complaint made was the drop in security values, which had exerted a decidedly bad influence on employee morale. For example, an official of an oil company writes: The plan was adopted as a result of considerable evi- dence of interest by the employees. The plan was adversely affected by the sharp drop of security values in the early Thirties. There were cases of employees wanting to sell at the purchase price when the market price was considerably below that figure. Such cases arose particularly during lay-offs and contributed to the lowering of morale. The whole situation led to a dwindling of interest of the employees who in 1934 by actual vote declared that they were not in favor thereof. An office appliance company sold common stock to its employees in 1936. Its experience is as follows: The price was fixed well below the then current market price and seemed attractive to the employees. Since then the entire allotment has been paid for in full. How- ever, as the market for the stock purchased has fallen far below the 1936-37 level, the employees are in the position of having purchased a security from the company which today shows a considerable loss of equity value. The say- ing grace to the management has been the continuity of dividends which have decreased the cost of the stock to the employee. RECENT EXPERIENCE WITH EMPLOYEE SrockPURCHASE PLANS Most of the active employee stock purchase plans studied were established in the Twenties. Inasmuch as they had withstood the very unfavorable economic conditions of the past ten years, they may be con- sidered to have been exceptionally successful. In general these concerns believed that their plans had accomplished their purposes. They had promoted thrift, and because the employees had been made part owners in the business, they were definitely interested in the progress of the company and understood the problems of management better. Also, they received larger return on their savings than was given by the savings banks. Apparently these concerns did not experience an unfavorable reaction from employees when the stockmarket values dropped to record lows, either because the employees' investments were protected, or the stock was not listed, or the employees had suf- As my own personal viewpoint I doubt seriously that the management would again entertain the sale of any stock under any conditions to employees. Conditions are much too uncertain and the risk of loss of goodwill of the employees who might participate is entirely too great to be ventured. A pharmaceutical company in 1939 obtained possession of a small block of stock when several large stockholders decided to dispose of their holdings. This was purchased for the purpose of selling to the employees who had expressed interest in obtaining stock of the company which was unlisted. An official of the company states: The plan was undertaken with the best interests of the employees in mind. However, it did not turn out to be as beneficial as anticipated, for we listed our stock on the New York Exchange and during the current year it sold as low as 812 per share (sold to employees at $181/2) due primarily to market conditions over which we had no control. We were not subjected to any par- ticular complaint on the part of the employees but 24 CONFERENCE BOARD REPORTS naturally under the circumstances, we cannot help but feel sorry that we went into the subject at all. Another company had an experience of the opposite nature. It sold its employees stock in 1934, and when the stock market rose at least half of the employees sold their stock. An electric appliance company introduced a stock purchase plan in 1935 which permitted the employees to purchase its securities under a time-payment arrangement. The results were discouraging, not because of any particular weakness of the plan, but because a relatively tage of it.small percentage of employees took adves A factor which may have discouraged to the more widespread adoption of employee stock po chase plans during the last ten years is the passe of the Securities Act of 1933, which in its definition the term "securities" would seem to include any securi- ties sold to employees. This Act requires the registration of company securities offered for sale with the Securities Exchange Commission. 'For & further discussion, see page 26. GENERAL EXPERIENCE AND CONCLUSIONS IGNIFICANT CHANGES have taken place in employee thrift plans since 1929. The collapse of the stock market in that year, the volume of unemployment and part-time employment, the many bank failures culminating in the bank holiday in March, 1933, subjected these savings plans to a crucial test which some types withstood better than others. EXPERIENCE-1997 TO 1941 A comparison of the results of the present investigation with those of the two previous employee thrift studies of THE CONFERENCE BOARD and its study of employee stock purchase plans reveal definite trends which are significant, even though the companies included in each study are not identical. In the 1936 investigation it was found that a considerable proportion of the savings plans in cooperation with banks had been discontinued since the 1927 survey because of the many bank failures and the cooling interest of banks in this kind of account. Since 1936, the savings bank plans have never recovered the popularity which they enjoyed in the Twenties. The plans in force have proved very satisfactory in aiding the employee to save systematically, but the rate of growth of new plans of this character has been very slow, as only about a sixth of the plans included in this classification was introduced since 1930. Several other types of employee thrift plans have so lost favor with industry that they have ceased to be a significant factor in promoting employee savings. At one time plans which provided for the deposit of the workers' savings in the company's business were of considerable importance, but during recent years their popularity has waned because other mediums for savings have been devised which relieve the company of the responsibility for the employees' savings, and "THE CONFERENCE BOARD, "Employee Thrift and Investment Plans," 1999; "Savings Plans and Credit Unions in Industry." 1936. THE States," CONFERENCE United 1928. BOARD, "Employee Stock Purchase Plans in the because the acceptance of deposits by the employing company is forbidden in many states unless it is in. corporated under the banking law. Plans under which the employees' savings are pooled and invested in securities are in reality small invest. ment trusts. Before 1929 they enjoyed a considerable vogue when stock prices were soaring, but the stock market crash eventually caused the abandonment of a considerable proportion of these plans. This trend was noted in the 1936 survey, and it has continued unchecked since that time, with several well-known companies discontinuing their plans of this nature for a variety of reasons. Experience with employee stock-purchase plans was also unfortunate during the depression years. In & three-year interval ending in 1932, stock market values dropped precipitously, and at the same time wage earners suffered widespread unemployment and greatly curtailed earnings. This situation made it extremely difficult for employees in companies which were hardest hit by the depression to retain possession of their stocks, so that in many instances they were obliged to dispose of their holdings at a figure far below the purchase price. Thus a plan which had been devised to promote employee savings and to better employeremployee relations failed of its objectives because of factors beyond the control of the employer. Consequently a large proportion of these employee stock purchase plans was discontinued. Few active plans were discovered in the course of the present investigation. The group studied comprised twenty-one plans of which only two were adopted since 1930. By and large the credit unions withstood the depression years very satisfactorily. This statement is borne out by statistics compiled by the Federal Government and THE CONFERENCE BOARD. According to the United States Bureau of Labor Statistics, the number of credit unions in operation increased from 838 in 1929 to 1,472 in 1932, although during the same interval, the EMPLOYEE THRIFT PLANS IN WARTIME These data do not separate occupational credit unions from other types. The Credit Union Section of the Farm Credit Administration, however, compiles statistics for the federal-chartered credit union in occupational groups. Since the Act was passed in 1934 to the end of January, 1942, the number of federal-chartered credit unions in occupational groups had grown to 3,664.2 The 1936 survey of THE CONFERENCE BOARD showed an equally satisfactory condition. Forty-six credit unions furnished complete statistics for the six-year period ending 1935. During that time, these credit unions lost 831,327 in defaulted loans, or 0.64% of the total loans. Credit unions included in the 1936 study apparently experienced little difficulty in granting loans and were able to meet all demands for withdrawals during the depression. Satisfactory experience with credit unions has con- 1941, and the companies were not identical. The percentage of participation in credit unions is considerably higher than in other types of savings plans. However, borrowers as well as savers are included in the credit union membership, whereas under the other types periodic savers only are included. The percentage of participation in the credit unions COVered in the present study is appreciably higher than in unions included in the 1936 survey. This may be attributed in part to the fact that the 1941 survey was restricted to credit unions which have been in exis- tence for five years or over, while many of those covered in the 1936 study were relatively new organizations. The older and more successful credit unions would obviously have attracted a wider membership. The statistics of participation by employees in company plans for the purchase of United States Bonds were collected in December, 1941, shortly after the declaration of war. Many of the concerns furnishing data were just inaugurating their payroll deduction plans. TABLE 5: PARTICIPATION OF EMPLOYEES IN THRIFT PLANS, BY TYPE OF PLAN, 1936 AND 1941 tinued to the present. Three-fourths of the companies with credit unions reporting in the present study had no criticism of their administration. The credit union had promoted thrift, had made credit available to its members at reasonable rates, had improved employee morale and strengthened employer-employee relations. The chief complaint made in connection with credit union operation in a fourth of the companies was the ease with which the members could borrow and the laxity evident in requiring repayment of delinquent loans. Other complaints made by the company management were the degree of responsibility which it must necessarily shoulder for the solvency of the credit union, and the amount of credit union business which was conducted on company time. Only five credit unions were found to have been liquidated in the present investigation. EMPLOYEE PARTICIPATION IN THRIFT PLANS A comparison of employee participation in thrift plans in 1936 and 1941, Table 5, indicates certain trends. In general, the participation in plans in cooper- Type Plan Number Number Number of Per Cent of Employees Employees Com- Employees Participating Partielpating panies 1941 Savings in banks Savings deposited with 64,473 16,788 86.0 25,212 3,588 14.0 $ hibited a similar percentage increase. even though the size of the sample was smaller in 5 share capital, which represents the employees' sayings, decreased from an average of 892 per member to 870. From 1929 through 1940, the credit unions increased from 838 to 9,510, or a tenfold rise, while membership which rose from 264,908 to 2,816,000 ex- 25 95,540 20,680 SE company Pooled savings and invest ments Stock purchase plans Credit unions United States bond sales TOTAL 25,789 14 69 29 152 6,888a 22.1 86.7 157,988 105,818 67.0 216,445 105,115 48.0 585,585 $58,803 44.4 1956 Savings in banks Savings deposited with company 110 288,250 93,626 38.5 18 71,946 8,854 11.0 Pooled savings and invest ments Credit unions TOTAL 18 $88,784 147,189 44.7 169 384,486 158,208 42.6 805 1,012,746 387,217 $8.9 ation with savings banks and in pooled savings and investment plans has decreased appreciably. This is in line with previous observations of diminished interest in these types of plans, and may be of significance United States Bureau of Labor Statistics, "Cooperative Credit Movement in 1934." Monthly Labor Review, October, 1935, p. 990. United States Department of Agriculture. Farm Credit Administration, Credit Union Section. "Federal Credit Unions, Monthly Report of Organization," January. 1949. Employee stockholders. There are a number of factors that may affect the employee's ability to save,-the size of his income, his family responsibilities, the cost of living in the community, and the standard of living which he believes he must maintain to keep the respect of fellow CONFERENCE BOARD REPORTS 26 workers. Accordingly the average amount of weekly savings and the percentage of participation vary greatly between companies as well as between the dif- ferent types of savings plans. Table 6 shows that seventy-two companies were making weekly payroll deductions of 8429,929 for the 185,467 employees who were saving regularly, or an average of 82.32 per week per saver, although the average for the different types of savings varied from $1.84 to $5.15 per week. TABLE 6: NUMBER OF REGULAR SAVERS, WEEKLY PAYROLL DEDUCTION FOR SAVINGS AND AVERAGE WEEKLY SAVINGS PER REGULAR SAVER Number Type of Plan Number of Com- Average Weekly Savings Savings 20,212 863,078 83.12 1,922 9,903 5.15 Regular Severs panies Savings in banks 40 Weekly Savings deposited in company $ Pooled savings and investments. 20,680 94,180 4.55 26 142,655 262,774 1.84 72 185,467 $429,989 89.32 3 U. S. bond sales TOTAL In a number of companies payroll deductions were given on . monthly basis. In these cases, conversion was made to . weekly basis by dividing by 4.53. SECURITIES AND EXCHANGE COMMISSION AND SAVINGS PLANS Wherever an offering of company securities is made it must comply with the regulations of the Securities and Exchange Commission From the definition of securities contained in the 1933 Securities Act this would seem to include any company securities offered for sale to employees. However, only one stock purchase plan received in connection with this study was definitely discontinued for this reason. Recently the jurisdiction of the Securities and Exchange Commission has been widened to include certain other employees' savings and pension plans whose funds are invested in securities, according to an opinion of the counsel of the commission. In February, 1940, he expressed the opinion that in the case of the savings and retirement plan of the United States Rubber Company the acceptance of deposits and company guarantees of interest and principal constituted the issuance of "securities" under the Securities Act of 1933. The company deemed it inadvisable to take on the additional burden and expense of filing an annual registration statement with the Commission, the cost of an annual prospectus and an annual audit of the accounts of the trustees. The plan was accordingly discontinued. In another case in which the pension funds were to be administered by a trustee and were to be invested in securities other than those of the employing pany, the counsel for the Commission expressed the opinion that this plan was under the jurisdiction of the Commission, as he pointed out that term in to mean plans, were invested in stocks which 1933 profit-sharing Act he the the interpreted funds agreements of "security" which and included contributory investment participation under contracts pension the bonds and other securities. He held that if the employees subscribe to such a voluntary self-adminis tered plan, the company is in effect offering securities to employees payable in instalments and consequently the company must register the plan with the Commission. If, however, the plan provides for compulsory membership, it need not be registered because participation is a condition of employment. These rulings would seem to bring within the jurisdiction of the Securities and Exchange Commission any savings plan which is based upon the purchase of securities. It should be emphasized, however, that this opinion of its legal counsel has not been definitely so cepted by the Commission, and that the issue is now somewhat beclouded and will require supplementary legislation to clear it up. Several bills have been introduced into Congress to exempt such plans from the Securities Act, but so far no law has been passed. COMPANY CONTRIBUTIONS AND THE WAGE AND HOUR ACT Under a number of savings plans, the employer makes contributions which bear some relation to the employee contributions, in order to encourage the workers to save. A recent opinion of the Wage and Hour Division is of special interest to companies with such plans. A company adopted a plan under which the employee authorized the employer to deduct a certain percentage of his earnings which was deposited in & trust fund, the company to deposit a like amount. The entire amount was to be made available to the employee at the end of three years. It was ruled that the company's contributions were an incentive for the employee to remain in the company's employ and rep resented compensation for future service. Accordingly payments made by the company pursuant to this plan must be included in the employee's regular rate of pay in computing overtime. Later the Division ruled that employer's contributions to a pension, annuity and similar plans, were not to be included in the employee's rate of pay on which overtime was computed. This ruling, however, did not affect plans such as the one mentioned above, as the employer's contributions in that instance were 'Wage-Hour Division, Special Opinion, October 24. 1941. EMPLOYEE THRIFT PLANS IN WARTIME regarded as a bonus and subject to overtime payments. SOCIAL SECURITY ACT AND SAVINGS PLANS There was some feeling that the Social Security taxes would retard the development of employee thrift plans and that the wage earners would be less inclined United States Wage and Hour Division, Release R-1748, 27 to save because of the unemployment compensation and old-age benefits provided by legislation. The companies included in the present survey were practically unanimous in the belief that this social legislation had not exerted a deleterious effect upon the employees' habit of thrift. F. BEATRICE BROWER Management Research Division February 18, 1948. APPENDIX A SUGGESTED LETTER AND PLAN FOR THE PAYROLLALLOTMENT SALE OF UNITED STATES SAVINGS BONDS PREPARED BY TREASURY DEPARTMENT pany will arrange with a qualified issuing agency to purchase To All Employees: Believing each of you will welcome a means by which you a Bond in the amount requested and have it registered in the may set aside regularly each month (each pay period) a portion of your earnings for the purchase of United States name (or names) as requested on the pay-roll authorization Bonds so purchased will be delivered by the issuing agency Defense Savings Bonds, we have established for your benefit direct to the employee-purchaser by mail or as otherwise directed. and will administer under the terms and conditions herein set forth, a Pay-Roll Allotment Plan. The Bonds to be purchased are Series E United States Defense Savings Bonds which are direct obligations of the United States Government. They yield about 2.9 per cent pany will, within 1 month, purchase such Bond. The Bonds interest when held for 10 years. will be dated as of the first of the month in which they are Further descriptions of the Bonds, their denominations, cost, and maturity values are found in the pages attached purchased. hereto, and also in a circular issued by the United States Treasury Department, a copy of which will be given you. Your participation in the Plan is purely voluntary. It is adopted only for your benefit and convenience. However, we believe you will welcome the opportunity of an automatic, simple method of buying a share in your Government Your money, as well as providing a sound investment for you, will be put to work at once in the National Defense Pro- gram to protect the safety and the freedom of the United States of America. 4. No interest will be paid upon such allotments while the purchase price is being accumulated. As soon as sufficient funds have been accumulated to purchase the Bond, the com- 5. The Company assumes no responsibility in respect to the Bonds purchased under this plan after they have been purchased and delivered to the employee. II. Pay-Roll Allotment Authorization Any regular employee may participate in this payment plan by executing a pay-roll allotment authorization order, specifying in addition to information regarding name of employee, residence, etc. 1. The denomination of the Bonds to be purchased and the amount to be deducted each pay-roll period. 2. The name of the person (or persons) in which the Sincerely yours, (Signed) XYZ Manufacturing Company (Name of employer) SAMPLE OF CONTENTS FOR PAY-ROLL ALLOTMENT ANNOUNCEMENTS I. Principal Features of the Plan. 1. United States Savings Bonds are Government obligations and are the prime investment of the Nation's insurance companies, trust companies, and other fiduciary institutions which are custodians of trust and other funds, and as such, seek safety as a first consideration. 2. Authorization to the company by employees of a regular allotment from their earnings for the purchase of Bonds in specified denominations The allotment is voluntary and will continue until the authorization is canceled or changed. 3. Upon accumulation of the required amount, the com- Bonds should be registered and the address to which the Bonds should be delivered. III. Schedule of Allotments From Earnings. For employees paid weekly and semi-monthly, the mini- If larger deductions mum allotment will be are desired they should be in multiples of NOTE-Employees have the privilege of subscribing to Bonds of any denomination offered. However, unless the allotment authorized is increased when Bonds of the higher denominations are subscribed for, the period for accumulating the purchase price, as well as the period during which no interest is earned on the savings, will be longer. Therefore, it is to the advantage of the employee to accumulate the purchase price as quickly as possible. In the case of the employee whose pay changes from a weekly to a semi-monthly or monthly basis, the deduc- tion will be two or four times the weekly amount, respectively. CONFERENCE BOARD REPORTS 28 IV. Funds Held In Trust. All money, while being accumulated, will be held in trust, be placed in a separate bank account, and be used only for the purchase of Bonds as directed. V. Pay-Roll Authorization and Interruptions Therein. Pay-roll allotment authorizations should be forwarded so as to reach the pay-roll officer at least one week prior to the close of the pay-roll period in which the first allotment is to in which remittance has been received by the Government The date of remittance will be shown in the notification the employee, mentioned in the preceding paragraph If delivery of a Bond should be accepted by another mem. ber of the household the employee should make the veris cation referred to in the preceding paragraph as soon as sible after its receipt. In case of error, the employee should pos return the Bond in person or by registered mail to the pay- period when the amount of pay is sufficient after making roll officer of the company, together with a signed statement covering the correction to be made. This will permit the Bond to be returned for correction to the point where it originated In order to avoid errors in the issuance of Bonds, it is ested period allotments cannot be made in full because the pay due tial that employees advise the pay-roll officer promptly of any change in the name (or names) in which Bonds are to be made. Allotments will be made from earnings in each pay-roll other deductions authorized or required. If in any pay-roll is insufficient, the allotment under this plan for that pay-roll period will be suspended. Allotments in the amount author- be registered, and of changes in address. ized will be resumed in the following pay-roll periods. form acceptable to the employee should be handled directly In the case of advance pay on account of vacations or otherwise, the allotment will be made in advance. VI. Changes In Pay-Roll Authorization An employee who desires to cancel his pay-roll authoriza- tion may do so by giving notice in writing to the pay-roll officer of such change. Such change should be made and in the hands of the pay-roll officer at least one week in advance of the end of the pay-roll period. Where an employee desires to increase or decrease the amount of the pay-roll allotment, a new allotment form should be filed with the pay-roll officer covering such change. When an employee leaves the service of the company the All matters relating to the Bonds after their receipt in by the owner with authorized agencies of the Government The company will undertake to furnish all employees ap propriate circulars issued by the Government, which should be retained by the employee for possible future reference m garding redemption, certification, protection against loss, etc. VIII. Co-Owner or Beneficiary. The purchaser of a Savings Bond, if an individual, may designate one individual co-owner or beneficiary-b not both. If either is named, the full name (not initials) must be given, and the address noted. (See descriptive literature sued by the United States Treasury Department regarding registration for personal purchase, for ownership by two persons and for naming beneficiary.) pay-roll authorization will be automatically canceled, and, unless otherwise directed by the employee, any amount to the credit of the employee's account will be refunded either IX. Information Relating To the Amount Accumulated in cash, or in Savings Stamps, as desired. In case of the death of an employee the pay-roll authoriza- Upon request the pay-roll officer will advise an employee of the amount accumulated in his account for the purchase tion will be automatically canceled, and any amount to the credit of the employee's account will be refunded. of United States Savings Bonds, but periodic statements VII. Purchase and Delivery of Bonds. ployees will not be issued. Once each month the company will arrange to purchase Bonds for those employees whose allotments have accumu- lated sufficient funds to permit of a purchase of the Bond requested and to have such Bonds registered in the name (or names) given in the pay-roll allotment authorization. Bonds so purchased will be delivered either direct or by mail to the address shown on the authorization form. The company will notify the employee at the time the purchase is made of such fact. If the Bond is not received within two weeks, the pay-roll officer should be notified so that proper follow-up may be made. The employee should not accept delivery of a Bond until he has verified that the denomination is correct, that his name (or names) and address are duly and correctly inscribed on the face of the Bond, and that the dating stamp (with current date) of the Federal Reserve bank or Post. master is imprinted in the lower left corner of the Bond, and that the Bond is duly dated as of the first day of the month showing amounts deducted and placed to the credit of X. Assignment. The assignment of funds accumulated to the account of an employee will not be permitted. XI. Responsibility. The company assumes no responsibility in respect to the Bonds purchased under this Plan after they have been pur chased and delivered to the employees. XII. Termination of the Plan. The Plan is subject to discontinuance at the discretion of the company, but not until notice thereof has been given to the employee. Such discontinuance, unless occasioned by ter mination of the offer by the Secretary of the Treasury of the United States, will apply only to new authorizations; authori- zations for allotments then in effect being continued until completed, and the Bonds purchased and delivered to the employees. EMPLOYEE THRIFT PLANS IN WARTIME 29 APPENDIX B Federal Credit Union BY-LAWS - SPECIMEN COPY ARTICLE I Name-Purposes SECTION 1. The name of this Federal credit union shall be Federal Credit Union." SEC. 2. The purpose of this credit union is to promote thrift among its members, by affording them an opportunity for accumulating their savings; and to create for them a source of credit for loans for provident or productive purposes. or in equal installments at the rate of 25 cents per month on each share so subscribed; but on any day when installments are due and payable any number of installments may be paid in advance. SEC. 2. The maximum amount of shares which may be held by any one member shall be established from time to time by resolution of the board of directors. SEC. 8. A member failing to pay any installment on shares when due may be required by the board of directors to pay a fine amounting to 1 cent per full week on each 82 or frac- tion thereof of the installment or installments in arrears: Provided, however, That in no case shall such fine be less ARTICLE II Qualifications for Membership SECTION 1. The field of membership in this credit union is limited to those having the following common bond of association, occupation, or residence: than 5 cents. SEC. 4. Shares may be transferred only from one member to another, by written instrument in such form as the board of directors may prescribe and upon the payment to this credit union of a fee of 25 cents for each such transfer. SEC. 5. Money paid in on shares, or installments of shares, may be withdrawn as in these bylaws provided on any day when payments for shares may be made; but the board of directors shall have the right, at any time, to require mem- Sec. 2. Each application for membership must be made in writing; must bear the endorsement of a member of the board of directors, indicating his opinion that the applicant bers to give 60 days' notice of intention to withdraw the whole or any part of the amounts so paid in by them: Provided, That no member may withdraw any shareholdings is honest, industrious, and of good habits; and must be pre- below the amount of his total liability to the credit union as borrower, endorser, co-maker, or guarantor without the written approval of the credit committee. sented by such director to the board of directors for action at & regular or special meeting thereof. SEC. 3. An applicant shall not be admitted to membership except by the affirmative vote of a majority of the directors present at the meeting at which the application is acted upon; and shall not become a member or entitled to any of the rights or privileges of a member until he shall have qualified by paying an entrance fee of 25 cents and shall have subscribed for at least one share of this credit union and paid at least the first installment thereon, as required in section 1 of article III of these bylaws. Sec. 4. To be in good standing a member must have one fully paid share, or must be paying on one share in accord- ance with the provisions of section 1, article III of the bylaws. A member who makes a withdrawal from his share account which brings the amount of that account below 85 shall thereafter make payments of at least 25 cents each month until one share is fully paid. A member who fails to do this shall not be considered a member in good standing. A member who withdraws all of his shareholdings thereby ceases to be a member. Sec. 5. Subject to the conditions herein contained, a member who leaves the field of membership of this credit union may retain his membership therein but may not borTOW therefrom in excess of his shareholdings. ARTICLE III Capital and Liability SECTION 1. The par value of each share shall be 85. Sub- scriptions to shares are payable at the time of subscription, ARTICLE IV Receipting for Money-Pasbooks SECTION 1. Money paid in on account of shares, installments of shares, repayment of loans, interest, fees, or fines, and money paid out on account of loans made or shares with- drawn in whole or in part, shall be evidenced by entries in a passbook which shall permit, in separate columns, the record- ing of successive payments or withdrawals on any of these accounts. Every entry in the passbook shall be initialed by the treasurer or other authorized person receiving or paying out, on behalf of this credit union, the money represented thereby. No money shall be received from or paid to a member unless the passbook is presented and the proper entry made therein, except money received from members under a payroll deduction plan or under a machine bookkeeping sys- tem approved by the Farm Credit Administration If either of these two plans is used, passbooks shall be brought up to date whenever presented to the treasurer, and shall be presented to the treasurer at least once every S months. SEC. 2. If a passbook is lost or stolen, immediate notice of such fact must be given to the treasurer, and written application must be made for the payment of the amount due the member as represented by said passbook, or for the issuance of a duplicate passbook. The board of directors may require the filing of an adequate bond to indemnify this credit union against any loss or losses resulting from the issuance of such duplicate passbook. CONFERENCE BOARD REPORTS 80 ARTICLE V Meetings of Members the tellers, and the results announced All elections shall by ballot except where there is only one nominee for the office. SECTION 1. The annual meeting of the members shall be held at SEC. 3. Nominations and elections shall be in the follow. ing order: (a) Nominations for directors; on the of January in each year. SEC. 2. At least 7 days before the date of any annual meeting of the members, the clerk shall cause written notice thereof to be posted in a conspicuous place in the office of this credit union; and at least 7 days before the date of any special meeting, shall cause written notice thereof to be handed to each member in person, or mailed to each member at his address as the same appears on the records of this credit union: Provided, however, That any meeting of the members, whether annual or special, may be held without prior notice, at any place or time, if all of the members entitled to vote thereat who are not present at such meeting shall in writing waive notice thereof, either before, during, or after the meeting. SEC. S. Special meetings of the members may be called (b) Election of directors: (c) Nominations for credit committee members; (d) Election of credit committee members; (e) Nominations for supervisory committee members, (f) Election of supervisory committee members. SEC. 4. No member shall be entitled to vote by proxy, but a member other than a natural person may vote through an agent designated in writing for the purpose. A trustee, M such, may not have a vote. Sec. 5. Irrespective of the number of shares held by him, no member shall have more than one vote. SEC. 6. Within 10 days after their election, the names and addresses of all persons elected to office shall be forwarded to the Credit Union Section of the Farm Credit Administration, Washington, D. C. by the president (or by the supervisory committee as in these bylaws provided); and shall be called by the president on the written request of not less than 10 members. SEC. 4. The order of business at annual meetings of members shall be: (a) Roll call; (b) Reading and approval (or correction) of the minutes of the last meeting: (c) Report of directors; (d) Report of the treasurer; (e) Report of the credit committee; (f) Report of the supervisory committee; (g) Unfinished business; (h) New business other than elections; (i) Elections; (j) Adjournment. Sec. 5. Except as hereinafter provided, at annual or special meetings 15 members shall constitute a quorum. If no quorum is present, an adjournment may be taken to a date ARTICLE VII Board of Directors SECTION. 1. The board of directors shall consist of members. SEC. 2. At the first annual meeting, or at any annual meeting following a change in the number of members comprising the board of directors, elections to the board shall be held in such manner that the terms of office of not more than a bare majority of the board shall expire at the same annual meeting. At the first annual meeting a bare majority of the members comprising the board of directors shall be elected for a term of 1 year and the others for a term of : years. Whenever the number of members on the board of directors is increased by amendment to the bylaws, one-half of such additional members shall be elected at the first annual meeting following the approval of the amendment for 1 year and one-half for 2 years. Thereafter the term of office for direc- tors shall be for 2. years and until the election of their not less than 7 nor more than 15 days thereafter, and the respective successors. members present at any such adjourned meeting shall constitute a quorum, regardless of the number of members present. The same notice shall be given for the adjourned meeting as is committee shall be filled by vote of a majority of the remain- prescribed in section 2 of this article for the original meeting, and such notice shall be given not less than 5 days previous to the date of the meeting as fixed in the adjournment. ARTICLE VI Elections SECTION 1. At least 80 days prior to each annual meeting, the president shall appoint a nominating committee of members. It shall be the duty of the nominating committee to nominate at the annual meeting 1 member for each vacancy for which elections are being held. SEC. 2. After the nominations of the nominating committee have been placed before the members, the president shall call for nominations from the floor. When nominations are closed, tellers shall be appointed by the president, ballots shall be distributed, the vote shall be taken and tallied by SEC. S. Any vacancy on the board of directors or credit ing directors; but the director or committeeman so elected shall hold office only until the next annual meeting of the members, at which meeting a director or committeeman shall be elected to complete the unexpired term (unless the term expires at the time of such meeting) SEC. 4. Regular meetings of the board of directors shall week of each month. The be held during the president, or in his absence the vice president, may call & special meeting of the board of directors at any time: and shall do so upon the written request of any 8 directors. Notice of meetings of the board of directors shall be given in such manner as the board of directors may from time to time, by resolution, prescribe. SEC. 5. The board of directors shall have the general direction and control of the affairs of this credit union. In addition to the duties customarily performed by boards of directors, the board of directors shall: EMPLOYEE THRIFT PLANS IN WARTIME (a) Act upon all applications for membership. (b) From time to time fix the amount and character of, and approve, surety bonds required of any persons handling or having custody of funds, and may authorize the payment of the premium or premiums therefor, by this credit union. (c) Recommend the declaration of dividends. (d) Fill vacancies in the board of directors and in the credit committee, as herein provided. (e) Employ, fix the compensation, and prescribe the duties of such employees as may, in the discretion of the board of directors, be necessary. (f) Determine from time to time the maximum number of shares that may be held by any member. (g) Determine from time to time the interest rates on loans and the maximum amount that may be loaned, with or without security, to any member within the limitations prescribed by law. When, by action of the board of directors, the interest rates on future loans are reduced, similar action may be taken with regard to interest rates on unpaid balances of existing loans. (h) Authorize and supervise investments of this credit union other than loans to members. (i) Designate the depository or depositories for the funds of this credit union. (j) Authorize borrowings and discounting operations on behalf of this credit union within the limitations prescribed by the Federal Credit Union Act, and any regulations issued thereunder by the Governor of the Farm Credit Administration (k) Authorize the charge-off of uncollectible loans. Sec. 6. A majority of the number of directors specified by the bylaws shall constitute a quorum for the transaction of business at any meeting thereof; but less than a quorum may adjourn from time to time until a quorum is in attendance. Written notice of an adjourned meeting need not be given the directors. SEC. 7. If a director or credit committee member fails to attend regular meetings of the board of directors or credit committee for 3 consecutive months, or otherwise fails to perform any of the duties devolving upon him as a director or credit committee member, or ceases to be a member in good standing, his office may be declared vacant by the board of directors and the vacancy filled as herein provided. ARTICLE VIII Officers and Their Duties SECTION 1. The officers of this credit union shall be a president, a vice president, a treasurer, and a clerk, all of whom shall be elected by the board of directors and from their number. The offices of treasurer and clerk only may be held by the same person. Unless sooner removed as herein provided, the officers elected at the first meeting of the board of directors shall hold office until the first meeting of the board of directors following the first annual meeting of the members, and until the election of their respective successors. Sec. 2. Officers elected at the first meeting of the board of directors following the annual meeting of the members shall hold office for a term of 1 year and until the election 31 and qualification of their respective successors: Provided, however, That any person elected to fill a vacancy caused by the death, resignation, or removal of an officer shall be elected by the board of directors to serve only during the unexpired portion of the term of such officer, and until his successor is duly elected and qualified. SEC. S. The president shall preside at all meetings of the members and at all meetings of the board of directors; shall countersign all notes of this credit union and all checks, drafts, and other orders for the disbursement of its funds; and shall perform such other duties as customarily appertain to the office of president or as be may be directed to perform by resolution of the board of directors not inconsistent with the provisions of law or these bylaws. Smc. 4. The vice president shall have and exercise all the powers, authority, and duties of the president during the absence or disability of the latter. Sec. 5. The treasurer shall be the general manager of this credit union. Before entering upon his duties, he shall give a proper bond with good and sufficient surety, in amount to be determined by the board of directors as herein provided, conditioned upon the faithful performance of his duties. He shall have custody of all funds, securities, valuable papers, and other assets of this credit union except his own faithful performance bond, which shall be in the custody of such other person as the board of directors may designate. He shall sign all checks, drafts, notes, and other obligations of this credit union. He shall provide and maintain full and complete records of all the assets and liabilities of this credit union. Within 7 days after the close of each month, he shall prepare and submit to the board of directors a financial state- ment showing the condition of this credit union as of the close of business on the last business day of such month, and shall promptly post a copy of such monthly financial statement in a conspicuous place in the office of this credit union, where it shall remain posted until replaced by the financial statement for the next succeeding month. He shall prepare and forward to the Credit Union Section of the Farm Credit Administration, Washington, D. C., such financial reports as the Governor may require. The treasurer may be compensated for his services to such extent as may be determined by the members at any annual or special meeting thereof. Sec. 6. The board of directors may appoint an assistant treasurer and authorize him, under the direction of the trea- surer, to perform any of the duties devolving on the treasurer, including the signing of checks. He may also act as treasurer during the absence of the treasurer or in the event of his inability to act. Where this authorization is made, the assistant treasurer shall give a proper bond with good and sufficient surety, in amount to be determined by the board of directors, conditioned upon the faithful performance of his duties. SEC. 7. The clerk shall prepare and maintain full and correct records of all meetings of the members and of the board of directors. He shall give or cause to be given, in the manner prescribed in these bylaws, proper notice of all meetings of the members; and shall perform such other duties as he may be directed to perform by resolution of the board of directors not inconsistent with the provisions of law or of these bylaws. CONFERENCE BOARD REPORTS 32 ARTICLE IX Smc. 2. The supervisory committee members shall choose Credit Committee SECTION 1. The credit committee shall consist of members SEC. 2. At the first annual meeting, or at any annual meeting following a change in the number of members comprising the credit committee, elections to the committee shall from among their number a chairman and a secretary. T secretary of the supervisory committee shall maintain and correct record of all action taken by it. The offices chairman and secretary may be held by the same person SEC. 3. The supervisory committee shall make, as end of each quarter, an examination of the affairs of this be held in such manner that the terms of office of not more credit union (including an audit of its books), and shall than a bare majority of the committee shall expire at the same annual meeting. At the first annual meeting a bare majority of the members comprising the credit committee make a written report thereof to the board of directors, and shall prepare and submit to the members at each annual ing a written report on the condition and affairs of this credit shall be elected for a term of 1 year and the others for a term union. It shall prepare and forward to the Credit Union & of 8 years. Whenever the number of members on the credit committee is increased by amendment to the bylaws, onehalf of such additional members shall be elected at the first tion of the Farm Credit Administration at Washington annual meeting following the approval of the amendment for 1 year and one-half for 2 years. Thereafter the term of office for committeement shall be for & years and until the books and accounts of all members to be verified with the election of their respective successors. SEC. S. The credit committee members shall choose from their number a chairman and a secretary. The secretary of the credit committee shall prepare and maintain full and cor- rect records of all action taken by it. The offices of chairman and secretary may be held by the same person. SEC. 4. The credit committee shall hold such meetings as the business of this credit union may require, and not less frequently than once a month. Due notice of such meetings such reports as the Governor may require. Sec. 4. The supervisory committee shall cause the pass records of the treasurer from time to time, not less frequently than once every 2 years. SEC. 5. By unanimous vote the supervisory committee may suspend until the next meeting of the members any di- rector, officer, or member of the credit committee. In the event of any such suspension, the supervisory committee shall call a special meeting of the members to act on said suspension within 7 days thereof. The notice of any such special meeting shall state the purpose for which it is to be held. SEC. 6. By the affirmative vote of a majority of its men- shall be given to members of the committee by the treasurer. bers, the supervisory committee may call a special meeting SEC. 5. The credit committee shall inquire carefully into the character and financial condition of each applicant for a loan and his sureties (if any) to ascertain his ability to repay of the Federal Credit Union Act (including any amendments fully and promptly the obligations incurred by him and to to consider any practice of this credit union which the com- determine whether the loan sought is for a provident or productive purpose and will be of probable benefit to the bor- mittee deems to be unsafe or unauthorized. Notice of any rower. The credit committee shall endeavor diligently to assist applicants in solving their financial problems. of the members to consider any violation of the provisions thereto), or of the charter or bylaws of this credit union: or such special meeting shall be given in the manner elsewhere herein provided for the giving of notice of special meetings of the members. SEC. 6. No loan shall be made unless approved by a majority of the entire committee and by all of the members of the committee who are present at the meeting at which the application is considered SEC. 7. Subject to the limits imposed by law and these bylaws and the instructions of the board of directors, the credit committee shall determine the security, if any, which shall be required for each loan and the terms upon which it shall be repaid. When there are pending more loan applications than can be granted with the funds available, preference shall be given, in all cases, to the applications for smaller loans if the need and credit factors are nearly equal. ARTICLE X ARTICLE XI Organization Meeting SECTION 1. On receipt of the approved organization octtificate, the subscribers thereto shall convene for the purpose of nominating and electing a board of directors, a credit committee, and a supervisory committee. SEC. 2. The subscribers shall elect a chairman and & secretary for the meeting. The subscribers shall then elect from their number, or from those eligible to become members of this credit union, a board of directors, a credit committee, and a supervisory committee, all to hold office until the first annual meeting of the members and until the election of their respective successors. If not already a member, every person Supervisory Committee elected under this section must qualify within 30 days SECTION 1. The supervisory committee shall consist of 8 members, none of whom shall be directors. Members of the supervisory committee elected at the annual meeting shall be elected from the members and shall hold office for the term of 1 year and until the election of their respective successors. member who does not qualify within so days shall auto matically become vacant and shall be filled in accordance with the provisions of these bylaws pertaining to the filling In the event of a vacancy in the membership of the supervisory committee, the remaining members of the committee shall fill such vacancy by appointing a member who shall hold office until the election of his successor. by becoming a member. The office of any director or committee of vacancies. Sec. S. Following the elections held under the provisions of the preceding section, the directors shall retire from the the meeting and elect the officers, who shall hold office until first annual meeting and until the election of their respective successors. EMPLOYEE THRIFT PLANS IN WARTIME ARTICLE XII 33 SEC. 3. A member shall be deemed to have one fully paid share for each 85 paid in, regardless of the number of shares for which he has subscribed Locas to Members SECTION 1. Except as otherwise provided in article XV, ARTICLE XV section 5 of these bylaws, loans shall be restricted to membent, and shall be made for provident or productive purposes Deposit and Disbursement of Funds-Investments SECTION 1. The funds of this credit union shall be de- only. Snc. 2. Rates of interest shall be fixed from time to time by the board of directors; and shall in no case exceed 1 per cent per month on unpaid balances, inclusive of all charges incidental to making the loan. posited only in national banks, or in state banks, trust companies, or mutual savings companies operating in accordance with the laws of the state in which this credit union does business; and, except with the specific written permission of Sec. 3. No loan shall be made to a director, officer, com- the Governor of the Farm Credit Administration or his mittee member, or to a member who has left the field of purpose for which the loan is desired, the security (if any) authorized representative, shall not be deposited in, or permitted to remain on deposit in, any institution the deposits of which are not insured by the Federal Deposit Insurance Corporation, or the Federal Deposit Insurance Fund SEC. 2. All funds of this credit union (except those mentioned in secs. 8 and 4 of this article) shall be deposited in such qualified depository or depositories as the board of directors may from time to time by resolution designate; and shall be so deposited within 48 hours of their receipt: Provided, however, That receipts in the aggregate of 8100 and such other data as may be required. less need not be deposited more often than once each week. membership, in excess of the amount of his shareholdings in this credit union. No director, officer, or committee member shall act as endorser or guarantor for borrowers from this credit union. Sec. 4. A borrower may repay his loan prior to maturity, in whole or in part, on any business day. SEC. 5. Applications for loans shall be on forms furnished by the credit committee and shall in each case set forth the Sec. 6. No loan shall be made to members in excess of Sec. S. All disbursements of funds of this credit union the limitations imposed in section 11 (d) of the Federal shall be made by checks signed by the treasurer or a duly Credit Union Act. authorized assistant treasurer, and countersigned by the Sec. 7. All applications for loans and the reports of the credit committee thereon shall be filed as permanent records of this credit union. SEC. 8. A member failing to pay an installment on a loan president, or, in his absence or inability to serve, by the vice president: Provided, however, That the board of directors may by resolution provide for the establishment and replen- directors, shall pay a fine of 1 cent per week on each 82 or ishment, at least annually, of a petty cash fund of not exceeding $10 for postage, and for defraying other expense items of this credit union in amounts of less than 81. fraction thereof in arrears: Provided, however, That in no case shall such fine be less than 5 cents. The board of di- SEC. 4. A cash fund for the purpose of making change may be established by the board of directors by resolution, rectors may take such steps toward making collection of delinquent loans, interest, or fines as may, in its judgment, be providing the said board of directors shall have first obtained when due, unless excused therefrom for cause by the board of advisable. ARTICLE XIII Reserves SECTION 1. All entrance and transfer fees and fines, and 20 per cent of the net earnings of each year (before the declaration of any dividend), shall be set aside as a reserve against possible bad loans, which shall not be distributed except in case of final liquidation. ARTICLE XIV Dividends SECTION 1. At the annual meeting only, on recommends tion of the board of directors, a dividend may be declared from the net earnings remaining after the setting aside of 20 per cent thereof for the reserve for bad loans. Any such dividend shall be paid only on shares fully paid up before December 1, and outstanding on December 31, of the pre- ceding year. In the case of any share which became fully paid up during such year and prior to December 1 thereof, the holder shall be entitled to receive a proportional part of the written permission of the Governor of the Farm Credit Administration or his authorized representative. SEC. 5. The funds of this credit union shall be invested only in: (a) Loans to members; (b) Obligations of the United States of America, or in securities fully guaranteed thereby as to both principal and interest; (c) Loans to other credit unions in the total amount not exceeding 25 per cent of this credit union's paid-in and unimpaired capital and surplus, in accordance with rules and regulations prescribed by the Governor; (d) Shares or accounts of Federal savings and loan associations; (e) Any other manner authorized by the Federal Credit Union Act. ARTICLE XVI Expulsion and Withdrawal SECTION 1. A member may be expelled only in the manprovided by law. Expulsion or withdrawal shall not oper- said dividend calculated from the first day of the month ner ate to relieve a member of any liability to this credit union. following such payment in full. All amounts paid in on shares by expelled or withdrawing Sec. 2. No dividend shall be authorized or paid at a rate in excess of 6 per cent per annum. members, prior to their expulsion or withdrawal, shall be paid CONFERENCE BOARD REPORTS 84 to them in the order of their withdrawal or expulsion, but only as funds become available and only after deducting therefrom any amounts due from such members to this credit union. ARTICLE XVII Minors SECTION 1. Shares may be issued in the name of a minor, SEC. 4. The board of directors may, by resolution nate another member of this credit union to act temporaris in the place and stead of any officer who is absent, disqual fied, or otherwise unable to perform the duties of his office The board of directors may also, by resolution, designate another member or members of this credit union, to act the credit committee when necessary in order to obtain a quorum. or in trust therefor. When shares are so issued in trust, the trustee must be a member of this credit union in his own right, and the name of the beneficiary must be stated. ARTICLE XVIII Definition of Terms SEC. 5. No director, committee member, officer, agent, employee of this credit union shall in any manner, directly or indirectly, participate in the deliberation upon or the determination of any question affecting his pecuniary interest or the pecuniary interest of any corporation, partnership, SECTION 1. When used in these bylaws the terms: (a) "Net earnings," for a given period, shall mean the balance remaining after deducting from the gross income of this credit union actually received during such period all expenses paid or payable during such period, and any losses sustained therein (as determined by the board of directors) for which no specific reserve has been set aside. association (other than this credit union) in which he directly or indirectly interested. In the event of the dis qualification of any director respecting any matter presented to the board of directors for deliberation or determination such director shall withdraw from the meeting during such deliberation or determination; and in such event the remais ing qualified directors present at the meeting, if constituting a quorum with the disqualified director or directors, may Amounts set aside during such period as a reserve exercise with respect to this matter, by majority vote, all the for bad loans shall not be deemed items of powers of the board of directors. In the event of the & qualification of any member of the credit committee or the expense. (b) "Paid-in and unimpaired capital," as of a given date, shall mean the balance of the paid-in shares account as of such date, less any losses that may have been incurred for which there is no reserve or which have not been charged against undivided profits or surplus. (c) "Surplus," as of a given date, shall mean the credit balance of the undivided profits account on such date, after all losses have been provided for and net earnings or net losses have been added thereto or deducted therefrom, as the case may be. Reserves for bad loans shall not be considered as a part of the surplus. ARTICLE XIX General SECTION 1. All power, authority, duties, and functions of the members, directors, officers, and employees of this credit union, pursuant to the provisions of these bylaws, shall be exercised in strict conformity with the applicable provisions of law and regulations issued thereunder, and of the charter and bylaws of this credit union. SEC. 2. The officers, directors, members of committees, and employees of this credit union shall hold in strictest confidence all transactions of this credit union with its members and all information respecting their personal affairs. SEC. S. Notwithstanding any other provisions in these bylaws, any director, committee member, officer, or employee of this credit union may be removed from office by the affirmative vote of two-thirds of the members present at a special meeting called for the purpose, but only after an opportunity has been given him to be heard. supervisory committee, such committee member shall with draw from the meeting during such deliberation or determination; and in such event the remaining qualified committe members present at the meeting may select from the men bership of this credit union an alternate committee member to act with them in regard to the matter in connection with which such disqualification exists. SEC. 6. Copies of the organization papers of this credit union, its bylaws and any amendments thereto, returns of nominations and elections, proceedings of all regular and special meetings of the members and directors shall be no orded in the minute books of this credit union. The minutes of the meetings of the members, the board of directors, and the committees shall be signed by their respective chairmen or presiding officers and by the persons who serve as secretaries of such meetings. SEC. 7. All books of account and other records of this credit union shall at all times be available to the directors and committee members of this credit union, and to any duly authorized representative of the United States Government, upon presentation of the proper credentials. ARTICLE XX Amendments to Bylaws SECTION 1. Amendments to these bylaws may be adopted by the affirmative vote of two-thirds of the members of the board of directors at any duly held meeting thereof, if the members of the board have been given 7 days' notice of such meeting and the notice has contained a copy of the proposed amendment or amendments; but no amendment to these by laws shall become effective unless approved in writing by the Governor of the Farm Credit Administration or by his authorized representative. 35 EMPLOYEE THRIFT PLANS IN WARTIME APPENDIX C-1 COMPANY A PAYROLL DEDUCTION PLAN IN COOPERATION WITH BANK any account. Both salary employees and hourly rate employees are in- The bank will issue a passbook to you when the account is a vited to participate in the Thrift Plan and you may join the plan by instructing the Company, in writing, to deduct stated amount from your regular pay and deposit it in & Thrift Account to be opened for you in your name. A brief summary of the terms and conditions applying to such Thrift Accounts at the present time is given below: The Bank Farmers Bank and Trust Company. Interest Rate At present the bank credits interest on such accounts at the rate of %% per annum on balances of $5.00 or more which at any interest date have been on deposit for three months or more. No interest is allowed, however, on any fractional part of a dollar, nor on any balance of less than 85.00. Interest Dates The bank credits such interest as is due the depositor on June 30th and December 31st. first opened, and will ask you for your signature for purposes of identification We are informed that the bank will arrange to hold your passbook for you in order to enter your deposits promptly after they receive the remittances sent them for your account, but you will have the right to go to the bank at any time during banking hours and see your passbook in order to make sure what your balance is at the time. The bank will mail you a notice, to the address entered in your pass book, twice a year; that is, shortly after the dates on which interest is credited on such accounts. This notice will show your balance, including any interest that has been credited. Naturally, if you move from the address first given to the bank you must notify the bank in writing of your new address. The bank will not accept any such notice unless it is in writing and bears your signature. How to Join the Thrift Plan If you wish to join this Plan and have a Thrift Account Withdrawal Privileges At present the bank permits withdrawals up to $100.00 in any one calendar month without requiring previous notice. For withdrawals in larger amounts written notice of thirty days is required. A form of notice to be filled out will be sup- plied by the bank to the depositor wishing to make a withdrawal from his balance. It should be remembered, however, that withdrawals made from the account will reduce the amount of interest that might be earned if no withdrawal were made. How the Plan Will Operate The Company will deposit into your account only the amounts which you have previously instructed it to deduct from your pay. That is, the Company is not making any arrangements for you to hand in currency to be taken to the bank. You will have the right, however, to go to the bank and make additional deposits into your account if you wish to do so. The Company will have no control over or responsibility for your account. It will be yours, just as if you opened it yourself and made all of your own deposits. Consequently, the terms and conditions applicable thereto may, without further notice to you from the Company, be changed from time to time by the bank, as the bank reserves the right to opened in your name at the bank, you need only fill in the necessary instructions to the Company to deduct a stated amount from each regular pay on the attached form and return it to the Cashier's Office. If circumstances make it necessary for you to change the amount of the deductions to be made, fill in another copy of the same form in order to change your instructions to the Company. It is hoped, of course, that upon joining the Plan, you will estimate care- fully how much you can afford to save and not have to change your instructions too often. No limitation, however, will be put at this time upon the number of times during the year you may change the amount of deductions to be made from your pay. Once you have joined the Thrift Plan and made out your instructions to deduct a stated amount from your pay. the Company will act on your latest written instructions until you give written notice to change the amount or make some other arrangement. The clerical and accounting expense of handling the Thrift Plan will amount to several thousand dollars per year and will be borne entirely by the Company. It is hoped that the plan may be continued indefinitely. but the Company reserves the right to modify or discontinue the plan at any time. set or change the terms under which it will accept or operate APPENDIX C-2 EMPLOYEE'S AUTHORIZATION CARD - PLAN IN COOPERATION WITH BANK from my wages To COMPANY B. INC. You are hereby authorized to deduct the sum of 8 each week, the same to be deposited to my credit in the THE INDUSTRIAL TRUST CO. Date Address Remarks Name Dept. No. CONFERENCE BOARD REPORTS 36 APPENDIX D-1 EMPLOYEES' STOCK PLAN As Amended up to and including December 14, 1936 Com- Any employee of the pany, or its subsidiaries, who, at the time of his subscription, has been employed by any of the Companies for twelve months continuously at the date of the current offering of stock under this Plan, may, on the first day of January, and on the first day of July of each year, subscribe for stock of the Company under the following terms and conditions. SECTION 1-SUBSCRIPTIONS (a) The subscription price for the stock offered, and the rate per share per month to be deducted from employees' salaries or wages, shall be determined at each subscription date by resolution of the Board of Directors. Each employee shall exercise his right to subscribe by signing a subscription agreement in the form provided and filing it with the Treasurer of the Company within the time prescribed by notice. SECTION 2-METHOD OF COMPUTATION OF SHARE ALLOTMENTS Any part or all of the shares provided by the following table may be subscribed for, but no employee shall be subscribing at any one time for more than the maximum number of shares allocated, except as pro- vided in paragraphs (b). (c). and (d) of this Section. (a) All Employees One share for each 860.00 or fraction thereof on the first 81,000 of salary or wages. One share for each 850.00 or fraction thereof on the second 81,000 of salary or wages. One share for each $40.00 or fraction thereof on the third $1,000 of salary or wages. One share for each 830.00 or fraction thereof on the fourth 81,000 of salary or wages. One share for each $20.00 or fraction thereof on the fifth 81,000 of salary or wages. (b) Special Provision for Length of Service The number of shares so computed for each employee may be increased by ten per cent (10%) for each full year of continuous employment with the Company in excess of twelve months, except that in no case may said percentage exceed 100% of the shares allowed under Section 2 (a), at the time of offering of sub- scription. (c) Employees Earning Salary in Excess of $5,000 Per Annum In addition to share allotments as set forth in (a) and (b) above, such shares as may be voted by the Board of Directors. (d) Any Employee Eligible May Subscribe to a Minimum of Twenty (20) Shares When the computation under Section 2 (a) and 8 (b) results in a number of shares not a multiple of ten subscribed to be is multiple of(10). ten may creased (10), the to number the next of higher shares (e) The Definition of "Salary" or "Wages" For the purpose of computing the allotment of shares in accordance with the above table, "salary" and "wages" are to be considered as the regular annual rate of compensation in the last month completed exclusive of any bonus or percentage of profit. Said terms are used herein interchangeably. "Salary" for salesmen is to be considered as the commissions earned during the last completed twelve-month period, ex cept that the "salary" so computed for any sales man shall not be in excess of $5,000 per annum. (f) Additional Subscriptions Additional subscriptions for stock may be made at each six monthly period by employees already subscribing, who, by virtue of an increase in earnings or service, are entitled at that time to a larger allotment than the amount for which they originally subscribed SECTION 3-EMPLOYEES' PAYMENTS (a) The subscription payments for stock shall be made by deduction from the employees' wages or salaries at a rate per share per month prescribed by the Directors at the time of offering new subscriptions at each six months' period, as provided for in Section 1 (a). De ductions shall begin in the second month following that in which subscription was made. For employees paid semi-monthly, half of the monthly rate per share will be deducted semi-monthly; for em- ployees paid weekly, one-fourth of the monthly rate per share will be deducted for each of the first four weekly pay roll periods ending in each calendar month (b) Interest at the rate of 6% per annum will be allowed and credited to the employees' account on all amounts received and credited thereto on the last days of March, June, September and December, that shall have been to the credit of the account continuously for three months prior to said dates. Said amounts credited as interest shall themselves bear interest thereafter, in the same manner as other credits to the account. SECTION 4-COMPANY BONUS PAYMENTS On the first, second and third anniversary of each subscription, the Company will allow as A bonus, fifty cents on each share subscribed for, such fifty cents per share to operate as a reduction in the price of the stock originally subscribed for. A fourth and final bonus of fifty cents (50c) per share will be paid to subscribers by the Company in cash one year from the date of issuance of stock, subscribed to under this Plan. provided he or she is still in the employ of the Company and has maintained ownership of the stock originally EMPLOYEE THRIFT PLANS IN WARTIME subscribed for, evidence of which will be required by the Company. SECTION 5-STOCK ISSUED TO SUBSCRIBER (a) When stock is fully paid by the regular installments provided under the Plan, further deductions from salary or wages will be discontinued and within thirty days thereafter, the Company will issue, or cause to be transferred to the subscriber, certificates therefor. (b) Stock subscribed for under this Plan does not participate in any dividends or rights to subscribe for new stock issued by the Company and offered to shareholders, except for such dividends or rights as are declared or offered after full payment has been made and certificate issued. SECTION 6-SUBSCRIPTION AGREEMENT Nor TRANSFERABLE Until stock is fully paid for, no employee shall pledge or in any manner alienate his rights under any sub- scription agreement under this Plan. A violation of this provision shall constitute a withdrawal by the employee from such subscription agreement and the only right to the employee or his assignee shall be to have the Company pay to the employee, or to the person entitled, the total amount withheld from his wages on account of the purchase price of the stock in question, together with interest thereon at the rate of 6% per annum, as provided in Section S (b). and such payment shall operate as a cancellation and satisfaction of all rights under the subscription agreement involved. SECTION 7-TERMINATION OF SUBSCRIPTION AGREEMENTS AND SUSPENSION OF PAYMENTS (a) Termination of Service by Death In case an employee's service terminates by death before his stock is fully paid for, his estate will be entitled to receive the net amount accumulated on his subscriptions as a result of deductions from wages with interest at the rate of 6% as provided in Section 3 (b). and the Company bonus payments which have been credited up to that time to the employee's purchase account; or alternatively the employee's estate may elect to have issued under the subscription and in settlement thereof, a certificate of stock for such number of full shares as the salary or wage deductions made, to the time of employee's death, plus interest on salary or wage deductions as provided in Section 3 (b). at the rate of 6% per annum, plus the Company bonus payments which have been credited up to that time, will purchase at the rate per share which his subscription agreement provides. The balance of shares under such subscription agreement shall be cancelled. Any difference necessary to bring purchase to one or more whole shares shall be made in cash (b) Termination of Service Otherwise Than by Death In the case of an employee's service terminating any 37 other way whatsoever than by death before his stock is fully paid for, his subscription agreement or agreements will be cancelled and be will be entitled to re- ceive within thirty days the total amount withheld from his wages, with interest thereon at the rate of 6% per annum, as provided in Section 3 (b). (c) Temporary Absence Any employee whose name is taken off the regular payroll by reason of leave of absence, temporary lay- off, or through temporary disability, may, at his option: a. Cancel any or all of his subscription agreements and in respect of any subscription so cancelled re- ceive the amount to which he would be entitled if his services were permanently terminated otherwise than by death, or b. Make the required periodical payments on his subscription or subscriptions directly to the Treasurer of the Company, or c. Suspend payments for the period his name is off the regular payroll, not exceeding a period of three months, the deferred payments to be made up by additional uniform deductions from his wages during the following six months. (d) Right of Employee to Withdraw from Plan Any employee in the Company's service may at any time prior to the final payment and issuance of stock withdraw from any or all of his subscription agree- ments as to any part or all of the shares covered thereby upon filing an application therefor with the Treasurer of the Company. Thirty days after the re- ceipt of such application by the Treasurer, the employee will be entitled to receive the total amount withheld from his wages, as to each share in respect to which such withdrawal is requested, with interest thereon at the rate of 6% per annum as provided in Section S (b), and his subscription agreement or agreements shall be cancelled as to such share or shares. (e) Determination of Questions Arising Under Plan Questions arising under this Plan as to term of employment, rate of pay, allotment of shares, or other questions that may arise shall be determined by the Executive Committee of the Company. SECTION 8-CHANGE IN PLAN The Company reserves the right from time to time to change the terms upon which stock is offered to em- ployees for subscription under this Plan, but such changes shall not affect the rights of employees under subscription agreements theretofore made by them and accepted by the Company. SECTION 9-WITHDRAWAL OF PLAN BY COMPANY The Company reserves the right to withdraw this Plan at any time without notice other than a refusal to accept new subscriptions hereunder. Such withdrawals will not, however, affect subscription agreements already accepted by the Company. CONFERENCE BOARD REPORTS 38 APPENDIX D-2 STOCK-PURCHASE AGREEMENT The undersigned, an employee of this company, does hereby subscribe for shares of the Electric Mfg. Co. and agrees to pay for the same at the rate of Five Dollars (85.00) per share in monthly installments of not less than twelve and one half cents (80.125) per share provided that in case of illness or accident or because of inability of the company to provide employment capital stock of The the monthly payments may be temporarily suspended. Certificates will be issued for ten shares or more when fully paid. Any dividends that may be declared will be figured on each Five Dollars ($5.00) paid and the amount applied to reduce the balance due on the subscription. DATE SIGNED Approved by: Superintendent APPENDIX E SELECTED LIST OF COMPANIES WITH EMPLOYEE THRIFT PLANS, BY TYPE OF SAVINGS PLAN United States Savings Bond Payroll Allotment Plans Allis-Chalmers Manufacturing Company, Milwaukee, Wisconsin American Optical Company, Southbridge, Massachusetts American Telephone and Telegraph Company, New York Bendix Products Division of Bendix Aviation Corporation, South Bend, Indiana Bethlehem Steel Company, Bethlehem, Pennsylvania Botany Worsted Mills, Passaic, New Jersey Bristol-Myers Company, Hillside, New Jersey Chicago Surface Lines, Chicago, Illinois Morse Chain Co., Ithaca, New York New York Life Insurance Company, New York, New York Northrop Aircraft, Inc., Hawthorne, California Nunn-Bush Shoe Co., Milwaukee, Wisconsin Pabst Brewing Company, Chicago, Illinois Phillips Petroleum Company, Bartlesville, Oklahoma Phoenix Mutual Life Insurance Co., Hartford, Connecticut The Prudential Insurance Company of America, Newark New Jersey R. J. Reynolds Tobacco Company, Winston-Salem, North Carolina The Clark Thread Company, Newark, New Jersey The Cleveland Railway Company, Cleveland, Ohio Congoleum-Naim Inc., Kearny, New Jersey A. O. Smith Corporation, Milwaukee, Wisconsin Sonoco Products Co., Hartsville, South Carolina Connecticut General Life Insurance Company, Hartford, Thomasville Chair Co., Thomasville, North Carolina United States Rubber Company, New York, New York Connecticut Eagle-Picher Lead Company. Cincinnati, Ohio General Petroleum Corporation of California, Los Angeles, California General Time Instruments Corporation, New York, New York Georgia Power Company. Atlanta, Georgia The B.F. Goodrich Company. Akron, Ohio Hartford Fire Insurance Company, Hartford, Connecticut Illinois Tool Works, Chicago, Illinois S.C. Johnson & Son, Inc., Racine, Wisconsin Kellogg Switchboard & Supply Company, Chicago, Illinois Kohler Co., Kohler, Wisconsin Lever Brothers Company. Cambridge, Massachusetts Milwaukee Gas Light Company, Milwaukee, Wisconsin Missouri Pacific Lines, St. Louis, Missouri Tide Water Associated Oil Company, New York, New York Wisconsin Public Service Corporation, Green Bay, Wisconsin Wolverine Tube Co., Detroit, Michigan Wright Aeronautical Corporation, Paterson, New Jersey Credit Unions Atlanta Birmingham & Coast Railroad Co., Atlanta, Georgia Bankers Life Company, Des Moines, Iowa Belknap Hardware & Manufacturing Company. Louisville, Kentucky Bird & Son, Inc., East Walpole, Massachusetts Boston and Maine Railroad, Boston, Massachusetts Boston Consolidated Gas Company, Boston, Massachusetts The H. C. Capwell Co., Oakland, California Carthage Mills, Incorporated, Cincinnati, Ohio EMPLOYEE THRIFT PLANS IN WARTIME The Cincinnati Gas & Electric Company, Cincinnati, Ohio Sears, Roebuck and Co., Chicago, Illinois Colorado Fuel & Iron Corporation, Pueblo, Colorado A. E. Staley Manufacturing Company, Decatur, Illinois Dennison Manufacturing Company, Framingham, Massa. The Standard Oil Co. (Ohio), Cleveland, Ohio chusetts Diamond Chain & Manufacturing Co., Indianapolis, Indiana Standard Oil Company, Incorporated in Kentucky, Louisville, Kentucky Drayton Mills, Spartanburg, South Carolina The Tappan Stove Company. Mansfield, Ohio El Paso Electric Company, El Paso, Texas Tennessee Eastman Corporation, Kingsport, Tennessee Wm. Filene's Sons Company, Boston, Massachusetts Thilmany Pulp & Paper Company, Kaukauna, Wisconsin Fitchburg Paper Company, Fitchburg, Massachusetts Tubize Chatillion Corporation, New York, New York Gates Rubber Company, Denver, Colorado The Tuttle Press Company, Appleton, Wisconsin Graton Massachusetts Walworth Company, Greensburg. Pennsylvania Horder's Worden-Allen Company. Milwaukee, Wisconsin Gilbert Wisconsin Holeproof Wisconsin 39 Whitin Machine Works, Whitinsville, Massachusetts Wisconsin Public Service Corporation, Green Bay, Wisconsin Geo. A. Joseph Pennsylvania Hughes Horne & Paper Hormel Tool Incorporated, Knight Hosiery Company, Company, Company, & Company, Co., Co., Chicago, Austin, Milwaukee, Houston, Pittsburgh, Menasha, Worcester, Minnesota Illinois Texas Humble Oil & Refining Company, Houston, Texas Hygrade Sylvania Corporation, Salem, Massachusetts Illinois Central System, Chicago, Illinois Indianapolis Railways, Inc., Indianapolis, Indiana Savings Plans in Cooperation with Banks Wallace Barnes Co., Bristol, Connecticut Bausch & Lomb Optical Co., Rochester, New York Buffalo, Niagara and Eastern Power Corporation, Buffalo, New York The William Carter Co., Needham Heights, Massachusetts The Cleveland Twist Drill Co., Cleveland, Ohio Individual Drinking Cup Co., Inc., Easton, Pennsylvania Interlake Iron Corporation, Chicago, Illinois Cluett, Peabody & Co., Inc., Troy, New York Knapp-Monarch Co., St. Louis, Missouri Defender Photo Supply Company, Inc., Rochester, New Koppers Company, Pittsburgh, Pennsylvania Kraft Cheese Company, Chicago, Illinois Eli Lilly and Company, Indianapolis, Indiana J. B. Lyon Company, Albany, New York Macwhyte Company. Kenosha, Wisconsin Marathon Paper Mills Company, Menasha, Wisconsin Meredith Publishing Company, Des Moines, Iowa Minnesota Implement Mutual Fire Insurance Company, Owatonna, Wisconsin John Morrell & Company, Sioux Falls, South Dakota National Enameling and Stamping Company, Milwaukee, Wisconsin New Bedford Gas and Edison Light Company, New Bedford, Massachusetts Northern Indiana Public Service Company, Hammond, Indiana Norton Company, Worcester, Massachusetts A. Nystrom & Co., Chicago, Illinois The Ohio Fuel Gas Company, Columbus, Ohio Pittsburgh Screw & Bolt Corporation, Pittsburgh, Pennsylvania Plimpton Press, Norwood, Massachusetts Portland General Electric Company, Portland, Oregon Powers Dry Goods Company. Inc., Minneapolis, Minnesota Rhinelander Paper Company, Rhinelander, Wisconsin Richmond, Fredericksburg and Potomac Railroad Company. Richmond, Virginia The Texas Company, New York, New York York Dill Manufacturing Company, Cleveland, Ohio The Duffy Silk Company, Buffalo, New York Dunlop Tire and Rubber Corporation, Buffalo, New York Eastern Corporation, Bangor, Maine First National Bank and Trust Company, Minneapolis, Minnesota Forbes Lithograph Mfg. Co., Boston, Massachusetts The Hartford Electric Light Co., Hartford, Connecticut Hood Rubber Company, Inc., Watertown, Massachusetts Leeds & Northrup Company, Philadelphia, Pennsylvania Monongahela West Penn Public Service Company. Fairmont, West Virginia The Namm Store, Brooklyn, New York New England Confectionery Company. Cambridge, Massachusetts New York Stock Exchange, New York, New York Onondaga Pottery Company, Syracuse, New York Peter Cailler Kohler Swiss Chocolates Co., Inc., Fulton, New York Rockbestos Products Corporation, New Haven, Connecticut Pratt & Lambert, Inc., Buffalo, New York Raybestos Division of Raybeston-Manhattan, Inc., Stratford, Connecticut Rochester Telephone Corporation, Rochester, New York Sayles Finishing Plants, Inc., Saylesville, Rhode Island The Shelby Salesbook Co., Shelby, Ohio Twin City Rapid Transit Co., Minneapolis, Minnesota 40 CONFERENCE BOARD REPORTS The Van Brunt Mfg. Co., Houcon, Wisconsin Willard Storage Battery Co., Cleveland, Ohio Stock-Purchase Plans Pitney-Bowes Postage Meter Co., Stamford, Connecticut The Proctor & Gamble Company, Ivorydale, Ohio Strathmore Paper Co., West Springfield, Massachusetts Stromberg-Carlson Telephone Mfg. Company, Rocheste New York Fuller Brush Company, Hartford, Connecticut Gardner-Denver Company, Quiney, Illinois Life-Savers Corporation, Port Chester, New York Ohio Electric Mfg. Co., Cleveland, Ohio Sunbeam Electric Manufacturing Co., Evansville, Indiana Pilgrim Laundry, Inc., Brooklyn, New York The Williamson Heater Company, Cincinnati, Ohio The S.S. White Dental Manufacturing Company. Philadel phia, Pennsylvania STUDIES IN PERSONNEL POLICY RECENTLY PUBLISHED BY THE CONFERENCE BOARD 247 Park Avenue, New York No. 15-Training Solutions of Company Problems A-Programs Giving Special Attention to Development of Executive and Supervisory Personnel No. 16-Company Pension Plans and the Social Security Act No. 17-Medical and Health Programs in Industry No. 18-Training Solutions of Company Problems B.-Programs Giving Special Attention to Development of the Skill of Non-Supervisory Production Employees No. 19-Some Problems in Wage Incentive Administration No. 20-Personnel Activities in American Business No. 21-Trends in Company Vacation Policy No. 22-Training Solutions of Company Problems C.-Programs Designed for the Development of Sales Personnel No. 23-Personnel Practices in Factory and Office (Revised Edition) No. 24-Employment of Allens and Plant Protection No. 25-Job Evaluation-Formal Plans for Determining Basic Pay Dif. ferentials No. 26-Quick-Training Procedures No. 27-Reducing Fluctuations in Employment-Experience In 31 Industries No. 28-Deferment under the Selective Service Act, with Appendix Covering the National Guard and Reserve Corps No. 29-Recognising Long Service No. 30-Foreman Compensation No. 31-Employee Publications No. 32-Experience with Employment Tests No. 33-Problems in Wage Adjustment No. 34-Vacation Policy and National Defense No. 35-Shift Operation under Defense Conditions No. 36-Training White Collar Employees No. 37-Selecting. Training and Upgrading Supervisors, Instructors, Production Workers No. 38-Employment Procedures and Personnel Records No. 39-Employee Rating No. 40-Shift Practice in War Industry No. 41-Women in Factory Work No. 42-Employee Thrift Plans in Wartime No. 43-Employee Suggestion Systems (In Press) Prepared by THE CONFERENCE BOARD MANAGEMENT RESEARCH DIVISION HAROLD F. BROWNE, Director F. BEATRICE BROWER KING MACRURY DOROTHY G. DONOVAN WM. BARNES O'CONNOR EUGENE S. HORNING S. AVERY RAUBE GENEVA SEYBOLD FOUNDED 1916 Published for the special information of Associates of the NATIONAL INDUSTRIAL CONFERENCE BOARD, INC. 247 Park Avenue, New York City The Research Institution of American Enterprise 266 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE June 22, 1942. TO Secretary Morgenthau FROM George Buffington Grs. I recommend the following for appointment with the Victory Fund Committees in the districts listed below: EFFECTIVE ANNUAL NAME SALARY TITLE Boston John O. Stubbs $7,500 Executive Manager New York Perry Hall Philadelphia Edward C. Bendere Cleveland Hugh D. MacBain Richmond Edward C. Anderson 7,500 Atlanta Julian A. Space 6,000 Chicago Francis Patton 7,500 St. Louis John R. Longmire 7,000 Minneapolis Paul W. Loudon 7,500 Kansas City Sigmund Stern DATE 1 May 27 7,500 May 27 1 June 6 June 8 June 1 June 6 June 1 . Wayne J. Estes 4,800 Judson S. James 5,000 DWB Asst. Executive Manager Executive Manager 7,500 OK. IML . San Francisco Arnold Grunigen, Jr. June 1 1 . Dallas May 27 May 27 . DISTRICT June 12 June 12 May 27 267 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE TO Mrs. Klotz FROM Joseph Gaer June 22, 1942 TOPIC: 4-H Club Release You may wish to glance through this release. I shall let you know the reactions from the field as they are received and tabulated. UNITED STATES DEPARTMENT OF AGRICULTURE DIRECTOR OF EXTENSION WORK 268 WASHINGTON. D. c. June 8, 1942 TO ALL STATE 4-H CLUB LEADERS: 4-H Club leaders have asked the Treasury Department for material explaining the War Savings program. In response to this request the War Savings staff of the Treasury Department has prepared especially for 4-H Clubs a leaflet containing a short talk and supplementary discussion material. Before this leaflet, "How Dimes Can Win the War," is printed for general distribution we should like to have your reactions to it. We are, therefore, sending you a small supply of dupligraphed copies of this leaflet with the request: 1. That you and your associates read it carefully. 2. That you distribute copies to a cross section of your county extension agents. 3. That you arrange for some of your local 4-H Club leaders to try it out at a meeting. Then will you write to us what you think of the material, what more should be included to make it most helpful in the war effort, or whatever criticism and suggestions you may have which will help the War Savings staff to revise it before printing. Will you also ask county extension agents and local club leaders to write us their reactions and suggestions. We shall appreciate your cooperation in the final preparation of this leaflet. If, within the next two weeks, we can hear from you and the others to whom you have sent the tentative draft, it will aid the Treasury in completing its printing plans. Also will you check with your extension director and editor and let us know in your reply how many copies of the revised printed leaflet you will want for distribution in your State and whether the supply should be sent to you or direct to the county offices? Very truly yours, m. h. Wilson M. L. Wilson Director of Extension Work 741-42 269 HOW DIMES CAN WINTHE WAR Material for a Talk by 4-H Club Leaders or Members in their NATIONAL 4-H VICTORY PROGRAM or for use in addressing VARIOUS SERVICE ORGANIZATIONS 270 Note to Speakers: Here is a brief talk on War Savings Stamps and Bonds. It is not a sales talk. It is much more important as material which should help you explain to your membership why and how everybody can and should participate in this part of our war effort. You may also use this material when called upon to address various community Service Organizations on the meaning of the war to us. The War Savings Program is only part, yet a very important part, of our war effort. This is a program in which we can all participate. It is therefore im- portant that every person, whether he buys a ten-cent Savings Stamp or a hundred-dollar Bond, should understand what this means to himself and to the nation, and realize the necessity of buying them. The brief talk given on the following pages is intended for 4-H Club members, but it does not necessarily have to be presented exactly as given here. This talk should be used as an example. After roading it carefully, each speaker should reviso it so as to include the local materials which he may consider necessary to carry across the full import of the arguments. Where this tall: is to be used before an audience of very young boys and girls, the speaker will naturally want to revise it so that they can understand it. There are also differences of interest from region to region and the speaker should change this talk to suit his particular group best. At thu and of this talk will be found three groups of facts which might be used to advantage. At all mootings where this material is used the speaker should make reference to the purchase of stamps and bonds in terms of his own personal purchases or that of his club and then work out the moaning of the amount in money in terms of communition or other war needs, using the facts given at the and of this talk. The questions and answers should be used in the discussion@following the talk. Again, the questions and answers given here are only examples. Anything that might not be clear to the audience should, of course, be taken up in the discussion. -11. "Two Worlds Are in Conflict" On December 10, 1940, Adolph Hitler made a speech. In it he said: "Two worlds are in conflict * * * One of these two worlds must break asunder." Many times, in his speeches and in his writings, Hitler had told us he is a firm believer in the lie. The greater the lie, the better he likes it. But what he said on December 10, 1940, happens to be the truth. Two worlds are in conflict. One world is represented by Hitler-Germany and the other Axis Powers; the other world is represented by the United Nations. The war between these two worlds is now raging on many fronts. There can never be any peace between them until one of them perishes from the earth. We know which of these two worlds will perish, which of these two worlds will go down in defeat, which of these two worlds will "break asunder." We know this because we are certain of the justice of our cause, we are certain of our willingness to fight for that cause, and we are certain of the united strength of our allies. We must not make the mistake of believing that the enemy is muak. The enemy is strong. And it will require great effort on our part to boat him. It will require great effort on the part of every man, woman and child in the United Nations to win this war. In this great war effort we are all called upon to help with every ounce of strength that is in us. In this war effort there are no civilians, there are no exemptions 271 272 -2because of sex, or age, or race. We are all in it, and we all have our part to perform to assure ultimate victory. Men and women, boys and girls, wherever they are throughout the nation, each, each has his or her part to do-his or her contribution to make to the war offort. The National 4-H Victory Program 2. We, here, and all the 4-H Clubs throughout the United States are now engaged in a victory program which is our part in the war effort. Our program consists in collecting paper, rubber and scrap metal; in working harder than ever before on the farm to help in the "food for victory" program; in many cases we who are too young to participate in military service are called upon to take the place of another member of the family who has been drafted or who has gone off to work in a munitions factory; and in addition to that, WO are asked to buy United States War Savings Stamps and War Bonds. Many questions have been asked about these bonds and many more questions ought to be asked and answered so that all of us clearly understand the importance of the War Savings Program. 3. What Our Dimes Can Buy The first question is: "How can a dime help win the war?" And this is the answer: The war we are fighting is the. largest and most expensive war ever fought in human history. Nations spend billions of dollars, hundreds of billions of dollars, for ships, bombers, destroyers, tanks, ammunition, and all the -3other arms needed in modern warfare on sea, on land, and in the air. We have to produce the food, the ammunition, and the other vital products not only for ourselves, but aleo to a great extent for our Allies. By the middle of 1942 the United States alone was spending at a rate of over $125,000,000 a day and that rate was still going up. How insignificant a dime seems by comparison with all those mountains of money spent daily on the war effort! It almost seems like a grain of sand in a sand dune-like a drop of water in the Pacific Ocean. But the fact remains that even the largest sand dune is composed of billions of grains of sand, that the Pacific Ocean is composed of billions of drops of water. Just think of it, we have about a million and a half members in our 4-H Clubs. If each member were to buy a ten-cent Savings Stamp a week we would have $150,000 each week; if we continued to buy stamps until each member had a Savings Bond of the smallest denomination, that is $18.75, our clubs would lend the Government $28,125,000. If each of us in the 4-H Clubs bought an $18.75 bond, Uncle Sam could buy one destroyer, 10 light bomber planos, 100 pursuit planes, 100 medium tanks, 100 anti-aircraft guno, 100 anti-tank guns, and he would have enough left over for more than 40,000 Garand rifles. * * If this material is used before any group other than a 4-H Club the speaker should obtain the approximate size of the membership, figure out what that number would mean in terms of Savings Stamps and $18.75 Bonds and what that amount would buy in airplanes, tanks, etc., using the facts at the end of this talk. 273 270 -4We are only one organization of many contributing to this part of the war efiort. If all the people in the United States, 131,000,000 strong, avoraged a ton-cent stamp per person per week 770 would have $13,100,000 just cut of these dimes every trock. If a war bond were bought for each person in the United States, the people would lend the Government nearly two and one-half billion dollars. People on jobs who are carning more money than they did a few years ago can, of course, buy more than one $13.75 bond for each member of the family. Together TO can long the Government all the money nooded to finance this war. Dimos, as you soc, can be very effective in supplying our son with the arris they nood to win the war. 4. A War Bond-A Share in America Another common question is: "Why should the amount o. Tar Bonds sold to anyone > limited?" The kind of bonds NO are interested in are known as "E Bonds." The Treasury stipulates that no person can buy more than 1,5,000 worth of E Bonds in any one year. There are also restrictions on how much anyone can buy of th: other kinds of your bonds. Now, why did the Treasury make such rulings, when even children are being askod to buy ton-cent stamps? There is a very good reason for this--th best reason in the world-and that is because wo are a democracy. The Secretary of the Treasury, himsolf a farmer, explained this reason in a talk he gave some months aro on what was then - 5-- 275 still called the Defense Savings Program. He said: "The purchase of Defense Savings Bonds and Stamps gives every citizen an opportunity to take part in the National Defense effort. I can think of no other single way in which so many people can become partners of their Government in facing this emergency." That was Secretary Morgenthau's way of saying that he is a firm believer in democracy and that ho wishes to see every American own a share in America. It was his way of saying that he did not wish to see the War Savings Bonds accumulate in just a few hands. There is, however, another and very important reason why people who are not wealthy are urged to buy more and more of Savings Stamps and War Bonds. This other reason is not so easy to explain. 5. A Bond to Win the War-A Bond to Win the Peace We all know that in order to carry on this war WO need iron and steel, rubbor and wool, sugar and paper, and all the different kinds of goods that we normally use for peace-time purposes. Although our nation is rich in natural resources and machines and factories and skills and labor, the war needs are so great that we cannot supply our men with planes, tanks, machine guns, and everything else they need, and at the same time provide us civilians with all the things we always had before the war. We must, therefore, cut down in one way or another the goods and services for civilians. If we invest our money in bonds we do not spend as much on food, clothing, and other things and we allow those goods to be used for the Army and Navy. -- 276 We can limit, and we are now limiting, the goods for civilians by rationing certain articles. We all now have our sugar rationing cards. In some parts of the country there are gasoline rationing cards. If the war lasts considerably longer, we can expect to have many other items rationed. But rationing alone does not accomplish what the Government wishes to accomplish through War Savings Stamps and Bonds. For by this program the Government hopes to win the peace as well as the war. No one knows how long the war will last. But we all know that when it is over we will be faced with a very serious problem. Our problem then will be to make certain that there will be no great depressions and that the people will not suffer from want. That is what is meant by-winning the peace. 6. After the War-- When the war is over we will all want Prosperity many things that we are unable to get now. There will be a great demand for automobiles and tires, bicycles and radios, and various other things that now have to make way for war needs. If we save as much as possible now we will be able to spend that much more on the things we will want after the war. People will buy more food and the farmer will prosper. People will buy more washing machines, radios and any- thing else they may want. and industry will prosper. Men released from war work or from the Army will find jobs waiting for them in stores and factories because these will be busy supplying the people with the things they went without during the war, and which they will be able to buy with the money they save now. -7In that way our savings in War Bonds and Saving Stamps now will not only help the Government carry on its war effort, but it will also help all of us to assure prosperity when the war is over. We have raised the question whother dimos can win the war. The answer is: Dimes can win the war. The dines and the spirit behind then--the spirit of secrifice, the spirit of determination, the spirit of unity--the spirit behind your dimos and mino will fight for us and in time will win the war for us. And what is more, when the war is over and we begin to spend these saved up dimes, they vill also help to win the peace for us. 277 -- 278 THREE GROUPS OF FACTS A. The Cost of This War This war will be costly--costlicr than any we have ever been engaged in. Compared with other wars in our history: 1. The Mar of the Revolution--cost $150 million (approximately) 2. The Ver of 1812-3134 million 3. The l'exican War-- 32 billion 345 billion " 11 If " 6. World War I-7. World Far II--noarly $15 billion " 5. The Spanish-imerican War-- " 4. The Civil Tar--North only) $166 million 3180 billion allocated (as of May, 1942) The amount allocated for this war by the United States alone up to May 15, 1942, is greater then all the costs of all the wars in our history, plus all other expenditures made by our Governnont from the day George Washington become President to December 7, 1941-remembered as "Poarl Harbor". it the beginning of this year President Roosevalt called for: 60,000 planes in 1942; 125,000 in 1943 45,000 tanks in 1942; 75,000 in 1943 20,000 anti-aircraft guns in 1942; 35,000 in 1943 8,000,000 tons of merchant ships in 1942; 10,000,000 in 1943. Mony of these goals have since been boosted upward. 3. What Stamps and Bonds Will Buy-for Victory 279 -9 One 10-cont stemp will buy: 5 cartridges; or 1 sot of Army insignia 25-cent 1 dozen bandages; or 6 yards of barbed " wire $1.00 1 trench shovel; or enough oil to run a destroyer 2 milos $18.75 bond 1 field telephone; or 1 pilot's winter jacket " $75.00 u : " $500.00 " 1 complete field range; or 3 dozen Army blonkets 6 garand riflos; or 3 parachutes " : When, together, WC lend the Government larger sums it can buy larger items, such as: 8 1,000 6,500 20,000 50,000 75,000 150,000 250,000 -- 6,000,000 8,000,000 one reconnaissance car 37 mm. anti-trink gun " 37 mm. anti-circraft gun pursuit plane medium tank two-engino bomber four-engine bomber submarine destroyer Those, and thousands of other items, ranging from First Aid pouches that cost less than two 10-cent Savings Stamps or 45-calibor cartridges at 2d apiece, to a battleship which will take 2 million $100 bonds--these your Stamps and Bonds will buy to win the war. 280 - 10 C. What Stamps and Bonds Will Buy--for Prosperity When the war is over, you will S till have your stamps and bonds to spend. If you keep your bonds for 10 years, every $3 invested will give birth to a fourth. You will then have $4 to spend for every 33 you now save. Instead of our giving you a list of all the things you will be able to buy with your savings, you ask your audience to make a list of all the things they would like to have when the war is over, and figure out how many of then they will be able to got with their savings in War Bonds. War Savings Stamps and Bonds can be spelled (and spent) in two ways. Both are right. The first way is: V-I-C-T-0-R-Y - - And the second way is: P-R-0-S-P-E-R-I-T-Y 281 - 11 QUESTIONS AND ANSWERS (Noto: Each talk on the War Savings Bond Program should bo followed by a question period. The audience should be encouraged to ask as many questions AS possible. If certain crucial questions, like those given below, do not arise from the floor, the chairman should propose thom to the audience. In that wey many misconceptions will be cleared away. If any questions are askod which the speaker or the chairman cannot answer, write those questions down and address thom to: Mr. Orville S. Poland, War Savings Staff, U. S. Treasury, Room 401, Do Moll Building, Washington, D. C. The answors will be sont back in time to discuss them at your noxt scheduled mooting.) Quostions about Stamps 1. Q. In what way do the stamps differ from the bonds? A. Stamps are very much like postage stamps. They are a variety of cash and do not boar any interest. They come in fivo denominations - 10#, 25$ 50d: $1.00 and $5.00. 2. Q. Why does the Government issue stamps? A. Becauso some people, particularly young people, cannot afford to buy an $18.75 bond at once, but can save up from their income slowly for such a bond. At the armo time their money is used to help pay for the war. 3. Q. How should one keep stamps? A. They should be pested in a book which is given you for that purpose whon you buy your first stamp. Thoy should not bo carriod around loose. 4. Q. What happens if stamps are lost? A. The same thing that happens when you lose monoy. Stamps are cash. - 12 5. Q. Do stamps in any amount bear interest? A. No, even if you should have a thousand dollars worth in stamps you would not get any interest. They must first be converted into bonds before they can earn any interest. 6. Q. When the book is filled with stamps, does that automatically become a bond? A. No, when your book is filled with stamps you have to turn it in and convert it into a bond. It is not a bond and does not bear interest until it is turned in. 7. Q. What is B stamp bank? A. When any individual or any organization buys stamps not to keep but to resell to others, those stamps constitute C Stamp Bank. 8. Q. How long will stemps and bonds bc on salo? A. Indefinitely. Secretary Morgenthau has emphasized that the program is to be a continuing effort. Its success will be monsured by the number of persons taking part, and the regularity with which they invest, as well as by the amount of money raised. Cuestions about Bonds 1. Q. What is the maturity value of bonds in Series E? A. The maturity value is as four to three; that is, for every $3.00 you pay now you will gut back $4.00 ten years from now. The bonds COLOG in $25.00, $50.00, $100.00, $500.00 and $1000 donominations, for which you pay respectively $18.75, $37.50, $75.00, $375.00 and $750.00. 2. Q. If a bond holder needs the money before the ten years are up, can he get his money? 282 - 13 - A. Yes, any time after sixty days from the first of the month in which the bond is bought he can get his money and the bond increases in value every year he keeps it. Assuming you buy a $100 bond for $75.00 - the first year you get no interest; the second year you can cash it for $76; the third year for $77; the fourth year for $79; the fifth year for $81; the sixth year for $83; the seventh year for $86; the eighth year for $90; the ninth year for $94; and at the and of ten years you get $100. 3. Q. Can a bond be sold? A. No, the only way you get the money for your bond is to turn it in to the Government. 4. Q. Are bonds transferable? A. No, bonds are not transferable and cannot, therefore, be used in any pledge or in any transaction the way people used Liberty Bonds in the last war. 5. Q. Can people speculate in bonds? A. No, because they are not transferable. During the last war Liberty Bonds, which woro transferable, were sold in the open market and when the demand for them was low prices went down and people sold their bonds for ninety, and even eighty, per cent of their value. That cannot happen now. The War Savings Bonds you buy now will be worth the exact amount you pay for them plus the interest for as long as you keep them. 6. Q. What happens if a bond is lost or destroyed by fire? A. You can ask the Treasury to issue a now bond upon proving that your bond was lost or destroyed. Every bond is registered at the Treasury Department, Washington, D. C. 7. Q. Is it necessary to notify the Treasury of a change of address? A. No, when the bond is turned in the bond holder should give his current address. 283 284 - 14 0. Q. Car: these bonds be used to provide a monthly income? A. Yes, if you buy a bond now every month for $37.50, ten years from now you will receive every month $50.00 which you may use for your education, to buy a farm, or for any other undertaking which requires regular monthly payments. Q. Is there a fixed minumum as to how much each person should 9. buy or pledge in bonds? A. No, there is no fixed table as to how much each person is expected to buy in proportion to his income, but the Treasury urges everyone to spend at least 10% of his current income on bonds and sim a pledge to continue to buy these bonds regularly. 10. Q. Why does the Treasury urge that these bonds should be bought out of current income rather than out of past savings? A. Because it is current income that you spend for various goods. Since the war created a scarcity of goods, invest- ment in bonds will keep the demand for goods down and in that way you would help yourself in greater savings, as well as help the nation in lowering the demand for consumer goods. General Discussion Questions If your family had to live on 10% less - because of a 10% price rise, or because of a cut in your income, or because you voluntarily decided to make this contribution to the war effort -- what things for which you and your family 1. ordinarily spend money would you cut down on? 2. Make a list of the things you and your family will want to buy after the war -- things you're now doing without, repairs, etc. How much will you have to save now in order to have money for these things then? 3. What things have you bought in the past few months which you now realise you might have gotten along without? 285 - 15 - 4. Should one stock up by purchasing canned goods, clothing, 5. When commodities are rationed, does it necessarily mean a etc., in excess of current needs? shortage? 6. Will it help in the fight against inflation (a) if people buy War Bonds with money taken out of their regular savings accounts? Or (b) if they stop saving money in the regular way so as to be able to sim un for more War Bonds? 286 JUN 22 1942 Honorable Frank Knox, Secretary of the Navy, Washington, D. C. My dear Mr. Secretary: I have watched with great interest the splendid progress that the Navy Department has been making in its Pay-roll Savings Plan throughout the naval shore establishment. The fact that the Navy was the first department in the Government to make available such a plan to its civilian employees entitles your department to considerable credit. Your efforts have been most helpful to the Treasury in its program for the sale of these bonds and your methods have served as a guide for the uniform plan recently adopted by the Interdepartmental Committee established by Executive Order No. 9135. In accordance with this uniform plan, I designated a committee composed of representatives of all bureaus and offices of the Treasury Department to develop an organisation and a plan of campaign running from June 1 to June 15 with a view to enrolling in the Voluntary Pay-roll Savings Plan the employees of the Treasury Department. You will be interested to know that our drive was eminently successful as we reached our objective before the closing date of the campaign. I understand that a similar campaign will be launched shortly to enroll the civilian employees of the Navy Depart- ment in the District of Columbia in the Pay-roll Savings Plan avail- able to them. As you know, the Government is now spending about 4 billions of dollars a month for the prosecution of the war. In the fiscal year beginning July 1, next, based upon the latest available estimates, the war expenditures will increase to about 50 billions of dollars a month. This is approximately 67 billion dollars a year. In addition, governmental corporations are estimated to spend about 3 billion dollars next year. It will be necessary to borrow next year in the neighborhood of 50 billions of dollars. This is at the average rate of over 4 bil- lions a month. As a part of this vast sun, it is my hope and expectstion to raise a minimum of a billion dollars a month through the sale of liar Savings Bonds to wage earners and salaried employees. I feel 287 -that it is vital to the war effort and to the economic welfare of the country that as much as possible of the current income of individuals be invested in Government securities. This has two advantages, first, it supplies funds needed to finance our war activities; and second, it reduces the inflationary pressure exerted by the increase in our national income. In order to accomplish this objective, I am urging the country to set aside every pay day at least 10% of every pay roll. Over 50,000 industrial concerns are now cooperating with the Treasury Department through the installation and maintenance of Pay-roll Savings Plans. Many have reached from 90% to 100% participation, and an increasing number are allotting over 10% of their gross pay rolls regularly to the purchase of far Savings Bonds. Wishing you every success in your campaign, I am Very sincerely yours, (Signed) E. Morganthau. Jr. Secretary of the Treasury. n.m.c. By Messenger Brown 9:10 6/23/42 EFB,1sc 6/18/42 CONFIDENTIAL 288 UNITED STATES SAVINGS BONDS - SERIES E Comparison of June sales to date with sales during the same number of business days in April and May 1942 (At issue price in thousands of dollars) : : : June : : : sales : daily Cumulative sales by business days June as April May :percent of May : : : Date June : June 1942 $ 19,834 $ 19,834 $ 12,679 $ 12,993 156.4% 8,008 12,970 17,388 24,789 15,209 27,841 40,811 58,199 82,988 98,197 24,263 46,532 55,460 73,824 97,049 24,256 35,050 47,119 65,115 73,795 114.7 87.7 104.9 112.4 101,2 125,245 134,157 154,242 169,920 186,470 201,700 114,218 128,670 151,956 161,346 177,133 194,047 85,714 97,925 108,707 116,081 138,272 146,937 109.7 104.3 101.5 105.3 105.3 103.9 13 27,048 8,912 20,085 15,678 16,550 15,230 15 23,984 225,684 233,218 249,033 261,321 280,742 291,729 208,939 223,242 247,532 257,374 271,079 290,485 154,623 168,103 178,870 189,156 207,742 217,104 108.0 104.5 100.6 101.5 103.6 1 2 3 4 5 6 8 9 10 11 12 16 17 18 19 20 7,535 15,815 12,288 19,421 10,987 100.4 June 22, 1942. Office of the Secretary of the Treasury, Division of Research and Statistics. Source: All figures are deposits with the Treasurer of the United States on Note: account of proceeds of sales of United States savings bonds. Figures have been rounded to nearest thousand and will not necessarily add to totals, CONFIDENTIAL 289 UNITED STATES SAVINGS BONDS - SERIES F AND G COMBINED Comparison of June sales to date with sales during the same number of business days in April and May 1942 (At issue price in thousands of dollars) June : : : : : sales : : daily Cumulative sales by business days June as April May :percent of May : : Date June : : June 1942 1 2 3 4 5 6 8 9 10 11 12 13 15 16 17 18 19 20 $ 7,302 $ 11,987 17,601 26,235 40,009 49,353 55,888 15,168 25,516 33,145 48,751 60,817 21,677 29,097 35,818 46,174 55.991 116.0 102.8 120.7 101.2 11,526 4,952 9,945 7,542 5,402 6,210 67,414 72,366 82,310 89,852 95,254 101,464 67,213 72,794 80,845 85,410 94,391 102,106 63,695 70,364 77,197 80,586 91,623 96,031 100.3 99.4 101.8 105.2 100.9 99.4 7,251 3,564 7,470 6,299 8,014 3,367 108,715 112,279 119.749 126,048 134,062 137,429 108,923 114,129 123,534 127,724 138,908 149,502 102,657 111,829 116,374 120,625 131,852 136,532 99.8 98.4 $ 9.705 $ 9,705 7,895 8,634 13.774 9,344 6,535 132.9% 91.9 96.9 98.7 96.5 91.9 June 22, 1942. Office of the Secretary of the Treasury, Division of Research and Statistics. Source: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of United States savings bonds. Note: Figures have been rounded to nearest thousand and will not necessarily add to totals. CONFIDENTIAL 290 UNITED STATES SAVINGS BONDS - TOTAL Comparison of June sales to date with sales during the same number of business days in April and May 1942 (At issue price in thousands of dollars) : : : June : : : sales Cumulative sales by business days June as May April :percent of May : daily : : : : Date June June 1942 1 2 3 4 5 6 8 9 10 11 12 13 15 16 17 18 19 20 $ 29,539 $ 29,539 $ 19,981 $ 24,980 15,903 21,604 31,162 34,132 21,744 45,442 67,046 98,208 132,341 154,085 39,430 72,048 88,605 122,575 157,866 45,933 64,147 82,937 111,289 129,786 38,574 13,863 30,029 23,220 21,952 21,439 192,659 206,523 236,552 259.772 281,724 303,163 181,431 201,464 232,801 246,756 271,525 296,152 149,409 168,289 185,904 196,667 229,895 242,969 31,235 11,099 23,285 18,587 27,435 14,354 334,398 345,497 368,782 387,369 414,804 429,158 317,861 337,371 371,066 385,098 409,987 439,987 257,280 279,933 295,244 309,780 339,594 353,636 Office of the Secretary of the Treasury, Division of Research and Statistics. 147.8% 115.2 93.1 110.8 108.0 97.6 106.2 102.5 101.6 105.3 103.8 102.4 105.2 102.4 99.4 100.6 101.2 97.5 June 22, 1942. Source: All figures are deposits with the Treasurer of the United States on account of proceeds of sales of United States savings bonds. Note: Figures have been rounded to nearest thousand and will not necessarily add to totals. 291 CONFIDENTIAL Sales of United States Savings Bonds From June 1 through June 20, 1942 Compared with Sales Quota for Same Period (At issue price in millions of dollars) : : : : : : : : : : 95.4 92.9 91.8 88.5 88.4 86.6 7.3 3.6 7.5 108.7 112.3 119.7 126.0 134.1 137.4 130.9 137.3 147.8 157.0 164.6 170.6 83.0 81.8 81.0 80.3 81.5 80.5 31.2 11.1 23.3 18.6 373.0 390.0 413.5 441.1 466.8 489.2 530.6 550.0 8.0 3.4 : : 21.4 6.3 : : 84.0 69.1 78.4 80.1 80.5 27.4 14.4 Sales to Date : as s of : : 125.2 134.2 154.2 169.9 186.5 201.7 82.0 81.2 82.6 15.8 12.3 19.4 11.0 : : : 30 : 29 : 27 192.7 82.9 82.6 38.6 13.9 30.0 23.2 22.0 82.2 89.2 99.6 108.4 115.4 120.8 236.5 251.1 271.3 295.2 317.4 336.9 : 26 55.0 76.5 : 25 : 24 : 23 : 22 45.4 67.0 98.2 132.3 154.1 67.4 72.4 82.3 89.9 95.3 101.5 225.7 233.2 249.0 261.3 280.7 291.7 Date $ 35.7 11.5 5.0 9.9 7.5 5.4 6.2 20.1 15.7 16.5 15.2 to $ 29.5 104.3 101.4 103.1 99.9 98.7 98.1 7.5 20 23.0 37.9 51.0 61.7 69.4 to Quota, June 1 29.5 15.9 21.6 31.2 34.1 21.7 69.3% 120.0 132.4 149.6 170.0 189.0 205.6 16 19 7.9 8.6 $ 14.0 13.8 9.3 6.5 24.0 18 $ 9.7 June 1 Date 17.6 26.2 40.0 49.4 55.9 15 17 : 13 : 12 $ 9.7 Quota Daily 86.9 87.9 91.5 104.3 104.8 8.9 11 Date* as % of 32.0 46.4 63.6 79.6 93.7 9 10 91.2% Date to 27.8 -40.8 58.2 83.0 98.2 27.0 8 $ 21.7 : Quota to $ 19.8 17.4 24.8 15.2 6 Date Daily 8.0 3 5 Date to June 1 : June 1 : to Date Actual Sales 19.8 13.0 4 to Sales : Daily 2 as % of : June 1 : June 1 : to Date Date 1 Sales Total : Actual Sales Quota, Series F and G Quota, Actual Sales : Series E Quota 82.6% 82.5 79.5 84.3 114.6 141.3 163.1 85.7 93.6 94.5 202.2 221.6 249.2 278.4 304.4 326.4 95.3 206.5 236.6 259.8 281.7 303.2 334.4 345.5 368.8 387.4 414.8 429.2 367.4 388.4 419.1 452.2 482.0 507.5 91.0 89.0 88.0 181.9 189.2 201.3 212.0 221.0 228.0 241.4 250.0 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. Takes into account both the daily trend during the week and the monthly trend during the month. 93.8 94.9 93.3 9289 92.9 85.7 86.1 84.6 554.9 579.2 614.8 653.1 687.8 717.2 772.0 800.0 June 22, 1942, 292 v JUN 22 1942 Mr. A. 3. Whitney. President, Brotherhood of Railroad Trainson, Gleveland, Ohio. Dear Mr. Whitneys This will acknowledge receipt of your letter of June 17. 1942. signed also on behalf of Ledge 779. B.R.T., Indianapolis, Indiana, Ledge 564, B.R.F., Heisington, Kansas, and Ledge 936, B.R.T., Bismarak, North Dakota, which you delivered to no on June 17th with check payable to the order of the Treasurer of the United States in the amount of $71,862.25. drawn on the National City Bank of Cleveland, representing voluntary contributions of the members of your Brotherhood, its Indies Augiliary, and friends of both organizations, for the purchase of a war plane for our Government to be called *The Iron Engle". Under the Second War Powers Act, 1942. approved March 27. 1942, the Secretary of the Treasury is authorised to accept donations of this chamator and to deposit such amounts to such various appre- printions available for the purchase of war material and the furtherance of the war program of the United States as in his judgment will best effectuate the intent of the donors. Accordingly, the proceeds of your check will be deposited to the appropriation from which fighting planes for the Army are purchased. The Treasury cannot undertake to designate any specific war plane as "The Iron Magie" in recognition of this contribution. Mr. As F. Whitner -2 293 However, I as forwarding a copy of your letter to Henorable Rebert A. Lovest, Assistant Secretary of Mar for MS, in the event 18 my be possible for the Mar Department to make arrangements for the designation of a was plane to bear an inscription that 18 has been given by the Brotherhood of Bailroad Training There is enclosed a copy of my letter of this date to Mr. Lovest. I degire to take this opportunity to express the appreciation of the Treasury to you, your associates, the members of your constituent organizations, and others who have participated in this patriotic undertaking for this substantial contribution for was purposes. Very truly yours, (Signed) H. MOROENTHAU, JR. Secretary of the Treasury. Enclosure. n.m.c. WTHsmlb 6-18-42 294 June 22, 1942. Dear Mr. Lovetts There are enclosed for your information a copy of a letter dated June 17. 1942. from Mr. A. F. Whitney, President, Brotherhood of Bailroad Trains transmitting a check in the amount of $71,862.25. representing a voluntary contribution to the Government for the purchase of a war plane, and a copy of my letter of this date to Mr. Whitney. will you be good enough to advise Mr. Whitney whether it will be possible for the Mar Department to arrange for the inscription of a war plane in the manner he suggests. Very truly yours, (Signed) H. MORGENTHAU, JR. Secretary of the Treasury. Honorable Rebert A. Levelt, Assistant Secretary of War for Air, War Department, Washington, a. a. Enclosures. WTHsmilb 6-18-42 295 Whitney President G.W.Anderson Grand Lodge Brotherhood Railwoad Trainmen General reply refer to No Cleveland,Chie: Washington, D. C. June 17, 1942 The Honorable Henry Morgenthau, Jr. Secretary of the Treasury Washington, D.C. Greetings: It is our privilege as members of the Protherhood of Railroad Trainmen to present to the United States government our check in the amount of $71,862.25. This sum of money represents the voluntary contributions of the members of our Brotherhood, its Ladies Auxiliary, and friends of both organizations, a list of whom is next attached. The offering was raised as a result of our campaign initiated in January, 1942, by which we called for contributions for the purchase of a warplane for our government, to be called the "Iron Eagle". If consistent with government policy and the successful conduct of the war, we would appreciate the designation of a specific warplane to be called the "Iron Eagle", to be piloted by & member of the Brotherhood of Railroad Trainmen, or a son of such member, who may be in the United States air service. We would suggest that this airplane bear the following inscription: THE IRON EAGLE Given to our beloved country, the United States of America, by the Brotherhood of Railroad Trainmen. On behalf of all who contributed, we hereby unconditionally present to the Government of the United States the sum of money specified in the accompanying check. This contribution is 298 -2voluntarily and enthusiastically given to our country as a taken of our deep feelings of loyalty to the cause for which the United Nations are now at war. Sincerely, BM Eidson B. H. EIDSON Member, Lodge 779, B.R.T. Indianapolis, Indiana Frank Wimp FRANK WIMP Member, Lodge 564, B.R.T. Hoisington, Kansas W. P. BERTELSEN Member, Lodge 936, B.R.T. Bismarck, North Dakota IRON EAGLE COMMITTEE A. F. WHITNEY, President. Brotherhood of Railroad Trainmen 297 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION CONFIDENTIAL DATE June 22, 1942 TO FROM Secretary Morgenthau Mr. Haas Subject: The Business Situation, Week ending June 20, 1942. Summary (1) Industrial activity continued to rise in May, paced by a further expansion in the output of war materials. The FRB index of industrial production rose to 176 in May from 173 in the previous month. Last November just before our entry into the war, the index stood at 166. (2) Due to a decline in prices of farm products, the general price level in the week ended June 13 sagged back to mid-April levels. In the week mentioned, the BLS all-commodity price index stood at 98.4, down 0.3 point from the previous week. On the other hand, the BLS index of basic commodity prices has shown a slight rise recently. (3) Inventories of department stores in New York City and Brooklyn continued to climb in May, and at the end of the month were 86 percent above year-earlier levels, as compared with a corresponding gain of 77 percent at the end of April. Inventories of department stores throughout the Second Federal Reserve District at the end of May were 79 percent above the corresponding date in 1941. (4) Retail prices of typical department store items, as measured by the Fairchild index, on June 1 dropped below month- earlier levels for the first time since July 1, 1938. How- ever, the decline was only 0.2 percent, and the index was still 17.5 percent above year-earlier levels. (5) Despite restrictions on non-essential building, construction contracts continue to be awarded in heavy volume. Thus contracts awarded in May, as reported by the F. W. Dodge Corporation, reached the second highest level on record, while heavy engineering construction awards reached unusually high levels in the early part of June. 298 -2Industrial production at new high Industrial activity continued to expand in May, and as a result the FRB index of industrial production rose to a new peak at 176. This compares with 173 in the previous month and with 166 last November just before our entry into the war. Increased production of war materials and a seasonal rise in mineral production were the dominant factors during May. Rise in stock prices halted by war news After reaching a new high at mid-week, industrial stock prices at New York subsequently turned downward under the impact of adverse war developments, particularly the British reverses in Libya. At the week's high on Wednesday the Dow-Jones average of industrial stock prices stood 14 percent above the 1942 low reached near the end of April. Moreover, despite the reaction near the end of the week, average prices for the period were still slightly above week-earlier levels. However, a sharper reaction in industrial stock prices has occurred in London (see Chart 1), where a decline has been in progress for over a week, reportedly due to the deterioration of the British military position in North Africa. Recent Allied reverses in Libya and China, together with uncertainty over the German drive in Russia, may temper somewhat the recent tendency to favor purchases of "peace" stocks over "war" stocks on the theory that the war may be over sooner than had earlier been expected. During the past week, according to our computed indexes, "war" stocks bettered their position relative to "peace" stocks for the first time since last March. (See Chart 2.) This may indicate that expectations of a relatively early end of the war may be undergoing revision. Wholesale prices continue narrow movement Wholesale prices of commodities in the past two weeks have continued to move within their range of recent months. In the week ended June 13, the BLS all-commodity index reflected recent weakness in farm products and declined 0.3 percent to 98.4, the lowest level since mid-April. (See Chart 3.) Last week, the BLS index for 28 basic commodities continued its slight rise of the week before, but kept within the limits of its fluctuations since early March. -3299 The rise in the index of prices of 28 basic commodities was due to small increases for nine products. Prices of only two commodities declined, and the others remained unchanged. (See Chart 4.) The index of 20 controlled commodities rose moderately, reflecting strength in lard prices on the basis of heavy Government purchases, and in cottonseed oil. Lard reached a new high since at least August 1939, permitted by a revision of the ceiling early in June at the wholesale level, but not at retail. Despite weak demand for rosin, the price advanced 4.3 percent, probably as a result of an OPA announcement exempting gum naval stores "as agricultural commodities* from application of the general maximum price regulation. Wood naval stores remain under the regulation. of the 20 commodities, only wool declined. Trade reports ascribe the weakness, which has been evident since mid-May, to fears that the OPA price formulae effective July 1 may in effect constitute a repudiation of Government wool-fabric contracts. A memorandum sent to Congress on June 18 by the National Association of Wool Manufacturers stated that the OPA regulations, unless modified, will necessitate reductions in prices in 90 percent of the contracts. Uncontrolled prices decline further The index of 8 uncontrolled commodities last week continued the decline that has been under way since the general price ceiling order was applied in mid-May. Last week's decline, however, was due solely to a sharp drop of 7.6 percent in the price of barley. This decrease was not unexpected by the Department of Agriculture, since a bumper crop is anticipated. A rising tendency in prices of other basic farm products occurred despite opposition expressed by Secretary Wickard to the Bankhead bill (which calls for loans at 100 percent of parity on basic farm products) unless the measure would provide for disposition of excess supplies. At the same time the Secretary indicated that the Department of Agriculture was ready to encourage further production of certain surplus farm commodities, particularly evaporated milk and cheese, which have been accumulating beyond present shipping facilities. The Secretary indicated that the oversupply was only temporary, and stated that larger production of skimmed milk 18 urgent at the present time. This statement was borne out by the May report of purchases by the Department of Agriculture for lend-lease and other needs, which included heavy purchases of dairy products. 300 -4Beet sugar price cut in East In an effort to provide warehouse space for beet sugar from the new California crop, leading processors of beet sugar have reduced their prices for refined sugar in eastern territory 10 points to 5.40 cents a pound in 10 States, and to 5.25 cents in three others and the District of Columbia. Although the East is considered a deficit area, a decrease in demand under rationing has necessitated some inducement to buyers to move sugar into this area from the West. There is indication in the press that this may be the opening move by domestic sugar refiners and producers to induce the Government to increase sugar rations. Arguments which may be used include the following: (1) The allocation of Cuban sugar for conversion into alcohol for explosives has been reduced to 400,000 tons from 1,300,000 tons. (2) A substantial increase in the domestic beet-sugar crop is in prospect, with warehouses already filled from previous crops. (3) The present difficulty of getting sufficient sugar for home canning is causing fruit and berry crops to remain unpicked. (4) The United States may find it necessary to take more of the Cuban and Puerto Rican sugar crops to avoid unfavorable economic repercussions in those countries. New York department store inventories at new high Although sales of New York City and Brooklyn department stores in May fell 4 percent below year-earlier levels, inventories continued to climb, and at the end of the month stood 86 percent above the corresponding date in 1941, according to the Federal Reserve Bank of New York. The pro- gressive gain over year-earlier levels in inventories of the stores mentioned has been as follows: January February March April May 33 percent 49 percent 61 percent 77 percent 86 percent - 5.- Inventories of department stores in the entire second Federal Reserve District at the end of May averaged 79 percent above the corresponding date in 1941, thus showing a moderately smaller rise than the stores in the New York City - Brooklyn area. Last week, at the annual meeting of the National Dry Goods Association, the deputy director of the WPB Division of Civilian Supply warned retailers that, unless they acted to equalize inventories between large and small stores, the Government might be forced to step in and impose inventory control. Subsequently it was reported that the Division of Civilian Supply of the WPB was undertaking a survey of the entire retail inventory problem. According to confidential data of the Federal Reserve Board, the widest gain in department store inventories over year-earlier levels at the end of April occurred in the New York district, where the increase was 70 percent. The smallest gain was in the Minneapolis district, where the increase was 36 percent. It was also revealed that the largest relative increases in inventories occurred generally in the larger stores. Thus inventory gains of over 40 percent were shown by 80 percent of the stores with annual sales of $5,000,000 or more, but by only 30 percent of the stores with annual sales of less than $1,000,000. May sales of independent retailers below May 1941 Sales by independent retailers (which exclude chain stores and mail order houses) in May fell below the corresponding month of the previous year for the first time in 42 months, according to the Census Bureau. The 4 percent decline in sales (in dollar totals) was chiefly due to a 78 percent drop in motor vehicle dealer's sales, although furniture stores and filling stations also showed declines of 14 percent and 9 percent respectively. The widest gains in sales were shown by dry goods and general merchandise stores, with a 19 percent increase, and drug stores and eating and drinking places, with an increase of 17 percent. (See Chart 5, left section.) Sales declined 2 percent from April to May. In addition to department and apparel stores, those selling hardware, furniture and motor vehicles showed declines, while all others scored gains. (Refer to Chart 5, right section.) 301 6- 302 Department store sales again fall below year-earlier levels After rising 7 percent above 1941 levels in the first week in June, department store sales in the week ended June 13 dipped 3 percent under the corresponding period a year ago. Moreover, Dun and Bradstreet reports that the slump continued last week, with retail trade for the country as a whole running from 5 to 10 percent under year-earlier levels. It was stated that cash sales made a relatively good showing, but a sharp decline was reported in applications for new charge accounts, as well as in sales for existing charge accounts. However, preliminary reports from the New York area indicate that re- tail trade in that area steadied last week after slumping in the previous week. Retail price index declines The Fairchild retail price index of typical department the first time since July 1, 1938. Although the decline store items on June 1 dropped below month-earlier levels for amounted to only 0.2 percent, each of the major groups comprising the index showed declines, with the largest decreases in piece goods and men's apparel. Despite the slight recession, the index on June 1 was still 17.5 percent above that of the corresponding date in 1941 and 27.3 percent above the low point just before the outbreak of war in 1939. Construction awards continue at very high levels In spite of the various restrictions which have been imposed on non-essential building activity, construction contract awards continue to reach unusually high levels. Thus contracts awarded in May, as reported by the F. W. Dodge Corporation, rose to nearly $674 millions. This is 23 percent above the May 1941 total, and is the second highest monthly figure on record. The extent to which the war program 18 dominating construction activity is evidenced by the fact that 84 percent of the May contract awards were for publicly-owned construction, as compared with 49 percent in May 1941. Heavy construction contracts were awarded in large volume in the early part of June, the total of $379 millions for the week ended June 11 being the second highest on record. As a result, our four-week moving average of contract awards, as reported by the Engineering News Record, reached a new high during the period. (See Chart 6.) While the recent decision to curtail new war plant construction, and other restrictive factors, should cause a slowing up in construction awards -7- 303 later in the year, the total for 1942 is still expected to run above that of 1941. In the meantime, reports of serious shortages in building materials continue to be heard. Large war housing projects in the Norfolk area are said to be running into difficulties due to materials shortages, while private contractors in the Detroit area recently failed to bid on a large war housing project for fear of not being able to get materials to complete the work. In addition to shortages in a wide range of metal products fabricated from copper, steel, etc., lumber has become hard to get. In recognition of the seriousness of the lumber shortage, the WPB has been trying to expand production, and is said to be working on a plan to speed equipment and spare parts to the lumber mills. Chart 1 304 INDUSTRIAL STOCK PRICES IN U.S. AND U.K. AUGUST 1936 - 100 Weekly (AVERAGE OF DAILY) 1 94 JAN. FEB. MAR. APR. MAY JUNE JULY AUG. THE PER SEPT. OCT. NOV. DEC. 1942 JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. PER CENT CENT 100 100 95 95 90 90 85 85 U.S. 30 INDUSTRIAL STOCKS (DOW-JONES) 80 80 75 75 70 70 65 65 60 60 U.K. 56 INDUSTRIAL STOCKS 55 55 50 50 45 45 I 1. JAN. N FEB. LI 1 IL MAR. APR. MAY JUNE JULY 1941 AUG. SEPT. OCT. NOV. DEC. JAN. 1 40 FEB. MAR. LL 11 APR. MAY JUNE LLL JULY AUG. 40 SEPT. 1942 ( Office of the Secretary of the Treasury Division of Research and Statistics FO 156 COMPARISON OF PRICE MOVEMENTS OF 20 "WAR" STOCKS AND 20 "PEACE" STOCKS * August 1939-100 1940 1939 ASND 1941 M M 1942 M M PER PER CENT CENT WEEKLY - Friday Quotations 160 150 140 140 120 120 War" Stocks 100 100 80 80 "Peace" Stocks 60 60 40 40 PER PER CENT CENT (Ratio) (Ratio) Ratio of "War" Stocks 200 to "Peace" Stocks 200 APRIL GERMANY INVADES YUMOSLAVIA AND 180 GREECE 180 for. 14 fail Dec. JUNE 14 Sept. 27 160 ATTACKS APRIL 26 Kamaii GERMANY INVADES Panis Massive 160 JAPAN JUNE " Russia MITLER'S WARENDERS SPEEDN APRIL . GERMANY INVADES NUMBER DEMMARE 140 APRIL a 140 ATHENS BURRENDERS 120 JULY 29 120 GERMANY BEGINS - AIR RAISE Nov. 30 Russia ATTACKS FINLAND - DESTAIN May 10 GERMANY ATTACKS HOLLAND. DELATURE 100 100 Sept. INVADES POLAND F F S 1940 O N D M A M J A J A 1939 A J 1941 . Stocks selected on bosis of relative benefits from prolonged war ve early peace Indexes are weighted averages of price relatives Secretary of the Treasury A SoNDJFMAM M M J 80 D N J J O S 1942 A SOND 80 P-225-8 1926=100 PER CENT PER CENT Weekly 106 106 104 104 102 102 100 100 889 Commodities, B.L.S. 98 98 96 96 94 94 92 92 90 90 28 Basic Commodities, B.L.S. 88 88 86 84 86 OCT. NOV 1941 -.--- DEC JAN FEB. MAR APR MAY JUNE JULY 1942 AUG SEPT. OCT NOV DEC 84 Office of the Secretary of the Treasury P-196-D MOVEMENT OF BASIC COMMODITY PRICES 1942 1941 PERCENT PERCENT August 1939-100 190 190 185 185 8 Uncontrolled Commodities 180 180 175 175 170 28 Commodities 170 165 165 160 160 20 Controlled Commodities 155 155 150 150 145 145 140 140 SEPT. MAR. JAN. NOV. JULY MAY NOV SEPT 1942 1941 PERCENTAGE CHANGE DEC. 6. 1941 TO JUNE 12 AND JUNE 19. 1942 PERCENT PERCENT 8 Uncontrolled 20 Controlled Commodities +45 Commodities +45 "Hoge 4178 +40 +40 +35 +35 +30 +30 +25 +25 Flanned 34.71 Lord nex +20 AShellee nex glood HIR +15 +20 Corn 157% +15 Follow 793 Print Class 24K Cottoneed OF 7.5% +10 "Bortey 1048 +10 Cotton 142 - 1.08 Stears 7/X Line 28 5 "Butter SIX Sugar 4.9% .5 0X Change Mides. a. - Tin. Rubber Coffee Copper, o What -44% o a at Street -5 -5 Cocce -ex Vantop AAK -10 Dec . June 12 June 19 1941 1942 1942 -/-I Office of the Secretary of the Transity -10 Dec. 6 1941 June 12 1942 June 19 1942 F P-244 RETAIL SALES OF INDEPENDENT STORES May 1942 Compared with May 1941 and with April 1942 PER PER CENT CENT Percentage Change May 1941 to May 1942 Percentage Change April 1942 to May 1942 20 20 GENERAL MERCHANDISE 19% RESTAURANTS, CTC 17% DRUG 17% 15 15 JEWELRY 15% FOOD 13% 10 10 JEWELRY a BUILDING MATERIAL of FILLING STATIONS 7% DRUG 6% 5 FOOD 5% 5 "APPAREL 4% RESTAURANTS, ETC 5% DEPARTMENT 3% BUILDING MATERIAL 4% HARDWARE 2% GENERAL MERCHANDISE a 0 0 AUTO AND ACCESSORIES -2% FURNITURE -3% -5 -5 HARDWARE -7% DEPARTMENT - ILLING STATIONS -9% -10 -10 APPAREL -11% FURNITURE -14% -15 MAY 1941 MAY 1942 -15 APRIL 1942 MAY 1942 SOURCE: BUREAU OF CENSUS Office of the Secretary of the Treasury - of - and - C 433 HEAVY CONSTRUCTION CONTRACT AWARDS DOLLARS DOLLARS Millions Millions Heavy Engineering Contracts 56 Eng. News Rec., Daily Ave. 56 52 52 48 48 44 44 40 40 36 36 1941 32 32 28 28 24 24 20 20 1942 16 16 1940 12 12 8 8 JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC. *Four-week moving average placed on fourth week Office of the Secretary of the Treasury Division of Research and Statistics C-393-A-1 310 June 22, 1942 Dear Archie: Thank you for your letter about the Committee on War Information and for the good things you said about Ferdie Kuhn. I hate to think that this Committee really will "disappear from sight" as I know what useful work it has done behind the scenes in the last few months. My own hope is that the same Committee, or one very like it, will continue under the new regime, and that it will have the benefit of your active participation in its work. From all that I hear, you can be proud of the work that you personally have done in forming this Committee and in leading it through such difficult times. Sincerely, (Signed) Henry Hon. Archibald MacLeish, Office of War Information, Washington, D. C. FK/cgk n.m.c. Photo File fill Thompson JUN 19 1942 OFFICE OF FACTS AND FIGURES WASHINGTON June 16. 1942 THE DIRECTOR My dear Mr. Secretary: As you know. an Executive Order has terminated the Office of Facts and Figures and thereby the Committee on War Information to which you were kind enough to appoint Ferdinand Kuhn as a representative of your Department. I cannot let the Committee on War Information disan- pear from sight without writing you to tell you how deeply I appreciate your kindness in appointing Ferdie to this service. The Committee turned in over some seven months of life a very useful piece of work - a piece of work which will never have public recognition but which has, I think, been recognized by those within the government with whom the Committee had to do. I know that I personally am deeply appreciative of the Committee's work and particularly of Ferdie's work. Both as Chairman of the Committee and as a human being, I should like you to know how deeply I appreciate it. Faithfully yours, and Archibald MacLeish The Director The Honorable The Secretary of the Treasury Washington, D. C. 312 ALBEN W. BARKLEY KENTUCKY United States Senate CONFERENCE OF THE MAJORITY June 22, 1942. Honorable Henry Morgenthau, The Secretary of the Treasury, Washington, D. C. Dear Henry: Allow me to thank you for sending me copy of your report to the Joint Committee on Internal Revenue Taxation on the subject of Wartime Tax Avoidance. I am very glad to have it for reference. Very sincerely yours, AWB:EC Alber B.B.Baruley 313 JUN 22 1942 My dear Mr. President: This is in reply to your memorandus of June 18, 1942, in which you request my views concerning a con- fidential suggestion made to you by Mr. Justice Byrnes concerning the taxation of presently tax exempt secu- rities. Mr. Justice Byrnes suggests that, as a substitute for the Treasury proposal to tax the income derived from such securities, an additional estate tax be imposed on the transfer of such securities at death in order to compensate the Government for the income tax exemption which they now enjoy. My proposal to subject these securities to income taxation was designed with a view to putting the income from this form of property on exactly the same footing with the income from other forms of property. I doubt very much whether the Justice's suggestion would accomplish this purpose. A decedent who died owning tax exempt securities would pay a such higher tax than a decedent who sold his tax exempt securities 314 -2the day before his death, even though both decedents may have derived the same income tax benefit from the ownership of such securities. Furthermore, the suggestion takes no account of the relative tax advantages which have been derived by taxpayers during their lifetimes from investment in tax exempt obligations. These advantages depend upon the length of time the securities have been held, the extent to which the value of the tax exempt feature was included in the price paid for the obligations, and the income tax rates applicable to the taxpayer's income. All of these variables are taken into account under an income tax but none of them would be adequately re- flected in a special estate tax such as the one suggested. I have entertained no doubts as to the constitutionality of our income tax proposal ever since the decisions of the Supreme Court in Alabama V. King & Boozer, 314 U.S. 1 and Grayes v. New York ex rel. O'Keefe. 306 U.S. 466. A non-discriminatory tax upon the income from State and municipal obligations appears 315 -3to be clearly valid. However, I as not entirely certain that the Justice's suggestion is on all fours with the New York statute which the Supreme Court sustained in Watson V. State Comptroller. 254 U. S. 122. The New York statute reached all property with respect to which the general property tax had not been paid. It was merely an instrument for enforcement of the provisions of the general property tax. Mr. Justice Byrnes' proposal would reach only governmental obligations the income from which had not been subjected to income tax without attempting to reach other classes of property, such as life insurance, the income from which is also free from taxation. The suggestion might thus involve some degree of discrimination against governmental obligations per se. Faithfully yours, (Signed) B. Morganthan. Jr. The President, The White House. file n.m.c. S.S. agenc 9:20 6/23/42 cc-m. Paid RBE:hdr 6-20-42 Initials copy taken w.n.Burdette 316 THE WHITE HOUSE WASHINGTON June 18, 1942. MEMORANDUM FOR THE SECRETARY OF THE TREASURY What do you think of this private and confidential suggestion? Let me know. F.D.R. 317 Supreme Court of the United States Washington, D.C. CHAMBERS OF JUSTICE JAMES F. BYRNES THE WHITE HOUSE June 16, 1942 JUN 17 II 20 AM '42 RECEIVED Dear Mr. President: The Press indicating that the disagreeable subject of taxation has been forced upon you, I have a suggestion to make and have set forth in a memorandum so that if you think it worthy of con- sideration, you can submit it to the tax experts without disclosing the source from which it come. Sincerely yours, JAMES F. BYANES. John Honorable Franklin D. Roosevelt, The White House, MEMORANDUM One of the arguments in Congress against the proposal to tax the income of tax-exempt securities is that it is unconstitutional. if you are satisfied as to the wisdom of the policy, the argument as to the constitutionality 01 the proposal might be met by a levy somewhat similar to the New York statute ($221-b, Laws of 1917, C. 700, $2) by which an additional tax equal to 5% of the appraised value 01 an investment is imposed on the transfer of investments held by the decedent at his death on which the general property tax nor the stamp tax levied by other statutes has been paid. Statutes somewhat similar have been enacted in Connecticut and Louisiana. The New York statute was sustained by the Supreme Court in the case of Watson V State Comptroller, 254 U. S. 122 in a unanimous.opinion delivered by Justice Brandeis. The Court held that in imposing an inheritance or transfer tax a state may distinguish between property which has borne its fair share of the tax burden during the decedent's life time and property of the same kind and passing to the same class of transferees which has not. (p.124) Under this decision tax-exempt securities could be reached by such a statute. "hether it would affect the issuance of taxexempt securities more seriously than the levy upon income is a matter for the +reasury experts to decide. 319 THE WHITE HOUSE WASHINGTON JUN 22 1942 My dear Mr. Secretary: Under the authority vested in me by the Act of Congress entitled "An Act to authorize annual appropriations to meet losses sustained by officers and employees of the United States in foreign countries due to appreciation of foreign currencies in their relation to the American dollar, and for other pur- poses," approved March 26, 1934 (48 Stat. 466), there is hereby allotted to the War Department, for expenditure upon approved requisitions, the sum of $50,000 from the appropriation of $975,000 provided for this purpose by the "Independent Offices Appropriation Act, 1942," approved April 5, 1941. Sincerely yours, The Honorable, The Secretary of the Treasury. 320 JUN 22 1942 Dear Mr. Secretary: Reference is made to a recent conversation between Mr. Geist and Mr. Harry White, in the course of which Mr. Geist stated that the State Department would be glad to receive a list of the economic and financial information on foreign countries which the Treasury Department would like regularly to receive in order that approprinte instructions might be sent to our missions abread. I am herewith enclosing a list of such information. I as aware that this list constitutes a formidable request for information and particularly in these times it way not be possible for the staffs In the Embassies and Legations so prepare regular reports on all of these subjects. Moreover, some of this information - notably that relating to gold and foreign exchange reserves and foreign exchange rates - 10 already being regularly received. However, Mr. Geist solicited from us a complete statement of our requirements for information from foreign countries and explained that he could readily check it against standing instructions. Sincerely yours, (Signed) R. Morgenthau, are Secretary of the Treasury. The Honorable capiette Thompson n.m.e. Dr where The Secretary of State. BY Messenger Brown 9:10 6/23/42 PAS:da:6/19/42 321 INFORMATION REGARDING FOREIGN COUNTRIES WHICH THE TREASURY DEPARTMENT WOULD LIKE TO RECEIVE REGULARLY THROUGH THE REDIUM OF FORKION SERVICE REPORTS 1. Budget, receipts, and expenditures (1) Annual budgetary estimates of receipts and expenditures for coming year. Indicate receipts by major items, specifically separating out borrowings. Indicate major items of expenditures, separating out any debt repayments. Preferably include comparetive figures for previous year, indicating major changes. Budget speeches and other official statements relating to the budget. (2) Actual receipts and expenditures, preferably monthly or quarterly but at least sent-annually. Indicate receipts by enjor items, specifically separating out torrowings. Indicate major items of expenditures, separating out debt repayments. Preferably include comparative figures for one or more previous years, indicating sajer changes, and compare with budget estimates. (3) Include similar information for any supplemental or extraordinary budgets, receipts, and expenditures. (4) Include similar information for any important autonouous governmental corporations and agencies not included in budget. (5) Include pertinent information relating to budgets, receipts, and expenditures of states or provinces and municipalities. (6) Annual review of tax system indicating all major changes during year. 2. Public debt: (1) Annual statement of outstanding debt of national government, indicating both external and internal debt. Indicate external debt by currencies. If external debt is stated in local currency or internal debt in foreign currency, indicate exchange rate used in conversion and why. Matinguish between funded and floating debt, both external and internal. (2) Indicate contingent as compared to direct debt of the National Government and debt of any governmental corporations or agencies. Indicate whether or not included in total figures under (1) above. Indicate whether continuent debt and debt of official corporations or agencies is external or internal (and the currency, if external). (3) Indicate the amount of any special clairs against the Governwent or any special forms of indebtadness, stating whether the indebtedness is external or internal. 322 -2(4) Indicate amount of both external and internal debt being serviced, amount in partial default, amount in total default. (5) Give analogous information respecting the debt of state or provincial governments and also of municipolities, being certain to indicate particularly the total external and internal debt of the local governments, the currency of the external debt, and the amount of both external and internal debt in default. (6) Animal review of the default status of the public debt, indicating particularly any adjustments or negotiations during the year. Indicate the amount of the annual debt service, if possible separating the foreign and the domestic debt service and particularly the service OR the dollar debt. Indicate particularly any open masket purchases by the Government of its defaulted bonds or amortisations ahead of schedule. 3. Exchange rates and exchange control system: (1) Weekly buying and selling rates for each type of exchange, including black, curb, or illegal rates. (Already reported for Conserce but included here for sake of completeness.) (2) Arrourages, 11 any, for both consercial and financial remittances with particular reference to remittances due to the United States. Report quarterly on the arrearages both in terms of time lag and total amount of payments in arrears, by types of arrearage, if possible. (3) Availability of exchange for both commercial and financial resittances with particular reference to remittances to the United States. Quarterly. (4) Balances of foreign exchange held by control organisation, by currencies if possible, particularly dollars. Monthly. Indicate whether these balances are reported by Central Bank as part of its foreign exchange holdings. (5) Annual report on exchange control system, outlining cajor features of the system and major changes during the year. Indicate specifically the sources of exchange made available to the control organisation, the rates at which such exchange is made available, and if possible the amounts made available at each rate. Report major outlets for controlled exchange and rates at which it is sold, wit the volume of exchange sold at each rate. Indicate particularly the tasis for allocating exchange between major countries and commidities and describe especially any discrimination against the United States either as 323 -3- regards the amount of exchange made available or the ratee at which it is sold. Report on the operations of any Stabilisation Fund which may take the place of exchange control. Since this information will probably not be public, special arrangements will have to be made to get it. Indicate specifically the size and importance of any legal free market, stating the sources and uses of its exchange. Report regularly on the existence and importance of any black or illegal exchange market. (6) Report monthly, if possible, on the total purchases and sales of exchange by the exchange control organisation, giving this information for each major foreign currency handled by the exchange control organisation, particularly dollars and sterling. (7) Report semi-annually, if possible, on the operation of any payments or clearing agreements, indicating the amount and currency of any blocked balances and the amounts of local our- rency, if any, owed to the other parties to the agreements. Report on any agreement for adjustment of blocked balances. Report particularly any use of blocked balances to repatriate foreign debt. (8) Report changes in the exchange control laws and regulations as they occur. 4. Gold, silver, and foreign exchange holdings and requirements (already being reported for Treasury but included here for sake of completenesa): (1) Monthly statement of gold, silver, and foreign exchange held by (a) the Central Bank, and (b) the Government or Governsent agencies such as an Exchange Stabilisation Fund or Exchange Control office. (2) Indicate the extent to which the above holdings represent reserves required by Central Bank or other legislation. (3) Indicate the amount of foreign exchange reported under (1) above consisting (a) of dollars, (b) of sterling. Indicate the amount of (a) free and (b) blocked foreign exchange reported under (1) above. (4) Report semi-annually the amount of gold and foreign exchange heldings by commercial banks, corporations, and individuals. Does existing legislation restrict or regulate such holdings? 324 -4(5) Report the reserve requirements imposed by existing legislation against Central Bank notes, deposits, and other sight liabilities. Report also the reserves required against currency issued by the Government. Report any important changes in this legislation immediately upon its passage. (6) Report any other legislation seleting to note issue and ocianage. 5. Balance of payments: (1) Report annually & complete balance of payments for the previous year and an estimate for the coming year. If no official or private estimates are available, prepare one on the basis of information available to the linbessy. (2) In presenting a report on the balance of payments, keep in mind particularly the following: (a) Adjust imports and exporte for any arbitrary tariff valuations. (b) Adjust imports to take into consideration the feet that purchases by foreign-owned concerns probably are paid for out of foreign balances and therefore do not represent a drain on exchange availabilities. (e) Adjust exports to take into consideration the fact that conversion of foreign currency into local currency by foreign-oned concerns to pay for local expenses any differ considerably from the value placed on experts of these concerns. (d) Attempt to separate service on the public debt from private interest and dividend remittances. (e) Attempt to separate long and short-term capital movements, particularly movements of short-term banking funds. Indicate the nature of any unusual flow, such as refugee funds from Europe. (f) Attempt to separate out the bilateral dollar balance of payments. 6. Money in circulation: (1) Report at least quarterly on the amount of money in circulation, giving information by kinds of currency. This report should include both metallie currency and paper money, and if possible should indicate the amount of outstanding currency that is hold by the banks. 325 -5- (2) Analyse the factors responsible for any major increase or decrease. 7. Central Bank (1) Complete balance sheet of Central Bank or analogous institu- tion monthly. (2) Note particularly any important changes in the reserve ratio and the reserves of commercial banks, analysing the factors responsible for the changes. (3) Report quarterly on the operations of the Central Bank, indicating any changes in rediscount rates, eligibility requirements, open market operations, loans to the Government, other portfolio changes, and any other significant factors. Note any official statements or suggestions with regard to Central Bank and general monetary policy. 8. Commercial banks: (1) Report quarterly on the contined balance sheet of all con- a particularly total domand deposits, lound and investments. (2) Indicate particularly changes in the reserves of commercial banks and any excess or deficiency compared to reserve requirements. Analyse the factors responsible for any major change in these items. (3) Report the reserve requirements for commercial banks and any important changes immodiately upon passage of the legislation. (4) Report annually on the operations of any agricultural banks, mortgage banks, savings banks, or special credit agencies. 9. Foreign capital (1) Annual report on foreign direct investments in the country by industry and by nationality of investors. It will be suffi- cient to report changes in such investments, after the first report. (2) Annual report on degree of foreign ownership (by nationality) of Government and other obligations. (3) Annual report on foreign balances (by nationality) in domestic banks. (4) Semi-armal report on operation of any freezing controls over foreign balances in domestic banks. 326 -610. Foreign trade: (1) Monthly exports and imports. (2) Quarterly or seni-annual reports on experts and imports by country and by major compodities. (3). For major export and import commodities, an annual breakdown giving for each major commidity the distribution by country. 11. Gold and silver production: (1) Monthly or at loast quarterly statistics on production exports and importe. 12. National income and production: (1) Annual estimate of national income. (2) Agricultural, mineral, and industrial production by anjor products. Annually. Also report consumption and carryover. Presunably exports and imports will be reported under 10. 13. Hongy market. (1) Quarterly report on changes in interest rates, stock and bend prices, particularly on prices and yields of Government securition. 14. Business activity: (1) Indexes of wholesale prices (angregated where available as to donestic, export, and import prices), retail prices, cost of living, wages, production (preferably by principal classes of products), check clearings, employment, carloadings, etc. Monthly. 15. Government controls: (1) Semi-annual report on Government price controls or agricultural surplus programs. Indicate the effectiveness of price control measures. Report on public works programs of national and local governments, scale of operations, method of financing, etc. (2) Report important new legislation on these subjects when introduced into and when passed by the legislature. Also report public and notable private scheses for post-war and other "planning". 327 -716. War or defence effort: (1) Report on the BAF or defense effort, with special reference to the conversion of posotime industries, curbs on peace-time consumption, volume and kinds of war production, and problems which have arisen in these connections. Also, effects of war (0.6., shipping shortage) on the domestic economy. 328 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE June 22,1942 TO FROM Subject: Secretary Morgenthau Mr. Kamarck Shipment of Planes to British Forces 1. In the week ended June 16, 1942, a total of 93 planes of all types (89 combat planes) were shipped to British forces. 2. The first shipment of a Martin "Marauder" medium bomber to the United Kingdom occurred in this week. This is the same plane used in the U.S. Army Air Corps as the B-26. 3. Over 1,300 Lockheed Hudsons have been delivered to the British. Over 100 Lockheed Venturas, which are to be the successors to the Hudsons, have already been delivered to England by air. The Ventura is the military version of the Lodestar transport and is powered by two 2,000 h.p. Double Wasp Motors. -2- 329 Table A - Shipments by Area Week Ending June 16,1942 Total Shipped Totalsince Shipped in 1942 to date Jan. 1, 1941 the United Kingdom Light and medium bombers Heavy bombers Neval patrol bombers Pursuit Army Cooperation Trainers 365 1,526 6 75 O 8 179 110 16 775 1,086 o 71 102 o 24 25 O Total to the United Kingdom 1,294 47 3,027 0 the Middle East Light and medium bombers Heavy bombers Pursuit Army Cooperation Trainers o 204 0 O 534 5 37 311 1,159 o 12 12 o 150 of Total to the Middle East 1,860 535 37 0 the Canadian Forces Light and medium bombers Heavy bombers Naval patrol bombers Pursuit Trainers o 41 o 1 209 1 31 23 o o 30 72 4 422 1,663 Total to Canadian Forces 1,976 517 4 o the British Pacific Forces Light and medium bombers Naval patrol bombers Pursuit Trainers o o o 27 200 363 105 O o Total to Pacific Forces 0 the British Indian Forces Light and medium bombers Pursuit 241 141 0 14 14 40 40 5 o Total to Indian Forces 736 341 O 54 54 5 Totals Light and medium bombers 30 765 2,524 76 Heavy bombers 6 Naval patrol bombers 0 31 185 168 53 1,356 2,720 Pursuit Army Cooperation Trainers Grand Total 0 83 114 4 430 1,942 93 2,741 7,653 -3- 330 Table B - Shipments by Types Week Ending June 16,1942 Bell Airacobra o Boston III Brewster Buffalo Cesana Crane I-A (AT-17) T-50 Consolidated Catalina Liberator Curtiss Kittyhawk Tomahawk airchild 24 R-9 Glenn Martin B-26A (Marauder) Baltimore Maryland Grumman Martlet II Lockheed Hudson Lightning Ventura I Ventura Bomber North American B-25 Harvard II Mustang Northrop Vengeance Pitcairn Autogiro Stearmen PT-27 to date Vultee-Stinson 0-49 Vultee Vengeance Grand Total-All Types Jan. 1, 1941 314 468 33 13 37 o o 168 o 65 65 o 86 700 31 168 63 152 542 924 544 O 5 37 o 492 O o 95 73 O 1 1 1 275 150 207 0 0 o 46 87 12 368 1,338 0 3 O 3 0 5 12 12 112 112 38 38 52 949 446 526 7 O 16 5 5 o 5 0 o 228 227 4 50 O Vought-Sikorsky Chesspeake since 13 o Douglas Boston I,II and III in 1942 o 1 Boeing B-17 Total Shipped Total Shipped O 0 10 14 14 14 5 93 2,741 7,653 . to date in 1941 * May 5, 1942 May 12, 1942 May 19, 1942 May 26, 1942 June 2, 1942 June 9, 1942 April 7, 1942 March 3, 1942 Ended of shipments Week June 16, 1942 April 28, 1942 April 21, 1942 March 31, 1942 April 14, 1942 March 10, 1942 March 17, 1942 March 24, 1942 January 6, 1942 Weekly average Total shipments February 3, 1942 February 17, 1942 February 24, 1942 January 27, 1942 January 20, 1942 January 13, 1942 February 10, 1942 since Jenuary 1,194 #1 2,524 69 30 32 23 10 22 14 35 55 55 69 49 94 34 25 26 24 9 20 9 24 4 3 medium 24 36 bombers Light and 185 6 8 3 8 o 3 2 10 11 7 2 1 9 1 2 O O O o o O O O o 2 Heavy bombers 168 O O O o o o o O 0 o 0 O 12 o O 1 2 2 3 3 1 o 2 5 3 Naval patrol bombers 2,720 114 8 53 23 68 34 37 75 98 39 43 86 o 0 O O o 12 o O 15 6 4 58 79 4 0 94 78 8 1 41 59 6 7 7 O 80 86 10 100 5 14 58 O O 30 4 28 Pursuit 1 Army Table C - Plane Shipments to the British by Weeks Cooperation 1,942 4 8 42 38 145 103 7 6 4 26 118 110 34 29 5 10 84 O 122 278 137 O O 106 113 1 O 4 4 13 60 42 9 30 Trainers Total includes planes shipped in 1942 prior to March 17 which are not included in the weekly 7,653 93 108 66 118 158 183 88 120 59 86 30 143 78 105 72 100 Totals 332 JUN 22 1942 My dear Mr. Secretary: I am enclosing copy of report on our exports to some selected countries for the period ending June 10, 1942. Sincerely yours, (Signed) 1. Morgenthau, Jr. Secretary of the Treasury The Honorable, The Secretary of State, Washington, D. C. Enclosure. p.m.c. By Messenger Brown 9:10 6/28/42 HDW:r1 6/22/12 Return to Deis. Office SECRET 333 June 20, 1942 Exports to Russia, Free China, Burma and other block d countries, as reported to the Treasury Department during the ten-day period ending June 10, 1942 1. Exports to Russia Exports to Russia as reported during the ten-day period ending June 10, 1942 amounted to about $12,764,000, represent- ing the lowest total for any ten-day period since the beginning of February. Military equipment accounted for less than one-fourth of the total. (See Appendix C.) 2. Exports to Free China and Burma Exports to Free China during the ten-day period ending June 10, 1942 amounted to about 83,399,000, of which military equipment accounted for about 90 percent. (See Appendix D.) Exports to Burma amounted to $234,000. Military equipment accounted for the entire amount. (See Appendix E.) 3. Exports to France No exports to France were reported during the period under review. 4. Exports to other blocked countries Exports to other blocked countries are given in Appendix A. Most important were exports to Switzerland amounting to $343,000. ISF/ers 6/22/42 STRICTLY CONFIDENTIAL 334 SUMMARY or UNITED STATES DOMESTIC EXPORTS TO SELECTED COUNTRIES AS REPORTED TO THE TREASURY DEPARTMENT FROM EXPORT DECLARATIONS RECEIVED DURING THE PERIOD INDICATED 1/ July 28, 1941 to Jane 10, 1942. (In thousands of dollars) July 28 Total Denerits Experts to Mar 20 Period ended Period ended New 32 June 10 $495,318 $26,180 812,575 $534,073 Free China 75,862 2,533 3,399 81,793 Burna 2/ 12,202 234 12,435 - % U.S. S. R. France 3/ ais 5/ 96 - 2,869 5/ s Switserland 10,118 249 Sweden 17,732 47 Pertugal 8,919 93 French North Africa w 6,283 - Treasury Department, Division of Menetary Research 2,849 343 10,720 17,778 s/ 15 9,027 - 6,283 June 18, 1942 1 Many of the expert declarations are received with a lag of several days or more. of Therefore this campilation does not accurately represent the actual shipment a particular period. The longer the period covered, the closer will these figures come to Department of General revised figures. 2 From September 11, 1941 to date - 18 is presence that a large percentage of material listed here, consigned to Darms, is destined for Free China. 1 Includes both Occupied and Uncoupled France - no breakdown is obtainable from Department of Commerce. / Includes Marcoco, Algeria, and Tunisia. Less than 8500. and/ora 6/12/48 SECRET 335 APPENDIX B Exports from the U. S. to Free China, Burna and U.S.S.R. as reported to the Treasury Department July 28, 1942 - June 10. 1942 (Thousands of Dollars) 1 Exports to Exports to Exports to Free China Burns 3/ U.S.S.R. July 28 - Aug. 2 395 4,523 Aug. 11 - Aug. 16 Aug. 18 - Aug. 23 Aug. 25 - Aug. 30 309 553 986 Aug. 4 - Aug. 9 Sept. 2 - Sept. 6 Sept. 8 - Sept.13 Sept.15 - Sept.20 Sept.22 - Sept.27 Sept.29 - Oct. 4 Oct. 6 - Oct. 11 Oct. 13 - Oct. 18 Oct. 20 - Oct. 25 Oct. 27 - Nov. 4,280 2,281 3,822 5,217 449 1,225 5,312 684 269 2,337 Dec. 15 - Dec. 20 Dec. 22 - Dec. 27 Dec. 29 - Jan. 3 Jan. 5 - Jan. 10 Jun. 12 - Jan. 17 Jan. 19 - Jan. 24 Jan. 26 - Jan. 51 Feb. 1 - Feb. 10 Mar. 10 - Mar. 20 Mar. 20 - Mar. 51 6 Apr. 1 - Apr. 10 Apr. 11 - Apr. 20 Apr. 21 - Apr. 30 May 1 - May 10 7 May 11 - May 20 May 21 - May 51 June 1 - June 10 Total 1,157 405 58 342 88 1,021 1,364 2,436 64 18 12,040 111 8 4.580 1 196 791 35 2 91 1,073 1,695 447 6,938 Feb. 10 - Feb. 20 Feb. 20 - Feb. 28 Nar. 1 - Mar. 10 2,333 5 Dec. 8 - Dec. 13 Dec. 1 - Dec. 6 752 110 Nov. 10 - Nov. 15 Nov. 17 - Nov. 22 Nov. 24 - Nov. 29 Nov. 3 - Nov. 8 1,025 204 4.772 1,672 2,851 1,228 3,239 1 2,735 2 1 923 1,054 583 - 23 8,058 4,836 447 1,872 2,533 3,399 5 $84,396 639 15,315 26,174 28,119 32,509 28,556 66,906 50,958 28,652 18,000 26,180 23th $11,322 $534.776 1. These figures are in part taken from copies of shipping manifests. SECRET in APPENDIX B 336 Page 2 2. Figures for exports to Free China during these weeks include exports to Rangoon which are presumed to be destined for Free China. 3. It is presumed that a large percentage of exports to Burma are destined for Free China. 4. Beginning with February 1 figures will be given for 10-day period instead of week except where otherwise indicated. 5. 6-day period. 6. 11-day period. 7. Due to changes in reporting procedure by the Department of Commerce this report is incomplete for the period indicated. Treasury Department, Division of Monetary Research IBP/efa 6/20/42 June 20,194 SECRET 337 APPENDIX C Principal Exports from U. S. to U. S. S. R. as reported to the Treasury Department during the ten-day period ending June 10, 1942 (Thousands of Dollars) TOTAL EXPORTS $ 12,764 Principal Items: Military equipment Motor trucks Sausage, canned 2,849 1,242 1,023 Iron and steel plates, sheets and stri pe 673 Sole leather 369 Wheat flour 345 Steel bars Lard Pork, pickled or salted 542 the Milling machines 327 Metal-grinding machines and parts 272 228 218 Wool cloth and dress goods 203 Telephone equipment and parts bronse sheets Brass and plates and Treasury Department, Division of Monetary Research ISF/efa 6/20/42 June 20, 1942 SECRET 338 APPENDIX D Principal Exports from U. 3. to Free China as reported to the Treasury Department during the ten-day period ending June 10, 1942 (Thousands of Dollars) TOTAL EXPORTS Principal Items: Military equipment Construction equipment and parts Relief supplies Coal-tar colors and dyes $ 3,399 3,082 163 70 44 Lubricating oil, n.e.s. June 20, I942 Treasury Department, Division of Monstary Research 188/efe 6/20/42 SECRET in 339 APPENDIX E Principal Exports from U. S. to Burma as reported to the Treasury Department during the ten-day period ending June 10, 1942 (Thousands of Dollars) TOTAL EXPORTS $ 234 Principal Items Military equipment Treasury Department, Division of Monetary Research ISF/efs 6/20/42 234 June 20, 1942 340 JUN 22 1942 My dear Mr. Presidents I - enclosing report on our exports to some selected countries for the period ending June 10, 1942. Faithfully, (Signed) R. Morgenthan. JR. Secretary of the Treasury The President, The white House. Enclosure. n.m.c. HDW:r1 6/27/42 S.S. agent 9:30 6/23/42 cc.Dr.u has Return here's Office 341 June 20, 1942 Exports to Russia, Free China, Burma and other blocks d countries, as reported to the Treasury Department during the ten-day period ending June 10, 1942 1. Exports to Russia Exports to Russia as reported during the ten-day period ending June 10, 1942 amounted to about $12,764,000, represent- ing the lowest total for any ten-day period since the beginning of February. Among the military equipment exported were thirteen light bombers. (See Appendix c.) 2. Exports to Free China and Burma Exports to Free China during the ten-day period ending June 10, 1942 amounted to about $3,399,000, of which military equipment accounted for about 90 percent. (See Appendix D.) Exports to Burma amounted to $234,000. Military equipment accounted for the entire amount. (See Appendix E.) 3. Exports to France No exports to France were reported during the period under review. 4. Exports to other blooked countries A. Exports to other blocked countries are given in Appendix Mest important were exports to Switzerland amounting to $343,000. ISF/efs 6/22/42 STRICTLY CONFIDENTIAL 342 SUMMARY OF UNITED STATES DOMESTIC EXPORTS TO SELECTED COUNTRIES AS REPORTED TO THE TREASURY DEPARTMENT FROM EXPORT DECLARATIONS RECEIVED DURING THE PERIOD INDICATED 1/ July 28, 1941 to June 10, 1942. (In thousands of dollars) July 28 Total Democrie Exports Period ended Period ended May 32 June 10 $495,318 $26,180 $12,575 $534,073 ree China 75,861 2,533 3,399 81,793 Burma 2/ 12,201 234 12,435 to May 20 ... 5. R. France 3 in 56 5/ - 2,849 - 5/ 56 5/ 2,849 Switzerland 10,118 249 343 10,710 Sweden 17,732 47 5/ 17,778 Portugal 8,919 93 15 9,027 French North Africa w 6,283 - Treasury Department, Division of Monstary Research - 6,283 June 18, 1942 Many of the expert declarations are received with a lag of several days or more. Therefore this compilation does not accurately represent the actual shipment of a particular period. The longer the period devered, the closer will these figures come to Department of Commerce revised figures. Free September 11, 1941 to date - it is presused that a large persentage of material listed here, consigned to Burna, is destined for Free China. Includes both Occupied and Unoccupied France - no breakdown is obtainable from Department of Commerce. Includes Marcooo, Algeria, and Tunisia. A Less than $500. JMW/efs 6/18/42 SECRET 343 APPENDIX B Exports from the U. S. to Free China, Burma and U.S.S.R. July as reported to-the Treasury Department 28, 1942 June 10, 1942 (Thousands of Dollars) 1 Exports to Free China 395 Aug. 11 - Aug. 16 Aug. 18 - Aug. 23 Aug. 25 - Aug. 30 309 Sept. 2 - Sept. 6 Sept. 8 - Sept.13 Sept.15 - Sept.20 Sept.22 - Sept.27 Sept.29 - Oct. 4 Oct. 6 - Oct. 11 Oct. 13 - Oct. 18 Oct. 20 - Oct. 25 Oct. 27 - Nov. 1 Nov. 3 - Nov. 8 Nov. 10 - Nov. 15 Nov. 17 - Nov. 22 Nov. 24 - Nov. 29 Dec. 1 - Dec. 6 Dec. 8 - Dec. 13 Dec. 15 - Des. 20 Dec. 22 - Dec. 27 Dec. 29 - Jan. 3 Jan. 5 - Jen. 10 Jan. 12 - Jan. 17 Jan. 19 - Jan. 24 Jan. 26 - Jan. 31 Feb. 1 - Feb. 10 20 - 5 Feb. 10 - Feb. 20 Feb. Mar. Feb. 10 28 1 - Mar. Mar. 10 - -6 -7 Mar. 20 Mar. Mar. 20 31 Apr. 1 -- 21 - Apr. 30 May May 11 1 May20 10 - May May 21 - May 31 6, June 1 - June 10 Apr. Apr. 11 Apr. Apr. 10 20 Total Burma 3/ Exports to U.S.S.R. 4,523 July 28 - Aug. 2 Aug. 4 - Aug. 9 Exports to 551 986 2,735 1,023 4,280 2 1 204 2,281 2, 3,822 110 1,225 5,312 5,217 752 2,333 449 684 323 6,845 1,157 5 35 269 403 4,772 1,672 2,851 1,228 3,239 58 791 2,337 1,924 5,623 4,484 342 88 1,021 1,364 64 18 111 8 4,552 2,677 3,581 2,436 3,609 12,040 4,580 35 91 1,073 1,829 3,993 8,247 1,695 447 - 3,885 6,938 4,889 4,853 2,921 2,879 8,058 923 1 - 196 2 1,054 583 23 3 2 2 4,836 5.335 2,827 296 1,872 2,533 3,399 $84,396 447 639 5 234 $11,322 5,874 9,608 13,315 26,174 28,119 32,509 28,556 42,435 51,698 66,906 50,958 28,652 18,000 26,180 12,764 $534,776 1. These figures are in part taken from copies of shipping manifests. SECRET 344 APPENDIX B Page 2 2. Figures for exports to Free China during these weeks include exports to Rangoon which are presumed to be destined for Free China. 3. Itare is presumed that a large percentage of exports to Burma destined for Free China. 4. Beginning with February 1 figures will be given for 10-day period instead of week except where otherwise indicated. 5. 8-day period. 6. 11-day period. 7. Due to changes in reporting procedure by the Department of Commerce this report is incomplete for the period indicated. June 20,1942 Treasury Department, Division of Monetary Research ISF/efs 6/20/42 SECRET 345 APPENDIX c Principal Exports from U. S. to U. S. S. R. as reported to the Treasury Department during the ten-day period ending June 10, 1942 Unit of Quantity Value (Thousands of dollars) Quantity $ 12,764 TOTAL EXPORTS Principal Items: Landplanes - light bombers (2 engine) Motor trucks Sausage, canned Iron and steel plates, sheets and strips Ammunition No. No. 13 1,950 735 1,242 Lb. 2,634,916 Lb. 17,066,418 7,000,000 armor piercing shells No. 30,800 high explosive shells No. 18,200 30,38, and 45 balls 37 tank and anti-tank 37 mm.tank and anti-tank small arm components Steel bars Sole leather Lard Wheat flour Pork, pickled or salted Milling machines Metal-grinding machines and parts Telephone equipment and parts Brass and bronze plates and sheets Wool cloth and dress goods 150,000 1,050,000 - - Lb. Lb. Lb. Bbl 7,618,510 Lb. 1,426,000 2,439,845 37,413 No. No. 6/20/42 342 16 327 20 272 228 - - Lb. Lb. 542 651,666 1,131,974 133,289 Treasury Department, Division of Monetary Research ISF/efs 673 608 No. No. No. 30 caliber balls 30 caliber armor piercing 1,023 218 203 June 20, 1942 SECRET 346 APPENDIX D Principal Exports from U. S. to Free China as reported to the Treasury Department during the ten-day period ending June 10, 1942 (Thousands of Dollars) TOTAL EXPORTS $ 3,399 Pri ncipal Items: Military equipment Construction equipment and parts Relief supplies Goal-tar colors and dyes Lubricating oil, N.E.S. Treasury Department, Division of Monetary Research ISF/efs 6/20/42 3,082 163 44 70 % 32 June 20, 1942 SECRET 347 APPENDIX E Principal Exports from U. S. to Burma as reported to the Treasury Department during the ten-day period ending June 10, 1942 (Thousands of Dollars) TOTAL EXPORTS $ 234 Principal Items Military equipment Treasury Department, Division of Monetary Research ISP/ore 672642 234 June 20, 1942 2 Treasury Department Office of the Secretary I Date To: 348 July 15,1942 19 Secretary Morgenthau From: Mr. Hoflich The attached illustrated booklet, "One Year Of Soviet Struggle Against German Invasion" may be of interest to you. It was sent to you from the Russian Embassy. Please note the picture and brief note on page 17 concerning the Russian enti-tank rifle. 349 ONE YEAR OF SOVIET STRUGGLE AGAINST GERMAN INVASION ONE YEAR OF SOVIET STRUGGLE AGAINST GERMAN INVASION June 22, 1941-June 22,1942 Embassy of the Union of Societ Socialist Republics Washington, O.C. Information Bullelin Special Supplement Table of Contents PAGE Political and Military Results of a Year of Patriotic War 13 Agreement Between the United States of America and the Union of Soviet Socialist Republics, Signed at Washington, June 11, 1942 21 Ambassador Litvinov's Address, June 22, 1942, at Madison Square Garden 25 Excerpts from Harry Hopkins' Address at Madison Square Garden, June 22, 1942 31 American Salutations to the USSRThe United States Canada Latin America America Observes Soviet War Anniversary 35 19 69 73 STALIN: (from his Order-of-the-Day, May 1, 1942) In the past period of war our country has become stronger than it was at the beginning of the war. Not only our friends but even our enemies are bound to admit that our country is now united and rallied around its government more closely than ever before, that front and rear in our country are united in a single fighting camp, firing at the same target, that the Soviet people in the rear supply our front with constantly growing quantities of rifles and machine guns, trench mortars and guns, tanks and aircraft, food and ammunition. As for the international relations of our motherland, they have recently grown and gained strength as never before. All freedom-loving peoples have joined forces against German imperialism. Their eyes are turned to the Soviet Union. The heroic struggle which the peoples of our country are waging for their freedom, honor and independence calls forth the admiration of all progressive humanity. The peoples of all freedom-loving countries regard the Soviet Union as a force capable of saving the world from the Hitlerite plague. First place among these freedom-loving countries is held by Great Britain and the United States of America, to which we are bound by ties of friendship and alliance and which are rendering our country constantly increasing military assistance against the German fascist invaders We are waging a patriotic war of liberation, a just war. We do not set ourselves the aim of seizing foreign countries, of conquering foreign peoples. Our aim is clear and noble. We want to liberate our Soviet land from the German fascist scoundrels. We want to liberate our brothers, the Ukrainians, Moldavians, Byelorussians, Lithuanians, Letts, Estonians and Karelians, from the disgrace and humiliation to which they are subjected by the German fascist scoundrels. To achieve this aim we must defeat the German fascist army and exterminate the German occupants to the last man, as long as they will not surrender. There is no other way. We can do this and we must do this at any cost. [ page six ] JOSEPH Chairman of the Council of People's Com Chairman of the Si PRESIDENT ROOSEVELT: (from his Address to the Nation, April 29, 1942) On the European front the most important development of the past year has been the crushing offensive on the part of the great armies of Russia against the powerful German army. These Russian forces have destroyed and are destroying more armed power of our enemies-troops planes, tanks and guns-than all the other United Nations put together. - FRANKLIN D. ROOSEVELT [ page eight ] President of the United States IN: (from his article published in Izvestia, June 21, 1942) people are holding no illusions of an easy victory over the enemy to save But his perus whomeans is trying byhis allskin. position peless the more adventures he undertakes. The end of Hitlerism is problem is to accelerate this end as fast as possible." [ page ten 1 MIKHAIL KALININ Chairman of the Presidium of the Supreme of the USSR POLITICAL AND MILITARY RESULTS OF A YEAR OF PATRIOTIC WAR The following statement summarizing the first year of Soviet-German hostilities was issued June 22, 1942 in Moscow by the Soviet Information Bureau: A YEAR has passed since the peoples of the Soviet Union began waging a patriotic war of liberation against Hitlerite Germany, which on June 22, 1941 treacherously attacked the USSR. What are the political and military results of the year of war? While preparing their bandit attack on our country, the Hitlerite ringleaders seriously calculated that they would be able to knock together a universal coalition against the USSR, draw into this coalition Great Britain and the United States, and thus completely isolate the USSR from other world powers. Not long before the treacherous attack of the German Army on the Soviet country, the Hitlerites, who had been flinging the worst abuse over the radio and in the press at the British and American "plutocrats," sent the notorious Hess to these very "plutocrats." Hess was charged "STORMOVIKS," THE HARD HITTING, ARMORED SOVIET ATTACK PLANES, HAVE BEEN ONE OF THE RED ARMY's MOST SUCCESSFUL WEAPONS AGAINST ENEMY with the task of intimidating the politicians of Great Britain and the United States with tales of the "Ked menace" and persuading the ruling circles of those countries to join the "crusade" against the USSR. What was the result of these attempts of the Hitlerite clique? The Hitlerites' plans to isolate our country from other world powers proved to be built on sand. Great GUNS. HERE A SQUADRON STREAKS UP A ROAD ON THE KHARKOV FRONT. Britain and the United States did not join the campaign against the USSR. More than that, instead of an alliance with Great Britain, Hitlerite Germany obtained an intensification of the war with Great Britain and war with the United States. Great Britain, the United States and the USSR proved to be in one camp of freedom-loving peoples WREAKING HAVOC ON A GERMAN TANK COLUMN. NOTE TANKS ON FIRE. against fascist Germany. TANKS FLYING FAST AND LOW. THEY RIP HEAVY GERMAN TANKS APART WITH HIGH EXPLOSIVE BOMBS, STRAFE ENEMY GROUND TROOPS FROM SIX MACHINE In the progress of the war the companionship-in-arms of the USSR, Great Britain and the United States has gained strength and grown into a mighty force. Conclusion of the treaty between the USSR and Great Britain in London on May 26, and the signing of the agreement between the Governments of the USSR and the United States in Washington on June 11, will expedite the final defeat of Hitlerite Germany. As is now known, in the course of Molotov's negotiations with Prime Minister Churchill and President Roosevelt, full agreement was reached with regard to the urgent tasks of creating a second front in Europe in 1942. Hitler's treacherous policy, calculated to defeat the freedom-loving peoples one by one, has collapsed finally and irrevocably. This Hitlerite policy has brought into existence against fascist Germany a coalition of countries possessing such mighty manpower, production, raw material and food resources as to render this coalition invincible. [ page twelve 1 [ page thirteen 1 No less serious was the collapse that met the Hitlerites' calculations and plans with regard to the rear of the Red Army. When embarking a year ago on this fresh, criminal military adventure, the Hitlerites reckoned on the weakness of the Soviet rear and believed that they would be able, as they had done in the countries of western Europe, our army, corrupt its base from within and thereby break the resistancetoofdemoralize the Soviet Union. But the Hitlerite ringleaders miscalculated here too. The temporary reverses of the Red Army in the first period of the war, as well as the whole subsequent struggle against the German occupants, strengthened still more the union of workers, peasants and intellectuals and the friendship of the peoples of the USSR. The German fascist occupants did not and could not find any support from any of the peoples of the USSR. All the peoples of the Soviet Union remained true to their motherland The Hitlerite adventurers believed that as soon as war broke out, disintegration of the collective farming system would set in and the peasants would come out against the working class and the Soviet Government. Now the whole world knows that nothing came of this Hitlerite scheme. The year of war against the German invaders irrefutably proved that our socialist organization of economy, like our whole Soviet system and its political and military organization, has stood with credit the grave trials that fell to its shareand in more the course stronger stable. of the year of war and has emerged from these trials still The year of war also testifies to the absolute correctness of the policy of the Soviet State, which never lost sight of the possibility of the fascists' attack on our country and therefore unswervingly sought for creation of a United Front of freedom-loving peoples against the forces of aggression and reaction, and by every means and in every way developed the industry and agriculture, science and culture of the Soviet Union, thereby raising the defensive might of our country. Thus the year of hostilities on the Soviet-German front has revealed the utter collapse of the political plans of German imperialism-its reckoning on the military and political isolation of the USSR and the instability of the Soviet rear. As a result of the year of war the companionship-in-arms of the USSR, Great Britain and the United States has grown stronger, the rear of the Red Army has grown stronger, the union of workers, peasants and intellectuals has grown stronger, the friendship of the war. peoples of the USSR has grown stronger. These are the political results of a year of SOVIET HEAVY TANKS RACE INTO ACTION. NOTE WIDTH OF TREADS, WH PERMITTED THESE TANKS TO MANEUVER IN FALL AND SPRING SLUSH WE GERMAN TANKS BOGGED DOWN IN SNOW OR MUD. THESE HEAVY TANKS R INTO LIGHTER GERMAN MODELS AND CRUSH THEM LIKE EGGSHELLS TH ARMOR RESISTS ANYTHING BUT A DIRECT HIT BY A HEAVY CALIBER SHELL TH GUNS ARE POWERFUL ENOUGH TO KNOCK OUT ANY TANKS THE GERMANS c SEND AGAINST THEM. OFTEN THEIR ATTACK, HELD BACK UNTIL THE DECIS MOMENT OF A BATTLE, HAS BROUGHT VICTORY TO THE SOVIET FORCES. The military results of a year of War have proved similarly deplorable for the Germans. When they started the predatory war against the Soviet Union, the German imperialists believed that they would be able to "do away" with the Red Army in one and a halfand or two months. But here too they miscalculated. The war proved to be a prolonged protracted one. The war of fascist Germany against the USSR broke out under conditions that were advantageous for the German troops and disadvantageous for the Soviet troops. [ page fourteen [ page fifteen ] In the first stage of the war the Hitlerite army, because of its sudden and treacherous attack upon the USSR, possessed certain temporary advantages over the Red Army. These advantages consisted in the fact that fascist Germany, while gradually preparing for war against our country, adapted beforehand all her economy to serve the needs of the front and created a numerical superiority in tanks and aircraft. By the beginning of the war against the USSR the German Army was fully mobilized. In addition, it possessed certain experience in modern warfare with the use of great masses of tanks, aircraft and automatic arms which it had gained in war with Poland, France, Greece and Yugoslavia. It is therefore clear why in the first months of war the Red Army was forced to retreat and evacuate part of Soviet territory. But while retreating, the Red Army kept wearing down the enemy forces and dealing them heavy blows. In the course of the fighting the Red Army commanders and rank-and-file became steeled, acquired experience, studied enemy tactics and worked out methods of combating his weapons. Thus things went on until November 1941. In November pitched battles developed at the close approaches to Moscow. Hitler hurled dozens of picked divisions against Moscow, including many tank divisions. Red Army troops engaged in active defense, wore down the enemy and bled him white, inflicting tremendous losses, and at the beginning of December themselves passed to the offensive. This was the turning point in the progress of the war. The Hitlerites lost the battle for Moscow. Soviet troops routed dozens of Hitlerite divisions, hurled the German invaders westward and liberated many thousands of populated places. The Hitlerite command expected to obtain breathing space in the winter months by resorting to positional trench warfare. The Hitlerite command planned to use the winter months to put its battered troops in order. reform them, replenish them with men and equipment, and lastly, give them rest in order to commence a large scale offensive in spring with fresh forces. The Red Army thwarted these strategic plans of the German command From December to March, having taken the initiative, the Red Army forced winter battles upon the Hitlerites that kept exhausting them, wiped out immense numbers of German soldiers and war equipment and forced the Germans RED INFANTRYMEN LEARN TO FIGHT TANKS WITH GRENADES, WITH F BOTTLES OF GASOLINE, WITH ANTI-TANK GUNS (QUICK-FIRING LIGHT LERY). BUT ONE OF THEIR MOST EFFECTIVE WEAPONS HAS BEEN THE AN RIFLE, OPERATED BY TWO MEN. IN THIS REMARKABLE ACTION PICT to use up prematurely their reserves from the deep rear, destined for spring and summer ANTI-TANK RIFLE CREW is SHOWN STOPPING A MEDIUM GERMAN TANK , operations. In the most difficult winter conditions, the Red Army dealt the German fascist troops such heavy blows that they shook the foundations of the German war machine and prepared for the defeat of the Hitlerite army in 1942. RANGE. AT THIS DISTANCE THE ARMOR-PIERCING SLUG, WHICH REAC TREMELY HIGH VELOCITY BEFORE IT LEAVES THE RIFLE'S LONG BARREL, THROUGH THE TOUGHEST TANK ARMOR. The German command has certainly renovated its army and reinforced it with a certain amount of fresh reserves of manpower and materiel for spring and summer operations. But to do this the Hitlerite ringleaders had to sweep clean all remaining men capable of carrying arms, including men with grave physical defects, fit only to a limited degree. During the winter the Hitlerite command time and again promised the German population to launch a "decisive" offensive against the Red Army in the spring. Spring is over, but no decisive offensive of the German Army took place. [ page sixteen 1 [ page seventeen ] Of course, on so extended a front as the Soviet-German front, the Hitlerite mand might still be able to concentrate considerable numbers of troops, tanks and com- has not come to a close. This means that Hitler deceived us-this is what the Germans think more and more frequently. craft in certain sectors and achieve certain successes. Such was the case, for instance, air- on the Kerch Isthmus, where the Germans accumulated superior forces of tanks particularly aircraft, gained a success and forced our troops to retreat. Such German and successes are not impossible in certain sectors of the front, even in the near future. decide it is perfectly obvious that successes like that scored on the Kerch Isthmus in no way But the fate of the war. These successes are temporary and transient. The German Army in 1942 is not the same as it was at the beginning of the Most of the German crack forces have been annihilated by the Red Army. Their war. lar officers have been partly exterminated by the Red Army and partly demoralized reguresult of looting and violence practiced against the civilian population in the occupied as a districts. Non-commissioned officers as a rule have been annihilated and are being replaced by mass promotion from among untrained soldiers. Today the German Army is unable to conduct offensive operations on last year's scale. This is proved convincingly by data on the losses suffered by the German Army. Here are the figures: most In one year of war Germany lost a total of about 10,000,000 men killed, wounded and captured, and the USSR 4,500,000. Germany lost over 30,500 guns, and the USSR Hitler has appeared before the whole world, including the German people, as a base braggart and humbug. Now the Germans cannot fail to see that fascist propaganda is a great fraud, that not a single word nor a single promise of Hitler should be trusted. The Germans are paying for the adventurous policy of the Hitlerite clique with millions of dead on the Soviet-German front. The consciousness of Germany's inevitable defeat is growing amidst the German people. The base of the German Army is beginning to fall to pieces. The day of imperialistic Germany's treacherous attack on the USSR, with the pur- pose of enslavement and extermination of our peoples, seizure and plunder of our motherland, became the day of the beginning of the end of Hitler Germany. This is proved by the political results of the year of war, since in the progress of the war all the plans and calculations of the Hitlerite clique suffered utter failure, whereas the Soviet Union stood all trials, further strengthened its defensive power, and jointly with other freedom-loving peoples of the world created the conditions for the final defeat of the Hitlerite army. 22,000. Germany lost over 24,000 tanks, and the USSR 15,000. Germany lost over 20,000 aircraft, and the USSR 9,000. This is inexorably proved by the military results of the year of war, since in the course of the Soviet-German war Germany's strength is continuously declining, Of the total German casualties, the dead account for not less than 3,500,000. Besides, a thorough study of this question has shown that as a result of the efficient medical service in the Red Army, 70 per cent of the total number of wounded returned whereas the strength of the Soviet Union and the friendly and Allied countries is steadily to the ranks; whereas, owing to the absolutely inadequate medical service of the German and mendacious propaganda. The Hitlerites' fabrications about a "New Order" in Army, which Was only adapted to "lightning war," no more than 40 per cent of the total number of wounded returned to the ranks, Thus a year of war on the Soviet-German front has revealed the utter collapse of the war plans of German imperialism. These are the military results of the year of war. The irreparable losses inflicted on the German fascist troops by the Red Army brought about a lack of confidence in victory among the German soldiers and especially the German people, and undermined their faith in Hitler and the fascist command. The German soldiers and population remember that Hitler promised final victory and an end of the war in 1941. The war did not end in 1941, and victory is not there. This means that Hitler deceived us-this is what the Germans think more and more frequently. The German soldiers and population remember that in October 1941 Hitler and his underlings announced that the Red Army was annihilated, that it would never again restore its strength, and that the problem of the eastern campaign was settled. It turned out that the Red Army had preserved all its strength, and the eastern campaign [ page eighteen ] growing. This is proved by the utter collapse of Hitler's imperialistic ideology and demagogy Europe and the allegedly special mission of the "Aryan race." about the fascists as the champions of culture, suffered collapse. The fascists have appeared before all the peoples of the world as the watchdogs of German imperialists, as reactionaries and obscurantists, enemies of the working people, vehicles of medieval barbarity, enemies of progress and wreckers of culture. Hitlerite Germany has become the mortal enemy of the majority of the population of the globe. This is also proved by the disintegration that has begun in the internal and European hinterland of the German Army, as the spirit of revolt and protest against a war for the alien interests of German bankers and plutocrats grows among the peoples enslaved by German imperialism and experiencing the incredible hardships of war. It is proved, lastly, by the prospects of the war, which are becoming ever more favorable for the Soviet Union, Great Britain and the United States, and unfavorable for Germany, her "allies" and vassals. These are the political and military results of a year of war with the German fascist invaders. [ page nineteen ) AGREEMENT BETWEEN THE UNITED STATES OF AMERICA AND THE UNION OF SOVIET SOCIALIST REPUBLICS, SIGNED AT WASHINGTON, JUNE 11, 1942 WHEREAS, The Governments of the Union of Soviet Socialist Republics and the United States of America declare that they are engaged in a cooperative undertaking, together with every other nation or people of like mind, to the end of laying the basis of a just and enduring world peace securing order under law to themselves and all nations: and WHEREAS, The Governments of the Union of Soviet Socialist Republics and the United States of America, as signatories of the Declaration by United Nations of January 1, 1942, have subscribed to a common program of purposes and principles embodied in the Joint Declaration known as the Atlantic Charter, made on August 14. 1941 by the President of the United States of America and the Prime Minister of the United Kingdom of Great Britain and Northern Ireland, the basic principles of which were adhered to by the Government of the Union of Soviet Socialist Republics on September 24, 1941: and WHEREAS, The President of the United States of America has determined, pursu- ant to the Act of Congress of March 11, 1941, that the defense of the Union of Soviet Socialist Republics against aggression is vital to the defense of the United States of America: and WHEREAS, The United States of America has extended and is continuing to extend to the Union of Soviet Socialist Republics aid in resisting aggression; and WHEREAS, It is expedient that the final determination of the terms and conditions upon which the Government of the Union of Soviet Socialist Republics receives such aid and of the benefits to be received by the United States of America in return therefor should be deferred until the extent of the defense aid is known and until the progress of events makes clearer the final terms and conditions and benefits which will be in the mutual interests of the Union of Soviet Socialist Republics and the United States of America and will promote the establishment and maintenance of world peace; and PRESIDENT ROOSEVELT and FOREIGN COMMISSAR MOLOTOV at the White House, during Mr. Molotov's visit to the United States in May and June WHEREAS, The Governments of the Union of Soviet Socialist Republics and the United States of America are mutually desirous of concluding now a preliminary agreement in regard to the provision of defense aid and in regard to certain considerations and the which shall be taken into account in determining such terms and conditions, making of such an agreement has been in all respects duly authorized, fulfill and all acts, conditions and formalities which it may have been necessary to perform, either or exe- of to the making of such an agreement in conformity with the laws been cute the Union prior of Soviet Socialist Republics or of the United States of America have performed, fulfilled or executed as required; The undersigned, being duly authorized by their respective Governments for that purpose, have agreed as follows: [ page twenty 1 [ page twenty-one ] ARTICLE I The Government of the United States of America will continue to supply the Government of the Union of Soviet Socialist Republics with such defense articles, defense services, and defense information as the President of the United States of America shall authorize to be transferred or provided. ARTICLE II The Government of the Union of Soviet Socialist Republics will continue to subsequent to March 11, 1941, and accepted or acknowledged by the President on behalf of the United States of America. ARTICLE VII In the final determination of the benefits to be provided to the United States of America by the Government of the Union of Soviet Socialist Republics in return for aid furnished under the Act of Congress of March 11, 1941, the terms and conditions thereof shall be such as not to burden commerce between the two countries, but to tribute to the defense of the United States of America and the strengthening thereof con- promote mutually advantageous economic relations x pecen them and the betterment and will provide such articles, services, facilities or information as it may be in a position to supply. of world-wide economic relations. To that end, they shall include provision for agreed action by the Union of Soviet Socialist Republics and the United States of America, open to participation by all other countries of like mind, directed to the ARTICLE III The Government of the Union of Soviet Socialist Republics will not without the consent of the President of the United States of America transfer title to, or possession of, any defense article or defense information transferred to it under the Act of March 11, 1941 of the Congress of the United States of America or permit the use thereof by anyone not an officer, employee, or agent of the Government of the Union of Soviet Socialist Republics. ARTICLE IV If, as a result of the transfer to the Government of the Union of Soviet Socialist Republics of any defense article or defense information, it becomes necessary for that Government to take any action or make any payment in order fully to protect of the rights of a citizen of the United States of America who has patent rights any in and to any such defense article or information, the Government of the Union of Soviet Socialist Republics will take such action or make such payment when requested to do so by the President of the United States of America. ARTICLE V expansion, by appropriate international and domestic measures, of production, employment, and the exchange and consumption of goods, which are the material foundations of the liberty and welfare of all peoples; to the elimination of all forms of discriminatory treatment in international commerce, and to the reduction of tariffs and other trade barriers; and, in general, to the attainment of all the economic objectives set forth in the Joint Declaration made on August 14, 1941, by the President of the United States of America and the Prime Minister of the United Kingdom, the basic principles of which were adhered to by the Government of the Union of Soviet Socialist Republics on September 24. 1941. At an early convenient date, conversations shall be begun between the two Gov- ernments with a view to determining, in the light of governing economic conditions, the best means of attaining the above-stated objectives by their own agreed action and of seeking the agreed action of other like-minded Governments ARTICLE VIII This Agreement shall take effect as from this day's date. It shall continue in force until a date to be agreed upon by the two Governments The Government of the Union of Soviet Socialist Republics will return to the United States of America at the end of the present emergency, as determined by the President of the United States of America, such defense articles transferred under this Agreement as shall not have been destroyed, lost or consumed and as shall be determined by the President to be useful in the defense of the United States of America or of the Western Hemisphere or to be otherwise of use to the United States of America. Signed and sealed at Washington in duplicate this eleventh day of June, 1942 FOR THE GOVERNMENT OF THE UNION OF SOVIET SOCIALIST REPUBLICS: MAXIM LITVINOV Ambassador of the Union of Soviet Socialist Republics at Washington ARTICLE VI In the final determination of the benefits to be provided to the United States of America by the Government of the Union of Soviet Socialist Republics full cognizance shall be taken of all property, services, information, facilities, or other benefits or considerations provided by the Government of the Union of Soviet Socialist Republics [ page twenty-two ] FOR THE GOVERNMENT OF THE UNITED STATES OF AMERICA: CORDELL HULL Secretary of State of the United States of America [ page !wenty-three AMBASSADOR LITVINOV'S ADDRESS, JUNE 22, 1942 AT MADISON SQUARE GARDEN T HE 22nd of June, 1941 was a notable date in the history of the second World War and will one day be seen to have been its turning point. On this day Hitler carried out his fateful decision to attack the Soviet Union, a decision which was to determine the fate of all his undertakings, of Nazism, of Facism and of the other ideologies akin to them. On this day Hitler flung down a challenge to the mightiest of the continental powers, a closely knit union of peoples with a joint population of a hundred and eighty million. Hitler was then at the zenith of his military glory. He had overcome all his adversaries in the west and south of Europe, after having dealt them crushing blows, Of these adversaries only Great Britain, isolated, enfeebled, was still showing fight and Hitler at that time had a good chance of emerging victorious from the war he had started in Europe, before it assumed world dimensions WHY DID HITLER ATTACK THE USSR? Why, it might be asked, did Hitler, instead of following up his great victories, victories which would have given him sway over the whole of Europe west of the Soviet border and, probably, over the colonial possessions of the European countries, decide to tempt fate once more by undertaking an adventure so fraught with risk as war with the Soviet Union? In seeking for an answer to this question we must of course ignore the mendacious explanations given by Hitler himself. At the very beginning of his political activities Hitler proclaimed to the whole world that one of his chief political weapons would be the lie, and whenever possible the thumping lie-lying propaganda, lying assurances, lying promises, lying explanations of motive. This practically amounted to an invitation to incredulity-the only invitation from Hitler that I would care to accept. If Hitler had set any limit to his aggressive aspirations he would, of course, have con- tented himself with the unexpectedly rapid, and quite considerable victories he had achieved up to the 22nd of June, 1941. But his appetite is insatiable. The careful study of Hitler's political credo, as expounded in Mein Kampf and other Nazi literature, SOVIET AMBASSADOR MAXIM LITYINOY AND HARRY HOPKINS, SPECIAL AssisTANT TO PRESIDENT ROOSEVELT. EXCHANGE A CORDIAL HANDCLASP AT THE AID-TO-RUSSIA MEETING, MADISON SQUARE GARDEN, JUNE 22. 1942. makes this quite clear. The unpardonable error of those who for many years actively opposed the organization of collective security against Hitlerism and all aggression, lay in the fact that they did not realize that Nazism, as a foreign policy (that is to say the super-imperialism of Hitler), set no limits to its aggressive aims, and was directed against the whole world, toward the domination of the whole of Europe and its colonies, and subsequently toward world domination They did not understand that while Hitler might change the order of his intended assaults, he would never curtail their scope, and that the conquests of [ page twenty-four ] [ page twenty-five ) Austria, Czechoslovakia, Poland, Belgium, Holland and other countries were mere stages on the road to world domination. And so, having set himself the aim first of European and then of world domination, Hitler could never have reconciled himself to the independent existence of any great country, whether the Soviet Union, the United States or even Japan. Even so, it would seem that the more rational course for Hitler to pursue would have first to finish the war in west, start on east. He seems to have however, that it would to continue war with armies drunk with victories after the conclusion peace, to start a new war. again the mission of Hess to England not results, Great Britain did not hasten to capitulate, and the crossing taking into consideration the naval of Great Britain, would been a hard nut to crack, and taken some time for preparations. Hitler was a you see, and he to find work his Hitler in rating of the internal of the Soviet so as to squeeze out of them additional manpower. If to all this we add the obvious advantages of surprise attack, it will be easy to understand the forced retreat of the Soviet troops in the early stages of the war. While retreating, however, the Soviet armies inflicted upon the enemy greater losses than they suffered themselves. The Hitler war machine lost its best units and was sorely buffeted by continual fighting for whole year. For the first time the German theory of the blitzkrieg was exploded, and Hitler was disappointed in his hopes of facile lightning victories by the Red Army's prolonged and stubborn defense of its positions. The Red Army destroyed the legend of the invincibility of the German Army, of the infallibility of Hitler's strategy, undermined the overweening self-confidence of Hitler's troops and Hitler's people, instilling in them doubts of the sagacity of their Fuehrer and mistrust of his promises and of their final victory. The Soviet peoples during the last year have had to undergo innumerable privations, to endure tragic weeks and months. Millions of them have had to abandon their State, and its army. He was taken in by the false of corrupt hearths, leaving behind, or rather destroying, their property, and, in the midst of apparently with tales of tendencies USSR and ing at superhuman pressure. But my country will always be proud of the mission that Ukrainian misled by the well known Rosenberg, who assured him Union would fall apart at a touch. Incorrect conclusions were did be the the and in of bamboozled also easier that of might other hurry, have made the yield the and Channel, of emigrès, miscalculations immediate then him the the had his Then separatist for myth-maker vast propaganda within thought, strength superiority armies, been emissary the than, unspeakable suffering, have had to seek for new shelter. The whole population is workhas fallen to it: to create the first dam to stem the tide of German aggression, to bring also, probably, drawn by Hitler from the initial setbacks of the Soviet Army during the to a halt-not for the first time in its history-the arrogant would-be world conqueror. Finnish campaign. He did not understand that these temporary failures were due to the fact that the Soviet Army had never prepared for war against Finland, that no plans for this had been made, the whole campaign having been imposed upon it by History has known many such conquerors, but Hitler, with his unbounded lust for Hitler's own aggressive plans. power and conquest, his insolence and cruelty, outstrips all his forerunners. What task could be more honorable and glorious than the historic one of giving this conqueror such a drubbing that, at least in the coming centuries, he should find none to follow in And so, harboring these illusions about the Soviet Union, Hitler hoped to strike it a lightning blow, to seize the fertile plains of the Ukraine, the mineral deposits of the Soviet south, the oil fields of the Caucasus and other riches of the Soviet Union, and by this means to force Great Britain to her knees, or at least to make his own future struggle against her less arduous. HITLER TRIED To AVOID WAR ON Two FRONTS In concluding a pact of non-aggression with the Soviet Union in 1939, Hitler was moved by the sole aim of avoiding war on two fronts, which he always feared. When he could sum up the position in the west as practically a state of truce, from which he could anticipate no disturbances, he attacked the Soviet Union. Hitler could now carry out his offensive hampered neither in his rear nor on his flanks for a whole year. Under cover of the Soviet-German pact of non-aggression, conscientiously observed on the Soviet side, he prepared meticulously for his attack. The huge military machine which he had created for his aggressive ends had emerged almost unscathed from the operations in the west and south of Europe. In addition he had been enriched by the wealth, labor, and even military resources of the countries he had occupied and enslaved. He could increase his pressure on his involuntary allies, [ page twenty-six J his footsteps? As I have already said, the Red Army had to retreat during the early stages of the war, and with it stepped back a considerable part of our war industry also. Enormous aviation, tank, metallurgical and other plants and factories, with all the workers in them, had to be evacuated from territory occupied by the enemy and transferred hundreds of miles to the rear. This exacting and onerous operation was splendidly carried out time and again. The evacuated factories were re-started in full working order on the new sites, and their present output not only equals, but in many cases actually exceeds pre-evacuation standards. Moreover, with the aid of our scientific institutions, new sources of raw material were discovered and exploited to make up for those left in the hands of the enemy. I should like to mention here that, throughout the year of war just completed, the cultural-educational work of the Soviet peoples in the spheres of science and art has been going on all the time with extremely fruitful and valuable results. At the same time, while bringing to a halt the onslaught of the Nazi hordes, the Red Army hurled them back in some places, compelling them in others to mark time for long months, and to go over to the defensive. This forced Hitler to mobilize all the remnants of his forces and resources. both in Germany and in the countries of his [ page twenty-seven satellites, and once more build up that front which he is bound to consider decisive for himself, in preparations for a fresh offensive. By pinning Hitler's forces to the Eastern Front, the Soviet Union enabled its ally, England-and after its entry into the war, the United States-to prepare and accumulate forces for future operations. These forces, unfortunately, have had to be scattered over separate fronts, while even forces not in use, and inactive, are not available to counterbalance Hitler's new and very considerable efforts on the Eastern Front. MORE AID FROM U.S., BRITAIN NEFFED Valuable at is the material aid received from the United States and Great Britain, it has not, so far, come into scale with the scope of operations. There is now, however, every ground for hoping that this situation will be changed in the near future, and that Hitler will have to relinquish his pet idea of war on one front only. But in the meantime he has been able to take the initiative on certain sections of the Eastern Front and, passing again to the offensive, to gain several new positions. Naturally, the more such positions he gains, the greater will be the operations required on a new front to equalize the changing situation. There can be no sort of doubt that if the German forces had been diverted from the Eastern Front at the moment when the initiative was in the hands of the Red Army, when the German troops were weakened and demoralized, the whole military situation might have been changed, and it would certainly have been possible to inflict considerable, if not final defeat on the main Hitler army. This moment was allowed to slip. Let us hope the lesson has not been in vain. Hitler has now embarked upon a fresh offensive on the Soviet front, flinging upon it all his forces and resources. This is his final throw of the dice, on which he is staking his all. The Soviet troops are meeting his new assault with the same unexampled heroism, tenacity and fearlessness which they displayed all through the past year, enriched "AFTER THE LIBERATION OF KERCH BY OUR UNITS, THERE CAME TO LIGHT THE SHOCKING DETAILS OF ONE OF THE MOST FIENDISH CRIMES THAT THE GERMAN ARMY PERPETRATED ON SOVIET TERRITORY-THE SHOOTING OF OVER 7,000 CIVILIANS THE GERMAN COMMANDANT'S OFFICE ASSEMBLED THE POPULATION BY RUSE. HAVING POSTED ORDER No. 4 DIRECTING THAT CITIZENS WERE TO APPEAR IN SENNAYA SQUARE. AFTER THEY ASSEMBLED THEY WERE SEIZED, DRIVEN OUTSIDE THE CITY AND MOWED DOWN BY MACHINE GUN FIRE." -FROM THE NOTE ON GERMAN ATROCITIES ISSUED BY PEOPLE'S COMMISSAR OF FOREIGN AFFAIRS VYACHESLAV MOLOTOY ON APRIL 27. 1942. THIS PICTURE WAS TAKEN AS TWO PARENTS, RETURNING TO KERCH AFTER ITS RECAP- TURE BY THE RED ARMY IN FEBRUARY 1942. IDENTIFIED THE BODY OF THEIR SON. by the experience of war and the study of the enemy's insidious military tricks. No temporary setbacks and retreats can break down their fighting spirit. They know that the United States and their ally Great Britain not only will not leave them without considerable material aid, but will increase this aid from week to week, from month to month. They know that the eyes of all the United Nations, the hopes of all humanity not caught in the Nazi and Fascist toils, are upon them and upon their duel with the Hitler monster. The warm sympathy and good wishes reaching out to them from all over the world are no slight moral support in their struggle. They know of the generous aid extended both to their wounded and to civilian war victims by the American people. I should like to take this opportunity to express on their behalf gratitude to Russian I War Relief, the American Red Cross and all contributors for their splendid help. know what American generosity is and have not the slightest doubt that Americans will not soon be weary of well doing. In the recently concluded agreements the Soviet, British and American Governments have again, and in no uncertain tones, given mutual pledges not to lay down their [ page twenty-eight ] [ page twenty-nine ] arms or cease from the struggle till the international terrorist Hitler, together with EXCERPTS FROM HARRY HOPKINS' ADDRESS his henchmen, have been swept from the face of the earth, till the ideological and material foundations for their criminal aggressive intentions have been destroyed. ALLIED STRENGTH CAN ENDURE TEMPORARY SETBACKS The inexhaustible resources of the three most powerful states-the USSR, the British Empire, and the United States of America-will enable them to endure any temporary setbacks or military failures whatsoever. This is where they differ from Hitler's Germany, whose endurance is strictly limited both as to time and resources. It would, however, be wrong to suppose that superiority of resources is bound mechanically and in all circumstances to ensure victory. Much depends on the rational and timely use of resources. Their dispersal in space and time might neutralize their superiority and lead to disastrous consequences. The foe cannot be beaten if his forces of today, mobilized and developed as they are to the utmost, are opposed by forces of tomorrow. But we may be sure that the agreements come to in London and Washington will prevent any such unfortunate consequences and ensure the utmost and swiftest effective- ness to our joint resources. These agreements, together with the Atlantic Charter and the declaration of 26-now 28-nations, will at the same time help to lay the founda. tions on which new and better international relations will rise, capable of preventing for the present and succeeding generations a repetition of the tragedy humanity is now passing through. Thus an end will be put to Hitler's attempts to hurl humanity back into a semi-savage state, and civilization will once more be enabled to continue its nor- mal onward movement AT MADISON SQUARE GARDEN, JUNE 22, 1942 Ten months ago I went to Moscow. The mighty German Army was crowding its very gates. The military world believed the city would fall in a few weeks. They said the Red Army had no supplies, that it was badly trained, and that the Russian people could never stand up against the invincibility of Hitler's army. I found a city feverishly preparing for the coming onslaught-men, women and children engaged in the one occupation of preparing the defense of Moscow. I found that only the foreigners believed that Moscow would fall. The people were supremely confident. As on the eve of every great battle, the whole population was nervous, a feeling of tenseness permeated the streets of Russia's capital. Long lines of trucks moved endlessly through the city toward the front. Recruits were marching through the city to take their position in the battle line. The fighter craft from the airfields around Moscow were on the instant alert. Thousands of soldiers manned the anti-aircraft guns. That night I went to see the leader of the Soviet Government. After four hours I left the Kremlin confident that the German Army would spend the winter not in Leningrad or Moscow but in the cold and bleak forests and plains from Murmansk to the Crimea, freezing their precious toes and cursing their boastful Hitler. Later that night the German bombers attempted to attack Moscow, and I saw their mighty anti-aircraft fire envelop the skies. Hundreds of night fighters took to the air and few of the bombers got through to their target The Soviet Union today enters upon the second year of war. I think you will agree with me that the activities in the country during this first year of war, in the military, economic and cultural spheres, have shown the world examples of the great achievements and boundless sacrifices of which a belligerent nation under proper leadership is capable, when firmly united, free of internal saboteurs, conscious of the righteousness of its cause, inspired by patriotism and by other high ideals. The Allies and the United Nations may rely upon such a nation. They may be sure that it will do its share in the struggle for the common cause, and then some. Tonight we meet for the particular purpose of considering the consequences of the vast and terrible battle being waged on the Russian front. Make no mistake about it, Russia and the Russian Army are in danger-just as they have been in danger for the last 365 days. We know they are fighting against great odds. We know that the Russian front is the most important strategic front in the world. A defeat of the Russian Army would be a major disaster and prolong the war for months Our flow of supplies is reaching the Russian front Our tanks and airplanes, manned by soldiers of the Red Army, are in direct conflict with our enemy. But more than that must and will be done. We will not be discouraged about that critical front. For of one thing we can be sure-the Russian Army will fight with the same skill and bravery and desperation. With that spirit and determination, with skillful leadership and with the help of their Allies, I believe again that Hitler will not make an irreparable break through the Russian lines. And, indeed, when the history of this war is finally written it will find the Russian armies pushing the barbarous invaders out of the homeland so beloved by all Russians. And so on this anniversary night we say "All Hail" to the Russian people and their gallant army [ page thirty ] [ page thirty-one ] A second front? Yes, and, if necessary, a third and fourth front to pen the German Army in a ring of our offensive steel. Hitler's boastings are getting tamer and tamer, for he knows that the Russian Army on his eastern front and a British-American army on other fronts-when and where he does not know-will bring his vaunted panzer divisions to heel. And his cities, one by one, will be destroyed by the Allied air forces. His so-called "ally," Italy, led by that fat, almost retired exhibitionist, Mussolini, will collapse like an inflated mushroom under the first stress of a violent attack. Once Mussolini wanted Ethiopia-and got it-well, when this war is over if the Italian people do not hang him by his cowardly neck I can only hope that he will be turned over to the tender mercies of the Ethiopian King. American Salutations to the USSR As the ring will grow tighter and tighter around Hitler's army, the German people will know then how they have been betrayed by their cruel and hateful leader and they, too, will take awful vengeance on his sneaking, lying soul. There are those in America who think merely because we cannot win the victory this year that the outcome is uncertain. I have no doubts but that we shall have defeats, that mistakes may be made, that dark days are ahead, that great sacrifices still unknown will have to be made by the American people. But that does not mean that we are not sure of victory. Our industrial and military might is mobilized The American people have made up their minds. Nothing can stop the onward march to overwhelming military victory. Here are printed some of the many expressions of American friendship recently transmitted to the Soviet Union. Some were addressed on the war's anniversary to Chairman of the Council of People's Commissars Joseph Stalin, to Chairman of the Presidium of the Supreme Soviet Mikhail Kalinin, Ambassador Maxim Litvinov or other Soviet officials. Others are excerpts from addresses by public officials Still others are from proclamations by state governors designating June 12, 1942, as Aidto-Russia Day. WOMEN IN THE RED ARMY. FROM LEFT TO RIGHT: NURSE SUKHOVAROVAWHO HAS CARRIED 41 WOUNDED MEN FROM BATTLEFIELDS, AMBULANCE PLANE PILOT SEDOVA, SCOUT YERSHOVA, CHAUFFEUR PAVLOVA, ASSISTANT SURGEON KOMAROVA. SURGEON BYLININA AND TELEGRAPH OPERATOR MAKSIMOVICH. [ page thirty-two ] [ page thirty-three 1 THE UNITED STATES VICE PRESIDENT WALLACE: HENRY A. WALLACE Vice President of the United States On this first anniversary of the Nazis' brutal attack on the Russian land, I wish to offer my sincerest congratulations to the Russian people on the outstanding bravery and tenacity they have shown. They are defending not only their own soil and own rights but are helping defend the future of plain people everywhere. Our own country as well as Russia, and every one of the United Nations, is pledged to fight on without stint to the limit until victory is won. Then we must all stand shoulder to shoulder in converting that victory into a world peace that will endure. It seems to be a law of life that from the greatest sacrifice and suffering come the greatest gains. And so I believe the tremendous price now being paid will have its compensation in the form of a better world in which to live. SECRETARY OF STATE HULL to People's Commissar of Foreign Affairs Molotov: I extend through you to the Government and people of the Soviet Union congratulations upon the success with which you have resisted the brutal aggression of Nazi Germany and thus frustrated the plans for world conquest so overconfidently laid by our common enemy. For a year the peoples of the Soviet Union have been engaging the armies not only of Nazi Germany, but also of those other European countries whose governments CORDELL HULL Secretary of State accepted Nazi dictation. In this struggle the armed forces of the Soviet Union, with the heroic support of the entire population, have so acquitted themselves as to win the admiration of the liberty-loving peoples of the world and to earn a place in history beside those Russian armies which over a century and a quarter ago did so much to ruin the plans of another aspirant of world conquest. During the past year the American people, although themselves threatened by aggression from several directions, have gladly shared their arms and supplies with the Soviet Union. It is planned that during the coming year these arms and supplies will pour forth from our factories and countryside in an ever widening stream until final victory is achieved. We are confident that before the end of another year the instigators of this war will have been given to understand how seriously they underestimated the determina- tion and ability for effective action of the peace loving nations and will have learned that in an aroused world aggressors can no longer escape the consequences of acts resulting in human suffering and destruction. [ page thirty-four ] [ page thirty-five ] HENRY L STIMSON Secretary of War SECRETARY OF WAR STIMSON: History knows no greater display of courage than that shown by the people of Soviet Russia in their year-long battle against the Nazi invader. During every minute of every hour in the past 12 months they have been achieving the impossible-and they are still achieving it. For all the United Nations they have become a symbol of valor, and to salute them today, on the anniversary of the beginning of their magnificent struggle against the enemy, is to salute heroism itself. SECRETARY OF THE NAVY KNOX: FRANK KNOX The United States and all the United Nations rise as one to salute their great ally, Secretary of the Navy the Soviet Union, which has held the Nazis at bay for a fateful year. History records no more valiant, steadfast, unflinching stand. We and all our embattled allies owe and acknowledge an everlasting debt of gratitude to the armies and people of the Soviet Union. Their gallant struggle from the Arctic to the Black Sea has once more arrested the tide of conquest that threatened to engulf the world. O [ page thirty-six ] [ page thirty-seven ] GENERAL GEORGE C. MARSHALL Chief of Staff, U. S. Army: The gallantry and aggressive fighting spirit of the Russian soldiers command the American Army's admiration. Their display of fortitude has been magnificent. The leadership of the Soviet troops, supported by the great fighting spirit of the soldiers and the courage of the Russian people, has already written one of the greatest pages in the history of nations. ADMIRAL ERNEST J. KING, Commander-in-Cbief, United States Fleet: I join with the rank and file of all the American forces in admiration for the Soviet Union's heroic and historic defense. She has withstood perhaps the most power- ful organized assault in all time. The quality of military leadership and the courage and gallantry of Russian soldiers and fliers is attested daily. Soviet seamen in the Arctic, Baltic and Black Sea played a part in the epic struggle of the past year which our navy is proud to acknowledge. MARSHAL SEMYON TIMOSHENKO GENERAL DOUGLAS MACARTHUR outstanding field commander of the Red Army Commander-in-Chief of United Nation Forces in the Southwest Pacific HARRY HOPKINS, Special Assistant to President Roosevelt: The American people are bound to the people of the Soviet Union in the great alliance of United Nations They know that in the past year you have, in your heroic combat against our common foe, performed for us and all humanity a service that can never be repaid. We are determined that nothing shall halt us from sharing with you all that we have and are in this conflict, and we look forward to sharing with you the fruits of victory and peace. I had the high privilege of seeing the Soviet people in the blaze and havoc of war. and I was profoundly stirred by their incomparable valor. They fought with a courage, GENERAL MACARTHUR to the Soviet Alliance Anniversary Committee in London: Eight months ago the German High Command, from a mountain near Smolensk, looked toward Moscow. Their armies had swept eastward victoriously; they had over- run Europe from Norway to Greece and had flowed over into North Africa: they had rolled into Western Russia and the Ukraine, encircled Leningrad in the north and captured Odessa in the south. And their leader, tingling with the thrill of anticipated victory, looked eastward toward the Soviet capital and announced in these words: "The Russian Army has been crushed, never to rise and threaten us again." How different the picture is now after the indomitable stand, the magnificent skill and audacity that will be remembered as long as free men live-and generations unborn will owe a great measure of their freedom to the unconquerable power of the counter-offensives and the resistless surge westward of Russia on the march! Today the free peoples of the world unite in salute to that great army and great nation which so nobly strives with us for victory, liberty and freedom. [ page thirty-eight ] [ page thirty-nine 1 Soviet people. CHAIRMAN NELSON, War Production Board: In the year which has passed since the treacherous invasion of the Soviet Union by fascist armies, the men and women on the production lines here in the United States have been inspired by the courage and devotion of the Soviet soldiers and workers. DONALD M. NELSON The Soviet people know how to fight; more than that, they know how to work and sacrifice on the home front with superhuman endurance. Chairman of the War Production Board American workers are proud to contribute in some measure to supply the weapons which strengthen the arm of the Soviet soldier. He fights for us all. Because of his example the American people have worked harder, resolved that more and more arms shall flow from American factories to our Soviet allies. The people of the Soviet Union and the United States fight shoulder to shoulder for freedom. They will go on working shoulder to shoulder for peace. EDWARD R. STETTINIUS, JR., Lend Lease Administrator: On the anniversary of the Nazi invasion of the Soviet homeland we extend warmest greetings to the heroic Russian people. The deeds of your fighting men and women, war workers and civilians, have inspired us all. They rank among the greatest achievements of the United Nations. They give us hope for victory in the war and for peace. The munitions we have sent already are only a token of the help you will receive. The United Nations' armies, backed by their fields and factories, will strike through the enemy's heart to victory. They will achieve for mankind a better world than we yet have known. TOM CONNALLY, Chairman, Senate Foreign Relations Committee: The magnificent defense of the Russian Army against German attack is one of the most inspiring events of our times. We will never forget the heroism of the Russian Army and the determination of the Russian people to drive the German invader from their homeland The United States will continue to supply Russia with all possible aid, and as our own strength increases we will strike ever harder blows against the common enemy. WILLIAM L. BATT, War Production Board: SENATOR HOMER T. BONE: Germany made one blunder in attacking Russia and another in declaring war on The first anniversary of Russia's entrance into our common battle for freedom is a fitting occasion to express our admiration for the courage, endurance and skill of the Russian people. We Americans are determined to match your achievement-in ever increasing supplies of planes, tanks, guns and other implements of war. May Russia ending. and may we fight this coming year as bravely as Russia has done in the year now [ page forty ] the United States. Germany is paying with blood for both. The United States understands the heroic spirit of the Soviet people fighting for their homeland. We are not interested now in the economic and government differences between the two nations. The war must be won, and Russia is our ally-a magnificent ally. I congratulate Russia in having sustained for a year the fiercest onslaught Germany's armies could deliver and dealing Germany blow for blow. [ page forty-one 1 SENATOR CHARLES L. McNARY: June 22 marks the first anniversary of Germany's attack on the Soviet Union. In the months of hardship and heroism that followed, the Russian people pledged in a sacrifice of blood their determination to cast out the aggressor. SENATOR CLAUDE PEPPER: June 22 is doubly memorable That date marks the height of German perfidy and the assurance of Axis defeat. The foul attack on Russia sealed Hitler's doom, brought into unshakeable fraternity mighty peoples which Hitler cannot hope to defeat. Moreover, it united the aspirations of the Russians, British, Chinese and Americans. Among us, Russia and the other gallant, free peoples with whom we fight, there have already emerged the United Nations, pledged together to rebuild this sad world when national banditry has been forever destroyed. We have passed dark days, and even darker may lie ahead. We know nothing can break the spirit of the United Nations, Nothing can halt their avenging wrath. They know divine benedictions are upon their swords and shields, they are moved fellow the hopes and prayers not only of those who are suffering but of those who love their by United men. Unafraid, undaunted and confident, with Russia gallantly leading, the Nations march toward victory and a new day. SENATOR ELBERT D. THOMAS: EARLY IN THE WAR THE GERMANS TRIED TO BOMB Moscow. THEY HAVE TRIED MANY TIMES SINCE. BUT NEVER HAVE THEY SUCCEEDED IN GETTING MORE THAN A FEW SCATTERED BOMBERS OVER THE CITY. DAMAGE HAS BEEN June 22 brought the war to Russia, but also brought good understanding between the United States and Russia. The understanding in the future will be of greater significance than Hitler's starting the war against Russia. NEGLIGIBLE CREDIT FOR THIS RECORD CONTRASTING WITH THE FATE OF MANY PROUD EUROPEAN CITIES, IS SHARED BY PURSUIT PLANES AND ANTI: AIRCRAFT BATTERIES SPECIALLY DETAILED TO GUARD THE SOVIET CAPITAL MANY OF THE INVADING GERMAN PLANES, LIKE THE ONE SHOWN HERE WITH THE COMMANDER OF THE BATTERY WHICH SHOT IT DOWN. HAVE NEVER RETURNED TO THEIR BASES. [ page forty-two 1 [ page forty-three 1 ANDREW J. MAY, Chairman, Military Affairs Committee, House of Representatives: The Russian people surprised the entire world by their vigorous, patriotic fight in defense of their country in the past year. They are now aided by the Allied Nations, and I believe will perform a major part in winning the war. The American Government, with everything it has and will have, stands beside them. HERBERT H. LEHMAN, Governor of New York: On this occasion of June 22 I send greetings to the heroic people of the Soviet Union. June 22 marks the completion of a full year of successful resistance to the Nazi invasion. You suffered untold hardships, made unbelievable sacrifices, but your courage and effectiveness infinitely advanced the cause of the United Nations, You have given tremendous practical help toward ultimate victory over Hitler and his partners in tyranny, The Red Armies, undaunted by the tremendous power of the Nazi war machine, met it directly, stopped its forward march and rolled it back. Because of their heroic stand and because of the grim determination of the Russian people to resist to the death against aggression, Hitler and his cohorts will be an infinitely much less powerful adversary when the time arrives for delivery of the final crushing blow. In a recent radio speech Roosevelt said: "The Russian forces have destroyed and are destroying more armed power of our enemies-troops, planes, tanks, gunsthan all the other United Nations put together." CAVALRY HAS PLAYED AN IMPORTANT PART IN RED ARMY VICTORIES. THROUGH THE WINTER, WHEN SNOW HAMPERED TANK MOVEMENTS, SOVIET CAVALRY UNITS STRUCK DEEP INTO GERMAN LINES AND CAPTURED MANY TOWNS BEHIND ADVANCED ENEMY STRONG POINTS. FASTER THAN INFANTRY, LESS DEPENDENT When a year ago the German Nazi war machine began its invasion of Russia, only a few Americans believed Russia would be able to resist the barbarians many weeks. But the summer dust of the Russian plains turned to autumn mud and winter ice and ON SUPPLIES THAN MECHANIZED FORCES, THE RED CAVALRY HAS PROVED ITS WORTH IN THIS WAR snow covered the land as Russia fought on. Today Russia is an ally of the United States in the war against Germany. Every blow struck against the Nazis by Russia is a blow on behalf of America. Every aid will be given our courageous ally. [ page forty-four ] [ page forty-five ] CHARLES EDISON, Governor of New Jersey: New Jersey, like her sister states, watched with sustained interest and deep admira- tion the unprecedented year of heroism and sacrifice through which our Russian allies have passed. Through one of the fiercest military campaigns in recorded history, the Russian people fought for their homeland with a bravery and stoicism that remain unrivaled in military annals, We dedicate this day as a special occasion to mobilize new aid for our Russian allies, so that the forces of tyranny will be driven not only from Russia but from all countries inhabited by free men. 2 COLONEL RAYMOND ROBINS, bead of the American Red Cross in Russia in 1917-18: Glorious comrades of the Soviet Union: This is the anniversary of the base betrayal and brutal aggression of the fiendish Nazi-fascist slaves against the people, homes, fields, factories and mines of the peaceful Soviet workers' republic. This has been the costliest but also the most glorious year in the long history of the Russian people. For 12 terrible months the Workers' and Peasants' Red Army, under the heroic and wise leadership of your matchless warrior chief, Stalin, and supported by the whole people of the Soviet land, fought a continuing battle which, in the words of General MacArthur, has been "in scale and grandeur the greatest military achievement in all history." UNDERGROUND IN SEVASTOPOL SOVIET WOMEN ARE SHOWN REPAIRING SOL- DIERS' UNIFORMS FAR BELOW THE SURFACE IN THE BESIEGED CITY. IN SUCH BOMBPROOF SHELTERS, CARVED OUT OF THE ROCKY CRIMEAN CLIFFS, THE LIFE At this anniversary the Soviet people no longer stand alone. These United States and Great Britain, with her commonwealth of nations, are united with Soviet Russia to win victory in this world war for freedom and also for peace, and for protection against future aggressions and aggressors. This is the hour in which the Soviets vindicate and fulfil the faith of Lenin. All who love the freedom of the human spirit now pay tribute to the matchless power of Lenin's great dream. [ page forty-six ] OF SEVASTOPOL WENT ON. SLEEPING QUARTERS, KITCHENS, SCHOOLS AND WORK SHOPS TO SUPPLY THE DEFENDERS ABOVE GROUND WITH ALL THEY NEEDED WERE SAFE FROM ENEMY BOMBARDMENT. [ page forty-seven ] JOHN P. DAVIS, Secretary, National Negro Congress: To the peoples of the Soviet Union: The finest sons of the Negro people, today part of the mighty American army in Northern Ireland, are eagerly awaiting the hour to attack the enslaving forces of Hitler on a western front. That hour is coming soon. We greet June 22 after one year of your gallant struggle, not only in defense of yourselves and your territory, but in defense of the freedoms and liberties of the peoples of the world. We hail the gallant exploits of your Red Army and Navy, guerrilla fighters, men, women and youth who made every sacrifice to save humanity from Hitler slavery. We send warmest greetings to your leaders, Stalin, Molotov, Kalinin, Timoshenko. Like you, the Negro people know this war is a fight for freedom. We will not fail you. Together we march to victory and freedom. CZECHOSLOVAK NATIONAL COUNCIL OF AMERICA On the day of the first anniversary of the cowardly attack of the barbarous, bloodthirsty, fiendish hordes of Nazis on the peace-loving peoples of the Union of Soviet Socialist Republics, we come to pay homage to you, the most heroic defender of the highest values of life and of human dignity. We are fully convinced of the Russian prowess, of their invincible spirit and of the final glorious victory. We say a hearty "spasibo" and share with you the firm conviction that the menace of Nazism will be extirpated this year with the help of the Western Front, which is inevitable. Glory and gratitude to the heroic Russian people! SNIPERS, CARRYING THE STANDARD RED ARMY RIFLE EQUIPPED WITH AN OPTICAL SIGHT. HAVE PATIENTLY MARKED DOWN MAN AFTER MAN OF THE INVADING HORDES THEIR TOLL MUST BE COUNTED IN HUNDREDS OF THOUSANDS IN RUMANIAN-AMERICAN ALLIANCE FOR DEMOCRACY; Paul M. Deac, National Chairman: SUMMER, THEY CRAWL THROUGH WHEAT FIELDS OR FORESTS IN SUITS THAT BLEND WITH THE GREEN BACKGROUND IN WINTER THEY WEAR WHITE SMOCKS, INVISIBLE AGAINST SNOW. THE RED ARMY PROVIDES ITS MARKSMEN WITH The Rumanian-American Alliance for Democracy, composed of eight large federations of Rumanian fraternal, cultural, religious, youth and political organizations representing more than 90 per cent of all Americans of Rumanian origin, wishes to congratulate the Russian armies for their heroic stand against Hitler's war machine during this past 12 months. It is our hope that the United Nations will finally crush the foe, free the country of our origin from Nazi bondage, and enable our Rumanian brethren to have a government of their own free choice within Rumania's natural frontiers. [ page forty-eight ] OPTICAL SIGHTS ON A MASS SCALE. [ page forty-nine 1 WILLIAM GREEN, President, American Federation of Labor, speaking at Russian War Relief meeting in Madison Square Garden, New York: INTERNATIONAL FUR AND LEATHER WORKERS UNION OF THE UNITED STATES AND CANADA, CIO, to JOSEPH STALIN, Chairman of the Council of People's Commissars of the USSR: A year ago today, Hitler sealed his own doom. Flushed with a succession of easy victories over unprepared smaller nations. this lightweight Napoleon dared to go out of his class and take on mighty Russia. He knows now that this was a fatal mistake On behalf of 75,000 organized fur and leather workers of the United States and Canada, we extend warmest greetings and solidarity to the heroic Red Army and peo- To the brave and unconquerable people of Russia we send this word: "Keep up the good fight, for the Yanks are coming!" ples of the Soviet Union on the anniversary of the perfidious attack by the Hitler bandits. The magnificent, death-defying resistance of the valiant Red Army and fearless Soviet peoples under your leadership and the heavy, damaging blows inflicted upon the brutal Nazi hordes, has destroyed forever the legend of Nazi invincibility and kindled the hopes of all mankind for speedy victory over the ruthless fascist foe. JOSEPH CURRAN, President, National Maritime Union: The fur and leather workers and the American people as a whole join in the declaration of our General Douglas MacArthur that the hopes of civilization rest on Warmest greetings to the Soviet Red Army and Navy and the valiant Soviet people for their courageous struggle on behalf of the people of the world. Your heroic stand has given the United Nations the element of time, which should now result in an all-out offensive culminating in the complete destruction of the fascist forces from the face of this earth this year. Forward to a free world. the worthy banners of the courageous Russian Army. We hail with joy the recent treaties concluded between our country, the Soviet Union and Great Britain and the public statements of the three Governments, recognizing the urgent necessity of open- ing a western front soon to crush Hitler in a mighty pincers and achieve victory in 1942. We pledge to redouble our efforts to achieve international labor solidarity of the trade union movement of our country with the trade unions of the Soviet Union and Great Britain. The fur and leather workers of the United States and Canada are determined to spare no effort and leave no stone unturned to promote the speedy and RADIOGRAM FROM AMERICAN SEAMEN to Chairman of the Presidium of the Supreme Soviet KALININ: successful prosecution of the war, to attain victory over our common enemy and the enemy of all mankind, barbaric fascism, and to establish freedom and democracy for all the peoples of the world. Long live the united free peoples of the world! Long live the Union of Soviet We American seamen and longshoremen, on the first anniversary of the treacherous Nazi attack on your country, pledge our utmost to keep ships sailing with supplies Socialist Republics! Long live Stalin, Kalinin, Timoshenko, Molotov, Voroshilov, Litvinov, leaders of the great Soviet peoples! Greetings! for Russia's heroic fighting forces and for other American allies. Forward to defeat of the fascist enemies of mankind NATIONAL MARITIME UNION OF AMERICA MARINE FIREMENS UNION OF THE PACIFIC COAST MASTERS. MATES AND PILOTS ASSOCIATION INLAND BOATMENS UNION MARINE COOKS AND STEWARDS ASSOCIATION INTERNATIONAL LONGSHOREMENS AND WAREHOUSEMENS UNION DR. ERNEST O. LAWRENCE, Professor of Physics, University of California; Honorary Member, Academy of Sciences of the USSR: I wish to extend greetings and felicitations to the Russian people on the anniversary of the Nazi attack. Your great courage and fortitude, which is standing the test of defense of your homeland, is magnificent, and free people everywhere are forever in- debted to you for your importance in stemming the tide of wanton aggression. I wish you increasing success in driving the invader from your great country and cherish the hope that this will be accomplished in the near future. [ page fifty ] [ page fifty-one ] PROF. WALTER CANNON, Professor of Physiology, Harvard University; Honorary Member, Academy of Sciences of the USSR: Germany's year of wanton war against the Soviet Union has again proved that German promises are utterly untrustworthy. Again, abominably hideous cruelties and barbarities have revealed the typical German treatment of captured and conquered. Again it is clear that freedom-lovers must fight fiercely to preserve freedom or become slaves of brutal tyranny. Perhaps the Germans, who praise and rejoice in war, who teach their children the glory of war, have learned that the ability to kill is not limited to their armies alone. The valiant forces of the Soviet Union have proved that the boasted Teutonic might is not invincible and that the Teutonic hordes are destroyable. Certainly the crowning event is the growing mutual understanding of the three great powers, the Soviet Union, the British Commonwealth and the United States, and their firm resolve to fight and labor together for a better future for all humanity. DR. KARL TAYLOR COMPTON, President, Massachusetts Institute of Technology: I am pleased to join other Americans in heartily congratulating the Soviet Union on the anniversary of its heroic, successful resistance to Nazi invasion. We are also engaged in war because of unprovoked attack. Success depends on the heroic qualities of common men, also scientists and technicians, on whom depends the reconstruction of the shattered world, wherein all may live without fear in peace and abundance. As FIRING WHEN ENEMY DIVEBOMBERS PLUNGE LOW TO BLAST RED ARMY president of a scientific, technical institution, I greet the scientists of Russia and assure them that we are doing all possible to guarantee the common victory. NS, THESE QUADRUPLE MAXIMS THROW UP A DEADLY PATTERN OF FIRE R BULLETS CURVE UP IN THE DARK TO RIDDLE GERMAN MACHINES TRANSBY RED ARMY SEARCHLIGHTS PROF. HENRY E. SIGERIST, Johns Hopkins University: On the anniversary of the invasion of the Soviet Union by the fascist hordes, the whole freedom and peace loving world looks to the Red Army and the Soviet people in admiration and gratitude. The heroism of your fighters, workers and peasants, your military skill and economic organization have made the greatest contribution toward final defeat of the fascist plague. American physicians and medical scientists greatly admire the achievements of your medical corps and hope for close cooperation between medical workers of the two countries during and after the war. [ page fifty-two ] [ page fifty-three ] DR. GILBERT N. LEWIS, Professor of Chemistry, University of California; Honorary Member, Academy of Sciences of the USSR: It is a great pleasure on this anniversary to acclaim the great heroism and fortitude of the Russian people. However, these virtues would have been of little avail without the almost unparalleled recent development of science and technology in the Soviet Union. THEODORE DREISER, writer: I consider it a privilege to express my appreciation and gratitude to the Russian people for their labors in behalf of all humanity, for their amazing social achievements, besides the heroic defense of their country against the lunatic Hitler attack. I have followed Russia's social plannings and labor ever since 1917 and have always been con- vinced-as MacArthur phrased it-"The hopes of civilization rest on the worthy banners of the courageous Russian Army," and also upon the bedrock of intelligence and innate humanity and social decency of the Russian people. UPTON SINCLAIR, writer: The happiest news of my lifetime is the news that my native land and Great Britain have joined the Soviet Union in a pledge of victory over the Nazi fascist aggressors and a peace of reconstruction after the hideous war. I speak for millions of other Americans in sending congratulations to the people of the Soviet Union upon their heroic defense. . S. 1942 THE RED ARMY RECAPTURED THE TOWN OF YUKHNOV The tide is turning and we will have an opportunity to build a more decent world. GERMANS AFTER CROSSING THE UGRA RIVER. IN AN EFFORT TO CROSSING THE GERMANS HAD BLOWN UP THE BRIDGE SHOWN PAUL DE KRUIF, writer: KHNOV is SOUTHEAST OF VYAZMA Some years ago I was very proud, as a sympathizer with the effort toward a new life of the people of the USSR, that my books were translated into Russian and widely read within the Soviet Union. In 1939, I am ashamed to confess, I was among those Americans who feared a real alliance was about to be formed between the Nazis and Soviets. It is with the greatest happiness that I now make amends for this error of my judgment, which was based on my ignorance of the true spirit of the Soviet leaders. To me the Soviet Union's resistance is the most inspiring event in this grim and tragic time of human trial. Without Soviet fortitude by this time the world would surely have been engulfed by its would-be destroyers. I hope very much the Soviet Union and the United States together will lead the world toward a new life. [ page fifty-four ] [ page fifty-five ] EFREM ZIMBALIST, violinist: We in America fully appreciate the service which the Soviet Union by its gallant resistance rendered to the entire civilized world, and we are aware of the tragedy and stupendous sacrifice which made this resistance possible. Mankind for generations in the future will be humbly grateful. THOMAS MANN, writer: June 22, 1941-the day when the Soviet Union entered this war of the freedom of peoples-will forever remain the most memorable day for all mankind With all my heart I share in the admiration which all freedom-loving humans pay to the tremendous and successful resistance of the Russian Army and the whole Russian nation against the ruthless invader. Unfortunately, we must fear that the struggle will still be long and the sacrifices still terrible. But the material help which the western democratic powers can extend to Russia in its heroic battle is happily increasing at great speed, and we never for a moment cease to believe in final victory. In the years before the war Russia was undergoing a cultural and industrial ascend- ancy such as the world has rarely witnessed. It is one of Hitler Germany's greatest crimes that, itself but a cultural desert and capable only of destruction, it interrupted this proud, hopeful development by its assault on your country. But I write immediately after the Anglo-American-Russian agreements, which are a promise that Russia will resume and successfully carry on its interrupted work after the war in cooperation with the great western powers. Nobody can tell how long this War will still last. For my part, I can only say Inow an old man-do not hope for anything more longingly and do not ask nature for anything more prayerfully than to live until the day when everywhere bells will toll, glasses will ring and people embrace each other with the call: "The monster is prostrate, the world is free, new life and new happiness can begin." IN SEPTEMBER 1941, WHEN THE GERMANS WERE DRIVING TOWARD LENINGRAD AND KIEV AND BATTLING AT BRYANSK AND SMOLENSK TO ADVANCE ON Moscow, THE SOVIET GOVERNMENT PROCLAIMED UNIVERSAL MILITARY TRAINING FOR ALL SOVIET CITIZENS. WITHOUT SLACKENING THEIR PACE IN THE FACTORIES, THE WORKERS MADE READY TO FIGHT, DRILLING WHEN THEIR HOURS OF LABOR LION FEUCHTWANGER. writer: WERE OVER. DETACHMENTS OF THESE WORKERS, THE PEOPLE'S MILITIA. Every victory, every major military achievement of the Red Army destroys not only a part of the war machine of the barbarians, but also helps to destroy the wall of prejudiced lies against the Soviet Union, built up all over the world by deliberate FOUGHT AT LENINGRAD, KIEV. TULA AND ELSEWHERE HERE A GROUP OF RAILWAYMEN DRILLS. propaganda and stupidity. What the Red Army accomplished during a year of war has not only defended the Soviet Union from the invading army of barbarians but has also opened the eyes of many millions all over the world to the power and truth about the Soviet Union. All the civilized world gives tribute to the Soviet Union, with admiration and love, on this day which marks one year of war. [ page fifty-tix ] [ page fifty-seven ] CANADA W. L. MACKENZIE KING, Prime Minister of Canada: I welcome the opportunity to send the gallant peoples of the Soviet Union greetings on behalf of the men and women of Canada. A year ago the German armies struck at the heart of Russia but met the combined resistance of the Russian people, who rallied to the defense of their homeland and thus to the defense of freedom against aggression everywhere in the world. In bitter months of fighting on the Russian front, the Red armies, supported by a united, resolute nation, have resisted the attack of the common enemy with a forcefulness and determination which have aroused the profound admiration of the civilized world. SAVA KOSANOVICH, Minister of State of Yugoslavia: For almost 25 years humanity has suffered under the fatal distrust between antifascist peoples of the western world and the Soviet Union. It is unnecessary to discuss the reasons. It is a fact that fascism flourished best in this atmosphere. Relying exclu- But something happened which the enemy of mankind did not foresee. Attacking the Soviet Union without a declaration of war, fascism did not dream of the strength it would meet and the reaction that would be inspired among the peoples of the world. By magnificent work the people of the Soviet Union astonished mankind with blows meaning certain destruction for the enemy. The Russian Army's successes in this struggle from June 22 to the present are most valuable for humanity. Its success shows the strength of the army, the strength of industrial workers and peasants, the sacrifices of Russian guerrillas and the deep patriotism of the masses. I believe the most important effect on mankind and the destiny of fascism of these successes will be elimination of the fatal distrust between the western democratic peoples and the Soviet Union. This is the best result of Russia's resistance. a sively on the depth of this distrust, fascism provoked a terrible war which placed choice before mankind: either struggle to exterminate the forces of evil, or death in the worst form, slavery, humiliation, spiritual and physical destruction. In this world-wide struggle against Axis domination the fighting fronts are many but the enemy is always the same. On land, sea and air Canada's fighting men maintain ceaseless vigil against the same foe. On the home front, factories and fields in Canada are working night and day to produce war materials. Ever increasing numbers of men and machines are leaving Canada to take up battle stations. Our common task has brought our two countries closer together. Essential weapons, munitions and foodstuffs are going forward regularly from Canada to sustain the Russian people in this struggle, which will determine the world's future for generations to come. The people of Canada welcomed the opportunity to contribute to the Canadian Red Cross, to send vital medical supplies to the Russian front. This desire to share more fully in the common effort to win the war and cooperate more effectively in peacetime has found official expression in the arrangements recently made between Canada and Russia, providing for the establishment of direct diplomatic relations between our two Governments by opening legations in our respective countries. We in Canada stand ready to extend a warm welcome to the official representative of the Soviet Union. We greatly welcome the exchange of views which this exchange of representatives makes possible. Today our peoples fight side by side. Tomorrow. when the scourge of fascism is ended, our peoples will work side by side to aid in the establishment of a world order based on the dignity of all men and the interdependence of all nations JAMES L. RALSTON, Defense Minister of Canada: On this first anniversary of Hitler's brutal invasion of Russian soil I send, on behalf of the Canadian Army, a message of congratulation for the magnificent struggle against the invading Huns. Your success in beating back the common for is an inspira- tion to the whole world to continue to fight until victory is assured. [ page fifty-eight ] [ page fifty-nine ] C.G. POWER, Air Minister of Canada: The courage and tenacity of the Red Air Force in decimating the Luftwaffe in a year of bitter fighting have earned the sincere admiration of the Royal Canadian Air Force. Our Canadian aviators have a particular bond of sympathy with their Russian brothers because of the similarity of weather conditions and topography of their respective homelands. Canadian and Russian aviators both know the bite of Arctic cold and the dazzling brilliance of new-fallen snow. Both know the sense of solitude in skimming the icy tips of mountains, the loneliness in flying over uninhabited wilderness, forest and muskeg. During peace Russian and Canadian aviators are neighbors in the northlands Presently they, brothers-in-arms, will be lending their flying skill and knowledge of far places to the common cause, smashing the Axis. Our Russian allies fought magnificently in the skies of Russia. They fought swarms of Nazi bombers away from the roofs of Moscow. They smashed Stuka attacks and ranged far behind the enemy lines, destroying transport shipping and aircraft on the ground. Some few of our Canadian aviators have fought alongside Russian aviators over Russian battlefields. Thousands of other Canadian aviators are now fighting the same foe day and night on many different fronts-but in the same cause-that fascist greed and aggression not be permitted to terrorize freedom-loving peoples. T. A. CREAAR, Minister of Mines and Resources of Canada: On the anniversary of the wanton, unprovoked attack by Hitlerite Germany against the Soviet Union I have great pleasure in expressing the admiration universally felt in Canada for the magnificent resistance of the peoples of the Soviet Union. The military might of the Soviet Union proved a rude shock to the self-confidence of the arrogant foe. In fighting with such undaunted courage and tenacity for the homeland, the Russian people helped save humanity from a barbarous slavery worse than death itself. Their prodigies of valor and determination filled ordinary men and women throughout the world with new hope. A GUERRILLA RETURNS. YOUNG CHISTYAKOV is WELCOMED BY MOTHER AND FRIENDS IN HIS NATIVE VILLAGE OF KULEBAKINO, Moscow REGION. AFTER THE RED ARMY FREED IT FROM THE GERMANS WHILE THE ENEMY WAS IN THE VILLAGE. CHISTYAKOV FOUGHT WITH A GROUP OF GUERRILLAS. In the hour of victory, all the Allies will remember the stupendous effort of the Soviet Union. On the foundation of cooperation in war, all the United Nations can combine in constructive cooperation to build a better world for the common man. [ page sixty I [ page sixty-one 1 ADELARD GODBOUT, Premier of Quebec: One year ago the Nazi hordes attacked the Soviet Union without warning and without reason. From the first hour the defense of the Russian people has been mag- J. H. KING, Minister Without Portfolio: nificent. In the Province of Quebec we watched with intense interest the titanic battle of Russia in all its stages. We admire the boundless courage of the Russian people, their spirit of sacrifice and resolute confidence in the approaching victory of the United Soviet military operations in 1941-42 are one of the greatest military achievements in military history. The people of the Soviet Union can enter the second year of war with the assurance that the Allies will send all possible aid, munitions, military supplies and other essentials The Allies' military operations in other parts of the world will be of a character and kind to relieve pressure on the Russian front. Nations. We sympathize with them in their grievous loss of life and property. The Province of Quebec, like the remainder of Canada, takes a prominent part in all phases of Canada's war effort-furnishing men for the armed forces, industrial and agricultural production on a vast scale for the United Nations, heavy contributions of war loans. We are determined never to rest until we achieve with our valiant Allies, the United Nations, an overwhelming victory which will be the prelude to a permanent, fruitful peace. MITCHELL F. HEPBURN, Premier of Ontario: When Germany, after signing a pact of friendship with Russia, treacherously attacked her last June, few even among the military experts believed that Russia, with her tremendously extended frontiers, could withstand the mechanized might of a coun- try which for years had devoted its entire national income to the production of armaments. The armies of the Soviet Union were forced to retreat but preserved their cohesion and strength to counter-attack successfully-this feat will remain one of the most remarkable in military history. By their valor, courage and endurance the Russian people astounded the world. J. B. McNAIR, Premier of New Brunswick: On this fateful anniversary of the invasion of Russia by the Nazi hordes, the people of New Brunswick salute the brave, united people of the Soviet Union and their continuing achievements in the field of battle against the common foe. The great courage, skill and audacity of the armed forces, the tenacity of the people, the resource and Our sympathy and understanding extends to the many millions in invaded territory who are suffering under the sting of German atrocities. I am certain that every loyal Canadian will do his part to give every possible assistance to bring these hangmen and murderers before a world court of justice. Meanwhile I say: "Hail the gallant Russian people! You have set an example of industrial production and heroic sacrifice of land, home and life. We must carry on until complete, final victory." ability of the Soviet leaders-these things the world will never forget. The Russian spirit of determination confronting the invader is a shining light to the other United Nations, who have pledged to give the utmost effort to utterly defeat the Axis aggressors. The Soviet people are fighting with heroic courage. The Canadian Province of New Brunswick supports the cause for which they fight to the utmost. Our thoughts and constant sympathy are extended to those who have lost loved ones and homes in the great conflict. While the loss of life is large and saddening, consolation may be found for our noble ally in the thought that the example set by the people of Russia is a source of admiration and inspiration for us all. [ page sixty-two ] [ sixty-three ] THANE A. CAMPBELL, Premier of Prince Edward Island: A year ago the Hitler-Nazi hordes treacherously attacked and invaded Russia Since then the Russian people's determination and courage to defend their country have invaluably contributed to the defense of the world's freedom and earned the unstinted admiration of all freedom-loving peoples. Prince Edward Island rejoices in the increas- ing measure of cooperation and assistance the United Nations are giving the Soviet Union-which we regard as one of the most essential methods for an early, victorious conclusion of the war. A.S. MACMILLAN, Premier of Nova Scotia: The magnificent stand of the Government and people of Russia against the fascist UNTIL THEY ROLLED ON TO SOVIET SOIL THE GERMAN PANZER DIVISIONS WERE UNBEATEN. THEIR MASSES OF HEAVY TANKS, STORED UP FOR YEARS BEFORE THE enemy has aroused the admiration of the democratic world. We see in Russia brave, gallant people fighting with supreme valor to rid their land of the cruel, treacherous invader. This spectacle of epic heroism moves men everywhere to quick sympathy and earnest desire to aid. WAR BEGAN, HAD OVERWHELMED OPPOSING ARMORED FORCES AND CRASHED THROUGH THE BRAVEST INFANTRY ALMOST AT WILL BUT IN THE RED ARMY THEY MET THEIR MATCH. SOVIET TANKS, THOUGH OUTNUMBERED INCLUDED HEAVY MODELS WITH STRONGER ARMOR AND MORE POWERFUL GUNS THAN ANY- THING THE GERMANS COULD BRING INTO ACTION. AND RED ARMY INFANTRY MEN WERE TRAINED TO MEET ENEMY TANKS AND EQUIPPED WITH SPECIAL WEAPONS TO DESTROY THEM. HERE is A PICTURE OF THE FAMOUS, LONG-BARRELED SOVIET ANTI-TANK RIFLE, WHICH FIRES A BULLET ABLE TO PIERCE HEAVY GERMAN TANK ARMOR. [ page sixty-four 1 It is a privilege for Nova Scotia to share fully in the present momentous struggle. Our workers and sailors are engaged in the battle of production and transportation. Our sons in the various fighting forces are in action on many fronts and help protect supplies to the Soviet Union. The day is drawing near when the combined forces of the United Nations will move against Nazi Germany in an irresistible tide. Then will be written one of the most glorious chapters in the history of war, when our peoples will hail each other as victors and brothers in the final battle for liberation of the world. [ page sixty-five ] JOHN BRACKEN, Premier of Manitoba: A year ago the power of the Nazi aggressors had scarcely been challenged. Today, through the sacrifice, bravery and devotion of the Russian people, Hitler's hordes have received such crushing blows it is seemingly certain they will never be able to recover the fighting strength they then possessed. Your brave fight has won for you the grati- tude of all the oppressed peoples of Europe and your Allies. Your magnificent effort for the defense of your national existence since that time has won the admiration of the world. The road ahead may be long, but the result is sure. Our victory will be final and complete, and we look forward to working with you in the task of rebuilding the post-war world on a basis that will ensure enduring peace and prosperity to all the peoples of the world. JOHN HART, Premier of British Columbia: On the anniversary of the invasion of the Soviet Union there arises within us a feeling of unbounded admiration for the courage of the Russian people who are so gallantly defending their soil. British Columbia is doing its utmost to contribute to the war against the Nazi-fascist countries and for the maintenance of all those free institutions to which the United Nations have dedicated their manpower resources. We will fight shoulder to shoulder in this great cause until victory and peace. JUSTICE P.H. GORDON, Chairman of the Executive Committee of the Canadian Red Cross: THE TURNIP-SHAPED CUPOLAS OF BOROVSK GLEAM BEHIND A CAPTURED GERMAN TANK. IN A PERIOD OF ONE MONTH AND 10 DAYS, FROM DECEMBER On the anniversary of the German invasion of the Russian homeland, the Canadian Red Cross sends a message of sympathy and comfort to our sister organization, the Soviet Red Cross. Through the long winter we heard stories of the courage and fortitude displayed by Russian Red Cross nurses and physicians, who have done much to alleviate the suffering of the valiant Soviet forces and civilian victims of cruel warfare. 6 TO JANUARY 15, SOVIET TROOPS CAPTURED 2,766 TANKS TOGETHER WITH LARGE QUANTITIES OF OTHER ENEMY EQUIPMENT. MANY MORE THAN THIS WERE DESTROYED. OFTEN THE GERMAN TANKS BOGGED DOWN IN MUD OR SNOW AND WERE ABANDONED, WHILE SOVIET TANKS, BETTER ADAPTED TO THE TERRAIN AND CLIMATE, CHURNED AHEAD ON THEIR BROADER TREADS TO OVER- WHELM ENEMY INFANTRY. We not only admire the heroic Russian people and their fight to retain their way of life, but we also try to show our admiration by raising funds among our people for the purchase of medical supplies and comforts for the Soviet Red Cross. Some of these supplies have reached the front line in Russia, more are enroute and more will continue to go forward in a never ending stream until victory has been won and peace estored. [ page sixty-six ] [ page sixty-teven ] W. J. PATTERSON, Premier of Saskatcbewan: LATIN AMERICA All the people of the United Nations have the greatest admiration for the services rendered their cause by the Government and people of the Soviet Union. In defending their homeland they performed what was seemingly impossible and established an example which we all should emulate. FULGENCIO BATISTA, President of Cuba: At the end of the first year of trial of the Soviet people against the mutilators and destroyers of all human welfare, we are convinced-those of us in a firm position of sacrifice for the good of humanity-of the decisive triumph of the valiant and veteran Soviet soldier. The wishes of the Cuban people are united with mine for the Soviet A. R. MOSHER, President, Canadian Congress of Labor: soldier's glorious victories. Every Canadian worker admires the courage and endurance of the people of Russia in defense of their homeland against brutal aggression. The Russians have fought not 1 only their battle, but ours. Their heroic resistance and the enormous losses inflicted on the common enemy provided the other Allies the necessary time to prepare an offensive strategy which alone will ensure victory. I am glad, therefore, on behalf of Canadian workers to send the valiant people of Russia hearty greetings on the anniversary of the treacherous, unprovoked invasion of their country by Nazi Germany, to send assurance the Canadian workers will do everything possible to provide war materials for the Russian front and the other fronts where the enemy will ultimately be defeated. We look forward with the Russians to the establishment of a social system wherein will prevail justice, freedom, peace, plenty and brotherhood, which the masses will fully earn by their sacrifices and fortitude in the present world struggle. ELIE LESCOT, President of the Republic of Haiti: Today it is just a year since the free peoples learned with indignation that Nazi Germany, ever more drunk with conquest and obsessed with desire to dominate the world after destroying it, had flung itself in brutal, unprovoked aggression on the valiant, courageous people of Russia. The whole universe hearkened to the gigantic and deadly shocks, unprecedented in history, of the opposing armies. Despite the advantage of surprise which aided the Nazi hordes, the whole USSR, filled with a great love of liberty, put up a resistance which astonished the world, fighting back so mag- nificently that it destroyed once and for all the myth of German invincibility-an element which had influenced certain nations to submit to enslavement. UNITED STEELWORKERS OF AMERICA, Local 1817, Osbawa, Ontario, to Ambassador Litvinov: Will you please convey to the union of Soviet steel workers our sincere greetings on the first anniversary of the Soviet Union's great struggle against Hitler's treacherous attack. Our members have followed the course of your country's magnificent fight with great interest. We were and are greatly encouraged by the Soviet Union's powerful stand. We know the steel workers of the Soviet Union have had a great share in the production of the weapons which the Red Army is using so splendidly against our common enemy. Tell them we, Canadian steel workers, are doing our share here so that unitedly we can go forward to victory over fascism and reaction. [ page sixty-eight ] Therefore today, June 22, on the first anniversary of the terrible battle which the glorious Russian people is carrying on against the unleashed forces of evil, it is my pleasure as chief of the Haitian nation, itself born in heroic struggle and forged by suffering, to address to the political directors, military leaders and soldiers of the USSR a message of complete sympathy and to tell them that the whole Republic of Haiti acclaims the Soviet Socialist Republics and is proud to be their ally in wiping out the Nazi demon and the Fascist demon. More than ever Haiti believes in the victory of the United Nations. [ page sixty-nine ] LEONIDAS TRUJILLO, President of the Dominican Republic: Although reciprocal establishment of representations between the Governments of the Dominican Republic and the Soviet Union, which would determine the existence of official relations between the two countries, has never taken place, the Dominican people and Government, absolutely at one with the United Nations fighting fearlessly against the barbarous totalitarian forces loosed to destroy the liberty and dignity of man, contemplate with lively sympathy the admirable effort which the Soviet Union is achieving in defense of its territorial integrity, with a valor and courage which are effectively contributing to the final vict/RE of the finest ideals of humanity. RICARDO ADOLFO DE LA GUARDIA, President of Panama: The great actions of the Soviet Army have not only dealt heavy reverses to Nazi aggression, but have contributed to creating the conditions necessary for the United Nations to take the offensive. The people and Government of Panama, recognizing this fact, are confident that the Soviet armies will surpass themselves in the United Nations' final effort to destroy totalitarianism, and that the Soviet Union will be a powerful factor in the reorganization of the world on a basis of internal liberty and democracy and of equality of all nations in the world family. EZEQUIEL PADILLA, Foreign Minister of Mexico: I accept with pleasure the invitation TASS Agency has been good enough to extend to me to send a few words of sympathy to the heroic Soviet people on the first anniversary of German aggression against the USSR. The notable resistance of the defenders of Moscow, Leningrad and Sevastopol is an example for free men and constitutes a source of encouragement for the nations which have united their destinies to save the world from the oppression of the Nazi-fascist dictatorships. THE SUB-MACHINE GUN IN THIS RED ARMY MAN'S HANDS is A USEFUL WEAPON AT CLOSE QUARTERS, IN THE DARK, OR IN SUDDEN, SLASHING RAIDS. His UNIT HAS JUST MADE A SURPRISE ATTACK ON A RAILWAY STATION, DRIVEN OFF THE GERMANS GUARDING IT, AND TAKEN OVER A STRING OF FREIGHT CARS WHICH THE ENEMY WAS PLANNING TO SEND TO THE REAR THE GERMANS HAD TO ABANDON THEIR DEAD AND WOUNDED Without erring in the direction of optimism, it may be affirmed that even though much suffering still lies ahead, the dawn of victory has already begun to illumine the horizon. The year 1942 will pass into history as the year of greatest effort. The democracies are sure that Russia, understanding it as such, will energetically continue the fight together with its Allies until the moment of ultimate triumph permits the organization of a permanent and indivisible system of peace on a basis of justice for all humanity. [ page seventy ] [ page seventy-one ] FIDEL VELASQUEZ, General Secretary of the Confederation of Mexican Workers: America Observes Soviet War Anniversary The Confederation of Mexican Workers, in the name of the Mexican proletariat, sends greetings to the Soviet people and Government on the occasion of the first anni- versary of Nazi aggression. We express sympathy and solidarity for their valiant attitude assumed in defense of human liberties and also express our wish that in the present struggle the forces of barbarism and savagery may be crushed forever and that a new world may arise in which social justice will reign. A year of staunch Soviet battle against Hitlerite invasion was celebrated by Americans June 22, 1942, with meetings and observances in many parts of the country. The governors of 28 states and the mayors of 214 American cities had officially proclaimed it "Aid-to-Russia Day." In New York City Ambassador Litvinov and Harry Hopkins, Special Assistant to President Roosevelt, spoke at a meeting in Madison Square Garden. Other speakers included the President of the American Federation of Labor, William Green, Bishop VICENTE LOMBARDO TOLEDANO, President of the Latin American Federation of Labor: William T. Manning and Rabbi Stephen S. Wise. Associate Justice Stanley F. Reed of the United States Supreme Court presided. In Chicago on June 22 a meeting for the benefit of Russian War Relief was held One year has been enough for Nazism-the strongest and most dangerous militarypolitical regime of all those which ever in history threatened human liberty and civilization, and which might have changed the destiny of the world for long years-to be halted, discredited and bled white, by the Soviet Union. A few months more will suffice for all peoples to be ready to thank the Soviet Union for the reconquest of their liberty, or the disappearance of the threat to it. One year has also been enough to at the Civic Opera House and in Philadelphia a similar meeting was held at the Academy of Music. At Los Angeles a mass meeting was held at the Shrine Auditorium on June 24 and at Boston there was a rally in Boston Garden on the 22nd. At Richmond, Va., there was a large Russian War Relief dinner on the 22nd and at Newark, N. J., a joint A.F.L.C.I.O. Victory Committee dinner on the 24th. destroy 20 years of systematic propaganda against the Soviet Union and to convince the masses of the people all over the world that a nation is invincible only when it fights as does the Soviet Union for the progress of humankind. At Trenton on the 22nd there was an outdoor rally, at Detroit and Miami there were Tag Days for Russian War Relief, at Seattle all major Slav groups joined in picnic on June 21. At Washington, D. C., there was a meeting at the National Press Club June 28, sponsored by the Jewish ICOR, and on June 30 a Russian War Relief meeting at the Potomac Water Gate. In connection with the latter meeting, Secretary of the It has been a whole year of pride, confidence and hope. Since the day of the German attack on the Soviet Union, I have felt sure the Soviet Union would resist and finally win. I know the Russian people. I remember Madrid. Everybody in America follows with passionate enthusiasm the Russian people's heroic stand and wonderful spirit that keeps them constantly counter-attacking. But perhaps Russia does not realize fully how great is the determination to help Russia and how everything is being done and will be done to send the gallant Red Army all the war material possible. Until a few weeks ago the idea of a second front was a popular demand. Today it is the government program and everybody here looks eagerly to Washington, where two great leaders, Roosevelt and Churchill, are discussing the second front. On this first anniversary of the Russian epic, my greetings to the Russian people, the Red Army, and immortal Sevastopol. [ page seventy-two ] Treasury Henry Morgenthau, Jr., requested 20,000 announcements and 400 posters for distribution through the Treasury Department, and Secretary of the Navy Frank Knox wrote to Russian War Relief that the Navy Department would "strive to the utmost to help in this most humane undertaking. All personnel of the Navy Department, headquarters, Marine Comps and the Coast Guard will be notified of the coming anniversary rally " ALVAREZ DEL VAYO, former Foreign Minister of the Spanish Republic: Typical of the June 22 proclamations by state governors was that issued by Gov- ernor Herbert H. Lehman of New York, who said in part: "The stubborn heroism and stoic courage of the Russians have amazed the world and won the admiration of America. Russia is now an ally of the United States in in the war against Germany. Every blow struck against the Nazis by Russia is a blow behalf of American defense. Every aid given Russia is help to a fellow combatant." [ page seventy-three ] Mayor Fiorello H. LaGuardia, of New York City, in his proclamation designating the week beginning June 20 as Russian War Relief Week, said: "WHEREAS, the Russian people has inspired the whole world by their tremendous stamina, fighting ability and valiant courage; and "WHEREAS, the Russian people, our heroic allies in this titanic struggle against aggression, have given a stirring example and dispelled belief in Axis invincibility, "THEREFORE, I strongly urge on the people of New York the observance of Russian War Relief Week as an occasion to express wholehearted cooperation and to extend most urgently needed moral and material assistance to this great fighting people and thus ensure our total victory." THESE GERMANS WERE BURIED BY THEIR FELLOWS. NOT ALL OF THE MILLIONS KILLED ACHIEVED THIS DIGNITY. THE GERMANS TOSSED THOUSANDS OF CORPSES IN GREAT PITS TORN IN THE EARTH BY EXPLOSIVES, BURNED THOUSANDS MORE AS THEIR SHATTERED LEGIONS REELED BACK FROM Moscow. SOVIET TERRITORY is STUDDED WITH SUCH GRAVEYARDS, RECALLING THE CHILL FIGURES OF THE SOVIET COMMUNIQUES: March 9-22 the enemy lost over 16,000 officers and men killed OR the Leningrad Front. March 11-21 the Germans lost about 12,000 officers and men killed OR the Kalinin Front. [ page seventy-four ] [ page seventy five 1