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204 Portugal: Principal Exports to Enemy Countries, 1941 10% bite 2501 (anot please Metric Tonnage Commodity Food and fodder Oilseeds 20,000 Vegetable oils caas Fish oil se Fish 888 aviso 1,200 12,000 10,000 Wine Other foodstuffs 5,000 pas Fodder 25,000 3,300 Industrial raw materials Turpentine, resin 21,000 Cork 13,000 Hides, skins, leather 1,500 Lead 1,000 de Tungsten ore 2,300 Tin metal, and ore 1,000 Based on secret data furnished by the Ministry of Economic Warfare, Records and Statistics Department, April 1942. In some cases information was available only for ten months and it was necessary to adjust the figures on a yearly basis. tio usaol Portugal United States Principal Imports1942 for Consumption, 1941 and First Quarter (Motric Tons) Commodity First Quarter 1941 1942 Fish 3285 000,00 Nuts and preparations 20010 2665 Olive oil, edible 95 92 33 Paprika, ground 888 451 Wines 000,00 532 45 000.88 260 62 Ergot Olive oil, inedible, sulphured TODDON or foots 1830 -- 679 -- Carpet and other wools not finor than 40's Cork 137,424 2221 169 - Tungsten ore and concentrates DOBER Argols, tartar and wino lebs 2967 Beeswax, crudo -- 45 (AJON nik Source: Department of Commerce no beated Brea sautba BEW at of seel and To't (PagA viao ads - oldeItave -8 205 Portugal: United States Principal Exports, 1941 and First Quarter of 1942 (Metric Tons) end on Commodity First Quarter 1941 1942 Barley 5,127 Corn 8,629 Leaf tobacco 3,283 1,553 Burley Raw cotton, except linters Wood pulp 48 802 - 518 2,730 Bituminous coal Crude petroleum 309,527 9,880 25,455 Bars and rods 4,037 3,294 3,445 283 337 8,050 893 1,457 1,986 29,669 14,768 10 - Iron and steel semimanufactures Plates, sheets, and skelp Tin plate and taggers' tin Steel mill manufactures Wire and manufactures - Motor trucks, busses, and chassis, new (number) Sodium hydroxide (caustic soda) Ammonium sulphate Florida land pebble Meat products - Glue of animal origin fabrics (1,000 sq.yds.) 9 20 201 Malt Proxylin coated or impregnated 200 - 25 Gas oil and distillate fuel oil -- 4,876 Old and scrap copper Typewriters (number) - 1,001 Copper sulphate (blue vitriol) Source: Department of Commorce - 445 611 - 10 SPAIN I. Spain's Economic Assistance to the Enemy The Axis does not depend upon Spain as the major source of any of the commodities vital to its war effort. Spain supplies the enemy, however, with important quantities of citrus fruits, edible oils, iron ore, tungsten, zinc, turpentine, resin, cork, potash, and canned fish. With the exception of the edible oils, tungsten, and possibly zinc, loss of the Spanish source of supply would not significantly hinder the Axis' war effort. About 20 percent of Germany's tungsten is currently being furnished by Spain; and although Axis-Europe has sufficient zinc for its needs, the Spanish supply of electrolytic blend relieves the Reich's overburdened power facilities. oooedod food Yet, for a country whose population is faming stricken, Spain exports to the enemy relatively large quantities of agricultural products. In 1941 Axis-Europe received from Spain 335,000 tons of citrus fruits, 25,000 tons of canned fish, 10,000 tons of olive oil, and 13,000 head of cattle, 5,000 tons of wine, 1,800 tons of seods. are STA bite othing nit In 1941 the bulk of the citrus fruit, half of the estimated total canned fish production, and almost all of the exportable wine surplus went to Axis-Europe. Despite a reduction of 14% in cattle herds in 1941, 13,000 head of cattle were shipped to Germany, and although eggs are being sold at 500% of Germany. 1936 prices, 20 tons of dried eggs were moved from Spain to The pig iron sent to the enemy represented the bulk of the estimated surplus; the load was one-fourth of the yearly surplus; the zinc blend, surplus.cork, turpentine, rosin and potash exports wore the entire yearly Rocent reports from the American Embassy in Modrid have indicated a stiffened attitude on the part of Spain to Axis economic demands, particularly economic for tungston. This tendoncy towards & more independont sources policy has been buttressed by the fnet that Spcin depends upon and within the control of the Unitod Nations for potroleum, coal, whent which the Axis cannot readily supply. II. Economic Benefits Derived by the United Nations from Spain for high-grade Spain is at presont the United Kingdom's solo source of iron oro (ovor 800,000 tons are shipped annually) supply and its 206 principal source for morcury (12 to 15 thousand flasks annually), pyrites (240,000 tons in 1941), and potash salts (30,000 tons in 1941). Britain's imports of citrus fruits, olive oil, and apricot pulp from Spain have also boon important to hor food economy, but these shipmonts have boon groatly roduced during the past your because of tho shipping shortngo and largo Spanish exports to the Axis. With the exception of cork, the United States does not now obtain any strategic or critical materials from Spain. In 1941 we were able to import almost 12,000 tons of zinc, 124,000 tons of pyrites, and 10,000 tons of cork. But export and shipping restrictions imposed by the enomy have prevented us from receiving during the curront your any significant quentities of important commodities. Efforts are now jointly being made by the United States Commercial Company and the United Kingdom Commorcial Corporation to obtain strategic commodities in Spain both for proclusive and supply reasons. III. Export Policy Towards Spain 00000 The United Notions' policy toward exports to Sprin has boon to provent any shipmonts of commodities in short supply or of those which involved n dangor of rooxport or substitution for exports to the onomy. Food, tobacco, and potroloum products (both from the United States and from sourcos under our control in tho wostern homisphore) have boonthe principal pormittod exports to Sprin. Sinco the ontry of the United States into the war, however, thoro hns boon a reconmination of our policy on potroleum shipmonts, boccuso of roports of diversion to Axis uso. During the first six months of 1942, only 80,000 tons of potroleum products word permitted to onter Spain from sources in this homisphore, whoreas during the srung period of 1941 over 200,000 tons word passod through the blockado. Ac E result of this rostrictive policy, stocks in Spain have boon reduced to lovols sufficiently low to provide some assur- anco grinst divorsion. A caroful chock on stocks and intornel oil movements is maintained by British and American observers in Spnin. With respect to food imports, Argontino has largely roplaced the United Statos CB a source, and Brazil hns been Spain's principal cotton supplier. Thoso exports from Latin Amorion have boen regulated by the Blockndo Committoo in London through the navicort quotre established for Spain on tho basis of avorage 1933-34 imports. Soon after the effect of the restrictions imposed during 1942 on exports to Spain began to be felt, officials of the Spanish Government expressed an interest in the possibility of arranging a barter deal whereby the United Nations may obtain increased quantities of Spanish goods (mainly tungsten, olive oil, mercury, zinc, cork, and strontium sulphate) in exchange for petroleum products and other commodities (mainly coal, copper sulphate, rubber, ammonium sulphate, asbestos, etc.). An effort would also be made through this exchange to supply Spain with certain agricultural products in return for a limitation on her imports from Latin Amorica and her exports to the enemy. This program is currently boing formulated in preparation for formal discussion with the Spanish authorities. Pending completion of such a barter arrangement, the United States Commercial Company and the Unitod Kingdom Commercial Corporation are ongaged in a joint program of proclusive buying in Spain, particularly directed toward depriving the enomy of tungsten, wards hidos and skins, and olivo oil. - 11 - Spain: Principal Exports tb Enemy Countries, 1941 (IMPE Commodi ty Metric Tonnage Food and fodder Citrus fruits and pulp Other fruits and nuts 000 Canned fish Vegetables Olive oil and oilseeds Fodder 335,000 1,626 25,000 4,200 10,700 700 Live animals (number) 13,000 Meat 22 Dairy products 25 Cereals and flour 12,000 Rice 100 Sugar 850 Coffee and cocoa 300 Wine 5,000 2,500 Spices and herbs Dried eggs 20 Seeds Other agricultural products 1,800 6,000 Industrial raw materials Iron ore 334,000 15,000 2,600 10,000 30,000 Pig iron Steel and manufactures Scrap iron Zine blende Tin ingots Copper and bronze sheets Aluminum sheets 90 34 14 Lead Cork Hides, skins, leather Wool and manufactures Cotton and manufactures Other textiles Potash and other fertilizers Turpentine, resin Rubber 8,000 23,000 5,000 1,300 700 2,200 40,000 30,000 120 Petroleun 500 Based on secret data furnished by the Ministry of Economic Warfare, Records and Statistics Department, April 1942. In some cases information was available only for ten months and it was necessary to adjust the figures on a yearly basis. - 12 tabica bodsau CANCE Spain: United States Principal Imports for Consumption, 1941 and First Quarter 1942 (Metric Tons) Commodit 1941 First quarter (her 1942 Cork and manufactures 9,225 Pyrites or sulphide of iron Zinc ores, except pyrites 492 126,260 10,745 Quicksilver or mercury 3.6 Iron-oxide and iron-hydroxide 4,803 pigments Potassium chloride, crude (Muriate of potash) Its 12,727 Source: Department of commerce. - 13 - (Iisali ito foot 207 Spain: United States Principal Exports - 1941 and First Quarter of 1942 bestents (Metric Tone) 1001 (ano1 Commodi ty First 1942 quarter 1942 Bacon Milk and cream, evaporated (unswectened) Wheat flour Beans, dried, except seed Peas, dried, except seed Peanut oil Sugar, refined Automobile Tires (No.) Cigarettes (Thousands) Tight Staves (Thousands) Wood pulp Kerosono Gas oil and distillate fuel oil Residual fuel oil Paraffin wax Asphalt Electrodes for furnace or clectrolytic work Tin plato and Togger' tin Motor trucks, busses, and chassis, new (NO.) Ammonium sulphate Source: Department of Commerce. --- 1,371 1,306 3,475 2,554 848 515 684 3,565 135,481 2,125 946 60 1,686 8,214 74,771 46,248 1,985 11,107 9,164 .5 49 43 2,036 SWEDEN 208 delbows I. sweden's Economic Assistance to the Enemy Germany's conquest of Norway and Denmark combined with Sweden's dependence upon imports for raw materials and fuels caused a drestic shift in Swedish trade. 3wedish industry is working largely for the enomy. Exports to Germany have al- most doubled in valuo since 1939 and now comprise 70% of the total, as compared with 15% before the war. At least 90% of Swedish trede is confined to Occupied Europe. Control of the Skagerrak is accompanied by thorough regulation of Swor dish foreign trado by the enemy. Swedish exports to Gormany were velued et $177,500,000 in 1941, a remark- ably high figure considering Sweden's population of only 6.3 million. Owing to the secrecy of Swedish statistics, it hes hereto been impossible to obtain a full picture of Swedon's trode with enemy end occupied areas. However, the most important item in exports to Germany was 9.5 million tons of high grede iron oro. This quantity is about equal to German imports from Sweden in 1938, and represents almost the entire German requirements for this type of ore. Othor known exports to the Axis included 16,400 tons of ferrO-alloys; 33,000 tons of charcoal pig iron, (used in ermer plate); 38,000 tons of iron and steel, mainly specirl steel, mainly special steels; 25,700 tons of pyrites; 3,000 tons of copper; 490 tons of tin; 1.6 million cubic motres of lumber; 770,000 tons of wood pulp; as well 88 machinery and mechine tools, non ferrous ores, loed, arsonic, paper and rubber. It is also known that in spite of successive poor harvests, Swedon exported in 1941 over 31,000 tons of breed grains SS well as important quantities of flour, breed, oats, suger, potatoes, ment, end butter. These exports went mainly to Finlend. Swedish assistance to the onemy has also been significant in the field of transportation. In 1940; Sweden was forced to send 500 railway cars to Germany in order to facilitate the shipment of coal to Sweden. About 800,000 tons of Swedish shipping is rendoring valuable assistance to the German merchant marine in the Baltic and by carrying iron oro from Norvik to German ports. Swodish shipyards in addition to repairing Germen ships have accepted orders to build 150,000 tons of shipping for Gormany but actual construction has been deleyed mainly because of Germeny's fsilure to deliver compensation commofities. In order to finance the heavy German import balance in trade with Sweden, the heavy German import balance in tredo with Sweden, the Swedish government has guarenteed e credit of 436,000,000 to Swedish exporters. This credit guerentee is about to be increased by $48,000,000. Germany has also received en important military concession from Sweden in the permission to dispatch troops back and forth to the Finnish and Norwegian fronts across Swedish territory. While the troops are not actually armed Crt the time of their trensit, this is of little consequence as all their equipment and supplies are permitted to be sent seperetely. In return for all those benefits, Germany supplies Swodon with a specified amount of coal, coke, crude iron, and steel essential to Swodish industry, &8 well as chemicals and other industrial products. Actual German deliveries have fallen far below those agreed upon. 215m 2 Swodish economic and finencial assistance to Finland has been extensive. addition to food exports, Sweden is sending substantial amounts of war In specratus. These are on assistance to Finland, mainly steto credits, since 1939, amounts to over $130,000,000. This includes an machinery, to a large chemicals, degree made iron and credit. steel, and Financial electrical materials, exports ment whoreby Sweden undert kes to finance food shipments from Denmark to Finlend, agree saldrow II. Economic Benefits Derived by the United States from Sweden The economic adventeges received by the United Statos from Swedish tridde are at present smell. As 8 result of Germen control over Swedish trade, exports to the United States in 1941 fell to $3,990,000, or 10% of normal. Those were com posed almost entirely of steol strip, bell bucrings, furs, and paper. After United States entry into the war, Gormany informed Sweden that no exports what the ever would beArgentine permittedand to the United States or any other countries in this hemisphere except Chile. akdT On the other hand, the United States is receiving assistance from that portion of the Swedish merchent merine kept outside of its homo ports when Norway was conquored Fifty-four Swedishports. vessels, aggregating 229,000 tons, are at present operating out of American Sweden has given the United States on orel commitment to resist axis aggression, and public statements by Swedish government officials have indicated that a policy of armed neutrality would be followed. It is understood that Sweden is cooperating with Great Britain by performing certain services in the military and diplometic sphores which do not openly compromise its neutrality. III. Export Policy Towerás Sweden by Swedish trade has been limited by the amount of shipping space available, since each month arrangement end 4 with the British and German governments only 5 Swecish ships for Swedish trnkors a your are allowed through the blockede. Foodstuffs consumption, materials which would if fell into one- my subject to constituro on important contribution to the German war Sweden is supply conside tions,not, been licensed. olely hands, domestic being they policy Trea efforttowards have, studied Sweden's now reviewed by a special sub-committee of the Board, which has submitted requirements for the third quarter of 1942. Its report will be seperately for approvel by the Board. dec the Exports following to Sweden items: during 1941 amounted to 20.4 million dollars and inclu- Dried fruits Rice 7,140 Tons Raw cotton 10,440 17,500 Coal Potroleum and products inclu ing eviction fuel 88,000 Bbls. ter products including tolusne Aircraft and parts 1,100 Tons 252,000 Rubber and manufactures, 605,000 paint 16 209 INCI ETHOUTH CODE HEIGEWB TOWORK (amot sixtell KNO.: N SWEDISH EXPORTS TO ENEMY COUNTRIES 1941* (figures are in metric tons unless otherwise specified) with thould FINLAND COLBINED ITALY CON ODITIES 93 93 Vegetable oils Fir extracts 274 eta0 200,000 600,000 Lumber (standards) Wood pulp Crude rubber Hides and skins Cotton wastes 170,000 a 6 a 50 a, a a a a Tungsten ore 31 a Husmanite 17 16,826 33,000 a toods bird 38,000 2,655 Copper 31 465 990 15,371 33,000 Manufactured and semi-manufactured iron and steel 25,735 a a Charcoal pig iron 203 17 Ferro-alloys (chrome, tungstem, manganese, molybalunum) is 9,549,788 594 150 25,735 Pyrites 10 10 203 Chrome ore a a 9,549,044 (nooT olx 50 Iron Ore Manganese ore 6 12 12 GODS a 3851 a 180 59 Tin 467 12 a, 15 a 1 38,000 2,986 251 12 Lead Nickel 200,000 770,000 12 3 Lubricating oil 274 479 16 000. 008.8 team DAA *Owing to the partial nature of the Swedish statistics this table presents only a fragmentary picture of Swedish exports to the enemy. a/Not reported b/Rayon pulp ( - 17 - KNOWN SWEDISH FOOD EXPORTS, 1941 (Metric Tons) 66 ATS 000.00S Commodity Quantity Destination Wheat 26,536 Unspecified Rye 4,707 Oats 2,027 (abrehande) 000.008 31 a SI Line or authorize KNOWN SWEDISH EXPORTS OF FOOD TO FINLAND, SEPTEMBER 1940 to NOVEMBER 1941 08 and (Metric Tens) 307,66 18. SS R Commodi ty Quantity 000 Wheat 21,000 000.88 000.80 Wheat and rye flour 11,000 000.98 das.s Bread 3,400 Sugar 5,000 Potatoes 5,000 Butter 3,900 Pork and other meat 3,700 Margarine blots abid dethows out of - 18 - 460 add TO ( 210 better one Sweden: hrs IAQU United States Principal Imports 1941 and First Quarter of 1942 cars First quarter 1941 Commodity 1942 Iron and steel mill manufactures $1,673,000 $83,000 Tools 165,000 31,000 Boarings 761,000 account Paper and manufactures 119,000 Loather manufactures 632,000 2,000 no2000 Iron and stool advanced 37,000 manufactures 000,000 0001080 000,000 000,000 .020 000.9000 MOTOLIA 000,965 000.11 Sourco: U.S. Department of Commerco. ( - 19 - Sweden: Principal United States Exports During 1941 and the First Quarter of 1942 (Quantity in Metric Tons Unless Otherwise Shown) Commodity First quarter 1941 Meat and meat products 1942 168 Animal oils and fats, edible 963 645 Leather N.S.S. N.S.S. N.S.S. N.S.S. $508,000 9,494 1,406 Rice Dried beans Dried fruit Rubber and manufactures Naval stores, gums, resins Field and garden seeds Tobacco, unmanufactured Raw cotton Cotton yarn and thread Cotton duck and tire fabric 9,498 $605,000 $123,000 $27,000 N.S.S. 637 124 1,260 260 16,398 160 $1,980,000 $586,000 $78,000 $702,000 49 $452,000 $889,000 10,520M.T. Petroleum and products (including aviation fuel) Iron and steel advanced manufactures, tools, etc. $114,000 Electrical machinery and apparatus Industrial machinery Office appliances Agricultural machinery $321,000 $335,000 $661,000 $243,000 Automobiles, parts, etc. Aircraft and parts $997,000 $252,000 Toluene $30,000 $20,000 $50,000 $47,000 $13,000 N.S.S. N.S.S. N.S.S. $22,000 $42,000 1,042 $208,000 Medicinals and pharmaceuticals Industrial chemicals $142,000 Photographic goods Scientific instruments and apparatus Source: U.S. Department of Commerce. N.S.S. - Not separately shown. - 20 $526,000 $218,000 10,520M.T. 2008 $11,000 $28,000 211 SWITZERLAND I. Economic Assistance to the Enemy The conquest of Europe by the Axis, combined with Swiss dependency on foreign trade for essential raw materials, food and the maintenance of employment has brought about virtually complete enemy control over the Swiss economy. Eightyfive curcent of Swiss foroign trace (by value) is now carried on with European countries. The extunsion of Axis custons control to all its borders has put Switzerland's foreign trade entirely under enemy regulation. In spite of its small size (pop. 4.2 million) and meaker resources, Switzerland is making a significant contribution to the enemy's war effort principally as a supplier of skilled labor. A ajor part of the Striss match, chemical, metals, and machinery industries is harnessed to the German war riaching. Among the most important industrial products exported to enemy and occupied territory during 1942 were 18,000 tons of aluminum and manufactures; 10,000 tons of chemi- cals, mainly industrial; 237,000 tons of iron ore; 33,000 tons of iron and steel scrap; 5,000 tons of iron and steel manufactures; 2,900 tons of cotton textiles; $38,000,000 of engines and exchinery; $21,000,000 of watches, clocks, and move- ments; $10,000,000 of rachino tools; $4,000,000 of airplanes, autos, trucks, bicycles, and parts; and $3,000,000 of instruments and apparatus. Tno raw materials and fuels which enable Swiss factorics to produce these goods for export are for the rest purt supplieu by Gormany. Gorman requirements for time fusos have own to a grout extent Butisfied by hu Swiss watch industry, nd large quantities of diesel engines, torpedoes, anti-aircraft guns and ammunition are also supplied. Exports of munitions to Ger- many increased from 9.9 million dollars before the war to 47.2 million dollars in 1941. Swiss factories are in some cases leased by Germany and placed under Ger- man supervisory commissions. Assistance to the enemy's wer effort hus also been given in the fields of utilities and transport. Switzerland is exporting to enemy areas from 20 to 25% of its total output of electric DOWET. Swiss railwaya. are used extensively in the traffic between Italy and Gormany, from 30 to 40 truins per day phasing through Basel. Although Switzorland has a serious deficiency with respect to food, it exported relatively large quantities to the enemy in 1941. Exports of food included 22,000 hond of cattle; 1,000 tons of ment; 4,400 tons of fresh milk; 3,000 tons of condensed milk; 12,700 tons of cheese; 28,200 tons of fresh fruit; 1,300 tons of preserves and 10,000 tons of wines. In return, Gurmany has sup- plied Switzerlang with potatous, sugur, and fertilizer. Swiss banks nave also aone M service of BOPIU value for the enemy in a large number of transactions for German account. Swiss, Portuguese, and suth American currencius are mude available to the German government und bunks in return for Gorran held gold and U. S. collar notes often confiscated from conquered countries. The principal German exports to Switzerland are coal, iron una stuel maand sibery THE tools, chemicals, electrodes Hild fertilizers. Potatoos, sugar, cextiles are also sent. The trade a reduent between Switzerland and Germany Switzer- illustrutes the dependant position of the Swiss. Under this agreement, land has agreed to use 40% of stipulated Gorman iron shipments to manufacture - 21 I goods for Gormany. The Swiss also agreed to permit Gormany to overdraw in the joint clearing account to the extent of $195,000,000 by the and of 1942. Finally, the Swiss agreed to clear all trade with Gorman-controlled areas through Borlin. II. Economic Benofits Derived by the United States from Switzerland Owing to onemy control over Swiss foreign trade the United States, with few exceptions, has only with great difficulty been able to obtain Swiss manufac tures of stratogic significance. Certain manufactures such as jowel boarings and precision instruments of considerable importance in aircraft production are at present being obtained by both Britain and the United States. There is no. other foreign source of supply for those vital products. Imports of silk bolting cloth, an essentail screening material for which Switzorland is the sole source of supply. have been fully maintained, as have imports of coal tar chemicals. Raw materials for both of these products are drawn from enemy sources. The remaining importe from Switzerland are unimportant from a war standpoint and con sist mainly of textiles, pharmaceuticals, civilian watches, and light machinery. Neverthelose it should be noted that the value of total Swiss exports to the United.) States have been maintained at a normal figure and are well in excess of base imports from the United States. noti The United Nations in addition receives from Switzerland certain non-economic advantages. Switzorland is at present representing United States interests in enomy countries. Furthermore, as a neutral country in the heart of Europo, Switzorland constitutes an observation post of great importance for intelligence purposes. III Export Policy Towards Switzerland In February 1942 the Board of Economic Warfare presented. for the consideration of the Blockado Committee in London a proposed revision of policy towards trade with Switzerland, based upon the belief that the enemy was directly benefitting from Swiss overseas imports of food, fodder and textile raw materials. In view of the Swiss relationship to the enemy and the fact that European supply problem must be considered as an entity, it was proposed: (1) To prohibit entirely the export of industrial raw materials, fuols and equipment. (2) To permit import of consumption goods and health supplies ordinarily imported by Switzerland, only if they could in no way assist the enomy. (3) To prohibit export of certain foodstuffs and textiles such as vegetable oils, fruits, cotton and wool until Switzerland should guarantee to stop exports of these or similar materials to the enomy. (4) To regulate exports of other food and fodder in order to prevent Switzerland from shifting the entiro burden of its requirements from Europe to overseas sources. This policy was designed to be floxible and WO.B intended as a bargaining from It was to the in the that weapon an to obtain suitable economic and pro Switzerland. in effort presented Blockade Committoo political quid bolief quos the restrictivo measures envisaged would not have any drastic effect upon Siles American relations, and in fact would stimulate the Swiss will 40 resist Germany, 22 212 At present negotiations on this basis are being conducted in London, particuwith a view towards reduction of Stiss machinery exports and elimination of larly unu textile exvorts to the enory. A rather complex arrangement, involving food barter of certain goods needed by the Striss army in return for specialized ram:factures, the and a number of diplomatic and military intelligence considerations, is now under discussion. research 1501 901 000,981 SEA .8.00 EASY IVA If 708 000,081 000,978 590.8 EIG. 000,818 TOA,S 00018 000,883 .2.8. SS BAP'S TOB,S 000.75 000,075 000 PS 0002068 pon.ns 000,008 000.318 000.00 C.B. applicas 1000.00 000,ASS 0002 000,S .0.00 000,INS 000,118 00020 000.00 000,85 200,005 vindarages - 23 - .0.3. Principal United States Exports to Switzerland During 1941 and the First Quarter of 1942 (Quentity in Metria Tone unless otherwise shown) First Cuarter Cormodity 1941 Sausago orsings Animal oils and fets, odible Leether Fure and menufacturors Corn Rico whort Vagatables a preparations Dried fruits Vegetable oils, odible Sugar Rubber and manufactures Field and gardon seeds Tobacco, unmanufectured Rew Cotton Cotton Duck , tiro fabric Wool menufactures Hair, unmenuinctired Iron 2 Stool menuTectures Electrical mechinory 2 apperatus Industriel machinery Office appliences Autos and parts Coal ter products Industrial chemical Photographic goods Sciontific , profossionel instruments is apprretus 1942 347 109 798 75 $128,000 278,000 6,924 3,095 5,318 212,000 2,497 3,650 7,533 236,000 N.S.S. 2,765 2,597 270,000 N.S.S. $138,000 N.S.S. $238,000 $29,000 W.S.S. 304,000 313,000 488 K.S.S. N.S.S. 743 471 5,091 54,000 442 22 N.S.S. 11,000 20,000 213,000 13,000 297,000 N.S.S. 724,000 185,000 241,000 277,000 208,000 48,000 2,000 N.S.S. U.S.S. $14,000 200,000 32,000 N.S.S. - - Not separately specified - 24 - 213 YEXERS zase% add at consisting alyown 1 3m about desroad Hond! bettAmage had COOPLET your end as aintretan algotatia to adioaza instroque of of SAGE jahue Provased Principal United Strtos Imports from Switzorland ent glates During 1941 and the First Quartor of 1942 organization 10 10 STOW sald 07 hotlagum adoudary 6TF affatomaz we ungafatiah lates and watersen it 03 STOW afte otch 2507320 bda Commodity [In't emi Vd and 1941 satural First Quertor add 03 bis asian (to plantic to 000.00 nilo senofav to Dollars to snot 000.10 adidas Choose to 346,000 39 30 0202 000 Lonthor and menufroturos, day To 270,000 principally womons shoos Cotton menufrcturos, mainly anida been bobks 10 agot 000 handkorchiofs, 1000 otc. stadom Bas foow to 870,000 Flex, homp, and romic monufecturos protests to 503,000 Silk bolting cloth togooo Hct broids To 562,000 436,000 1942 Dollers N.S.S. 21,000 110,000 83,000 97,000 29,000 Procious stonos and imitations 100% and goodwith 325,000 18,000 Iron rnd steel rdvoncod taggoo omordo to and mcnufecturos end mcchinory of 3020roooA 708,000 Corl ter products of fiogxo of now 2,813,000 201 686,000 89,000 ods) Modicinel end Phorprooutis props. bed 781,000 Sorp and toilot proporations 032 532,0001 be 59,000 Musical instruments, prits, palno [to 580,000 E2c 139,000 Clocks, wetchos, clockwork si greated tobacc TOYOOTOM mechrinisms and ports MRS bas SARI at 17,352,000 acto 3,392,000 hovelled good ovad of Indique SAST it in 0000 antro dads at sometime 0.3 and 070m taxes and add out odt coowted sofflace TO alaonooo and YES no good evalf advoite anizad bottaU hand sodio control dolda about Ig' antquide to Appl a gif hotaqued belawon WITH bedgoqze 107 at soverpers 202m !anolto% bodlaU edit bodolstaot and of ,Cargorg ohomastindosing suit art god Bevires simonook most accident beding road ann adidas BottoM odt Sign dobseth bqdlau stef oild dide 341 requents at 070 actordo to origino and odd oved actus Vibigue an another Botton oil$ of salod at PIO satagins an today vitro odd orn mutgo ban toggo pabilities related 6.44 to 100q out 30 passood boyalob Dational added STO dold to 25 TURKEY I. Turkey's Economic Assistance to the Enemy Turkey has committed itself through trade agreements with Germany to important exports of strategic materials to the enemy. During 1942, however, exports to the Axis appear to have declined, mainly due to Gormany's failure to doliver to Turkey the quantities of manufactures and war materials promised. In 1941, however, Turkish products supplied to the enemy ccuntrios were of material assistance in reducing the Axis' deficiency in foodstuffs, vegotable oils, fodder, and tanning extract. More vegetable oils were supplied by Turkey to the enemy during 1941 than by Spain. The following shipments were of particular aid to the enemy: 60,000 tons of oilsoods and oil cake, 20,000 tons of vegetable oils, 31,000 tons of valonea (tanning) extract, 40,000 tons of fruits, 28,000 tone of legumos, 8,000 tons of fish, 7,500 tons of hides and skins, and 4,000 tons of wool and mohair 500 tons of chrome oro 760 tons of cooper Thus far, however, Turkey has rosisted Gorman efforts to obtain large quantities of chromo, copper, antimony, zinc, molybdonum, and other strategic materials. According to the torms of the agreement with Germany for 1942, Turkey was to export to the enemy 8,000 tons of copper (the total estimated Turkish production), 2,000 tons of mohnir and relatively large quantities of cotton waste, skins, vege-table oils, oil seeds and oil cake, antimony, nnd tanning materials. Moreover, under this agreement, Germany is entitled to receive 90,000 tons, of chromo ore annually in 1943 and 1944. Because German deliv- erios thus far in 1942 appoar to have boon negligible, it is believed that the agreement has moant little more than an Attompt to postpono an. economic show-down or military conflict between the two countries. On the other hand, United Nations' proclusive buying offorts have been hamperod by a lack of shipping facilities for goods which Turkey requires in exchange for those exported. This situation, coupled with the commitments made to Germany, has restricted the United National purchasing program. II. Economic Benefits Derived by the United Nations from Turkoy Both the United Kingdom and the United States have been receiving during 1942 the entire production of chrone oro in Turkey. Although shipments have been delayed because of the condition of the Turkish ore ischromo being exported to poor the United Nations as rapidly as railroads, shipping conditions permit. Copper and opium are the only other commodities of stratogic importance which are currently being imported 26 - 214 into the United States from Turkey. The United Kingdom is seeking to obtain wool, mohair, tanning extract, raisins, etc. from Turkey and a joint U. S.-U. K. purchasing program (based mainly on preclusive notives) is being worked out. III. Export Policy Toward Turkey The United States' export policy toward Turkey has been based on the assumption that if attacked by the Axis the Turks would offer military rosistance; that, therefore, it was to the interest of the United Nations to build up the armed strength of the country: and that Turkey was entitled to consideration as a potential ally and Lend-Lease recipient. On the basis of this policy, dictated largely by military considerations, the United States has been exporting relatively large quantities of iron and steel manufactures, industrial raw materials, rubber goods, machinery, trucks, lubricating oil and araments. In May 1942, for example, Turkey received over $500,000 worth of Lend-Lease goods, including: 201 trucks 1500 tons of steel reinforcement bars 5000 pairs of rubber boots - 27 of Turkeys Principal Exports to Enony Countries, 1941 and our not ate going. Tindon ovlaviostip bound) inlandoming .U foow faiot of aleddo 8 bns (novison Commodity BrowoT 10/10% Motric Tonnage ROST burnat golloq bottau fraging Food and fodder outs each our art fruit rd test old NO San Sing grounds Oilsoods at viettlin 11 Servis to with 41,740 of of SAW yourself bad Oilcako and bran Vegotablo oils fina CAN sis To sland," 20,260 tgloom 0200I-band andada boakau gild Iteda Date notif 19,800 Kd 03701 Olivos reddier 23,200 Boans and pocs 27,800 good Fruits, driod and frosh Nuts sell you aboos 40,000 LOS 19,000 2010 Soods afood 0081 sting 0008 33,000 Fish 8,350 Industrial Raw matorials Valonoc and oxtract 31,000 Skins and hidos 7,500 Mohair and wool 3,800 Cotton and wasto 17,000 Coppor and scrap 760 Pig iron 6,850 Basod on socrot data furnished by the Ministry of Economic Warfaro, Rocords and Statistics Dopartmont, April 1942. In somo casos information WC.S available only for ton months and it was nocossary to adjust tho figuros on a yourly basis. - 28 - WAVE indicate 215 Turkoys Unitod Statos Principal Imports, 1941 and First Quartor 1942 (Motric tons) ** First quartor Commodity 1942 1941 Chromo 25,971 a Coppor 820 b Opium Olivo oil 10,795 a 51 78 485 85 Sourco: Dopartmont of Commorco Chromic Contont b /Coppor Contont a - 29 - 216 TELECRAI SENT July. 13. 1942 PH This telegram must be paraphrased before being 10 p.m. communicated to anyone other than a Governmental agency. (BR) MEMBASSY BUENOS ARES CIRCULAR With reference to Department's circular telegram, June 23, 11 p.m. Treasury requests that telegraphic reports on United States currency be sent only as of the first and third Wednesday of EVERY month. WELLES ACTING (L.B.) Same to: Tangier Santiago Rio de Janciro Lima Montevideo Asuncion Hadrid Lisbon Bogota La Paz Stockholm Quito Ankare Bern Caracas 811.515/13650 FD:GL:JD FF DCA FA 217 C 0 P PLAIN HRL London Dated July 13, 1942 Rec'd 1:43 p.m. Secretary of State, Washington. 3852, thirteenth Trading with Enemy Department of Board of Trade has informed the Embassy of a request from the London Branch of National City Bank of New York to transfer certain deposited French securities now held in its name by the National City Bank of New York (France) S.A. to French banks to be named by the actual owners and held in their names in order to facilitate the liquidation of the French subsidiary. Board of Trade is reluctant to grant request since securities are bearer and it fears possible falling into enemy control. Total amount is not large, though exact market value not ascertainable, and owners are all British subjects. London Branch of National City in letter of June 24 informed New York head office of Board of Trade's attitude, adding that its largest customer would prefer that his securities be transferred to French Bank but kept in name of National City Bank London Branch. Board of Trade expresses the view that this latter procedure would prevent misuse by enemy and be an acceptable solution. No decision will be taken until reply is received from New York head office, but the views of the Department are requested for transmittal to Board of Trade. WINANT WSB Copy:1c:7/14/42 218 COPY BY SAFE HAND BRITISH EMBASSY, WASHINGTON, D.C., July 13th, 1942. No. TF. 262 Dear Mr. Dietrich, I thought you would be interested in reading the attached copy of a report which appeared in the Bank for International Settlements' Press Review of June 2nd, dealing with the attached. market for dollars in Switzerland. Two copies are I am also sending copies to Mr. Pehle. Yours sincerely, (SGD)H. W. Auburn Mr. Frank Dietrich, U.S. Treasury Department, Stabilization Office, Room 279, Washington, D. C. COPY:lap-7/15/42 219 COPY The Swiss Market in Dollars N.Z.Z., 1/6, reproduces from the weekly bulletin of the banking-house Julius Bar & Co. a long article on the present state of affairs on the Swiss $ market, as a result of the blocking of Swiss assets in the U.S. While recognising the necessity of the foreign exchange restrictions applied in various countries, as arising from conditions of war economy, the writer takes a somewhat critical view of the U.S. freezing measures, contending that these serve to protect neither the $ nor foreign currencies, and have been taken merely for political reasons. With reference to the grave consequences ensuing for Switzerlend from the U.S. freezing order, he raises the question whether the Swiss monetary authorities, by a less bureaucratic policy in this respect, could not contribute to the improvement of con- ditions for Swiss interests. The writer then gives a description of what he terms the "grotesque muddle" in capital exchange between Switzerland and the U.S. Swiss residents interested in the capital exchange with the U.S. have to reckon with several types of dollars, ranking first among which is the commodity $, which may be bought and sold through a bank at about par for both import and export. The amounts required for import must, however, be obtained by the banks from the National Bank, since for this purpose no free dollars whatsoever derived by the banks from any transaction may be utilised, while, on the other hand, the National Bank undertakes to acquire, at the official exchange rate, the dollars resulting from export of commodities to the U.S. The transfer of capital to the U.S. is free to a great extent. For this purpose so-called finance dollars, i.e. dollars for which there exists a U.S. transfer permit, may be utilised. As far as banks are sellers, the rate may not be below 4.29 while the purchase price, for example, of dollars derived from the crediting of coupons has been fixed at the minimum rate of 4.23 minus 2% Since the export of capital is at present on a small scale only, it is obvious that offers of this type of $ by far exceed the demand and that the banks have hardly any opportunity of selling at the fixed rate, so that only in rare cases are they in a position to realise coupon proceeds. In consequence, these dollars are being dealt in at rates far below 4.23 on an unofficial market, in which, owing to a gentlemen's agreement, the banks may not participate. Business in this respect, if any, takes place either between finance companies, directly between private persons or through American banks, it being noted that the SF rate in New York, which officially amounts to 23.30 has recently risen to 38 but is now being quoted at about 30, corresponding to a $ parity of approximately SF 3.30. As a rule, finance dollars are derived from blocked assets for which the U.S. Treasury has granted a licence, there being a possibility of obtaining licences for $100-500 per account per month, according to circumstances. In principle, only American nationals living abroad are entitled to $500 per month. Otherwise it must be proved that the amounts asked for are really needed for subsistence purposes. In the case of Switzerland, licenses are, in 220 -2principle, granted only in favour of Swiss nationals domiciled in Switzerland and, possibly, nationals of non-enemy countries. So far as the legal market in free dollars is concerned, this emuneration is exhaustive. Blocked dollars may, however, also be dealt in legitimately from the Swiss point of view, but without the intervention of Swiss banks, which in this case also are debarred by the gentlemen's agreement. A transfer of blocked dollars is, however, only possible in the books of ereg Swiss banks, which means that business can only take place between two private contracting parties with accounts at the same Swiss bank. This type of business entails the risk that, should the Americans ask for details of the composition of $ balances at Swiss banks, they may raise objections to internal transfers. The rates applying to these blocked dollars are also in the neighbourhood of SF 3 and business is probably on an insignificant scale. Illegitimate, but only from the U.S. point of view, are dealings in "black" dollars, in so-called private payments. These are dollars which Swiss nationals hold with friends or relatives in the U.S. and which have not been notified to the U.S. authorities. Both private paying agents and recipients are liable to punishment under the American regulations, since these amounts ought to have been registered and blocked. The rate for private payments also approximates to SF 3. Finally, there is the legitimate business of dealings in $ notes, done on a large scale by banks. The rate for $ notes had until recently slumped to SF 2, but is today about SF 2.35. i.e. somewhat more than half the official parity. The depreciation of $ notes was originally due to transport difficulties, it being understood that pressure was exerted on the market by large amounts said to have come from both French zones. Of late, this depreciation of the $ notes has found technical justification in the fact that despatches of notes to the U.S. have been prohibited and imports restricted to $1,000 for each traveller. It is interesting to observe that after the issue of the import embargo, the rate for $ notes in Switzerland improved, while, for example, the rate in Buenos Aires, which had hitherto been maintained at about the official parity this picture of giving suffered a sudden slump to about SF 2.70. After the position, the writer raises the question whether the devaluation which the various types of dollars show is really justified and whether it is not possible to bring about a return to normality by a somewhat more elastic attitude on the part of the U.S. and the Swiss monetary authorities. He compares the economic and financial position of the U.S. with that of Switzerland, stating that the latter country has so far been much more affected by the war than the U.S., where, in addition, prospects for the period after the war are much better, since the huge raw material resources open to that country will enable it to return to normal conditions on the commodity market much more quickly than will be the case in Switzerland. In so far as the international exchange of payments is not regulated by clearing agreement or effected through the central 221 -3- banks, demand and supply, provided trade is possible at all, are still the decisive factors. This is demonstrated by the black markets for inland payments, which used to flourish but today hardly exist any longer. Free foreign exchange dealings are only legitimate in the case of the three European neutral countries and the finance dollar. But since it is just this type of business that has taken root, the writer regards it as absurd that banks should be kept away from it by a gentlemen's agreement. He argues that if dealings in finance dollars were done through banks, this would normalise the market and probably also improve the $ rate, since the pressure on the rate is to some extent attributable to the difficulties encountered by the private citizen doing business in finance dollars. The writer criticises the system by which the monthly $ amounts released by the U.S. Treasury under licence are not taken by the National Bank at the official rate unless the holder of the account can prove that he needs the sums for subsistence requirements. So long as the holder is in possession of other cash resources, the National Bank is not prepared to buy dollars. Licensed dollars, apart from certain exceptions, can thus be realised only at very unfavourable rates and under great difficulties, which gives rise to the question whether the National Bank should not be obliged to buy all dollars derived from "licensed" capital yields and withdrawals from accounts of owners domiciled in Switzerland, since it in any case acquires the proceeds of commodity exporte at the full rate. COFY:1ap-7/15/42 222 C 0 P Y MEC Montevideo This telegram must be paraphrased before being Dated July 13, 1942 communicated to anyone other than a Governmental agency. (BR) Rec'd 5:45 p.m. Secretary of State, Washington. 580, July 13, 3 p.m. The substance of the Department's telegram No. 415, July 7. 4 p.m. has been communicated to the appropriate authorities. The Managing Director of the Bank of the Republic desires to cooperate but he still does not believe that a requirement to deposit all United States Currency would achieve in Uruguay the objective sought. He maintains that such currency is now held by (1) persons confident that their currency is without taint, (2) persons not wishing to convert into Uruguayan pesos and (3) persons knowing or suspecting that their currency is tainted. He points out that pursuant to the measures already adopted the first group has deposited $127,000 while the second group has furnished valuable and detailed information regarding its holdings of $176,000. He is positive that no Uruguayan law can induce the third group to declare or to deposit. He believes that the second group might deposit if it were announced that currency not deposited by a fixed date would not be released by the Treasury. While it was recalled that the Bank was advised on June 22 that the Treasury Department would probably refuse applications for the release of currency not promptly forwarded to the United States, he maintained that a specific date should be fixed. An analysis of the currency declared but not deposited will be forwarded by air mail. $91,000 of the $176,000 declared are in the hands of the French Legation. The Spanish Legation is returning its currency to Spain. The second paragraph of the Department's telegram under reference em- phasizes that all currency should be accepted on a collection basis only. May the Embassy notify the Bank that this does not (repeat not) apply to the small purchases from persons arriving from the United States as outlined in the Embassy's despatch No. 1223, July 6. DAWSON MRM Copy:vw:7-14-42 223 COPY NO. 13 BRITISH MOST SECRET U.S. SECRET OPTEL No. 239 Information received up to 7 A.M., 13th July, 1942. 1. HOME WATERS 12th. Dutch motor minesweeper sunk by air attack in BRIXHAM HARBOUR MEDITERRANEAN. 11th/12th. H.M. destroyers carried out bombardment of MERSA MATRUH in conjunction with air attack. One schooner blown up, two Italian torpedo boats forced to retire. 2. AIR OPERATIONS WESTERN FRONT. 12th. 12 Bostons, 6 mannod by U.S. Army Air Corps dropped 7 tons of bombs at ABBEVILLE aerodrome. Enemy activity slight. One craft destroyed over Channel and another damaged by our fighters. 12th/13th. Aircraft despatched: sea-mining FRISIAN ISLANDS, LORIENT, ST. NAZAIRE 55, aerodromes 12, leaflets 1. 2 missing. Enemy activity mainly sea mining, but a few bombs were dropped at SWANAGE. MALTA. Between 3.45 p.m. 11th and 8.23 a.m. 12th about 60 aircraft attacked. 6 destroyed another damaged. We lost two Spitfires shot down and one destroyed on the ground. BURMA. 10th. U.S. aircraft attacked MOGAUNG (30 miles west southwest of MYITKYINA) hitting a railway bridge, a factory and sidings. 3. INTELLIGENCE German Navy. TIRPITZ, SCHEER and HIPPER are now probably in NARVIK area although one of them, or possibly LUTZOW may have moved further south. SCHARNHORST is at KIEL with repairs nearly completed. PRINZ EUGEN in dock at KIEL is expected to be ready for trials next month. GRAF ZEPPELIN is nearing completion at GDYNIA. NURNBERG, LEIPZIG and EMDEN (?) now in BALTIC. NURNBERG refitting KOLN is at KRISTIANSAND SOUTH. 4. AXIS SUPPLIES TO NORTH AFRICA Increasing use is being made of TOBRUK for direct traffic with BENGHAZI and TRIPOLI (L). A ,recent convoy of 6 merchant ships arrived on 10th. These ships were escorted from ITALY by SUDA BAY, CRETE, and were attacked by aircraft on passage and also after arrival. 5. GERMAN AIR FORCE 2 long range bomber Gruppen (30 i.o. each) from Russian Front have been identified in Western France. Probable these units will operate from BRITTANY in near future. About 1,500 and 2,500 aircraft on Russian Front are concentrated betwee KURSK and KHARKOV in support of present offensive. This concentration is comparable in size to that against MOSCOW in October, 1941. CORRECTION OPTEL No. 236. In para. 1, line 3 for "NAPLES" read "ETAPLES". 224 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATEJULY 13,1942 Secretary Morgenthau TO Mr. Hoflich FROM Subject: Summary of Military Reports R.A.F. Activities The British Ministry of Economic Warfare estimates that the damage caused by recent R.A.F. raids on the Ford and Renault works in France has deprived Germany temporarily of about 6 percent of her total estimated motor vehicle pro- duction. (British Ministry of Information, Economic Warfare Intelligence Series, No. 222, June 16, 1942) Russian Front Keep the entire Russian battlefront "in perspective" is relayed over the British Broadcasting system. In explanation, the advice of Paul Winterton in a broadcast from Moscow he says "the Russians say the Germans are not 98 strong now as they were last year. Pravda today declares the Red Army is far stronger than it was a year ago. Yet Moscow admits its forces are outnumbered in the fight for the Don. Somewhere along the front the Russians, too, have accumulated vast reserves of tanks, guns, and men." (Federal Communications Commission, July 9, 1942) Russia and Japan Recent developments in the Far East appear to make a Japanese invasion of Siberia increasingly probable. The recent capture of several strategic airfields in southeastern China and the occupation of the western Aleutian Islands would serve to protect the Japanese flanks in the event of a move into Siberia. It is known that some time ago, two or more Japanese divisions moved out of the southern seas along the Chinese coast, apparently headed for Manchuria. Another division has been brought into Manchuria from North China. -2- 225 It is believed that with these reinforcements the Japanese have about thirty. divisions in Manchuria and northern Korea. It is estimated that within the next week or two Japan will have available in Manchuria around 2,000 operational planes. Observers have felt that Japan would not undertake an attack on Siberia with fewer than 2,000 planes available. Reports indicate also that the number of airfields in Manchuria has increased from 150 to 250 within recent months. (Office of Strategic Services, "The War This Week", July 2 - 9, 1942) 226 July 14, 1942 MEMORANDUM FOR THE FILES: I have discussed with Director Hall the matters referred to in the attached copy of a letter addressed to Mrs. Roosevelt by Associate Editor Weaver of The Washington Tribune. Mr. Hall tells me that if any case comes to his attention requiring disciplinary action against either white or colored, he will recommend such action. To date, however, no such evidence has been presented. He states the difficulty is that if a white employee should insult a colored employee in the manner suggested he would take pains to see that there were no witnesses and in that event you have only the word of the white employee against that of the colored employee, which obviously would present an impossible situation on which to base disciplinary action. As to clerks complaining of working seven days a week, Mr. Hall tells me that only volunteers put in such time when the work load requires it and that they are only too glad to get this extra work because they receive pay for it at the regular rates. The only thing they do not get is extra pay for overtime. In view of the facts in the situation and since the Associate Editor of the Tribune did not write directly to the Secretary in the matter, the wise course would seem to be to take no action. Am 227 Theyoor 8 July 1942 Mrs. Franklin D. Reosevelt, The White House Washington, D. C. My dear Mrs. Roosevelt: I am attaching an editorial from the July 4 issue of the Washington Tribune, dealing with a situation at the Bureau of Engraving and Printing that we Feel should be brought to the direct attention of the President The Secretary of the Transacty, through W. N. Thompson, Administrative Assistant directed the Bureau to be in accord with the policy of (the President's Executive Order, No. 8602. Notices to this effect are posted in the various sections of the Bureau but that is as far as it goes. The white employees.) according to numerous complaints that some to us, continue in their way to prevent Negrees from using rest and looker rooms known as for whites," and to embarase and humiliate these who insist on using the "wrong" rest OF locker room. The editorial same up in brief the gist of the complaints we have received, and from reliable reports the atmosphere there is so racially tense that an unpleasant outbreak is likely most anytime. The white supervisors, we are told, are in sympathy with the attitude of the white employees under them, which makes for encouragement of their abstitudes. Another complaint not touched upon in the editorial is that the girls, both white and colored, are required to work seven days a week for months at a time. Most of these girls have families, with children. Their regular work period is a five day week. They have no objections to working six days a week during this emergency, but feel it an imposition to require then to work seven days a week, which denies them any time with their families or to spend with their children. Nost of these girls with families have to hire an attendant to eare for their children while they work, and these maids are not conducive to working seven days a week 228 Mrs. Reesevelt - 2. The other aspect is that women should not be required to perform the arduous daties at the Sureau seven days. They are physically incapable of doing so, and maintaining their health. They receive no overtime for this extra work. Knowing your attitude toward young women as I so, I thought there might be something you could do to have this latter sendition changed. with kindest regards, I as Sincerely yours, THE WASHINGTON TRIBUME By, X Frederick S. Weaver Associate Editor FSN/jbs Enel. a bw & os HUMBSON OLEICE 229 THE WASHINGTON TRIBUNE, SATURDAY, JULY 4. 1942 The Tribune Speaks work The regulations forbid the Bureau of any but American citizens They take the oath to support the Constitution: they the NAACP Out of Step? N.A.A.C.P. through its director of publicity, Radio FOR WEEK BEGINNING swear that they are not affiliated with organizations Crump. wired the Tribune that the Board voted Monday hold its annual advocate the overthrow of the Government But their oaths mean nothing. Angeles, July 14 to 19. scheduled. Every day, complaints come to the Tribune of the is disappointing news. We had hoped that the ungodly treatment these poor whites who come here would accede to the request of the Office of De from the South to work, inflict upon the Negro etc Transportation, and call off its Scheduled meeting ployees at the Bureau, Negroes referred to by many interest of furthering the War Effort, as They are insulted they dare in wash locker Theyto have thrown their stand We expressed the opinion last week, and again, that think of no business that the SATURDAY 1:30 River Lazy WWDO Barriagton wait the bowis in until AACP has to transact in Los Angeles that could not be www whites have finished their hands. They sneered and hit transacted in New York City by the Board of Directors. The policy of the NAACP is not dictated at these ventions; the funds of the organizations are not ap propriated or allocated at these conventions; the elec- tion officers are not had at these conventions. All of no these WWDO Orcheatra employees, taken abuses they matter can Heard of Directors at New York meetings The mem- WINX them authority form the items of business are transacted by the WJBV until This who bers large have nothing to do with theme. There is Dialing Your SUNDAY into their Michaex WJBV hands Officials to these Negro ployees, you complaints democracy within the confines of the NAACP. If the members had voice at these conventions, no doubt they would repudiate those officials who, in spite Church WJSV They have their complaints; they have furnished of government requests, called their convention in- WWDC the Engraving Union has conducted investiga tions filed complaints of discrimination and abuse to session anyway. But the Board of Directors are not responsible to the the members do not and have posted notices abandoning sep elect them and cannot fire them. arate lavatories, white employees are still endeav Aside from furnishing, at the expense of washoring prejudices on these employees women, trip to sunny California for certain offi- written on this subject before, and hard for believe that the President has been made cials, to be had that will Board The this aware of the condition at the Bureau of Engraving. For believe that If he had been made aware, he would people. benefit matter Directors of sate and still have time with line to reconsider to war real the meas. situation. ought and bill, the with the situation, so pass the problem on to President, feeling that can find a solution to South, the in up Other have proved that they are unable to trip California to pay their own way. that cleaned have edjort, and abandon of those few who want them. big they this most would and friend, old Future Defense the to visit their speeches of be MONDAY Planning Subject Of Institute Pickens, Dean convention, TUESDAY Planning Job for the President Paul V. McNutt, chairman of the War Manpower Green) Commission, speaking in New York last Sunday before crowd of 6,000 Negroes in the Golden Gate Ballroom mighty fine atterances. Among them WEDNESDAY "Discrimination, based on anything but clale: man's worth, must go, just as economic discrim Monday. ination must "There is Bill of Rights without which the little people of these United States would never have WMAL ratified the Constitution. There is Constitution the Constitution THURSDAY of the United States makes the rights of American citizen Constitution which estab FRIDAY lishes those rights in law. are localities into which the principles of the American Way and the plain words of the Con stitution have not penetrated individual thinking." Tribune News Flashes Yes, they were fine utterances, but the pity is that the officials in charge of the Bureau of Engraving 7:14 Printing didn't hear Mr. McNutt, For those words that those the than much the Negroes realize who only Letters to the Editor well the truth all that said. for the Government preach ENJOYED doctrine of equality of Lice inequality in the Departments. the tion The Bureau hardest Engraving and this Printing matter to discrimina of charge with of the of this recent white PORVICTORY Federal Treasury the BUY Administrative Alvin spoken. W. Weaver, But around for the PresChief people, indicate all of that Division ment of 230 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE July 14, 1942 TO Secretary Morgenthau FROM Mr. Buffington You requested that I report to you anything of interest in Mr. Ganson Purcell's memoranda relating to the activities of building and loan associations and the capital controls exercised in other United Nations. The memorandum relating to activities of building and loan associations points out that there are two general classes of paid-in capital, "full paid shares" and "share accounts". Full paid shares are paid for in full at their face amount by the investor at the outset and share accounts are opened by investors who are unable to purchase full paid shares. It appears to be general practice for the share accounts and full paid shares to receive the same dividend (pro rata) and the holder of an account is not penalized in any way for failure to maintain regular payments. An investor is induced to maintain regular payments, however, by promising him a bonus over and above the amount received on fully paid shares. This procedure differs somewhat, I believe, from the opinion expressed in the meeting here in D. W. Bell's office on June 18, at which time it was stated that the investor was penalized for not maintaining regular payments. The memorandum regarding present capital control in other United Nations contains a paragraph regarding investment company cer- tificates, industrial insurance policies, and building society shares and their treatment in England and the Dominions. Little information appears to be available but the best opinion seems to indicate there is little doubt that no new issues of investment trust certificates or building society shares are permitted to be made. It is also pointed out that in Australia financial controls are supplementary to direct controls over industrial expansion. 231 July 10, 1942. Dear Mr. Purcell: The Secretary has asked me to acknowledge your letter to him of July 8, 1942, enclosing menoranda relating to the activities of building and loan associations and the capital controls exercised at present in other United Nations. I shall discuss the contents with the Secretary the early part of next week. Sincerely, George Buffington, Assistant to the Secretary. Mr. Ganson Pureell, Chairman, Securities and Exchange Commission, Philadelphia, Pennsylvania. GBiamo 232 SECURITIES AND EXCHANGE COMMISSION -WASHINGTON Philadelphia July 8, 1942 OFFICE OF THE CHAIRMAN Hon. Henry Morgenthau, Jr., Secretary of the Treasury, Treasury Department, Washington, D. C. Dear Mr. Morgenthau: I am attaching hereto brief memo- randa relating to the activities of building and loan associations and the capital controls exercised at the present time in other United Nations which you may wish to review prior to the next meeting of the informal capital control committee. Sincerely yours, Youn timel Ganson Purcell Chairman Enc. 233 MEMORANDUM Re: Activities of Building and Loan Associations By: Securities and Exchange Commission Appreximately 92% of the capital obtained by building and loan associations from the public is represented by capital shares and capital accounts and the balance is in the form of investment certificates and deposits. There are two general classes of paid-in capital, "full paid shares' and "share accounts". Full paid shares are paid for in full at their face amount by the investor at the outset. Share accounts are opened by investors who are unable to purchase full paid shares. In this case the in- vestor makes periodic payments on his account. At the present time it is becoming general practice for the share accounts and the fully paid shares to receive the same dividend (pro rata) and the holder of an account is not penalized in any way for failing to maintain regular payments. As a matter of fast all federally chartered associations are pro- hibited from charging "any membership, admission, repurchase, withdrawal, or any other fee or sum of money for the privilege of becoming, remaining, or ceasing to be a member of the association". An investorhis to apayments, however, over above life of That is, he is a bonus of is to assum if he payments the amount he maintaine of the over a 100 shartered building assoei- ations are to sell investment certificates deposits, asseeiations which sell such certificates and accept doFederally his by is is an received or not promising indused per contract. unbreken or 200 permitted to payment accept on record maintain fully period. benue maintains paid regular payments either shares and although all given and loan if over posite may become members of the Federal Home Loan Bank System. Although the number of associations 234 -2issuing investment certificates has decreased materi- ally, many are still engaged in this practice. The provisions of the investment certificate are not standardised. Many different types are sold and no statistics are available as to the aggregate amount of each type sold or redeemed annually. Indications are that some associations are still selling contracts of the type distributed by Investors Syndicate of America in appreciable amounts. As of December 31, 1941, there were 7,078 operating savings and loan associations in the United States having total assets of $6,064, 202,000. This compares with 7,189 associations having total assets of $5,681,583,000 as of December 31, 1940. While there are no recent statistics relating to the com position of the assets and capital of all building and loan associations, the Federal Home Loan Bank Administration has prepared certain figures on member associations. These associations represent 53.3% by number and 79.3% of total assets of all savings and loan associations. Gross figures on sales and retirements of capital shares and withdrawal of deposits are not available, however, the comparative state ment of assets, liabilities and capital of member associations attached hereto shows that there was a not increase in outstanding share capital of nonber associations in the amount of $347,124,000 in 1941. In the same year deposits and investment certificates outstanding increased $25,127,000. In view of the fact that total assets of all gaviage and loan associations increased only $382,619,000 in 1941, it can be concluded that new investments in non-member associations were offset by the withdrawals and lesses which they suffered. Information is available showing Kress new investments and withdrawals made by the public is savings and loan associations whose deposits and capital are insured by the Federal Savings and Loan 235 - Insurance Corporation. 1 3 - As of December 31, 1941, these institutions numbered 2343 and had total assets of $3,361,792,000, OF 55% of total savings and loan assets. During 1941 total new investment in insured savings and loan associations amounted to $873,163,000 and with. drawals totaled $543,680,000, leaving a total net increase in investment by the public of $329,483,000. In the first four months of 1942 now investments in insured associations amounted to $274,135,000 and withdrawals equaled $253,424,000. Edw. T. McCormick July 7, 1942 1/ All members of the Federal Home Loan Bank System are not insured by the Federal Savings and Loan Insurance Corporation. The Federal Home Loan Bank System, with capital contributed by the U. a. Government and member institutions, pro- vides a credit reserveir which is used to make both short and long-term advances to members. The Federal Savings and Loan Insurance Corporation insures the deposits and capital contributions of each individual investor in any association affiliated with the , S L I 0 up to an amount of $5,000. 236 Comparative Statement of Condition For All Savings and Loan Members 1941-1940 Assets 1940 1941 3,918,967 First Mortgage Loans (Inc. Int.) Jr. Mortgage Liens (Inc. Int.) 3,495,884 5,840 89,844 167,169 2,985 29.577 Other Loans (Inc. Share Loans) Real Estate Sold on Contract 173,598 189,429 Real Estate Owned Investments: F.H.L.B. Stock U.S. Gov't Obligations (Inc.) HOLC Bends) Other Investments (Inc. Accrued Int.) Cash on Hand and in Banks Office Building (Net) Furniture-Fixtures and Equipment (Net) Other Assets 5,293 8,148 4,530 8,964 Total Assets 4,797,758 4,410,963 195,692 220,477 Liabilities & Capital* U.S. Gov't Investments (Shares & Deposits) Private Repurchasable Shares Mortgage Pledged Shares Deposits & Investment Certificates Advances From F.H.L.B. Other Borrowed Money Loans in Process Advance Payments by Borrowers Other Liabilities Permanent Reserve or Guaranty Stock Deferred Credit to Future Operations Specific Reserves General Reserves Bonus on Shares Undivided Profits Total Equities Number of Associations $ 3,416,075 3,068,951 130,772 331,926 217,861 66,786 17,620 20,826 26,519 16,044 8,050 211,337 623 116,257 145,971 13,707 16,604 9,613 198,169 105,302 $ 4,797,758 $ 4,410,963 3,771 3,818 In thousands of dollars. Prepared by: Division Research & Loan Statistics,ofFederal Home Bank Administration, Washington, D. 0. June 29, 1942 237 MEMORANDUM Re: Present Capital Control in Other United Nations. By: Securities and Exchange Commission England Pursuant to Regulation 6 of the Defense (Finance) Regulations Order, 1939, 18 is unlawful, without the consent of the British Treasury, to "make an issue of capital in the United Kingdom, to make in the United Kingdom any public offer of securities for sale, or to renew or postpone the date of saturity of any #2curity naturing for repayment in the United Kingdom. The issuance of securities whether for each or other- wise is deemed a capital issue, as is the receipt of any money by loan in the expectation that repayment will be made, in whole OF in part, by the issuance of cecurities. Thus, the effect of the regulation is to require concent for all public offers and for all private offers for capital purposes. The Regulation in eludes also the creation of mortgages or increase in amounts secured thereby. The Treasury is permissed to make exemptions. Executions Transactions which, together with all previous transactions within the seops of regulation, involve less than 610,000 are exempted. Tax anticipation borrowings by local authorisies, for limited purposes and in limited amounts, certain local building society transactions, changes in the nature of securities not involving the subscription of new money, certain prometers' transactions, private company sales of securities to members in small amounts, issues in consolidations, etc., not involving new money, the issuance of securities to banks to make them whole for advances or overdrafts, where the issue was not originally contemplated in the lean, repayments of certain obligations 238 .2incurred prior to the regulations, government issues, and personal mortgage transactions are also exempted. No exemption is available for an issue of accurities made whelly or partly for the purpose of capitalising profits or reserves. Administration The Capital Issues Genmittee passes on applications and approves then only if 18 finds that the transactions involved are 'advisable in the national interest.' Obtainable information as to the history of capital control in Great Britain indicates that that control is succeeding in aiding the competition of government with private non-var financing. New capital issues in the year 1940 reached the total of $1088.7 million, of which 61070.8 million were for the British Government. Lecal authorities and public boards raised no new capital whatever, and United Kingdom companies only 616.6 million as against 666.2 million in 1939 and practically $200 million in 1937. Foreign issues were completely eliminated, and Empire borrowers raised only 11.3 million in 1940 as against 625.5 million in 1939 and 463.4 million in 1937, by capital issue. (See table on next page). Definite information regarding the actual effect of the administration of capital control on the sale of investment company certificates, industrial insurance policies, and building society shares in England and the Dominions is not readily available in this country. However, the best obtainable information is that there is little doubt that no new issues of investment trust certificates or building society shares are permitted to be made. Although building societies are probably allowed to accept deposite there is 119810 likelihood that they receive any substantial sums as such node of investment is not attractive at this time because of destruction by bembings and priority restrictions on building. It is believed that the sale of industrial insurance is permitted but the extent of such sales is not known. 239 3United Kingdom: Capital Issues 1 1937 - 1941 ($ million) BRINGS 143.1 75.9 36.8 1070.8 Sept. )1114.1 45.3 27.7 12.1 nil nil Total : Total: Empire: Foreign:: Issues : 0 Govern- : Home 2/ ment porations : TO Others: Home 199.1 110.1 66.2 16.6 387.5 213.7 115.1 1087.4 63.4 53.7 25.5 2.2 1.3 nil 458.0 273.1 142.8 1088.7 2.9 1117.0 3.5 0.1 1120.6 7.1 5.7 Total new borrowing, including Stock Exchange "permission to deal" refunding excluded. Including County and Public Board loans. ree: The Economist, March 15, 1941, D. 6, April 5, 1941, p. 454, and October 4, 1941, D. 418. A breakdown of these issues by classes of industrial and other borrowers is presented in the Economist from time to time, including those pages cited above. The breakdowns show nothing of significance, since the amounts of non-governmental securities were very small and were distributed widely over a number of indus- trial classifications. By far the largest amounts of non- governmental issues are included under the omnibus category "Manufacturing and Miscellaneous." 240 Australia The Australian system of capital central is effected pursuant to regulations under the National Security Act, 1939-1940, known as National Security Regulations. These Regulations require the consent of the Treasurer of the Commonwealth for the regis- tration of any company organised for profis, for increases in nominal capital, for issues of authorised capital, for calls upon shares, and for the receipt of any payment on account of authorised capital OF calls. Except for hort-term or demand loans from banks, individuals may not issue securities or mortgage or charge the whole of their property or assets without consent. 1/ with certain exceptions, nort. gages cannot be traded at more than 5% discount, with out consent. Among other provisions, limitations are set on rates of interest payable on deposite (with others than banks) and banks and land companies are regulated with respect to interest chargeable on loans. Building societies may not without consent raise interest rates on deposits with respect to demand or short-term deposite. with respect to all transactions requiring sonsent, the Treasurer may "in his absolute discretion, great the consent, either unconditionally or subject to such conditions as he thinks fit, or refuse to grant the consent." The Treasurer may, by order, "exempt from the application of the whole or of any provisions of these Regulations, any person, company, society, club, association or body, or class of persons, companies, societies, clubs, associations or bedies, or any security, mortgage, charge or other transaction or class of securities, mortgages, charges or other transactions. Significantly, Australian financial centrols are supplementary to direct controls over industrial OXpansion-which, I am informed, have been increased until 1/ Consent is required to pay or charge interest higher than the specified rate in the mortgage or to evade the interest limitation by repayments in excess of the amount of the mortgage. 241 - 5most expansion has to be spensored by central ordnance authority. Controls have extended to restrictions on speculative trading and control over banking. The latter controls extend to the requirement that banks deposit with the Central Bank any expluses over their needs as an ant1-inflatienary measure. A conference with Mr. Brigden as the Australian Legation was had respecting the operation of Australian controls. It was revealed that at the outset of the war Australia set up a Board consisting of business mon and bankers to review new issues. Recently, how. ever, 18 was found necessary to stiffen the administration of capital controls and to substitute for this industry board a whelly governmental body--on which the government bank was represented. On February 19, 1942, eable information indicated: "There will be a prohibition of the sale OF investment of capital except by permission of the Government or for obvious war purposes such as investment in public loans OF in capital issues sanctioned by the Capital Issues a visory Committee. This will eliminate any forms of speculation and concentrate capital transfers on immediate war needs." More recently the press and Official Australian Short-wave have indicated some relaxation of peliey with due regard to the prevention of speculation. Cable information received in New York early in April of this year indicates: "The sale of stock, shares and debentures of a company is permisted without consent if the seller has been registered as owner for at least five months. Steek Exchanges, after consul sations with the Treasurer, have fixed the BAXISUS and minisus prices at which shares may be sold. Should shares officially listed on Exchange notibe sold through a member of the Stock Exchange, the Treasurer must be supplied with details of the sale within seven days of the transaction". July 6, 1942 242 TREASURY DEPARTMENT PROCUREMENT DIVISION WASHINGTON OFFICE OF THE DIRECTOR July 14, 1942 MEMORANDUM TO THE SECRETARY: There is submitted herewith the operating report of Lend-Lease purchases for the week ended July 11, 1942. We were advised today by the Steel Branch of the War Production Board that the matter of granting priorities rather than allocations for Lend-Lease requirements is contemplated. The matter will be brought up at Mr. Stettinius' meeting tomorrow morning to empha- size our position that steel for Lend-Lease purposes must be earmarked, either by allocation, quota or other appropriate means to insure required deliveries, and a report will be submitted as to the final conclusion reached. Chifton E. Back Director of Procurement BUY all BONDS States LEND-LEASE TREASURY DEPARTMENT, PROCUREMENT DIVISION STATEMENT OF ALLOCATIONS, OBLIGATIONS (PURCHASES) AND DELIVERIES TO FOREIGN GOVERNMENTS AT U. S. PORTS AS OF JULY 11, 1942 (In Millions of Dollars) Administrative Undistributed & II Allocations Purchase Authoriza- tions (Requisitions) Requisitions Cleared for Purchase Obligations (Purchases) *Deliveries to Foreign Governments at U. S. Ports China $953.8 Russia $419.0 (1695.9) (940.9) (389.7) (56.7) $1272.9 $835.4 $384.8 $46.5 (1234.4) (805.5) (376.2) (46.5) $1230.2 $810.8 $366.9 $46.4 (1187.5) (796.5) (338.7) (46.4) $1171.2 $801.9 $324.0 $39.9 (1140.7) (784.4) (311.1) (39.9) $ 454.9 $362.8 $ 70.3 $20.0 ( 449.8) (359.5) Total U. K. $1693.7 ( 68.6) $56.3 (20.0) Expenses $1.6 (1.6) Miscellaneous $263.0 (307.0) $ 6.2 - ( 6.2) $ 6.1 ( 5.9) - - - $1.5 (1.5) - $ 3.9 ( 3.8) $ 1.8 1.7) *Deliveries to foreign governments at U. S. Ports do not include the tonnage that is either in storage, "in-transit" storage, or in the port area for which actual receipts have not been received from the foreign governments. Note: Figures in parentheses are those shown on report of July 4, 1942. 244 EXPLANATION OF DECREASE The decrease of $2,200,000 in Allocations is due to withdrawal of this amount by OLLA from Services & Expenses fund. Reduction of $400,000 in Chinese Allocations was effected by a decrease in this amount from estimated value of requisition to actual cost value of contract in Requisition C-662. 245 July 14, 1942 MEMORANDUM TO THE SECRETARY: There is submitted herewith the operating report of Lend-Lease purchases for the week ended July 11, 1942. We were advised today by the Steel Branch of the War Production Board that the matter of granting pri- orities rather than allocations for Lend-Lease requirements is contemplated. The matter will be brought up at Mr. Stettinius' meeting tomorrow morning to empha- size our position that steel for Lend-Lease purposes must be earmarked, either by allocation, quota or other appropriate means to insure required deliveries, and a report will be submitted as to the final conclusion reached. Director of Procurement for Clifton E. Mack TREASURY DEPARTMENT, CUREMENT DIVISION STATEMENT OF ALLOCATIONS, OBLIGATIONS (PURCHASES) AND DELIVERIES TO FOREIGN GOVERNMENTS AT U. S. PORTS AS OF JULY 11, 1942 (In Millions of Dollars) Allocations Purchase Authorisa- tions (Requisitions) Requisitions Cleared for Purchase Obligations (Purchases) Deliveries to Foreign Governments at U. S. Ports Total U. K. $1693.7 Administrative Undistributed & China $953.8 Russia $419.0 $56.3 (1695.9) (940.9) $1.6 (389.7) (56.7) $263.0 (1.6) (307.0) $1272.9 $835.4 $384.8 $46.5 - (1284.4) (805.5) (376.2) (46.5) 6.2 - 6.2) $1230.2 $810.8 $366.9 $46.4 - (1187.5) (796.5) (338.7) (46.4) 6.1 - 5.9) $1171.2 $801.9 $324.0 $39.9 (1140.7) $1.5 (784.4) (311.1) (39.9) 3.9 (1.5) 3.8) 454.9 $362.8 $ 70.3 $20.0 - 449.8) (359.5) ( 68.6) (20.0) 1.8 - 1.7) Expenses Miscellaneous Deliveries to foreign governments at U. S. Ports do not include the tonnage that is either in storage, "in-transit" storage, or in the port area for which actual receipts have not been received from the foreign governments. Note: Figures in parentheses are those shown on report of July 4, 1942. 247 EXPLANATION OF DECREASE The decrease of $2,200,000 in Allocations is due to withdrawal of this amount by OLLA from Services & Expenses fund. Reduction of $400,000 in Chinese Allocations was effected by a decrease in this amount from estimated value of requisition to actual cost value of contract in Requisition C-662. 248 7-14-42. My dear Sension: This is in reply to your letter of July 7, 1942, requesting information - silver circulation and silver steales in Green Britain, India, Medico, Canada, the United States, - the world. The - to your questions are as follows. 1. The Government of Great Britain publication of silver currency data at the outbreak of war. The Intest available date, therefore, are those for December 32, 1937, 1 lished late in 1936. AS that time the British Government reported £ 60 million starting in silver soins is circulation. The fine silver content of this acimage represents about 108 million - AS of December 31, 1937, share - - silver reserve hold in the British Treasury although, of course, the British Government had - silver soin and nish stocks on hand. Date ea such allow holdings are not available. No recent information to available - the circulation of silver aria in Intin, or - the silver holdings of the Reserve Bank and the of India. IS is estimated that the existing colange of Intia in circulation and boards, in the Reserve Bank of Intin, and in the Treasury is appreciantely 2,500 million impose containing 865 million fine custom of silver. this estimate so largely based on the entrage records of the Intia nine. Complete records are evallable - - - - withdrawals of soin after 1900. Since that year the - addition to the silver soin of India has been appressisately 550 million fine - The amount of silver hold by the Government of India is not reported. As of December 32. 1940, the monstary allow stacies hold by the Government of India - by banks in Intia was reported as 300 million suppose containing alightly more them 100 million fine oundee of allow 2. No silver is held as reserved by the British Government or by the Healt of Hagland. 7/13/42 Sent to Mr. Bell by Mr. E.M. Bernstein 7/14 - Ret. - to EM Bernstein by Mr. Bell, for initial. In. and returned to Bell 249 -2The principal silver reserved of Initia - these held w the Reserve Bank of Initia. since July 24g 1940, the Reserve Bank of India has combined in the published figures of reserved against the notes both allow sim and / & July 19, 1940, the Reserve Bank of Initia least reported cegarately its w - of allow report, 0 they - to 252 million repose containing newly 100 million fun - of silver. 3. Silver held by the Bank of Mexico as of my 30, 2042, amounted to nearly 20 million fine - as follows Coins and silver in process of octange Stabilization Fund Metallis reserve Total 4.7 million from .7 24.4 19.8 . . " o . . . . . The amount of silver held in the Mestican Stabilization had and in the setallis - to provided to this Government in - Cleanes and should not, sharefore, be published. There are - date evallable - commental - of allow in Medica. Prementally they are those annual to a company producing appreciately a million - of allow a year, monty all of which is expented 4. AM of December 32. 1940, the Interest date for which date are available, the Bank of Canada hold - silver other than soin in 100 sale and the Government of - reported - ailver holdings, studies on I/ of - as had - allow sala and mine There - - data available - - studio of allow in California Presentably they are those normal to a - 10g appreciately 24 million - of allow a year, nearly all of which is aparted 5. The only stepies of allow hold by the - of fine outpos hold w the Resid of Medical We - of - Lass - Median which could be sold in commercial chandals - the 20 million the Bank of Medico from selling the allow is - - 250 -3- 6. As stated in the - to question 4, the Bank of Canada holds no silver other than the silver soins is its Bills, and the Government of Canada holds only - silver soin and mine steeles. No considerable amount of silver - by the - of Canada or the Bank of Canada in, therefore, available for sale in - etal channels. 7. AS of December 30, 1941, the total silver in Mexican soins in circulation amounted to about 110 million fine In addition to this, there was silver in the missing reserve (hold in the form of scient) and silver in the Medican Stabilination Fund (hold almost entirely in the form of bare), for both of which figures as of May 30, 1942 are given in the - to question , above. S. AB of December 31, 1940, the Canadian Government reported silver coins in circulation of a total value of approximately 37 million Canadian dollars, containing appreciantely 22.1 million fise outsom of silver. Neither the Canadian Government nor the Bank of Canada holds - silver as a reserve against outstanding paper surrency. 9. The total amount of silver in the montary stacies of the United States as of May 30, 1948 - 3,319 million common. of this, 1,360 million - represented silver bullion as most in the General Fumil. this silver in the General Punit is used for osiange purposes to the extent that 18 is midded. No date are available on the amount of silver available for industrial week in the United States and its percessions. is 1941, the United States produced $ million ourses of silver, imported not 116 million - of silver, and recentered old ativer for further we. There are currently available for inhaterial - all the old silver resevered, and importe of silver running approximately as the rate of 8 million - . month. American indentrial were may also require some of the current output of nowly-sized democrite silver. 10. Preside date are not available on the mostary silver stocks of the work. As of December 31, 1940, the reported montary silver stocks for all countries I the United States, China, and Initia, including silver is - is banks - in circulation (in those countries for which Such date are available) - to $1,260 Million at surrectivates of - Malding 251 -4allowance for unreadable silver scinnage in circulation and silver holdings of governments and central basism, is would - that appresidantely 1,500 million - of silver - available for survenal ween in other countries of the world, not instating the United States, Chim, and India. stocks of allver available for infestrial uses outside the United States are not I Production outside the United States in 1941 amounted to approximately 195 million - Net imports into the United States amounted to 118 million ourses. on this basis, appreciantely 80 million custom of and ailver, plus an wikown amount of reserved silver, was available for solings and for injustrial purposes outside the United States. Very truly years, Acting Secretary of the Treasury Henorable Pas McCarren, United States Senate, Hashington, D.C. 7/13/42 BB United States Senate COMMITTEE ON APPROPRIATIONS July 7, 1942 Hon. Henry Morgenthau, Jr. Secretary of the Treasury Washington, D.C. My dear Secretary Morgenthau: I would greatly appreciate it if you could see fit to give me the following information, as promptly as possible, in line with our discussions of recent date. If you will do me the courtesy of sending this information here to my office, I will be grateful. Those items upon which I would like specific data may best be presented in the form of the following questions: 1. How much silver is now in the currency systems of Great Britain, and British India, in and outside of the treasuries? 2. what of the silver owned or controlled by these governments, respectively, is held as reserves? 3. What stocks of silver are held in Mexico, both for commercial and currency purposes? 4. What stocks of silver are held in Canada, both for commercial and currency purposes? 5. Does the government of Mexico have stocks of silver which are available for sale in commercial channels? If so, how much? 6. Does the government of Canada have stock of silver which are available for sale in commercial channels? If so, how much? 7. How much is there in the currency system of Mexico, in coinage and held against outstanding paper money, or otherwise held as & reserve? MAINE BRIDGES HERRY CABOT LODGE, MADS United States Senate COMMITTEE ON APPROPRIATIONS Hon. Secretary Morgenthau - 2 8. How much silver Is there in the currency system of Canada, in coinage and held against outstanding paper money, or otherwise held as a reserve? 9. What is the total amount of silver available for currency and industrial uses in the United States and its possessions? 10. How much silver is available for currency and industrial uses in other countries of the world (exclusive of silver in hoarding in India and China)? I will be extremely grateful to you for the courtesy of a prompt reply. My kind personal regards to you. Sincerely, Pat Milvran 254 21 Copyright 1942 by N.Y. Post and Arthur Bayk. "THE ENGLISH BETRAYED US. THEY DID NOT SURRENDER!" " 255 New York Post JUL 13 1942 MY.42. Copyright. 1942. by N Y Post and Arthur Bayk "WE ASK FOR PEACE A PIECE OF THE GLOBE! 256 New York Post JUL 11 1942 THE POST PRESENTS A NEW WEAPON TO DEMOCRACY THE CARTOONS Courtesy of Callier's Weekly OF ARTHUR SZYK WORLD FAMOUS ARTIST-CARTOONIST WHOSE EASEL IS A FRONT LINE TRENCH IN THE FIGHT FOR FREEDOM Arthur Szyk (pronounced Schick) is considered by authorities the foremost painter of miniatures and illuminator of priceless books. When the war started, this famous artist turned his talents to scathing cartoons as a weapon for destroying totalitarianism. His cartoons quickly evoked acclaim. You may have seen some on the covers of magazines. Now the New York Post brings you the stirring work of this inspired artist on its editorial page four or more times each week. Szyk's cartoons introduce to America a unique and masterful style. They are distinguished by their great attention to minute detail, developed through years of painting miniatures. So potent are his barbed jabs at the evils of Fascism and dictators that Hitler has placed a price on his head. A former delegate to the League of Nations and a keen student of history, Arthur Szyk brings to the Post a powerful weapon for the cause of justice, enriched by an artistic merit that is ingrained in this consummate artist. Mr. Szyk, in a gracious tribute to Rollin Kirby, expressed the hope that his cartoons would be worthy of succeeding those of his great predecessor on the Post. WATCH FOR THE CARTOONS OF ARTHUR SZYK, STARTING MONDAY New York Post Freedol 1110 257 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE July 14,1942 Secretary Morgenthau TO Mr. Hoflich FROM Subject: Comparison of War Production in the United States and Axis Europe 1. The table below shows the production of selected armament items in the United States as percentages of estimated production in Axis Europe. first quarter of 1942 : U. S. Production : : Items U.S. Production as Percentage of Estimated Axis Europe Production U.S. Production schedule for the year 1942 Combat 96 Training and transport 86 153 156 139 Guns (army and air) 72 171 Armored combat vehicles 61 33 150 171 105 147 276 85 165 Planes 94 Tanks Armored cars and carriers Trucks Total selected items 75 It will be noted that, except for trucks and planes, American output was substantially below that estimated for Axis Europe during the first quarter of 1942. It is believed that Axis production reached its peak by the end of the first quarter, and that it might decline somewhat during the remainder of the year due to the increasing pressure on manpower. If United States production expands according to schedule, it should exceed that of Axis Europe in all items for the entire year by a considerable margin. 258 -22. For other items that are less comparable between the two areas, and for which less information is available on Axis European output, the following "rough and preliminary" estimates are made: (a) Scheduled United States production of ammunition for 1942 18 less than half the amount estimated for Axis Europe. (b) It is estimated that naval construction in the United States will be about double that of Axis Europe for the year 1942. 3. It is estimated, very roughly, that total war production in the United States during the first quarter of 1942, was about half that of Axis Europe, but that it will be about equal for the entire year. (This includes the construction of merchant marine, factories, bases and other installations). (Office of Strategic Services, "The War This Week", July 2 - 9, 1942) 259 Chaunoey TREASURY DEPARTMENT FOR MINO OFFICE OF THE SECRETARY July 14. 1942 CONFIRMSTIAL Received this date from the Federal Reserve Bank of New York, for the confidential information of the Secretary of the Treasury compilaties for the week ended July 1. 1942. showing dollar disbursements out of the British Repire and French accounts at the Federal Reserve Bank of New York and the means by which these expendi- tares were financed. Att lap-7/14/42 260 0 0 P Y FEDERAL RESERVE BANK OF NEW YORK July 10. 1942 CONFIDENTIAL Dear Mr. Secretary: Attention: Mr. H. D. White I am enclosing our compilation for the week ended July 1, 1942, showing dollar disbursements out of the British Empire and French accounts at this bank and the means by which these expenditures were financed. Faithfully yours, /a/ Robert G. Rouse Robert G. Rouse, Vice President. The Honorable Henry Morgenthan, Jr., Secretary of the Treasury, Washington, D. C. Enclosure Copy:vv:7-11-42 FRENCH (in billions of Dollar BANK OF Expendi Net Incr. of Gov't Other shim of Total (+) Securities (arridal) CHEDITS DEBITS CREDITS DEBITS Total Debits BANK ENOLAND THE GOVERNMENT) Dear.(-) Credits(S) Balanoe Other Total Debits Prooseds Gov't Expendi- Other tures (d) Debits Total Credits of Gold Other Sales Credits Debits Credits Gold 1.187.6 1.828,2 1,356.1 52.0 420.1 35.0 866.3(e) 416.6(e) 449-7 1,09536 900.2 195.1(e) +229.0 108.0 575.6 +10.8 878.3 421.4 456.9 1,098.4 900.2 2,792. 2,109.5 +220.2 2,793.1 198.2 1,425.6 1,356.7 2,189.8 274.0 722.1 - 13.2 38.9 4.8 8.8 8.8 -30.1 410.8 1,193.7 - 1,792.2 34.1 2,203.0 2.0 0.3 0.5 0.5 0.2 0.3 0.3 - 0.3 - 77.3 0.3 - 109.0 Dec. 3 156.1 Dec. 31 88.4 111.6 69.6 35.3 41.9 -21.5 -36.9 0.3 Oct. 29 154.1 150.1 - 105.9 20.1 - 140.9 Jane Jan. 28 102,3 73.2 Jan 29 - Feb . 25 87.2 63.8 PERTOD Arst year of n 128/00 War period through r. 1940 year a war Oct. 1 Fabric 26 - Apr Apr. 2 - Apr. 29 Apr. 30 - June 3 June 4- July 1 1.793.2 tures(a) 605.6 121W 86 M 98.1 64.2 81.4 72.6 104.0 89.9 35.0 31.7 44.5 18.8 29.1 23.4 35.0 33.9 22.6 17.3 1234 ENDOR June 10 12 24 July 176.2 150.9 134.6 - 1,0 133.6 51.5 51.5 - 69.3 - 0.5 68.8 - 1.0 56.2 171.4 57.2 70.6 165.7 113.6 32.0 28.5 3.5 62.3 22.1 15.2 10.4 6.4 19.0 3.6 24.8 18.0 3.8 7.5 14.0 21.8 0.8 Average Weekly sconditures Since outbreak Mar France (Through June 19, 1940) 19.6 million England (through June 19. 1940) 27.6 million England (since June 19, 1940) 37.1 million monthly breakdown see tabulations prior to April 23. 1941. #For monthly breakdown see tabulations prior to October 8, 1941. **For (See attached sheet for other footnotes) 0.5 70.1 165.7 113.6 33.0 30.0 50.0 m_27.5 16.1 0.8 0.2 - 16.1 0.4 - - 0.8 0.4 - - 0.2 0.4 - 0.3 - 0.1 0.2 - 0.4 - 0.2 0.4 - +61.2 +23.7 0.3 0.3 30.3 0.1 62.3 19.0 - 3.1 24.8 7.5 +10.8 - 14.3 - 0.1 Transfers from British Purchasing Commission to Bank of Canada for French Account Week ended July 1. 1942 162.7 Cumulation from July 6, 1940 - 15.7 0.6 0.6 -04 0.4 0.3 0.4 0.2 0.4 0.3 0.3 0.1 0.1 0.1 0.1 0.1 million million 0.3 0.3 +'0.2 + 0.3 0.3 t.0.1 +0.1 +0.1 (a) Includes payments for account of British Purchasing Commission, British Air Ministry, British Dupply Supply Timber Control, and Ministry of Shipping. (b) Estimated figures based on transfers from the New York Agency of the Bank of Montreal, which apparently represent the proceeds of official British sales of American securities, including those effected through direct negotiation. In addition to the official selling, substantial liquidation of securities for private British account occurred, particularly during the early months of the war, although the receipt of the proceeds at this Bank cannot be identified with any accuracy. According to data supplied by the British Treasury and released by Secretary Morgenthau, total official and private British liquidation of our securities through December, 1940 amounted to $334 million. (c) Includes about $85 million received during October, 1939 from the accounts of British authorised banks with New York banks, presumably reflecting the requisitioning of private dollar balances. Other large transfers from such accounts since October, 1939 apparently represent the acquisition of proceeds of exports from the sterling area and other currently accriding dollar receipts. (d) Includes payments for account of French Air Commission and French Purchasing Commission. (e) Adjusted to eliminate the effect of $20 million paid out on June 26, 1940 and returned the following day. Transfers PERIOD Net your of Total Debite to Proceeds Official of Buttleb A/C Total Other Debits Credits Gold Sales Transform Transfers from Official British A/C For Own A/C For French A/C Net Incr. Other Credits (+) or Decr. (-) Imon (O) oz to in Balance Total Debits Official British Other of Gold A/C Debits Total Credits Sales Other Credits Decr. (-) in Balanos 4.9 412.7 20.9 38.7 32.4 +181.7 31.2 3.9 27.3 6.1 (8/29/79-8/28/40). 504.7 30.0 16.6 306.4 36.1 323.0 War pariod through December 1940 Second_year of war 16.6 460.6 707.4 534.8 20.9 110.7 41.0 230.2 57.9 14,5 43.4 62.4 50.1 12.3 477.2 460.4 462.0 52.2 246.2 3.4 123.9 88.5 + 1.6 72.2 16.7 55.5 81.2 62.9 18.3 9.0 2.8 2.1 0.2 2.9 19.7 32.5 11.9 5.9 2.1 19.3 9.0 2.6 22.2 2.6 17% 0.2 33.0 27.0 - 39.5 10.8 35.7 12.4 - - 34.1 46.5 99.3 20.3 7.7 35.9 14.2 Aug.21 Oat. 23.1 - 23.1 - 37.4 1941 Oct Deg 2- Oct. 29 0- Dea. 3 A- Dag. 31 37.4 52.8 17.7 52.7 0.1 NA - 1942 LOF 28 29 - Fab 25 26-Anr 1 39.5 34.1 46.5 - - - 24 July 1 11.5 - 19.6(a) - - 17.7 - 20.3 8.2 10.3 5.5 6.9 2.7 4.9 -25% 3.9 1.8 2.1 - 6.0 - 6.5 4.5 - 4.5 10.8 8.4 5.3 7.8 1.3 8.0 3.1 6.5 2.9 1.6 3.6 16.8 9.5 3.2 12.6 0.5 2.0 3.0 3.0 0.5 0.1 0.6 0.6 0.2 + 0.5 + 0.2 - - 23.3 71.1 3.4 7.9 25.0 8.1 11.5 19.60 6.8 2.9 5.6 2.8 8.1 nee tabulation prior to April 23. 1941. see tabulation prior to October 8, 1941. + 0.2 - - 33.0 of Total Debits Since Outbreakmillion of War July 1, 1942 7,8 13.2 8.2 8.2 - - 0.5 142 June July 1 7.9 - 10.7 8.0 11.6 2.8 - - +29.1 12.2 5L.2 17 - 31.0 15.2 N2.2 June 10 - 47.9 72.9 Anra2-Apr29 1 - 21.2 32.2 37.4 37.4 SL.2 Apr. 30 - June 21.2 10.2 4.5 + 460.4 + +1.6 52.8 15 10.9 6.3 13.2 58.2 +25.2 2.5 29.6 +24.8 22.1 2.5 A - 1.17.1 3.4 12.8(b) easery Railway HT (a) Includes 165million paid tonot New"8" York 5 accounts banksinto and Cenadian National OF ofof chartered rah depo U. 0.1 3.4 + + 1.3 1.1 6.3 1.6 6.6 - 3.6 L.2 - 16.8 5.9 14.6 1.2 0.8 0.8 1.3 0.2 1.3 11.6 1.1 0.9 0.9 0.5 + 0.5 0.2 5 264 Treasury Department Division of Monetary Research Date To: From: Miss Chauncey Mr. White For your files. Deneral 19 265 HEL PLAIN London Dated July 14, 1942 REC's 1:20 p.m. Secretary of State, Washington. 3881, fourteenth. FOR THE SECRETARY OF THE TREASURY FROM CASADAY. Department's 1730, April 22 and Embassy's 3783 July 8 and previous. The following report was prepared by Eileen Winton of the Financial Section's Staff: A visit was made to Northern Ireland (population 1.5 million) which with the EXCEPTION of Belfast and a few large towns is predominantly ag- ricultural. BElfast contains roughly one third of the total population of the province; ship building rope making and war munitions are its important industrits. The UlstEr Savings Committee which is comparable with but completely independent of its English counterpart, has only been in EXISTENCE since 1939. The Ulster Savings Branch of the Ministry of Finance however is a permanent general administration staff which was set up in order to Encourage thri ft through the sale of Ulster Savings certificates. In contrast to England 266 -2- #3881, July 14, from London to England and Scotland, saving was not fostered in the pre-war years Either through the organization of local savings committees or savings groups with the result that at the outbreak of war not only did they have to set up an Ulster Savings Committee and the civil service staff to maintain it but all the local savings committees had to be formed. The organization in Ulster is as follows: paid staff. The Ulster Savings Branch of the Ministry of Finance does all the administrative work connected with the issue of Ulster Savings certificates to the central of fices of the post office, joint stock banks and trustee savings bank KEEPS all records of individual holdings and authorizes repayments of Ulster Savings certificates. This branch is officered by a deputy principal 2 staff officers (one a woman) a junior staff officer and 90 temporary clerks. The headquarters staff in Belfast which maintains the Ulster Savings Committee comprises 19 paid persons, the secretary, staff officer, junior staff officer, 5 temporary organizers and clerks. This completes the paid staff voluntary organization: the Ulster Savings Committee was formed in 1939. There are 60 members who were invited by the Ministry of Finance to form a committee so that 267 #3⑉, #3881, July 14, from London. all interests in the province would be represented The Lord Chief Justice is chairman of the committee which meets two or three times a year. It is not a working body. An EXECUTIVE committee of 8 persons chosen from the larger committee meets ten times a year to decide broad policy and make suggestions. The accountant of the Ministry of Finance sits off the EXEcutive committee. Local savings committees: there are 78 local sayings committees in Ulster which have all been 'organized within the past 18 months mainly through the Efforts of the paid organizers. The method generally Employed was to USE the local government council as a springboard call a public meeting having the Mayor as chairman and advertise it WELL, The meeting was usually addressed by the Mayor and someone from the Ulster Savings Commit- tee headquarters. BEfore the meeting broke up a resolution was usually passed proposing a committee to be formed and a nucleus of one chosen. The paid organizer having made a preliminary survey usually saw to it that the most suitable person in his opinion was chosen as secretary. County committees: six county committees WERE originally organized to coordinate the work of the local committees for warships WEEK, but they have proved 268 -4-, #3881, July 14, from London. proved so us eful that they will function permanently. Two members from each local savings committee comprise the county committee and two members from Each county committee are members of the Ulster Savings Committee. The difficulty of getting an active and responsible local savings committee in a large city as indicated in previous telegrams was also found in Belfast. The first local savings committee heavily loaded with prestige was unequal to the work of organizing and maintain ing savings groups in the city principally because of apathy on the part of the city corporation. The committee was reconstituted in January 1942 largely through the Efforts of the paid headquarters staff on the grounds that the people who were doing the work that is the group leaders and collectors should bE represented on the committee. A meeting of the group secretaries and collectors was called but this was only a pretext as head- quarters chose the list of 80 persons representing all important interests in the city which was approved by the advisory committee chosen at the meeting of group SEC- retaries referred to above. In Effect the persons called to the meeting had nothing to do with the choice of the committee members. THE Belfast savings council has four subcommittEEs: publicity, 269 -5-, #3881, July 14, from London. publicity, industry and COMMERCE schools and street groups and other social organizations which meet whenever necessary. An EXECUTIVE committee comprising 15 persons representing the four subcommittees post office, trustee savings bank and the Belfast Corporation deter- mines policy and deals with matters of urgency which arise. The BELFAST savings council meets quarterly, Techniques: savings groups formed by the local savings committees are identical with those found in Eng- land. Kiosks carrying on full banking facilities similar to those reported in Scotland are operating in Ulster but they are not outstandingly successful in lifting savings. One difficulty Encountered was that deposits made on Friday would be drawn out on the following TUES- day thus increasing the work of the savings bank staff unnecessarily. The bank manager finally gave the names of the persons to the savings officer of the plant who refused to allow the offenders to make further deposits. Street group organization has progressed rapidly particularly in BElfast which has been almost completely organized since January 1942. The 18 members of the street group subcommittee of the BElfast Savings Council split up according to their residence which generally followed the 6 ARP and police divisions of the city. They WERE responsible 270 -6-, #3881, July 14, from London. responsible for the development of street groups in their districts. The districts have been split into five divisions so that there are 30 di visions in the city. Each street group has an honorary president and a secretary. The group secretary appoints collectors who make WEEKLY returns to her. One return is made EVERY six months to headquarters by the group secretary. The savings official can tell each month to a penny how much has been saved from returns made by post offices and trustee savings banks. Publicity: savings publicity in Ulster has been conditioned by the political situation in the country. It is Estimated that one third of the population of BELFAST is opposed to the present governmental arrange- ments and for this reason will not cooperate by joining savings groups. The Roman Catholic Archbishop has con- sistently refused to support the savings campaign but this does not mean that Catholics do not save as SOME have formed groups and officer them. About 20 percent of the Catholics in Belfast may be considered entirely apathetic to the campaign. This apathy was demonstrated in Portadown (population 10,000) is county Armagh when I attended the gala Evening of the warships WEEK which consisted of parades of the Civilfefnkits military bands and speeches by distinguished guests. One section of the town 271 -7-, #3881, July 14, from London. the town the Nonsavers remained at home and could be SEEN standing in doorways and houses too disinterested EVEN to join the crowd only a short distance away. The rest of the town turned out En masse to SEE the parade and hear the music and speeches. The publicity appeal used mainly is one of pounds, shillings and pek, that is it is sensible to save now at an attractive rate of interest in order to be better off after the war. Since the strong patriotic appeal can be used only in a limited way only about 50 percent of the national savings committee propaganda can be uti- lized in northern Ireland. National savings committee films are shown as movie fill-ins but they are not used much at meetings as they usually draw more children than adults. There are no cinema vans in Ulster. The Ulster Savings Committee inserts advertisements in local newspapers on a basis of circulation and on a strict rota. In turn the press usually devotes considerable space to savings during warships WEEK and any special drive. The total cost of advertising last year was only 16,500. It was pointed out that advertising of all types was not as widely used in Ulster as in England and that personal contact was more successful on the whole. Industrial savings: a visit was made to a war munition factory in Belfast where the management cooperates closely 272 -8-, #3881, July 14, from London. closely with the Ulster Savings Committee. The firm hired a wage clerk at the beginning of the war just to take care of the deduction from pay scheme in which 50 percent of the workers participated. 1. member of the staff is the part time war savings*officer of the plant. The deduction from pay scheme secured only minimum savings so a supplementary scheme was tried. A Kiosk was opened two days a WEEK Saturday and Monday when the men could deposit savings Either in the BELFAST Savings Bank or the Post Office. This scheme did not SECURE sufficient additional savings and a third attempt was made. is war savings committee was formed in the works which consisted of shop stewards who had direct contact with all the men. It was decided that stamps should be sold by the floor checker who knew all the men in his unit and could canvass them personally. This scheme had immediate SUCCESS and also had the Effect of increasing the requests for deductions from pay. This EXPERIENCE is another Example which emphasizes the fact that the personal approach is the most Effective way of increasing savings. The War Savings Committee consisting of 15 members including staff representatives meets on strictly Parliamentary lines. The firm has spent a good deal of money and time on publicity. The plant has an internal 273 -9-, #3881, July 14, from London. internal broadcasting system which is used for giving announcements and speeches relating to savings. The difficulty with the stamp scheme is that the floor checkers have a multiplicity of jobs to do and after it had been in operation for a time the management indicated that the workers would have to COME to the checker to buy the stamps instead of having the checker go to the men. This caused a slight falling off in savings at first but now the seasonal trends in savings must be Expected, for Example during Easter and holiday times savings fall off considerably. Not all managements are as cooperative as the one described above. The manager of the largest industrial unit in Belfast will not allow the Ulster Savings Committee organizer to Enter the yard to form groups be- cause he is afraid it will interfere with production. Only about 10 percent of the workers in this unit are Enrolled in the deduction from pay scheme. ThE Ulster Savings Committee has recently sent out a questionnaire to firms in an attempt to find out the number of Employees in savings groups, the percentage of group members to total number of Employees and percentage of WEEKLY savings to the weekly gross wages. The opinion of the management was also asked on how savings could be improved. It is too Early to judge how successful 274 -10- #3881, July 14, from London. how successful the inquiry will be. All Ulster savings are lent to the imperial government. To date 445 million consisting of 121.5 million XWL savings and 124.5 million large savings have been so transferred. The accountant of the Ministry of Finance pointed out that this figure would bE much higher if the large Belfast firms invested in northern Ireland rather than in their London offices. WINANT RR 275 C 0 P Y DEPARTMENT OF STATE WASHINGTON In reply refer to FD 851.516/299 July 14, 1942 The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses a copy of despatch no. 1051, dated June 22, 1942 from the American Embassy Vichy, France trans- mitting information concerning the Societe de Credit Intercontinentale. Enclosure: From Embassy Vichy, France, despatch no. 1051, June 22, 1942. Copy:bj:7-14-42 276 AIR MAIL. No. 1051 CONFIDENTIAL Vichy, June 22, 1942. Subject: Submitting additional information concerning the Societe de Credit Intercontinentale. The Honorable The Secretary of State, Washington. Sir: With reference to this Embassy's confidential despatch No. 972 of May 19, 1942, I have the honor to submit herewith a memorandum regarding the SOCIETE DE CREDIT INTERCONTINENTALE which was de- livered to me confidentially by Mr. Alan ARRAGON, the representative of MORGAN & CIE at Chatel-Guyon, (Puy-de-Dome). This memorandum contains additional supplementary information, particularly with regard to the participants in the Societe de Credit Intercontinentale and the composition of its Board of Directors. It will be noted that the subscribed capital is placed at thirty million france and the initial deposits at one hundred million francs. Respectfully yours, S. Pinkney Tuck Charge d'Affaires ad interim Enclosure: 1. Memorandum In triplicate SPT/FP 277 Enclosure No. 1 to despatch No. 1051 COPY dated June 22, 1942 from the Embassy, Vichy MEMORANDUM Credit Intercontinental It appears that owing to the liquidation of the National City Bank (France) General de Chambrun and the Marquis de Mun were concerned about the difficulties which some of the members of the staff would face in obtaining employment and that the idea of forming a new small bank probably had its origin in their de- sire to assist their staff. It is difficult to know just how the matter now stands for it seems a number of American Companies have been approached with the view to their taking a partici- pation in the capital of the enterprise, which most have declined, and their reports are somewhat conflicting. However, it is understood that a mimeographed memorandum has been placed in the hands of some of them. A summary of this memorandum, transmitted verbally, follows: Name: Credit Intercontinental Capital: Frs. 30,000,000.- Participants: Union Europeenne (Schneider) Banque de 1'Indochine French insurance companies grouped under the Societe Francaise de Reassurances 15% 15% 15% Group (German) of Dr. Kreuter of Dillon Read, Berlin 20% Industrial companies comprising Gillet, Thiebaut (Gibbs Soap), French Ford, International Business Machines Total Board of Directors: 35% 100% General de Chambrun, President Gabriel de Mun Le Quellenec Seymour Weller (of Dillon Read) General Manager by delegation of the President Representative from each of: Union Europeenne, Banque de l'Indochine, Compagnie Francaise de Reassurances. Initial Deposits: Frs. 100.000.000.- It appears that a post scriptum has been added stating that after the war the staff and the accounts will be returned to the American banks if they wish. Copy:bj:7-14-42 C 0 PARAPHRASE OF TELEGRAM RECEIVED P 278 Y FROM: American Legation, Stockholm, Sweden DATE: July 14, 1942, 2 p.m. NO. : 1811 Reference is made to telegram no. 1652, sent by the Legation at 3 p.m. on June 30. 1942. In answer to inquiries which the Legation made to the Sveriges Riksbank after receiving the circular telegram from the Department dated June 23, 11 p.m., the Riksbank sent the Legation a letter. my According to this letter there is in Sweden no legal market for American currency notes and illegal trade is very insignificant as far as can be ascertained. (A law was passed on February 25, 1940 which prohibited private trade in foreign currency.) All cases which involve the purchase of notes are investigated by the bank to make sure that no country having blocked assets in the United States holds an interest in such a transaction. During the first half of 1942 approval has been given by the Riksbank to the purchase of the following, an investigation has discloseds a. $7926 from 1800 individuals who established that friends or relatives in the United States had sent the remittances; b. $2961 from 41 sailors; C. $502 from the American Legation; d. $3189 from refugees and travelers who have been permitted to (*); e. $10,811 from Swedish subjects from older holdings of notes. During this period the total purchases equalled $25,389 and the total holdings of the Rikebank now equal approximately $100,000. In conclusion the letter states that instructions have been sent to the Swedish Legation to negotiate with the Treasury in order to investigate possibilities to aid the shipment to the United States of dollar notes and asks this Legation for assistance in the solution of this task. The cost of shipping notes to the United States from Sweden, according to the statement of a bank official to the Commercial Attache, would be very high. In the bank official's opinion the United States Treasury should investigate the feasibility of authorising the Rikebank to destroy, under the supervision of the American Legation, all dollar notes in Sweden. The British did this when sterling currency was called in on August 21 and 22, 1940 for cancellation, less than 48 hours notice being given. Caution must be exercised to keep plans of this character secret so that possibility of fresh importations from the continent will be prevented. JOHNSON (*) Apparent omission eh:copy 7-15-42 279 C 0 P Y Caracas DM This telegram must be paraphrased before being Dated July 14, 1942 communicated to anyone other than a Governmental Rec'd 10:45 p.m. agency. (BR) Secretary of State, Washington. 567, July 14, 7 p.m. Department's 466, July 11, 7 p.m. Reference my despatch 2563, July 7. Minister of Hacienda considers Article XII of decree 152 of July 3. 1942 sufficiently forceful to require holders to deposit dollar currency and states that is the intention. Considers second paragraph of decree sufficient notice to holders of dollar currency to deposit it immediately, however, is having issued a public notice through the Superintendency of Banks that unless dollar currency is immediately deposited with Central Bank applications for release in the United States may be refused. Central Bank accepting dollar currency for forwarding on collection basis only. CORRIGAN EMB Copy:1c:7/17/42 280 COPY NO. 13 BRITISH MOST SECRET U.S. SECRET OPTEL No. 240 Information received up to 7 A.M., 14th July, 1942. 1. NAVAL A Turkish tanker was torpedoed off TRIPOLI (s) on 12th. INDIAN OCEAN. About 4 Japanese submarines have been operating in the MOZAMBIQUE CHANNEL area since the end of June but no attacks have been reported since the 8th July. It is possible that whale factory ships are being used to supply them using a base in the extreme south of the INDIAN OCEAN where they habitually work in peace time. Such whale factory ships are reported to be fitted for carrying aircraft and midget submarines. At least one Japanese armed merchant ship raider is operating in the INDIAN OCEAN. 2. MILITARY RUSSIA. The Russians continue to counter attack in force northwest of VORONEZH and have made a slight penetration into the German lines. East and southeast of KHARKOV the German offensive has made further progress to an extent of over 100 miles on the left flank and of 50 miles on the right. 3. AIR OPERATIONS WESTERN FRONT. 13th. 12 Bostons bombed the railway centre at BOULOGNE. 20 Squadrons of Spitfires provided escort and carried out offensive operations. 2 F.W.190's were damaged and 3 Spitfires are missing. 13th/14th. 210 aircraft were sent out - DUISBURG 194, aero- dromes 10, leaflets 6. Six bombers are missing and 2 others crashed. Almost complete cloud was met over the objective. MALTA. Between 1.15 p.m. 12th and 9.30 a.m. 13th, a total of 37 JU 88's with fighter escort, made 3 attacks on our aerodromes. 2 of our circraft were destroyed and 9 damaged on the ground. 6 enemy aircraft were shot down, 2 probably destroyed and 10 damaged. 1 Spitfire was lost. 281 TREASURY DEPARTMENT Washington Press Service No. 32-53 FOR IMMEDIATE RELEASE, Wednesday, July 15, 1942. Secretary of the Treasury Morgenthau today announced the final subscription and allotment figures with respect to the current offering of 2 percent Treasury Bonds of 1949-51. Subscriptions and allotments were divided among the several Federal Reserve Districts and the Treasury as follows: Total Subscrip- Federal Reserve Total Subscrip- District tions Received tions Allotted Boston New York $ 218,046,000 $ 117,699,300 Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dellas San Francisco Treasury 1,587,258,700 198,854,900 231,751,200 199,092,100 227,408,000 511,216,200 102,418,500 64,403,300 97,357,200 115,066,800 287,277,600 9,345,000 $3,849,495,500 -000- 834,234,500 108,454,800 128,015,400 109,087,300 135,643,400 280,593,000 62,378,200 39,320,700 58,817,500 65,587,800 152,566,500 4,881,000 $2,097,279,400 7-16-42 668 282CIMES TREASURY DEPARTMENT 5700 INTER OFFICE COMMUNICATION STORES DATE TO Mr. Ted Gamble FROM Mr. Ed. Pulte July 15, 1942 The following cities have notified us to date that they are endeavoring to organize an "American Heroes Day" in their communities. These reports have come to us from our State Administrators, U. S. Chamber of Commerce, National Retail Dry Goods Association and Chain Store Associations: Alabama Arizona Phoenix Birmingham Decatur Tucson Dotham Yuma Enterprise Mobile California Calif. (cont'd) Laverne Glendora Arcadia Colorado Ozark Florence Grand Junction Ensley Bessemer Oakland Long Beach Pasedena Boulder Delta Huntsville Brawley Denver Delano San Diego Canon City Greeley Pueblo Russellville Stockton Los Angeles Jan Jose Berkeley Glendale Alexander City Burbank Tuscaloosa Anniston Godsden Natumpka Tallahasee Phenix City Colorado Springs Walsonburg Connecticut Bridgeport Selmo Santa Barbera Geraldine Santa Ana Bristol Santo Paula Manchester Middletown Arkansas Redlands Pomona New Britain Upland Alameda Anaheim Wallingford Rogers Warren Coalingo E1 Cantro San Bernardino San Francisco Stamford Meriden Heber Springs Sacramento Torrington San Rafael Hollywood West Hartford Batesville Siloam Springs Little Rock Fort Smith Hot Springs Pheonix Jonesboro Eldorado Beverly Hills Mena Santa Monica Norwalk Waterbury Hartford New Haven Naugatuck Norwich Farmington East Hampton Danbury New London Colchester 283 -3Michigan Maine Bangor Alia Lewiston Alpena Waterville Ann Arbor Portland Battle Creek Skowhegan Detroit Augusta Flint Camden Niles Pontiac Calumet Lansing Harbor Beach Mt. Clemens Lake Linden Maryland Frederick Baltimore Salisbury Cumberland Massachusetts Cardner Quincy Malden Gallatin Marshall Brookfield Springfield Lebanon Montana Miles City Grand Haven Grand Rapids Saginaw Kalispell Sturgis Missoula Manistoe Holyoke Boston Ypsilanti Fitchburg Greenfield Haverhill Cape Girardeau Moberly Butte Monroe Chelsea Kansas City Saint Louis Muskegon Jackson Ayer Pittafield Missouri Marquette Midland Plymouth Great Falls Glendive Helana Billings Nebraska Falls City Lincoln York Minnesota Omaha Scottsbluff Newton Austin Kearney Southbridge Worcester Lowell Brookton Duluth Fairburg Saint Paul Minneapolis Albert Lea Fairbury Lynn Winona Cambridge Malden Lawrence Chisholm Beatrice Willmar Columbus Greenville New Bedford Northampton Peabody Fergus Falls Mankoto New Ulm Mississippi Salem North Platte Fremont Gering Norfolk New Hampshire Manchester Laconia Springfield Gulfport Greenville Concord Lebanon Westfield Columbia Nanhua Dorchester Hattiesburg Roxbury Columbus Waltham Fall River Vicksburg Tupelo West Point Portsmouth 284 -2Delaware Illinois (cont'd) Wilmington Champaign East St. Louis Florida if Evanston Galesburg Hooperton Orlando Madison Marion Freeport Jacksonville Kewanee Kankakoo Tallahassee Moline Peoria Vero, Beach Miami Rock Island Streator Pensacola Bradenton Chicago Rockford Aurora Decatur Ft. Myers Port St. Joe Iowa (cont'd) City Mt. Pleasant Red Oak Davenport Mason City Kansas Atchinson Wichita Arkansas City Topeka Lawrence Great Bend Abilene Winterhaven Palatka Rochelle Okeechobee Ottawa Concordia Dodge City Macomb Manhattan W. Palm Beach Russell Tampa St. Petersburg Coral Gables Coffeyville Indiana Georgia Winfield Pittsburg Columbus Madison Hays South Bend Hutchinson Emporia Terre Haute Augusta Cordelle Vincennes Kentucky Griffin Wishawaka Savannah Indianapolis Hopkinsville Fort Wayne Covington Lexington Cynthiana Bowling Green Thomasville Valdoeta Atlanta Evansville Macon New Albany Kokomo Hammond Idaho Elkhart Muncie Pocatello Idaho Falls Illinois Oak Park Elgin Benton Joliet Bloomington Carbondale Owensboro Somerset Iowa Louisiana Boise Lewiston Louisville Mt. Sterling Clinton Dubuque Burlington Albia Waterloo Des Moines Fort Dodge Fort Madison Sioux City Eatherville Natchitoches Lake Charles Shreveport Waterville Winnfield Plaquemine White Castle Monroe West Monroe Ville Platte Crawley De Ridder Baton Rouge 285 -4New Jersey New York (cont'd) Passaic Newburgh Orange Oswego Maplewood Middletown Brooklyn Patterson Salem Trenton Somerville Asbury Park Montclair Newark Bloomfield Dunellen Jersey City Elisabeth Hammerton New Mexico North Dakota (cont'd) Lisbon Bismarck Ellendale Bowhan Hudson Mayville Niagara Falls Velva Doahi Ashley Fargo Glen Falls Staten Island Seneca Falls Norwich Deposit Valley City Minot Lockport Medina Doglerville Glensville Ithica Old Forge Ohio Ashtabula Lama Akron Dittle Falls Barberton Las Vegas Albuquerque Frankfort Cambridge Dayton Raton Yonkers Findlay Ilion Santa Fe Silver City Artesia Carrisozo Lancaster North Carolina Marietta Marion Lenoir Medina Painesville Hot Springs Burlington Charlotte Roswell Durham Carlsbad Elisabeth New York Greensboro High Point Springfield Steubenville Youngstown Zanesville Cleveland Canandaigua Oxford Cincinnati Troy Raleigh Columbus Buffalo Greater Wilmington Portsmouth Greenfield Amsterdam Winston-Salem Corning Dunkirk Syracuse New Rochelle Poughkeepsie Rochester Schenectady Asheville Toledo Mount Vernon Tarboro Gastonia Warren Hickory Ravena White Plains Elmira Reidsville Shelby Fayetteville Lexington Newton Rome Olean Binghamton foods Auburn Fredonia Utica Albany North Dakota Devils Lake Mandant Grand Forks Williston Geneva Grafton Lackawanna Jamestown Middletown Canton Elyria Geneva Lorain Masaillon Van Wert East Liverpool Hamilton Wooster Bellefontaine 286 -5Oklahoma E1 Reno Sapulpa Pennsylvania (Cont'd) Tennessee (cont'd) Ford City Wilkes-Barre Nashville Shelbyville Oklahoma City Johnstown McKeesport Scranton Okmilgee Pottstown Enid Miami Forest City Ada Vandergrift Cushing Wilkinsburg Muskogee Allentown Lufkin Dallas Chickasha Cherokee Kittaning Terrell Guthrie Tulsa Henrietta Oregon Baker Putnam Chattanooga Murfreesboro Texas New Kensington Albany Houston New Castle Pottsville Tyler Latrobe Washington Williamsburg E1 Paso Beaumont Marshall Midland Columbia Olney Eugene Oregon City Pendleton Portland Pennsylvania Altoona Braddock Marlin Rhode Island Corpus Christi Paris Cranston Providence Pawtucket Westerly Cotulla Goose Creek Greenville Harlingen Jacksonville South Carolina Bradford Longview Chester Rock Hill Stroudsburg Columbia Coatesville Greenville Erie Sunter Williamsport Beaufort Grove City Hazleton Lancaster Lebanon Butler Bethlehen 011 City Morristown Reading Sharon York Easton Shamokin Greensburg Philadelphia Pittsburgh Ridgeway Lock Haven Waco Pt. Lavaca Galveston Breckenridge Kerrville McAllen Hartsville Palestine Plainview Texas City Chester Charleston Brookings Bonham Canton De Smet Fort Worth Slaton Texarkana Pierre Yankton Sioux Falls Aberdeen White Utah Deadwood Ogden Lead Salt Lake City Huran Tennessee Memphis Provo Spanish Fork -6Vermont Wisconsin Burlington Manatowoo Brattleboro Janesville Rutland Barre Fond du Lac Marinette Virginia Arlington Kenosha Waukesha Beloit Lynchburg Oshkosh Madison Delavan Racine Milwaukee Richmond Wisconsin Rapids Danville Fredericksburg Harrisonburg Buena Vista Norfolk La Crosse Green Bay Roanhke Front Royal Washington Long View Mt. Vernon Kelso Seattle Spokane Wenetchee Everett Port Angeles Yakima West Virginia Charlestown Clarksburg Wheeling Bluefield Princeton Huntington Fairmont Logan Hinton Martinsburg Parkersburg Wyoming Casper Cheyenne Lovell 287 Treasury Department . Defense Savings Staff NEWS MATERIAL Five million dollar breakfasts, two million dollar rallies, eight million dollar drives are on the calendar for this Friday American Heroes Day, as cities throughout the nation vie with each other to honor their local war heroes with record breaking War Savings Bond and Stamp sales. American Heroes Day is the key day in the current drive by 1,000,000 re- tailers to help reach the billion dollar War Savings Bond quota set by the Treasury for July. From reports to the Retail Advisory Committee to the War Savings Staff, Major Benjamin H. Namm, Chairman, states that more then 750 cities will stage city-wide drives and that $100,000,000 in War Bond and Stamp sales is a conservative estimate for the day's total. Boeton expects to raise at least $10,000,000 by allowing Bond purchasers to autograph bomb cases to be delivered to Germany and Japan by our Army Air Corps. Every store in town will have these bomb cases for their Bond buyers to autograph. Cincinnati has set as their goal an amount of Bonds equal 1 the cost of a new destroyer or $8,000,000. So sure are they that they will be able to raise this amount. they have asked Naval officials to be present Friday evening to hear the results. Chicago, inspired by the success of the Birmingham Bond Breakfast which (more) 289 -2raised $1,987,000. on July 1st, is staging a $5,000,000 Bond Breakfast Fri- day as the opening event in their all-day drive. Birmingham is repeating its July 1st success with a $2,000,000 breakfast. Kansas City has planned an hour and a half parade to be topped off with a $1,000,000 Bond Rally at which local war heroes will thank their hometowners for buying Bonds. The Yest Coast reports similar events from Portland and Seattle to San Diego and the Southern California cities. Los Angeles is going in for an American Heroes Day celebration in typical motion picture style with Hollywood stars joining the army, navy, and marines in selling War Bonds in the city's stores. Although the West Coast is prevented by army defense regulations from staging huge parades and rallies, many cities like San Francisco are planning small rallies in spots all over town. In Orange County, California, thirteen cities are joining in a celebration which will feature thirteen war heroos and thirteen motion picture stars to match the thirteen stars on the Treasury Department's Minute Man flag. Typical of the novel ideas which cities are planning for the American Heroes Day drive is the report from Terro Haute, Indiana. Terre Haute will have a Bond Wagon, filled with soldiers, sailors, and the city's prettiest girls tour the streets, advertising War Bonds and Stamps. Every store clork in the city has been enlisted as a Bond salesman for the day. Among the many arrangements is a War Sweetheart election: A ten-cent War Stamp counting one vote, a twenty-five cent stamp two and a half votes, a Bond counting one hundred and eighty-seven and a half votes and so on up the scale. At a huge Victory Dance Friday night, for which admission is one dollar's worth of War Stamps, the Terre Haute girl receiving the (more) 290 -3greatest number of votes will be crowned Terre Haute's War Sweetheart. Indianapolis, headquarters of the American Legion which is joining with the retail merchants of the country in sponsoring American Heroes Day. is planning a parade in which each plant, store, and business enterprize will have in the line of march one person representing a boy from their business now in the service. The parade will be climaxed by the presentation of a special citation to an Indianapolis father who has lost three sons in the Navy and who is in defense industry himself. In Waco, Texas the city's air raid wardens will make personal calls on every person in their local district to sell War Bonds and Stamps. In Waco, as in many cities, the Mayor has officially proclaimed July 17, American Heroes Day. Dos Moines, Iowa is extending their American Heroes celebration over the entire week-end. The Des Moines program opens with individual programs in every store in Des Moines at ten o'clock, Friday morning. This will be followed by intensive War Bond selling throughout the day, leading up to a patriotic rally in the Drake University stadium, with War Bonds and Stamps the price of admission. On Saturday a roll of honor, listing all Des Moines boys in the armed forces will be unveiled. On Sunday there will be a sunrise religious service at which the city will turn out to pray for Des Moines American Heroes in the armed forces. St. Louis merchants will give postal cards to the purchasers of War Bonds, for them to mail relatives and friends in the armed forces, telling them they have bought War Bonds in their honor. (more) 291 -4The smaller cities of the nation are joining enthusiastically in the American Heroes Day celebration. Williamsport, Pennsylvania has set a quota of half a million dollars for the day. Among the cities sending in pledges of their all-out support are Silean Springs, Arkansas, Anaheim, California, Walsenburg, Colorado, Manion, Florida, Cordele, Georgia, Washawaka, and Kokomo, Kansas, Showhegan, Maine, Tupelo, Mississippi, Carrizozo, liew Mexico, Enid, Oklahoma, Pendleton. Oregon, De Smet, South Dakota, Goosecreek, Texas, Rutland, Vermont, Yakima, Washington, and Manatawoc, Wisconsin. 292 TREASURY DEPARTMENT WASHINGTON July 15, 1942. MEMORANDUM FOR THE SECRETARY: You asked for a report to-day from Mr. Callahan, indicating the procedure to be followed by radio stations in selling War Savings Bonds. Mr. Callahan was at the time in Chicago, meet- ing with representatives of the stations, and I found that he was not due back until Friday. I asked him to give me a telegraphic report this morning, and I attach this for your information. I will give you a more detailed report later on, after I have had a chance to talk with Mr. Callahan. GRAVES. PORTICTORY BUY THINK T 293 R E A S R Y 1942 JUL 16 AM 7 51 MULES 197 GOVT NT COLLECT 1/180 T HAROLD N GRAVES ASST TO THE SECY TREAS DEPT I HAVE HAD A FRANK AND FULL DISCUSSION WITH RADIO STATION PEOPLE ABOUT METHODS TO BE USED IN THE SALE OF WAR BONDS OVER RADIO STATIONS STOP THE CONSENSUS OF OPINION IS THAT THE STATIONS INDIVIDUALLY WOULD LIKE TO OPERATE ON THEIR OWN UTEAS AND WITHOUT REFERENCE TO ANY METHOD OR PLAN LAID DOWN BY THE TREASURY DEPARTMENT STOP I APPROVE OF THIS POLICY BECAUSE I AM CONFIDENT THAT THE RADIO STATIONS WILL DEVELOPE A COMPETITIVE SPIRIT STOP IN ALL OF MY DISCUSSIONS I HAVE TOLD RADIO STATION MANAGERS THAT WE NEED THEIR ASSISTANTS AND THAT THEY KNEW BEST HOW TO HELP US STOP GENERALLY SPEAKIN RADIO STATIONS WILL ACCEPT CASH ORDERS IN THEIR STUDIOS AND WILL ASK OVER THE AIR FOR MAILED SUBSCRIPTIONS STOP I THINK THAT IN TWO WEEKS THE RADIO STATIONS WILL THEMSELVES DEVELOPE THE PROPER AND SUCCESSFUL METHOD STOP IN THIS WHOLE OPERATION I HAVE REFRAINED FROM MAKING DEFINITE SUGGESTIONS STOP OUR PLAN IS TO HAVE STATIONS START SELLING BONDS ON JULY 23RD STOP BOTH OF THE RADIO GROUPS REPRESENTING STATIONS HERE IN CHICAGO HAVE ENTY 1. WUWE 6 2/17 CHICAGO ILL GRAVES WASHDC ENTHUSIASTICALLY APPROVED AND ENDORSED THE TREASURY SUGGESTION THAT STATIONS SELL BONDS STOP WILL BE BACK FRIDAY MORNING VINCENT F CALLAHAN. E CHICAGO ILL JULY 15 1942 294 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE TO July 15, 1942. Secretary Morgenthau FROM Harold Graves ga In response to your telegram of July 12, I hand you herewi th a memorandum from Mr. O'Malley about Bolling Field. You will note that they started their campaign on payroll allotment Monday night, July 13, with a meeting attended by 2,300 men. 295 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION July 14, 1942 TO DATE Mr. Graves FROM Mr. O'Malley Under date of March 16, 1942 the War Department released Circular #77 embodying details of a pay reservation plan for the purchase of U. S. Savings Bonds by the military personnel and civilian employees. In connection with the furtherance of this pay reservation plan among the military personnel connected with the Army Airport at Bolling Field, Anacostia, you are advised that on Monday, July 13th I contacted Lt. Colonel Fred Drury of the War Department who informed me that the supervision of this airfield was not within the jurisdiction of the War Bond Division of the War Department in Washington. I was told that this airfield comes within the province of the War Bond Officer for the 3rd corp area, headed by Major Connelly, who has his headquarters at Baltimore. I contacted Major Connelly by phone and he advised me that as far as he knew nothing had been done on the War Bond Program there, but that the inaugural ceremonies for the commencement of the pay reservation plan at Bolling Field were scheduled for Monday night. Major Connelly also informed me that the War Bond Officer for Bolling Field was Captain Dewsnup, Special Service Officer, in charge of athletics and recreation. Accordingly I contacted Captain Dewsnup at Bolling Field for more detailed information as to the progress and future plans for furthering the pay reservation plan. He advised me that the opening meeting was scheduled for Monday night and invited me to attend, which I did. Approximately 2300 of the men working at Bolling Field were assembled in the auditorium to witness the presentation of vaudeville brought over from the Capitol Theatre in Washington. At the conclusion of the vaudeville program Captain Dewsnup made a very clear and concise talk on the mechanics of the pay reservation plan, explaining its workings and its application to each individual soldier. His short talk was then followed by a personal appearance of Loretta Young who gave a very nice, brief talk to the men about the benefits of and necessity for purchasing War Savings Bonds, particularly through the pay reservation plan. It was 296 -2- indeed a very pleasing ceremony, and I am sure it will be of valuable assistance in securing the enrollment of the soldiers at that airport in the pay reservation plan. Captain Dewsnup also informed me that the frequent changes of personnel in the past have been the cause of the lack of activity on the pay reservation plan at Bolling Field. He advised me that there had been three replacements within the recent past of the War Bond Officers who have been selected to handle the War Bond Program at that airport. Each time the War Bond Officer had arranged the program and was all ready to start, it seems that a transfer was effected and a new officer had to be selected to act as War Bond Officer. Captain Dewsnup has his organization arranged for personal contact with each and every soldier at the airport. The occasion Monday night is to be the first of a series of such events in order to arouse interest in the pay reservation plan. Captain Dewsnup has only been on the job as War Bond Officer four days before the Monday night assembly. Captain Dewsnup has some very capable men assisting him in the program who were salesmen in private life and judging from the interest which they manifested in the War Savings Program last evening, I feel that we can expect some very good results in the pay reservation plan of Bolling Field in the very near future. I offered to assist Captain Dewsnup in any way possible, furnishing speakers, promotional material, posters, envelope stuffers, etc. whenever he needs them. The Captain has promised to keep me informed of the progress of the pay reservation plan. 297 Calendar of Direct and Guaranteed Bonds, Notes and Certificates 1/ July 15, 1942 (In millions of dollars) Fixed maturities Description Date Guaran- Direct teed Callable issues 2/ First callable Final maturities Direct Guaranteed Direct Guaranteed 1942-Jan. Feb. Mar. Apr. May June July July Aug. Sept.15 Oct.15 Nov. 1 Dec.15 342 Note 2% RFO 7/8% Certificate 1/2% 1,507(T) Note 1-374% 320 2,081 Total 1943-Jan. Feb. 1 Mar.15 320(T) Certificates 5/8% 1,588(I) Note 3/4% Apr. May 1 June15 June15 July15 Aug. Sept.15 Oct.15 Nov. Dec.15 000 3/4% Note 1-1/8% Feb. 1 Mar.15 Mar.15 Apr.15 Apr.15 May 1 May 15 June15 454 Bond 3-3/8% (1943-47) 324(T) RFC 1-1/8% Note 1% 279 1,401 Bond 3-1/4% (1943-45) 421 Note 1-1/8% 2,983 Total 1944-Jan. 289 629 613 1,855 114 USHA 1-3/8% 515 Note 1% FFMC 3-1/4% (1944-64) Bond 3-1/4% (1944-46) 95 1,519 571(T) RFC 1% HOLO 38 (1944-52) FFMC 3% (1944-49) 779 835 416 Note 3/4 July Aug. Sept.15 Sept.15 283 Note 1% 635(T) Note 3/4% Oct. Nov. Deo.15 Total 1945-Jan. Feb.15 Mar.15 1,037 Bond 4% (1944-54) 1, 849 685 2,556 1,709 412(T) CCC 1-1/8% 718 Note 3/4% Apr. May June 1 July Aug. Sept.15 Oct.15 Nov. Dec.15 Dec.15 755 HOLC 1-1/2% (1945-47) 1,214 Bond 2-3/16 (1945-47) Bond 3-1/4% (1943-45) 541 Bond 2-1/2% Note 3/4% Total 1,401 531( (T) 1,790 412 1,214 755 1,401 T 1, Taxable issue. special issues, issues redeemable at option of holder, has Postal been Savings made and bonds, Excludes FHA debentures, and issues for which an exchange offer the bulk of the holders. 2 accepted Callable by issues with respect to which a definite notice of call has been made are listed as fixed maturities. DO Calendar of Direct and Guaranteed Bonds, Notes and Certificates 1/ July 15, 1942 (In millions of dollars) Fixed maturities Description Date 1946-Jan. 1 Feb. Mar.15 Mar.15 Apr.15 May June15 June15 Direct Guaranteed Callable issues 2, Final maturities First callable Direct Guaranteed Direct Guaranteed 16 Conversion 3% 503(T) Note 1% 489 Bond 3-3/48 (1946-56) Bond 3-1/4% (1944-46) 1,519 1,036 Bond 3% (1946-48) Bond 3-1/8% (1946-49) 819 July Aug. Sept. Oct. Nov. Dec.15 Note 1-1/2% Total 1947-Jan. 1 1,118(T) 1,637 Conversion 2,344 1,519 13 Feb. Mar. Apr. May June 1 June15 755 HOLO 1-1/2% (1945-47) Bond 3-3/8% (1943-47) 454 July Aug. Sept.15 Oct.15 Nov. Dec.15 1,214 Bond 2-3/4% (1945-47) Bond 4-1/4% (1947-52) 759 Bond 2% 701 Total 714 759 1,668 755 1948-Jan. Feb. Mar.15 Mar.15 1,115(T) Bond 2% (1948-50) Bond 2-3/4% (1948-51) 1,223 Apr. May June15 1,036 Bond 3% (1946-48) July Aug. Sept.15 Bond 2-1/2% 451 Oct. Nov. Dec.15 571 Bond 2% (1948-50) Total 451 2,909 1,036 1949-Jan. Feb. Mar. Apr. May 15 June15 June15 835 FFMO 3% (1944-49) Bond 3-1/8% (1946-49) Bond 2% (1949-51) 819 1,014(T) July Aug. Sept.15 Bond 2% (1949-51) 1,292(T) Oct. Nov. Dec.15 Dec.15 Dec.15 Bond 24 (1949-51) Bond 3-1/8% (1949-52) Bond 2-1/2% (1949-53) Total 2,097(T) 491 1,786 6,680 819 835 T 1, Taxable issue. special issues, issues redeemable at option of holder, has Postal been made Savings and bonds, Excludes FHA debentures, and issues for which an exchange offer 2 Gallable accepted by issues the with bulk of respect the holders. to which a definite notice of call has been made are listed as fixed maturities. 299 Calendar of Direct and Guaranteed Bonds, Notes and Certificates 1/ July 15, 1942 (In millions of dollars) Fixed maturities Description Date Direct Guaranteed Callable issues 2/ Final maturities First callable Direct Guaranteed Direct Guaranteed 1950-Jan. Feb. Mar.15 1,115(T) Bond 2% (1948-50) Apr. May June July Aug. Sept.15 Bond 2-1/2% (1950-52) 1,186 Oct. Nov. Dec.15 571 Bond 2% (1948-50) Total 1,186 1,686 1951-Jan. Feb. Mar.15 1,223 Bond 2-3/4% (1948-51) Apr. May June15 June15 Bond 2% (1949-51) Bond 2-3/4% (1951-54) 1,014(T) 1,627 July Aug. Sept.15 Sept.15 Bond 2% (1949-51) Bond 3% (1951-55) 1,292(T) 755 Oct. Nov. Dec.15 Dec.15 Dec.15 Bond 2% (1949-51) Bond 2-1/4% (1951-53) Bond 2% (1951-55) Total 2,097(T) 1,118 510(T) 4,010 5,626 1952-Jan. Feb. Mar.15 Apr. May 1 June15 Bond 2-1/2% (1952-54) 1,024(T) 779 HOLO 3% (1944-52) Bond 2-1/4% (1952-55) 1,501(T) July Aug. Sept.15 Oct.15 Nov. Dec.15 1,186 Bond 2-1/24 (1950-52) Bond 4-1/4% (1947-52) _759 491 Bond 3-1/8% (1949-52) Total 2,525 2,436 779 1953-Jan. Feb. Mar. Apr. May June15 Bond 2% (1953-55) 725 July Aug. Sept. Oct. Nov. Dec.15 Dec.15 1,786 1,118 Bond 2-1/2% (1949-53) Bond 2-1/4% (1951-53) Total 725 2,904 Taxable issue. T issues, issues redeemable at option of holder, has Postal been made Savings and Exoludes bonds, FHA special debentures, and issues for which an exchange offer 1 2 Callable accepted by issues the with bulk respect of the holders. to which a definite notice of call has been made are listed ar fixed maturities. 000 Calendar of Direct and Guaranteed Bonds, Notes and Certificates 1/ July 15, 1942 (In millions of dollars) Fixed maturities Description Date Direct Guaranteed Callable issues 2/ First callable Direct Guaran- Mar.15 Direct Guaran- teed 1954-Jan. Feb. Final maturities teed 1,024(T) Bond 2-1/2% (1952-54) Apr. May June15 June15 Bond 2-3/46 (1951-54) Bond 2-1/4% (1954-56) 1,627 681 July Aug. Sept. Oct. Nov. Dec.15 1,037 Bond 4% (1944-54) 681 Total 3,688 1955-Jan. Feb. Mar.15 Bond 2-7/8% (1955-60) 2,611 Apr. May June15 Bond 2-1/46 (1952-55) June15 Bond 2% (1953-55) 1,501(T) 725 July Aug. Sept.15 -755 Bond 3% (1951-55) Oct. _510(T) Nov. Dec.15 Bond 2% (1951-55) 2,611 Total 3,491 1956-Jan. Feb. Mar.15 Mar.15 489 Bond 3-3/46 (1946-56) Bond 2-1/2% (1956-58) 1,449(T Apr. May June15 681 Bond 2-1/4% (1954-56) July Aug. Sept.15 Bond 2-3/4% (1956-59) 982 Oct. Nov. Dec. Total 2,431 1,170 1957-Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Total Taxable issue. issues redeemable at option of holder, has Postal been Savings made and T 1 Excludes bonds, FHA special debentures, issues, and issues for which an exchange offer the bulk of the holders. 2/ accepted Callable issues by with respect to which a definite notice of call has been made are listed as fixed maturities. 301 Calendar of Direct and Guaranteed Bonds, Notes and Certificates 1/ July 15, 1942 (In millions of dollars) Callable issues 2) Fixed maturities Description Date Direct Guaranteed First callable Direct Guaranteed Final maturities Direct Guaranteed 1958-Jan. Feb. Mar.15 1,449(T) Bond 2-1/2% (1956-58) Apr. May June15 919 Bond 2-3/46 (1958-63) July Aug. Sept. Oct. Nov. Dec. 919 Total 1,449 1959-Jan. Feb. Mar. Apr. May June July Aug. Sept.15 982 Bond 2-3/4% (1956-59) Oct. Nov. Dec. 982 Total 1960-Jan. Feb. Mar.15 2,611 Bond 2-7/8% (1955-60) Apr. May June July Aug. Sept. Oct. Nov. Dec.15 1,485 Bond 2-3/4% (1960-65) 1,485 Total 2,611 1961-Jan. Feb. Mar. Apr. May June 1 July Panama 3% 50 Aug. Sept. Oct. Nov. Dec. Total 50 Taxable T Excludes issue. special issues, issues redeemable at option of holder, Postal Savings bonds, FHA debentures, and issues for which an exchange offer has been made and 1 2/ accepted Callable by issues the bulk with of respect the holders. to which a definite notice of call has been made are listed as fixed maturities. 302 Calendar of Direct and Guaranteed Bonds, Notes and Certificates 1 July 15, 1942 (In millions of dollars) Fixed maturities Description Date Direct Guaranteed Callable issues 2/ First callable Direct Guaranteed Final maturities Direct Guaranteed 1962-Jan. Feb. Mar. Apr. May June15 Bond 2-1/2% (1962-67) 882(T) July Aug. Sept. Oct. Nov. Dec. Total 882 1963-Jan. Feb. Mar. Apr. May June15 Bond 2-3/4% (1958-63) 919 July Aug. Sept. Oct. Nov. Dec. Total 919 1964-Jan. Feb. Mar.15 95 FFMC 3-1/4% (1944-64) Apr. May June July Aug. Sept. Oct. Nov. Dec. 95 Total 1965-Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.15 Bond 2-3/4% (1960-65) 1,485 1,485 Total T Taxable issue. special issues, issues redeemable at option of holder, Postal been made Savings and bonds, Excludes FHA debentures, and issues for which an exchange offer has 1 2 accepted Callable by issues the bulk with of respect the holders. to which a definite notice of call has been made are/listed as fixed maturities. 303 Calendar of Direct and Guaranteed Bonds, Notes and Certificates 1 July 15, 1942 (In millions of dollars) Fixed maturities Description Date Direct Guaranteed Callable issues 2 First callable Direct Guaranteed Final maturities Direct Guaranteed 1966-Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Total 1967-Jan. Feb. Mar. Apr. May June15 July Aug. Sept 15 882(T) Bond 2-1/2% (1962-67) Bond 2-1/2% (1967-72) 2,716(T) Oct. Nov. Dec. 2,716 Total * * 1972-Sept.15 T 1 882 Bond 2-1/2% (1967-72) 2,716(T) Taxable issue. Excludes special issues, issues redeemable at option of holder, Postal Savings bonds, FHA debentures, and issues for which an exchange offer has been made and 2 accepted by the bulk of the holders. Callable issues with respect to which a definite notice of call has been made are listed as fixed maturities. 304 UNITED STATES SAVINGS BONDS, SERIES E TOTAL DAILY SHIPMENTS BY DENOMINATIONS FROM JULY 1 TO JULY 14, 1942 : $500 Pieces $1,000 : $100 Total : : : : : : : : 441,453 515,964 464,350 736,205 678,221 558,650 440,389 672,288 643,310 654,983 673,000 79,590 94,404 80,760 82,647 163,951 106,000 89,212 117,122 121,615 118,591 109,750 78,344 93,481 79,220 89,767 160,712 115,461 112,623 107,512 135,412 98,816 102,000 2,256 3,068 8,320 8,475 24,510 15,039 7,807 5,508 5,062 6,314 7,775 2,527 3,510 3,565 2,235 13,894 3,790 5,816 5,967 15,649 8,528 10,000 798,940 655,847 908.397 921,048 887,232 902,525 6,478,813 1,163,642 1,173,348 94,134 75,481 8,985,418 July 1 2 3 6 7 8 9 10 11 13 14 Total $50 : $25 : : Shipment Denominations - Number of Pieces : Date of July 15, 1942. MRL/kwk may 604,170 710,427 636,215 919,329 1,041,288 305 MEMORANDUM July 15, 1942. TO: The Secretary FROM: Mr. Sullivan ILS This morning Frank Bane, Executive Director, Council of State Governments, called to discuss with me the appointment of a Federal Committee on Federal, State, and Municipal Fiscal and Tax Relations. A similar Committee of twelve has already been appointed by the States. Mr. Bane was very anxious to have this Committee appointed at once so that they could do their work and make specific recommendations to the States by November 1. He explained that State budgets and legislative programs are formulated in November and December, and if the work of this Committee were to be effective its recommendations would have to be in the hands of the States two months before the new legislatures convene in January. I advised him that the studies being made by the Treasury would not be completed until about the middle of September, and that it might be well to postpone the appointment of a Committee.until these studies are available for the Commi ttee. He agreed that that would be wise, providing the completion of the studies was not delayed. I talked with Harold Groves, who told me that although the report would not be available for the public by September 15, he was confident that there would be a summary that would be adequate for the Committee to use in its deliberations. Mr. Bane thought that this should be initiated by his writing a letter to the President asking for the appointment of a Committee and he is to prepare such a letter and submit it for clearance by you and Harold Smith early next week. He agreed with me that it would be wise to postpone sending this letter to the President until about the first of September. He is anxious to have you indicate the size and membership of this Committee. 306 Sales of Treasury Notes - Tax Series A and Tax Series January - June 1942 B Classified by denomination (Par amounts in millions of dollars - As reported by the Federal Reserve Banks) :Jan. - Mar. Apr. June May : Total : Series and denomination Tax Series A $ .5 .9 .6 .6 1.1 1.1 1.2 1.8 17.9 3.1 5.6 14.8 4.6 5.1 5.1 29.6 1.4 3.0 29.4 .5 .6 1.1 .6 3.1 6.0 64.7 249.8 25 .6 50 .9 100 500 1,000 Total -- Tax Series A. .2 .3 9.4 1.4 2.5 2.7 .2 .2 .3 .3 2.9 2.9 ax Series B $ 100 500 1,000 10,000 100,000 500,000 96.4 195.0 .9 10.6 39.7 12.0 53.0 1.0 12.7 60.7 122.4 149.2 191.0 34.5 62.0 43.0 158.0 130.0 574.8 200.4 541.0 Total--Tax Series B. 578.2 256.4 390.1 415.1 1,639.8 Total--Both Series 593.0 261.0 395.2 420.2 1,669.4 1,000,000 62.0 108.2 Office of the Secretary of the Treasury, Division of Research and Statistics. 60.9 July 15, 1942 307 Classification by Type of Purchaser of the Sales Tax Series A and Tax Series B of Treasury Notes January - June 1942 (Par amounts in millions of dollars - As reported by the Federal Reserve Banks) and month : Tax Series : Tax Series : Type of purchaser Total B A Individuals 1 January February March April May June Total 4.2 4.7 4.6 60.7 23.8 23.9 33.0 24.6 30.9 66.1 26.7 28.8 37.2 29.3 26.7 196.9 223.6 .5 160.9 100.9 208.0 223.4 365.5 384.2 161.6 101.3 208.5 223.8 365.9 384.7 2.9 1,442.9 1,445.8 6.1 3.3 5.4 4.6 5.1 5.1 221.6 124.7 231.9 256.4 390.1 415.1 227.7 128.0 237.3 261.0 395.2 420.2 29.6 1,639.8 1,669.4 5.4 2.9 4.9 35.5 Corporations January February March April May June Total .7 :4 .5 .4 .4 Total sales January February March April May June Total Office of the Secretary of the Treasury, Division of Research and Statistics. 1 Includes partnerships and fiduciaries July 15, 1942 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE JUL 15 1942 Secretary Mr. Foley The Morta E of s:TV r for use in industry and the arts .... created a marlet demand for newly-mined domestic silver at a rice in excess of 71.11 per ounce, the price now paid for such silver by the coinage mints. In the immediate future this type of silver will probably be sold to consumers. However, title to more than 6,000,000 ounces of the production of the refineries for the months of July through November has already been transferred to the United States under Instruments of Transfer. An Instrument of Transfer vests title to the silver in the United States immediately upon its acceptance and the Oliver is required to be delivered at some future time, , usually within the next five months. Some of the refinories that have executed Instruments of Transfer calling for deliveries in the months of July through November are anxious to have them cancelled or modified in order that this silver may be sold to industrial and artistic con3. -2Instruments of Transfer have been modified on erous occasions in the past to permit late deliveries. 13 is my opinion that you have the legal authority to Free to a modification of the Instruments of Transfer 80 as to postpone the delivery dates until sometime in the future. If you approve our taking steps to modify the Instruments of Transfer, will you please indicate your approval below. General Counsel. APPROVED: the youthant Secretary of the Treasury. THE WHITE HOUSE WASHINGTON July 15, 1942. MEMORANDUM FOR THE SECRETARY OF THE TREASURY To read and return for my files. THE WHITE HOUSE WASHINGTON July 1, 1942. VENDRANDUM FOR THE PRESIDENT: Re: Canadian Affairs, I have been spending a good deal of time on Canadian-American relations in the past year and I should like to indicate some of the things that have been done and some of the emerging problems. You will recall the Hyde Park Agreement. The flow of orders to Canada following it was petering out by last December when the Joint War Production Committee, U. S. and Canada, which you set up on my recommendation, began to function. It has, in many respects, accomplished much more than I had dared hope. Some 500 million of orders have been placed in Canada in the past five months, exclusive of the $1.75 million ship deal. Much of this represents production that would not otherwise have been undertaken. Hundreds of millions are pending or under negotiation. Considerable progress has been made in integration and in standardizatione Work is proceeding on the exchange of information on best production techniques. A very competent Canadian has been added to the Anglo-American Ordnance Technical Committee (I worked this out with General Somervell). A general report on accomplishments will be submitted to you shortly by the Chairman. The problem now looming is the conversion of a shortage of U. S. dollar exchange into a surplus. I have suggested to Secretary Morgenthau that we re-examine the exchange picture. Various possibilities suggest themselves: 1. We might slacken off on new orders. 2. We might continue orders provided the Canadians cut down on their production of gold and divert the resources freed to the war. 3. We might do the same with other exports such as newsprint. 4. We might place new orders for ourselves and arrange that certain existing orders to Canada under lend- lease to Britain be shifted directly to Britain. 5. We should maintAin a close watch that the surplus of dollar exchange is not used up through an increase of non-essential imports from us by Canada. Kemorandum for -2- July 1, 1942. The President Re: Canadian Affairs I explored the situation informally with Clarence Howe, Minister of Munitions in Canada, over the weekend. I got the impression that neither he nor the Minister of Finance would object in the slightest to cutting down Canadian gold production. of the various alternatives, this appeals to me most as it would result in an actual increase in the overall war effort Lauchlin Currie Bill IRVING LEHMAN 36 WEST 44TH ST. NEW YORK July 15, 1942 plant Personal 2:30 , ned just 4 My dear Henry, I have just had a talk with Moses A. Leavitt, the member of the staff of the J.D.C. in charge of such problems as you and I discussed by phone last night. He and Joseph C. Hyman, the Executive Vice Chairman his of the J.D.C., will come to Washington to take up the matter. I told Leavitt that you would make the necessary appointments and (in order to save time) let the J.D.C., 100 East 42nd Street, know direct instead of through me. I enclose a cable in this matter that will, I think, interest you. Yours rough. The Honorable Henry Morgenthau, Jr., Treasury Department, Washington, D.C. ENCLOSURE Every person connected with J.D.C be you and full Heat you are "free"! 314 COPY. WASHINGTON JOINT DISTRIBUTION COMMITTEE NEW YORK HAVE BEEN ADVISED BY INTERNATIONAL RED CROSS COMMITTEE IN GENEVA THAT YOUR FORMER CONTRIBUTION TO COMMITTEE ASSISTANCE EUROPEAN JEWISH REFUGEES SHANGHAI CEASED DECEMBER AND THAT YOUR AUTHORITY TO RAISE LOANS SHANGHAI FOR A TOTAL HUNDRED EIGHTY THOUSAND IS NOW EXPIRING RENEWAL IS OF GREATEST URGENCY AS NINE THOUSAND ABSOLUTELY DESTITUTE DEPEND ON THIS RELIEF. DELEGATE OF INTERNATIONAL RED CROSS COMMITTEE IN SHANGHAI IS WILLING TO SUPERVISE DISTRIBUTION OF FUNDS . A COMPLETE REPORT ON THIS SITUATION HAS BEEN CABLED TO THE STATE DEPARTMENT BY THE INTER ATIONAL RED CROSS COMMITTEE. MY ADDRESS IN WASHINGTON IS 2500 QUE STREET NW MARC PETER INTERVATIONAL RED CROSS COMMITTEE IN USA 315 TREASURY DEPARTMENT INTER OFFICE COMMUNICATION DATE July 15, 1942 TO Secretary Morgenthau FROM Mr. White HOW There is attached a list of memoranda and reports prepared in the Division of Monetary Research during April, May and June, 1942. W usa 316 Memoranda Prepared in May the Division of Monetary Research during April, and June, 1942 United Nations Stabilization and a Bank for Reconstruction of the United and AssociatedFund Nations. Post-war Cancellation of Contracts and Results Thereof. Request of Motion Picture Industry, and of R.K.O. in particular for release of its funds blocked in the Sterling Area. Memorandum to the President, on Proposal to Deal with Axis Activity in Argentina. Military Aspects of Proposals to Send Supplies to Sweden. Canada's U. S. Dollar Position. Extension of Freezing Control to Argentina. Financial Implications of the Proposed Pooling of Canada's War Production through Washington. Outline of British memoranda on Reciprocal Aid. Outline of State Department Documents on Reciprocal Aid Material. Saving Shipping to Hawaii. Latin American response to dollar currency controls. Secretary Jones' letter on the Status of British Plant Purchases. Alleged "Political" Benefits of the British 100% Excess Profits Tax. British Income Tax on Wage Earners: Criticism of Method of Collection at Source. New British Minister of Production. Digest of Cables from Wasserman to Stettinius on the Supply Situation in Australia. British Tax System - Increased Criticism and Predictions of Changes. Discussion of General Rationing at the Brookings Institute. Comparative Statement of Earnings and Expenses of Stabilization Fund. Numerous memoranda with regard to Stabilization Loan to China. 317 -2- Division of Monetary Research Executive Order - Board of Economic Warfare. Second Report of American Technical Mission to Cuba. Cuba Mission's Central Bank Report. South American Traffic in Dollar Currency. British War Damage Insurance. Iceland Stabilization Agreement. British Press Reaction to President Roosevelt's April 27th Message to Congress. The British Budget, 1942-43. Status of Stabilization and Gold Purchase Agreements. Canada's Foreign Exchange and Fiscal Position. Draft letter to be sent out suggesting reestablishment of the Fiscal and Monetary Advisory Board on an active basis and draft of a proposed agenda for discussion at first meeting. Proposed Honduran Mission. Silver Purchase Agreements. Canada's War Savings Campaign. Memoranda regarding Bolivian Stabilization Agreement Negotiations. Mr. Hoflich's local reports on War Savings Campaign in Canada. Summary of Reciprocal Aid Proposals. The British Gold and Dollar Position, May 15 through December 31, 1942. Stabilization Fund purchase of 1,000,000 Swiss francs from Central Bank of Turkey. Use of the Stabilization Fund to handle the Liberian currency problem. U. S. Monetary Stocks of Silver. 318 -3- Division of Monetary Research Reports from Mr. Casaday on the British and Scotch Voluntary Savings Campaign. Deferment Policy. Individual Saving in the First Quarter of 1942. The Department of Commerce on Compulsory Saving. Report of Interdepartmental Committee on a Stabilization Fund and a Bank for Reconstruction and Development of the United and Associated Nations. United States Foreign Trade Trends. British Press Review. The Food Situation in Continental Europe. Cuban Gold Purchase Contract. Excessive Department Store Inventories. Count R. N. Coudenhove-Kalerg1 on a United States of Europe. Desire of Iranian Government to Purchase Silver. Numerous memoranda with regard to Trade Agreement Negotiations. Article on United States War Finance for Distribution to Latin American Newspapers. The Control of United States Currency. Comments on Mr. Bernard Baruch's memorandum. Acquisition of 1,200,000 ounces of silver by Federal Reserve Bank of New York for account of Australia. Tariff Act impedes plan to permit free movement of agri- cultural machinery and labor across United States-Canadian Border. 319 -4- Division of Monetary Research Census of American-Owned Property Abroad. Latin American Funds in the United States. Petition for revocation of anti-dumping finding on glass frostings. Financing the costs involved in the use of United States Treasury stocks as bus bars. Unpaid balance due on British non-aircraft contracts. The Monetary and Banking System of Martinique in event of American occupation. Exports of Petroleum and Products. Tentative program for the conference of central banks or similar agencies charged with control of assets of Axis nations. Reduction of import duty on coca leaves in Peruvian trade agreement. Opium Estimates. Cuban Alcohol. Universal Blocked Sterling Balances. British Purchasing Mission's Payments in the United States. Depreciation of Currency Notes. Foreign Exchange Rates on the European Neutrals. The Price Safeguarding Provision of the Treasury Silver Leasing contract with defense plant corporation. Purchase of dollar currency in Switzerland by the Turkish Government. The forthcoming conference of freezing control authorities of the American Republica. Swiss Commercial Agreement and Financial Arrangements. Debt Amortization and Tax Liabilities. 320 -5- Division of Monetary Research The Melting Point of the New Five-cent Piece. The Valuation of Silver Bullion in the General Fund. Uruguayan Gold Reserves. Gold Shipment Costs in Latin America. United States-Mexican 011 Settlement. Composition and Value of Reserves of the Bank of Mexico. Proposals of John Parke Young regarding Inflation in Latin America. Change in Ecuadoran Exchange Rate. Analysis of Bolivia's Current Financial Position. The Reserve Position of the Bank of Mexico. Status of Bolivian Stabilization Negotiations. Mexican Public Finance. Proposal for a new Stabilization Agreement with Brazil. Current Economic Situation in Mexico. Developments in Mexico, April - May, 1942. Financial and Monetary Conditions in Free China. Outline of Scheme forChina's Guaranteed Bond Issue. Unfreezing of Chinese Assets. Aid to China and Export-Import Bank Loans. Summary of Report on Korean Independence Movement prepared by C.O.I. Estimated figures on China's and India's comparative economic strength. Request to India for information regarding financial and economic conditions. 321 -6- Division of Monetary Research Current economic and financial conditions in China and recent measures taken by Government. Conditions in Japanese-occupied Shanghai. India's Silver Position. Proposed British Loan to China and Stabilization Board. Japanese-sponsored currencies in occupied China. Some implications of having the Chinese Stabilization Fund pay the salaries, etc. of the Board. State Department on Economic Conditions in China. Chinese Industrial Cooperatives. General Rationing and the War Production Program for the fiscal year 1943. General Rationing and the Restriction of Consumers' Expenditures during the Fiscal Year 1943. Discussion of General Rationing at the Brookings Institute. A progressive system of compulsory saving. Individual Incomes, Consumers' Expenditures, and Voluntary Saving in the United States. Can Sales Tax Administration be made a first step toward General Rationing? A Compulsory Lending Program for the United States. A new program for Government borrowing. Government-financed industrial facilities for War Production. U. S. Control over the French Possessions in the Americas. The Department of Commerce on Compulsory Saving. Inventory Accumulation, War Production and Inflation. Income Payments and Retail Sales. 322 -7- Division of Monetary Research The Financing of War Production Facilities. The failure of the War Savings Bond Program. Social Security Trust Funds. The reliability of Treasury Revenue estimating. Secretary Jones' letter on the Status of British Plant Purchases. Mr. James A. Howe's "Proposal for a Two Fund Gold Standard". Mr. McCloy's commitment to provide $110 million from ordnance funds for the purchase of British Supply Contracts. Value of Unpaid Balance on British non-aircraft Contracts. Sir Frederick's Memorandum on Britain's Dollar Position. British memoranda on their dollar position and on their proposed terms of reciprocal aid. Mr. will Hays' memorandum of May 12 on Motion Picture Industry's request for Treasury's assistance in obtaining release of funds blocked in the Sterling Area. Reciprocal Aid Negotiations. Comments on the War Money Bill. Information on Sterling Debt contained in Mr. Bewley's memorandum of May 28. Status of the British Dollar Relief Program. Proposals being discussed by Lend-Lease and BEW for "Protecting Foreign Trade Channels". British Dollar Position. Value of New Zealand Foreign Trade. A British Plan to organize war production. Digest of London Press Reactions. British Income Tax on Weekly Wages. 323 -8- Division of Monetary Research British Economic and Political Developments. British Financial Developments. British Budget Statement for 1942-43. Keynes' opinion on the proposed change in British Excess Profits Tax. The British Cabinet and Economic Controls. The control of advertising in relation to the Excess Profits Tax. British Voluntary Savings Campaigns. Consumer Rationing and Consumer Needs in Great Britain. British Rationing - Coupon Banking Scheme. Administration of limitation of supplies and consumer rationing in the United Kingdom. Canadian Silver Exports to the United States. Reports on Canadian War Savings. Recent British Economic Developments. Sir William Beveridge's recommendations on fuel rationing for Great Britain. Lost assets and the British Excess Profits Tax. United Kingdom - Limitation of Supplies and the Utility Scheme during April. British opinion on post-war problems. The announcement of Government control of the British coal mines. The 1942-43 British Budget and recent exchequer returns -Additional comparisons and criticisms. Wholesale price, cost of living and wage rate indices in the United Kingdom, 1939 to April 1942. 324 -9- Division of Monetary Research Wage Increase for British Coal Miners. Malayan companies and the excess profits tax. Recent British Consumer Rationing Developments. British Post-War Reconstruction (From Consular Report). Summary of British dollar situation. Canadian Price and Wage Control. Continuance of the United States-Canadian Joint Economic Committees. U. K. Public Finance. The Black Market in Foodstuffs in the United Kingdom. Balance of International Payments of the United States during 1941. Improvement in Canada's U. S. dollar position since January 1, 1942. Sterling balances held by Spain and Portugal. India's Third War Budget. Progress of the Government of India's sterling debt repatriation schemes 1937-42. Percentage change in production of selected commodities from an early recorded year to 1938. Proposal to establish a United States Assay Office in Alaska. The Problem of Merchandise Hoarding in Anticipation of General Rationing. The Sale of Interest-Free Bonds to the Reserve Banks. The Problem of Hawaii's Food Supply. Report on Sterling Products, Inc. Reduction in interest rates on War Savings Bonds. 325 - 10 - Division of Monetary Research Compulsory Corporate Savings. Probable Ecuadoran violation of the Stabilization Agreement. Federal Reserve Bank credit to Uruguayan Central Bank. Change in Ecuauoran Exchange Rate. Increase in Swiss franc rate of exchange. Use of Stabilization Fund to control the Swiss franc. Swedish silver holdings in the United States. Proposal to deal with Axis activity in Argentina. Purchase of Swiss francs from Turkey. Shall we propose exchange stabilization negotiations to Brazil? Senator Glass's proposed amendments to Inter-American Bank Charter. Scheme to solve Latin American bond defaults. Dutch-owned gold eagles now held on earmark at the Federal Reserve Bank. The Brazilian Stabilization Agreement. Uruguayan gold matter. Peruvian Exchange Stabilization Negotiations. Turkish bounty countervailing case and implications for Latin America. Pros and cons of Proposed "Schorched Earth" Program for Hawaiian Currency and Securities. Government Inventory Verification. Concentration of Distribution. Production of Photographic Sensitized Materials. Notes on Japanese Occupation of the Philippines. 326 Division of Monetary - 11 - Research Settlement of Contracts, Demobilization, and Unemployment Immediately after the First World War. Wartime Manpower: Report by Economics Division, offi ce of Coordinator of Information. Silver Imports that May be for Non-Defense Use. Japanese Regulations Restricting the Withdrawal of American Deposits. U. S. Dollar and Foreign Currency Imports in Mail Examined in New York City. Application by Bank of America National Trust and Savings Association. Blocked American Citizens in the Generally Licensed Trade Area. Analysis of Trade Lists with Reference to the Practicability of Extending the White Lists to Various Selected Commodities. Protection Extended by Foreign Funds Control to Nationals of Luxembourg. Licensing, under the Trading with the Enemy Act, certain European transactions of the International Standard Electric Company. Proposed Spanish Clearing Account. Recent Price Trends in Leading Commodities Exported from the United States to the French West Indies. The War and British Patent Policy. Disposal of Title to Blocked Dollar Assets in German-controlled Europe. Changes in German, Italian, and Japanese Assets in the United States in Recent Years. Swiss Purchasing Group. Licensing Transactions with the en emy by United States subsidiaries in Foreign Countries. 327 Division of Monetary Research - 12 Applications filed by the Gillette Safety Razor Company of Boston, requesting licenses to correspond with its Swedish and Swiss subsidiaries. Applications requesting licenses to ship coupons from foreign securities to blocked neutral countries for collection. Exports of cork to Germany by Manufacturas de Corcho Armstrong, S. A. Seville, the Spanish subsidiary of the Armstrong Cork Company, of Lancaster. Vesting of Dutch Funds in this Country by or for the Dutch Government. Property Reported for the Laval Administrati on and French Consular Representatives in the United States. Application filed by International Telephone and Telegraph Company requesting license for certain transactions between Spanish, Belgian, French and German subsidiaries of International Standard Electric Corporation, New York. Request by BIS for Reconsideration of Application NY 358614. Application of Patino Mines and Enterprises Consolidated, Inc., to permit payment of dividends to holders of foreign certificates. Vatican Sale of Special Lire in the Argentine. The Use of Dollar Accounts in Sweden to meet Belgian Obligations to Sweden. Estimation of the Amounts Applied for on all Applications to Foreign Funds Control for the year May 1, 1941 to April 30, 1942. Memorandum on the Transfer of Dollar Funds from the Bank for International Settlements to the Banque Nationale Suisse. Current Reports in addition to the above: Ten-day report on Exports to Russia, Free China, Burma and other blocked countries, as reported to the Treasury. Daily report on transactions in domestic stocks (compiled from S.E.C. figures). 328 Division of Monetary Research - 13 Weekly Table: "Balances Account".and Earmarked Gold Held for Foreign Weekly Table: "Net-Capital and Gold Movements". Material for monthly Treasury Bulletin. Correspondence: 148 letters replied to. In addition to the above, material falling in to the following categories is also prepared: 1. A large number of tables on various items. 2. Reports on conferences in which this Division participates. 3. Participation in preparation of some of the statements and speeches by the Secretary. 329 PARAPHRASE OF TELEGRAM RECEIVED FROM: American Embassy, Chungking, China DATE: July 15, 1942, 2 a.m. NO.: 841, Section One This is a message from Mr. Adler for the Secretary of the Treasury and is marked TF50. Just before his death Mr. Fox was preparing a report on economic conditions which was referred to in paragraph (1) of TF40 dated May 26, 1942. The draft he left was along the following lines. 1. Conclusion. Since the beginning of 1942 the economic condition of China has become worse. From January until May of this year the note issue has expanded and prices have risen at approximately the same rates as they did during the last five months of the preceding year. expenditures and revenues are both on higher levels than they were last year. The Government still finds it necessary to depend on issue to pay 2/3 of the current in spite of the improvement on the expenditures revenue side resulting from the land tax. Little benefit other than beneficial psychological effects has resulted from the American loan as far as the financial problems of China are concerned. The favorable outlook for the 1942 crops has to some extent eased the gravity of the economic situation. 2. Prices. In Chungking the retail price level for May according to official data was 4300 and the general wholesale price level was 4790, (100 equalling first six months of 1937). The increase since January was about the same as during the last six months of 1941, 1.0. between 50 and 60 per cent. In May the wholesale price of (*) was 32 (?) and the retail price 3940, the latter being a jump of 80 per cent from January until May or more than twice the increase during the five months preceding. Although there is much local divergence in cities outside Chungking, the price movements there are parallel to those in Chungking. The expansion of the note issue in order to finance deficits and not the cutting off of sources of supply from outside of China has caused the rate of increase in prices in 1942. GAUSS (*) and (8) Omissions which are being serviced. 330 0 0 P Y PARAPHRASE OF TELEGRAM RECEIVED FROM: American Embassy, Chungking, China DATE: July 15, 1942, 9 a.m. NO. : 841, Section TWO As yet there has been no establishment of any satisfactory mechanisms for the control of prices nor has there been any real progress made toward this goal, in spite of the recent plans to con- trol the prices of foods and the national mobilization program for commodity administration. There is now evident a definite tendency to more extensive resort to forms of barter. 3. In May at CN$20,032,000,000, the note issue was 25 per cent more than it was in January. The increase from August 1941 until December of that year was 27 per cent. Prices are going up twice as fast as the issue of notes. 4. Budgetary situation. The expenditures totaled CN$7,570,000,000 for the- period from January to May. This is approximately 80 per cent of the net expenditures for the year 1941 and 44 per cent of the estimated expenditures for the year 1942. Insofar as assignable the military expenditures are between 62 and 66 per cent of the total. About 30 per cent of the estimated revenue from taxes, etc., or CN$2,359,000,000 has been collected. This figure equals 30 per cent of the current expenditures and is almost 80 per cent above the total revenues collected for 1941. Almost half of the 1942 revenues can be accounted for by the institution of the land tax in kind and the valuation at CN$100 per picul of the collections. Government bank advances to the Government have covered almost all the current deficit which equals CN$5,212,000,000. Against these advances the banks either (?) or take up securities of the Government which serve as backing for the further issue of legal tender. The inability of the Government to persuade the public to buy voluntarily governmental securities on a large scale continues to be the dark side of the fiscal picture. From the first of April until the end of May the net sale of securities backed by United States equaled CN$75,000,000. Mr. Fox held the considered opinion that although the sale of these securities might be helped by improving the methods and terms of their issue, still no appreciable difference would be made by such improvements. GAUSS (?) Omission which is being serviced. Copy:bj:7-17-42 331 PARAPHRASE OF TELEGRAM RECEIVED FROM: American Embassy, Chungking, China DATE: July 15. 1942, 9 a.m. NO.: 841, Section Three So far not much value has been derived from the loan as far as the amelioration of the fiscal situation is concerned. Recently the advisability of using the loan from the United States in order to import gold for the establishment of a free gold market to sop up fapi has been discussed in this connection. 5. Public debt. The total of the internal debt incurred in custom gold units, sterling, and United States dollars as of the 31st of December 1941, equalled at the present rate of exchange CN$5.5 billion. The total of the four government banks' loans to the government was CN$16.2 billion which apparently constitutes 90 per cent of the internal fapi debt and 80 per cent of all their loans. 6. Industrial production. Although this data is incomplete and inadequate, during the first quarter of 1942 Industrial production seems to have maintained itself. There has been somewhat higher pro- duction of fuels and minerals for export than in the first quarter of 1941, but imported parts and materials are running short and this is now becoming noticeable in manufacturing. 7. Agriculture. There are encouraging prospects of the harvest this year. The estimated yield of the wheat crop is 222,000,000 piculs (1 picul equalling 110 pounds), while the all important rice crop was estimated to be about 85 or 90 per cent of the average crop from 1931 through 1940. The admittedly grave economic situation should be relieved to some extent in an agricultural country such as China is by the prospects of a favorable harvest. Through the land tax almost twice the 1941-42 collections of cereals is expected to be raised by the Government, the estimate being 43,000,000 piculs. Compulsory purchases should add about 33,000,000 piculs, which is about the same as it was last year. With these amounts it is expected by the Government that local food shortages will be met and the civil servants and the army will be fed. GAUSS Copy:1c:7/17/42 332 DEPARTMENT OF STATE WASHINGTON In reply refer to July 15, 1942 FD The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and encloses a copy of a memorandum, dated July 14, 1942, from the Legation of E1 Salvador in Washington, D. C., inquiring as to the legal status of the Banco Central de Reserva de E1 Salvador under the Internal Revenue Laws of the United States, in order to determine the net income that would be obtained by the Banco from contemplated investments in United States Treasury notes and bonds. The Secretary of State would appreciate being ad vised of the reply to be made. Enclosure. Copy:ime:7/15/42 333 C 0 P Y MEMORANDUM The "Banco Central de Reserva de E1 Salvador" would eventually invest in United States Treasury bonds and notes part of its foreign exchange on hand. As the rent on these bonds and notes is subject to taxation in the United States, the "Banco Central de Reserva de E1 Salvador" is, therefore, interested that the United States Department of State deter- mines, in this respect, the legal status to which the "Banco Central de Reserva de E1 Salvador" is subject under the Internal Revenue Laws of the United States by reason of its being a public service institution, so that the Bank may be able to establish the net income that should be obtained from its investments in this kind of paper. July 14, 1942 Copy:imc:7/15/42 334 P Y HEL AIRGRAM Mexico Dated July 15, 1942 Rec'd 5:25 p.m., 17th Secretary of State, Washington. A-9, July 15, 5 p.m. Ramirez, new chief of Office of Control and Sup- plies, states that American Customs authorities at border are requiring presentation copies of Certificates of Necessity in addition to export licenses. Please inform whether this procedure is correct. If the Collectors of Customs are exceeding their instruc- tions, it would be appreciated if they could be so advised. MESSERSMITH CSB Copy:bj:7-20-42 335 C 0 P DEPARTMENT OF STATE Y WASHINGTON In reply refer to July 15, 1942 FF 740.00112A European War, 1939/14075 The Secretary of State presents his compliments to the Honorable the Secretary of the Treasury and transmits copies of a paraphrase of telegram no. 855, dated July 9, 1942, from the American Embassy at Lisbon, requesting information as to the names of the officials of the deutscher Handelswirtschaft Dienst, formerly located at 17 Battery Place, New York, and of their present whereabouts. It would be appreciated if the Treasury Department would furnish this Department at an early date with whatever information it has available or it can ascertain, in order that a telegraphic reply might be sent to Lisbon. Enclosure: From Lisbon, no. 855, July 9. 1942. Copytime:7/17/42 336 0 P Y PARAPHRASE OF TELEGRAM RECEIVED FROM: AMEMBASSY, Lisbon DATED: July 9, 1942, 10 a.m. NUMBER: 855 The Embassy has evidence that certain persons associated with the firm of deutscher Handelswirtschaft Dienet, which formerly maintained offices at 17 Battery Place, New York and was engaged in the sale of food parcels to Europe, are continuing their business under the firm name of "Dehawi" from Portugal. To date the Embassy has been unsuccessful in its efforts to find this firm and the Department is requested to obtain and telegraph whatever information can be ascertained with respect to the former officials of this concern and their present location. Copytime:7/17/'3 OFFICE OF WAR INFORMATION Bureau of Intelligence 7/15/42 337 Washington, D. C. July 17, 1942 TO: FROM: Mr Magenthan R. Keith Kane Chief, Bureau of Intelligence SUBJECT: SURVEY OF INTELLIGENCE MATERIALS No. 25 AND SUPPLEMENT You will find attached a report which has been prepared in this Bureau as a supplement to an earlier report on the negro problem. Since you did not receive the earlier report, you will find one also enclosed. Attachments (2) 338 July 15, 1942 MEMORANDUM TO: Henry Morgenthau, Jr. FROM: R. Keith Kane, Chief, Bureau of Intelligence Supplement to Survey No. 25 Because the Bureau of Intelligence has a supplemental report this week concerning the Negro problem, which is being distributed today, the regular weekly report will not be issued until Friday, July 17. Such recommendations and suggestions as may 339 appear in this report have not been cleared in advance with the Director of the Office of War Information and do not necessarily reflect his views or those of the Office of War Information. Recommendations and suggestions, if they do appear are only submitted by individuals in the Bureau of Intelligence who have assombled the data and they are offered for the consideration of appropriate authorities. BI-Misc-3 7-15-42 7 Henry Morgenthau, Jr. 340 Secret July 14, 1942 SURVEY OF INTELLIGENCE MATERIALS SUPPLEMENT TO SURVEY NO. 25 Bureau of Intelligence Office of War Information 341 CONTENTS SUMMARY MEMPHIS NEGROES AND THE WAR page 1 Significance page 2 Grievances, North and South page 3 The "Double V" Campaign page 4 Views on Other Issues page 5 Ignorance page 5 Hopelessness page 7 Chicago - Atlanta page 9 CONCLUSIONS page 9 SOURCES This report is a supplement to Survey No. 25, "Negroes in a Democracy at War", . and should be read in conjunction with it. It is based upon the following material - which is available to those who desire it: "Memphis Negroes and the War", . Extensive Surveys Division, Report $26 "The Negro Looks At the War". Extensive Surveys Division, Report #21 "The Grievance Pattern", Division of Surveys, Report #15a Special Services Division report on the Negro problem, June 23, 1942 "Editorial Emphasis in the Negro Press, May 29 - June 20", Special Intelligence Report #48, Division of Infor- mation Channels "Statements of Thought Leaders on the Negro Problem, March to June, 1942", and supplementary report of June 24, 1942, Source Materials Division. 342 SUMMARY The responses of Memphis Negroes to the same questions asked a month earlier of Negroes in New York show that the two groups have essentially the same grievances. Negroes in both Memphis and New York are patriotic and in full sympathy with our expressed war aims. But they feel that they themselves are not being treated democratically or given adequate opportunity to participate in the war effort. The dissatisfaction they feel in consequence takes different forms of expression in the two cities. The militance which was so widespread in Harlem was conspicuously absent in Memphis. Memphis Negroes were fearful of expressing their views, and were more ignorant about war issues and more apathetic about them than New York respondents. The greater ignorance of Memphis Negroes was most apparent from the large proportion of "don't know" responses. These were particularly numerous on all questions at all remote from the group's everyday experience. The proportion of respondents who failed to express an opinion on the question, "Is the army unfair to Negroes?", was not significantly greater in Memphis than in New York. But four Memphis Negroes in ten "didn't know" if the navy is fair to Negroes, whereas practically everyone interviewed in Harlem had an opinion on this question. The apathy of Memphis Negroes was particularly evident from their responses to questions on the outcome of the war. Only a third of the sample felt that a United Nations' victory would mean any improvement in their lot. Only a fourth felt that they would be worse off under Japanese rule than they are at present. To some extent this response may reflect some sympathy with the Japanese as a colored race; but only 45 per cent believed that they would be treated worse by the Germans than they are by their fellow Americans. The intimidation of Memphis Negroes revealed itself most sharply in the different ways they responded to white and Negro interviewers. They consistently tended to conceal their true views from whites and to give instead the opinions which they felt it was proper to express. Even in talking to members of their own race they were suspicious and apprehensive. In both Memphis and New York, Negroes are most concerned about the dis- crimination they experience in trying to earn a living. The chief difference is that New York Negroes are most troubled about employment discrimination, where as Memphis Negroes feel most resentment about the wages paid to colored workers. In both cities poor housing conditions and Jim Crowism are much less frequently mentioned. DIFFERENCES IN RESPONSES TO WHITES AND NEGROES walk "YES" ANSWERS TO: Is the Army fair to negroes? white interviewers 69% 40% Is the Navy fair to negroes? 54% 39% Should negro officers lead negro troops? Is it more important right now to beat the Axis than to make democracy work at home ? Would negroes be treated better under Japanese rule? Is the U.S. sure to win the war? 22% 43% 62% 39% 2% 9% 79% 59% Do negroes have just as good a chance as whites to get defense jobs? Have you heard of any negroes 52% 39% who have been turned down for defense jobs ? 18% Are labor unions fair to 47% negroes ? 10% 30% is enough being done for air-raid protection? 40% 21% negro interviewers 343 Supplement to Survey No. 25 MEMPHIS NEGROES AND THE WAR "Yes suh, the Army is all right to our people." When asked whether the Army treats Negroes fairly, seven out of ten Memphis Negroes gave this sort of answer to white interviewers. But only four in ten said that the Army is fair to Negroes when talking to interviewers of their own race. On question after question Memphis Negroes exhibited this tendency to give whites the answers they felt were expected of them - to kowtow to white prejudices, to repress opinions which might not be well received by the dominant race. The chart on the opposite page shows the way they differed in their responses to white and Negro interviewers on ten important questions related to the war. Only a month before, the same questions had been asked of Negroes in New York. As in Memphis, both white and Negro interviewers were employed. On one or two questions there was a considerable difference in the responses made to the two groups. But in general the differences were so slight that they could be disregarded in assessing the sentiment of New York's Negro population. Thirty-five percent of those questioned told white interviewers that the Army treats their race fairly; 31 percent gave this same answer to Negroes. In Memphis, on the other hand, the answers given to white interviewers were apparently so influenced by deference or fear as to be almost valueless as an index of Negro opinion. Throughout this survey it is the responses which Negroes gave to members of their own race which are cited to show their views. -2 Even these responses may understate the amount of disaffection which exists among Memphis Negroes. Many of them were so apprehensive and suspicious that they may have concealed opinions which might have appeared unpatriotic or defiant even in talking to members of their own race. On the average, Memphis interviews took twice as long as those in New York because of the necessity of reassuring respondents. Their greatest concern was that someone in town might be shown or told what they said. Significance In assessing the war morale of Memphis Negroes their anxieties deserve as much attention as their views on various issues. A group which does not feel free to express its opinion probably does not feel full identification with the war effort and is inclined to regard this as a "white man's war." Behind these anxieties are decades of living on a sufferance basis in a white-dominated world. Southern Negroes must "know their place." Discrimina- tion and frustration are the lot of Negroes in all parts of the country. But in the North, where Negroes constitute a political force and are relatively secure against illegal physical attack, Negroes may at least venture to express their dissatisfaction and, within limits, even their hostility. In the South many forms of pressure - all of them backed by the lurking threat of physical violence - are exerted to keep them quiet and docile. Any manifestation of assertiveness is certain to arouse the most bitter opposition. In Memphis this pressure is at least as severe as in other Southern cities. It is known that on one occasion the police commissioner exercised his influence to keep Memphis Negro newspapers from publishing "inflammatory articles." The following excerpt from a news item in a "white" Memphis newspaper describes the incident: -3- 344 The Commissioner/ said he summoned the two editors to his office. I simply told them that I would not have them running articles that would stir up feeling between the whites and the blacks, he said. 'They assured me that none of the articles they had published were intended to do so, but the articles speak for themselves. IN Four out of ten of the Negroes interviewed in Memphis admitted reading the more militant Negro newspapers published in other cities. About one-third read the necessarily mild Memphis World. The remainder read no Negro newspaper. Grievances, North and South At least so far as areas close to their everyday activities are concerned, Memphis Negroes do not need the prod of a militant press to be aware of the dis- crimination to which their race is subjected. They have sufficient first-hand experience with it in their daily life. It is the discrimination they experience in their attempt to earn a living which is most keenly resented. When asked "What do Negroes feel worst about right now?", 43 per cent of those interviewed specified the wages paid to Negroes; another one-third referred to employment discrimination. Eight per cent mentioned housing and an equal percentage mentioned segregation. The primary concern of Memphis Negroes with their economic situation is evident. Better economic opportunities are apparently regarded as the key to the improvement of Negro life in all its aspects. The grievances mentioned most frequently by Memphis Negroes were by and large the same ones which received most emphasis in Harlem. Respondents in both cities were most aggrieved about economic injustices. But whereas New York's Negro population felt most rancor about. employment discrimination, in Memphis wages were the main source of concern. Jobs are relatively plentiful in Memphis, but most of those open to Negroes pay poorly. And Memphis Negroes particularly resent the fact that they are often forced to accept lower pay than whites for the same work. -4- The "Double V" Campaign Still another indication that Negroes in various parts of the country feel much the same way about the discrimination they suffer is the response of Negroes in New York and Memphis to the "Double V" campaign. Militant Negro leaders maintain that if the war is to have meaning for Negroes it must have a two-fold goal - victory for democracy at home, as well as abroad. The "Double Vn campaign is intended, on the one hand, to mobilize Negro opinion and, on the other, to remind Americans generally of the contradiction inherent in the nation's al- legiance to democratic ideals and its treatment of its Negro minority. In effect, it is an attempt to promote the idea that Negroes must be permitted to enjoy the full advantages of democracy before they can be expected to devote their full energies to defending it. The chart below shows the extent to which this line of reasoning has taken hold in New York and Memphis: IS IT MORE IMPORTANT RIGHT NOW TO BEAT GERMANY AND JAPAN OR TO MAKE DEMOCRACY WORK AT HOME? BEAT 47% GERMANY AND JAPAN MAKE 39% 42% DEMOCRACY WORK AT HOME ? 35% 11% NEW YORK 26% MEMPHIS DON'T KNOW 345 -5As will be seen, a far larger proportion of those interviewed in Memphis either had no opinion on the question of did not venture to express one. But of those respondents who did express themselves, almost the same proportion in Memphis as in Harlem felt that our primary preoccupation today should be, not the defeat of the Axis, but the perfection of our own democracy. CHOW Views on Other Issues Not only are Memphis Negroes discouraged about their present situation; many of them do not feel that a United Nations victory will mean any improvement in their lot. Only a third of those interviewed feel that Negroes will be treated any better if we win the war. Four in ten expect that Negroes will be treated just the same as at present. Seven per cent anticipate worse treatment. Such expectations are hardly likely to generate enthusiasm for the war effort. The extent of the apathy toward the war among Memphis Negroes is dramati- cally revealed by their attitude toward a Japanese victory. Only one-fourth of those interviewed felt that they would be any worse off under Japanese domination than they are now. Nine per cent thought they would be better off; and it must be remembered that still others may have hesitated to express such a dangerous opinion. These responses reflect not only apathy but some feeling of kinship with the Japanese as a dark-skinned race. Only a very small number of Memphis Negroes maintained that they would be as well off under German, as under American, rule. Nearly half of those interviewed said definitely that they would be worse off. Ignorance Nevertheless, notably fewer respondents in Memphis than in New York appeared to be aware of German racial theories and of the probable consequences -6for Negroes of a German victory. The chart below compares the responses in the two cities: WOULD NEGROES BE TREATED BETTER UNDER GERMAN RULE? NEW YORK SAME 22% WORSE 63% DON'T KNOW 14% MEMPHIS SAME 22% WORSE 45% DON'T KNOW 30% The fact that more respondents in New York than in Memphis said that they would be worse off under German rule is all the more remarkable in view of the fact that outspoken criticism of American policies is more prevalent among northern Negroes. The difference must be attributed in very large measure to the greater ignorance of the Memphis respondents. Three Memphis Negroes out of ten "didn't know" whether their lot would be better or worse if Germany won. Less than half as many of those interviewed in New York failed to express an opinion on this point. On almost all questions at all remote from respondents everyday interests there was a wide difference in the proportion of "don't know" responses in New York and Memphis. The chart on the opposite page shows the extent of the variation on five issues: 346 -7- ? 2 "DON'T know" RESPONSES Would negroes be 23% better treated Is the Army fair under Japanese rule ? 34% If we win, will 11% to negroes ? Is the Navy fair to negroes? negroes be treat- ed better ? 21% Is enough being done for air-raid protection ? 20% 25% * 38% 20% New York 41% Memphis Less than 1/2 of 1%. Unquestionably, fear sometimes prompted Negroes to give "don't know" answers when faced with a dangerous question. But the failure to express any opinion may be ascribed in most cases to ignorance. This ignorance is a re- flection not only of the lower educational level of southern Negroes, but of the way they react to discrimination. In the north, the frustrations Negroes suffer often generate outspoken hostility against the dominant race. In the south, where such a reaction would not be tolerated, discrimination begets discouragement and apathy. Ignorance is one consequence of that apathy. Hopelessness The feeling of helplessness and hopelessness of Memphis Negroes is perhaps most clearly revealed in their answers to the question, "Who would a Negro go to around here if he couldn't get his rights?" -8One-fourth of those interviewed said definitely that there was no one to whom a Negro could apply to get redress for his grievances. Another onefourth said they would not know where to turn. Three per cent said they would invoke the help of God. Seven per cent would look to the benevolence of the federal Government. Only five per cent indicated that they would seek the help of the police or courts of law, although 27 per cent of those who talked with white interviewers professed to have confidence in these regularly constituted authorities. Seven per cent said that they would go to see Memphis' mayor or its political boss. An additional 18 per cent indicated that they would turn to other white people for help. Only three per cent said that they would seek help from member of their own race or from organizations working for Negro rights. Yet the most widely publicized campaigns of what is perhaps the most influential of these organizations, the National Association for the Advancement of Colored People, have been conducted in the South; and in response to another question, 20 per cent of those interviewed indicated that they were familiar with its work. Memphis Negroes may feel, however, that even such an organization as the NAACP functions very much on a sufferance basis in the South. In Memphis, Negro municipal employees cannot keep their jobs if they are members of the NAACP or any similar organization. The attitudes of New York Negroes, as revealed in their responses to this same question, contrast sharply with those of Memphis respondents. New York Negroes show no more faith than the members of their race in Memphis in courts of law and the police, but they show far greater disposition to rely 347 -9 upon their own resources or upon unofficial champions of their race. More than a fourth of those interviewed in New York said that if they couldn't get their rights they would turn for help to militant colored leaders or to organisations which seek to advance the welfare of Negroes. Chicago - Atlanta Another recent study conducted by the Bureau of Intelligence reveals that the same general contrast which prevails in Memphis and New York also exists between the Negro populations of Chicago and Atlanta. Half of the Negroes interviewed in Chicago had negative views on four or more of eight issues which were selected as indices of discontent; only four per cent of these interviewed in Atlanta had so many grievances. On the other hand, a far larger proportion of respondents in Atlanta than in Chicago were either ignorant of the issues or afraid to express their opinion. In Chicago far more Negroes than whites had numerous grievances - even though the number of disaffected whites was high as compared with Atlanta. In Atlanta, on the other hand, Negroes voiced even fewer complaints than the rela- tively satisfied white population. CONCLUSIONS The findings of both the New York-Memphis and the Atlanta-Chicago studies suggest that discontent is prevalent among American Negroes generally, but takes a different form of expression in the north and in the south. In Chicago and New York grievances are freely expressed, and a militant, defiant spirit is evident. In Memphis and Atlanta lack of enthusiasm for the war is revealed most clearly by apathy - by ignorance of the issues involved and a "don't care" attitude. - 10 The need to reduce the resentment and frustration experienced by Negroes in all parts of the country is clearly indicated. Because Negroes are especially bitter about economic discrimination, efforts to enlarge their opportunities for employment and to eliminate inequitable wage differentials present particularly promising possibilities. The federal government has an unprecedented opportunity to exercise leadership in this area because of the growing importance of defense work, with which it is concerned, in the total economy. Those policies of the armed forces which arouse the resentment of Negroes should also be reexamined. An obviously indicated way of improving the morale of Negroes is to give them wider opportunities to participate in the war effort in ways that, while consistent with their ability and training, do not make them feel humiliated. Negro leaders should be invited to cooperate with the federal government in publicizing its efforts and achievements in reducing discrimination. The essential grievance of Negroes is that they have not been admitted to full partnership in our democratic society. Once they are convinced that the justice of their demands is recognized, their full participation in the war effort may be confidently anticipated. The poor morale they manifest at present does not stem from lack of patriotism, isolationist sentiment or any lack of enthusiasm for democratic values. It is a direct result of the frustrations they experience in their daily lives and, very frequently, even in their attempts to contribute to the war effort. It is important that America heed the just complaints of its Negro minority and enlist their full cooperation not only or even primarily because the nation needs their strength. Rather such a course must be followed 348 - 11 because any other one would weaken the faith of the American people themselves, as well as of their allies, in the sincerity of their objectives and the greatness of their cause. 349 Such recommendations and suggestions as may appear in this report have not been cleared in advance with the Director of the Office of War Information and do not necessarily reflect his views or those of the Office of War Information. Recommendations and suggestions, if they do appear are only submitted by individuals in the Bureau of Intelligence who have assombled the data and they are offered for the consideration of appropriate authorities. BI-Misc-3 7-15-42 350 Secret May 27, 1942 SURVEY OF INTELLIGENCE MATERIALS No. 25 Office of Facts and Figures Bureau of Intelligence 351 CONTENTS SUMMARY NEGROES IN A DEMOCRACY AT WAR page 1 Militancy page 2 Negro Organisations page 3 Negro Newspapers page 7 Orievances page 8 Discrimination page 13 Megroes and the Armed Forces page 14 Negroes and Civilian Defense page 17 Negro Appraisals of the War page 18 Attitudes Toward the Japanese page 21 Attitudes Toward the Germans page 25 CONCLUSIONS page 26 352 SUMMARY Despite a fundamental loyalty to the United States Government and to democratic ideals, American Negroes are somewhat apathetic toward the war effort. Discrimination excludes them from full participation in the national program and seriously impairs their morale. Militant Negro leaders and organisations have placed their emphasis on the first half of the Double-V Campaign - victory for democracy at home, as well as abroad. They insist that Negroes be given a larger share in democratic rights and opportunities. Among Negroes interviewed in New York City, nearly two-fifths declared, in response to a question, that it is more important right now to make democracy work at home than to beat Germany and Japan. Nearly one-half of the same sample voiced a belief that they would be at least no worse off under Japanese rule than they are now - an indication of the kinship they feel for the Japanese as a dark-skinned race. A substantial minority said that they thought their lot would be about the same under German as under American rule. These attitudes are expressive of Negro distrust of their white fellow-Americans. The Negroes in New York indicated that they consider job discrimination their gravest problem. Although they are concerned about housing, segregation and other disadvantages, they regard economic opportuni ty as the basic solution of their difficulties. Many of them believe that the war has already wrought some improvement in their lot and that they will be accorded better treatment if the United States is victorious. But at the present time they tend to believe that jobs are withheld from them because of their color and that employers, labor unions and the Government share in the responsibility for this discrimination. Negroes are deeply resentful of the restrictions placed upon their race by the armed services, the Navy in particular. They feel that all men in uniform should be treated alike and they desire to serve under the leadership of Negro, as well as white, officers. In spite of these grievances, Negroes feel a high degree of confidence in the Federal Government. Their morale can be greatly improved by giving them increased opportunities for participation in the war effort, by appreciation of the contributions which they are able to offer and by a recognition of their reasonable hopes for the future. 353 "Despite our apathy toward the war, it is not because we don't recognize the monster Hitler We recognized him immediately, because he is like minor Hitlers here... The Gestapo is like the Ku Klux Klan here We must be sure that out of this war must come freedom for all countries with colored peoples in them." Adam Clayton Powell New York Negro Leader NEGROES IN A DEMOCRACY AT WAR The prime determinant of morale within a nation at war is the identification of the individual with the community. Such an identification is a prerequisite to participation in the common cause. And, conversely, participation serves to promote the morale essential to a wholehearted community effort. Negroes in the United States have only partially identified their own interests with those of the nation. They are a special segment within a society dominated by white symbols and values. Deprived of full participation in this society, their energies have been devoted, in part, to winning for their own race a greater measure of freedom and opportunity. This is not to say that Negroes are disloyal to the Government of the United States or to democratic institutions. On the contrary, they are deeply devoted to American ideals, asking only that these ideals be realized in relation to themselves. They seek no "new order", no overthrow of established values, no supremacy or race. 354 -2They desire eagerly to identify themselves as Americans and are frustrated because they are not permitted to do so. Their apathy toward the common cause is occasioned mainly by their exclusion from it. Militancy A new spirit has grown among American Negroes. Migration from the South to the greater freedom of the North, increased education and a general renascence of faith in the principle of human equality have given to Negroes a surging impulse to share in the American dream. They are no longer satisfied with a sub- servient status. They no longer ask merely for kindness or charity. They have begun to learn the meaning of democracy and to believe in it. In response to this impulse, a fresh type of leadership has sprung from Negro ranks. The patient temperance of men like Booker T. Washington or Robert Moten is no longer respected. The men who today evoke the support of Negroes are men who demand, rather than supplicate, men who are vocal, unembarrassed and aggressive. During the last world war, Negro leaders such as Dr. W. E. B. DuBois and Bishop Percy appealed to the Negro people to "close ranks" with the whites; they called for a suspension of grievances until the war was won. In the present war, however, no outstanding Negro leaders have urged a policy of this sort - perhaps because they would lose their leadership if they too closely identified the interests of Negroes with whites in the war. On the contrary, the 355 - -3outbreak of the present war was accompanied by an intensification of Negro demands for equality in all phases of the national effort. There has been, on the other hand, no real opposition to the prosecution of the war on the part of any important Negro leaders or organisations. Even prior to the attack on Pearl Harbor, Negroes avoided any identification with the America First Committee, although there was some similarity between their points of view. Both pointed to the imperialistic character of Great Britain, emphasized British and Dutch oppression of colonial peoples, referred to the shortcomings of American democracy and the desirability of concentrating our resources on the solution of our domestic problems. Nevertheless, Negro isolationism differs markedly from white isolationism. It rarely argues that the Western Hemisphere is impregnable, that the war, even if successful, will diminish democracy at home or that the Axis is without aggressive intentions; and it never undertakes a defense of the totalitarian philosophy. Negro isolationists, unlike white isolationists, are not motivated by ethical pacifism, hatred of Roosevelt or sympathy with totali- tarianism. They are hostile or indifferent to the war effort because they are distrustful of their white fellow-Americans and because they are not convinced that prosecution of the war will ameliorate the conditions which aggrieve them. Negro Organizations It is in this atmosphere that Negro leadership now operates. A war fought in the name of the Four Freedoms provides a great 356 -4opportunity for professional race leaders. The organisations for racial protest and advancement are acquiring, for the first time in their history, a mass following. The bodies which most intimately reach the Negro masses and influence their attitudes are the religious and fraternal associations. The best figures available indicate that the several Negro church bodies claim a membership of about 8,000,000. The number of Negroes belonging to fraternal orders has not been determined, but it is safe to say that next to the churches they have the largest following. The most important Negro groups, apart from the religious and fraternal fields, are the National Association for the Advancement of Colored People and the Urban League. The former, established in New York City in 1909 as a protest group, is concerned mainly with protection of the civil rights of Negroes. The latter, which was formed in New York in 1911 as a social service organisation, has concentrated on increasing their economic opportunities. Actually, there has been a good deal of overlapping between the two. When Negroes in Harlem were asked "What organisations or persons do you think are trying hardest to get the Negroes more rights?", 41 per cent of them named the NAACP; the Urban League, which received the next highest vote of confidence, was chosen by 13 per cent. The one important Negro organization which has arisen as a result of the war's stimulus is the March-On-Washington Committee, organised by A. Philip Randolph, interventionist socialist, head of the Brotherhood of Sleeping Car Porters and widely acknowledged to be the best informed 357 -5and most judicious among Negro labor leaders. Almost a year ago, representatives of most of the Negro organizations were invited to a conference by Randolph at which he proposed that a committee be formed to organize a march on the Nation's capital as a means of impressing upon the Administration the significance of anti-Negro discrimination. The March-On-Washington Committee has the backing of most of the major Negro organizations. Its attitude was given expression by Randolph when he said that the " ...tides of democracy for the Negro are running extremely low" and that this is the "hour of the Negro's greatest opportunity to win his democratic rights in America". The organization appears to have been influential in securing the establishment of the President's Fair Employment Practices Committee. Indeed, its purpose seems to be to exert pressure upon the Government for the improvement of the Negro's status, rather than to promote an actual march on the capital for the discharge of Negro resentments; but there remains a real danger that the hands of its leaders may be forced by the very momentum which they have generated. All of the leading Negro associations, the Urban League, the NAACP and the March-On-Washington Committee, vigorously endorse the Double-V Campaign, which has become the most vital expression of the Negro's attitude toward the war. To the conventional symbol, "y for Victory", the Negroes have added another V to symbolize their own special concern with the war - victory for democracy at home, as well as abroad. The proponents of this slogan declare that the war against the 358 -6external enemies of democracy is necessary and has their unqualified support. But they believe that it must be accompanied, to have meaning for their race, by insistent pressure for the promotion of Negro interests in the United States. To many Negroes, the achievement of democracy at home takes precedence over the conflict abroad and is a condition of their contribution to the national effort. Some of them declare that they would rather die, if necessary, fighting for democratic rights in this country than in foreign fields. And most of them feel that the stated purposes of this Government in the prosecution of the war can be given validity only by a greater recognition of the Negro's claims to justice and equality. There is a marked tendency among Negroes to rely for the advancement of their welfare upon their own resources or upon unofficial champions of their rights. It seems significant that when Harlem Negroes were asked "Who would a Negro go to around here if he couldn't get his rights?" the first choice was the Reverend Adam Clayton Powell, a militant preacher, newspaper publisher and New York City Councilman. The only other individual mentioned by an appreciable number of Negroes was Mayor LaGuardia. Grouping together the wide variety of answers given to this question, it is seen that 22 per cent of New York's colored population would turn for the protection of its rights to political leaders; another 22 per cent would look for aid from special organizations; and 14 per cent would appeal to the church or the clergy. Only five per cent indicated that they would put reliance upon the courts or the police. 359 -7 This lack of confidence in these two regular democratic institutions established for the protection of civil liberties seems a dramatic expression of the Negro's feeling that he has been deprived of the full prerogatives of American citizenship. Negro Newspapers The dominant theme of the Negro press, in both news and editorial pages, is racial discrimination. These newspapers depend for their existence on the championship of the Negro cause; they can compete for readership with the national press only by devoting themselves to Negro affairs. The emphasis in news, consequently, is always upon the relation- ship of events to purely Negro interests. Extreme prominence is given to every instance in which Negroes are disadvantaged. Situations such as that which developed in Detroit over the Sojourner Truth Housing Project, regulations of the Army, Navy, Marine Corps and Air Force affecting Negroes and employment opportunities in war industries are prime sources of news for these publications. Their news pages inevitably have a pronouncedly agitational influence. Editorially, all of the Negro newspapers are vigorously aggressive in the defense of Negro rights and in the insistence that Negroes be given unqualified social and economic equality. They express support for the war effort, most of them acknowledging that the welfare of Negroes is bound up in a United Nations victory. But, like other leaders of Negro thought, they place their chief stress upon the achievement of democracy at home. 360 -8The Negro press is militant in its campaign for the Double-V program - it has, in fact, contributed largely to the popularization of it in Negro ranks. The problem of Negro morale can be solved, according to these newspapers, only by removing its main corroding factor - discrimination. The Amsterdam Star News is the Negro newspaper which enjoys the largest circulation among New York's Negro population; more than one- half of the Negroes interviewed in Harlem declared that they usually read this publication. All but one-fifth of the Negroes interviewed indicated that they regularly read one or another of the Negro newspapers. In addition, of course, they are in the habit of reading one of New York's standard dailies. By far the most popular of these among Negroes is the extremely isolationist and anti-Administration New York News; three quarters of the Negroes interviewed said that they read this paper regularly, as compared with a mere 18 per cent who claim they read the New York Times. Grievances Basically responsible for the Negro's present outlook toward the war effort is a deep-seated frustration. This frustration derives from a stimulation of the Negro - as a part of the whole American people -- to contribute to the war effort and by a blocking of his normal response when he attempts, as a Negro, to behave as an American. The frustration increases with the development of Government pressure for action. Appeals for enlistment in the Army or the Navy 361 - -9 - are constant reminders to the Negro of discrimination against him. They induce in him a feeling of cynicism and despair, rather than of patriotism. Similarly, the publicity regarding the importance of the production program creates a resentful anger among Negroes who are denied employment in war industries. It is in regard to job discrimination that Negroes feel the deepest rancor. They recognize that economic opportunity is the basic remedy for all of the injustices which they suffer. They are distressed by social discrimination, by segregation, by the unfortunate living conditions imposed upon them and by other disadvantages. But interviewing indicates that their prime concern at present is over their economic handicaps. The following chart shows the distribution of responses to a question asked of a sample of the colored population in New York City on the relative urgency of Negro problems: WHAT DO NEGROES FEEL WORST ABOUT RIGHT NOW? JOBS 47.5% WAGES 22.5% HOUSES 16% SEGRE9.5% GATION DON'T KNOW 4.5% 362 - 10 In order to obtain a comparison between the opinions of Whites and Negroes toward Negro problems, the Bureau of Intelligence asked certain questions of white persons of an economic status comparable to that of the colored sample. All of the contacts with the white respondents were made by white interviewers; the Negro sample, on the other hand, was questioned in equal numbers by white and colored interviewers.* It is difficult to make comparisons between Negro and white attitudes since the two groups necessarily answer questions in different frames of reference. Although Negro attitudes toward the war are undoubtedly conditioned in large part by economic circumstances and edu- cational background and are, therefore, partially comparable to the opinions of poor whites, still, resentment over racial discrimination is widespread throughout the Negro population, regardless of income or education. In the white population, on the other hand, recognition of the status of Negroes as a sociological problem, together with the power to regulate this status, is centered in the better informed, higher economic segment. On issues involving racial discrimination, therefore, the two samples respond from wholly different points of view. The poor whites, for example, are not conspicuously anxious to help Negroes get better jobs or wages. They look on housing as the one Negro problem which whites would be most willing to do something about now. There were differences between the responses given to white and Negro interviewers. But these differences, while significant from the viewpoint of methodology in public opinion analysis, were not in general of such a nature or extent as to affect the inferences drawn from the responses. 363 - 11 The two charts reproduced below show the attitudes of poor whites and Negroes in New York toward present and prospective con- ditions affecting the colored people. No generalization is warranted from these data concerning opinion in other parts of the country; it should be noted, indeed, that Negroes in New York are peculiarly disadvantaged economically -- a fact which undoubtedly colors their opinions.* I ARE NEGROES BETTER OFF NOW THAN BEFORE THE WAR? NEGROES WHITES BETTER 39.5% BETTER 10" SAME 35.5% SAME 32% WILL NEGROES BE TREATED BETTER IF WE WIN? NEGROES BETTER 41.5% IIIIIIII DON'T WORSE 15% N 4% KNOW 10% DON'T KNOW 14% WORSE SAME 38.5% DON'T KNOW 16% E DON'T WHITES BETTER 24% SAME 62% KNOW 12% About one-seventh of the Negroes interviewed in the study de- clared they are "worse off now" than they were before the war started -probably not an abnormal percentage in view of the dislocation brought by the war to the whole population, white and colored alike. But it is * A comparative study of Negro attitudes in a southern city is now in preparation. 364 - 12 - apparent that substantial portions of both groups believe that the war has already wrought some improvement in the Negro's lot; the whites are more prone than the Negroes to hold this opinion. The Negroes, however, are more disposed than the whites to believe that their race will encounter better treatment when victory has been achieved. Nearly two-fifths of the colored people, however, foresee no change in their condition - a hopelessness which can scarcely fail to be a begetter of apathy toward the war effort. The fact that slightly more than three-fifths of the poor whites expect the treatment of Negroes to be unchanged may perhaps be interpreted as an indication that they are indifferent to the conditions under which Negroes live or unprepared to make any concessions to them. It seems significant that Negroes who had had at least some high school education were more prone than those with less schooling to believe that conditions for their race have already undergone some improvement; they were no more hopeful than their fellows, however, that victory will bring about better treatment than they are accorded now. The reasons given for expecting better treatment of Negroes after the war differ somewhat between colored and white respondents. In both groups, the expectation of better treatment for Negroes was based mainly on the assumption that the white people would make concessions to them out of gratitude for their contributions to the war effort. But Negroes are much more prone than whites to feel that their improved 365 - 13 - status will result from their own initiative - because they will mobilize their strength to demand better treatment. Discrimination Among poor whites there is a prevailing feeling that Negroes have an equal opportunity with whites to obtain jobs in war industries. But the Negroes by no means hold this view. And a majority of Negroes believe, not only that employers discriminate against them, but that labor unions do so as well. The charts immediately below show the relative attitudes of whites and Negroes regarding the chances for employment open to colored workers. HAVE NEGROES AS GOOD A CHANCE AS WHITES TO GET DEFENSE JOBS? 28% JUST AS GOOD 63% 61.5% NOT AS GOOD 21% 10.5% ? DON'T KNOW 16% ARE LABOR UNIONS FAIR TO NEGROES? 20% FAIR DiA 54% 45.5% si UNFAIR 11 34.5% ? DON'T KNOW 35% . 366 - 14 In general, Negroes with better than average education are more disposed than others to believe that their race suffers from inferior employment opportunities. . And discriminations on the part of plant managers is most frequently blamed for this condition; a substantial percentage, however, holds governmental attitudes responsible. About one-fourth of the Negroes interviewed had members of their families belonging to a labor union. Affiliation with the AFL was slightly greater than with the CIO. The disposition to regard labor unions as fair was very much higher among this group than among those who had no union members in their families. The grievances expressed by those who regarded the unions as unfair to Negroes were mainly that Negroes are denied membership, that when they become members they get poorer jobs, fewer benefits and lower wages, that they are the last to be hired and the first to be fired. When asked which of the two major branches of the labor movement was the fairer, they chose the CIO over the AFL in a ratio of two to one. Negroes and the Armed Forces Negro attitudes toward the armed forces are colored by a longstanding resentment against their policies of segregation and exclusion; the war, the operations of the Selective Service Law and the treatment accorded Negroes recently brought into the Army and Navy merely sharpened these feelings and produced a keener awareneness of them. Nearly one-half of the Negroes interviewed said that they consid- ered the Army unfair to members of their race. A full two-thirds of this sample held the same view respecting the Navy. In contrast a 367 - 15 mere nine per cent of the sample of low income white persons regarded the Army treatment of Negroes as inequitable. These whites were, how- ever, more conscious of the Navy injustices; 17 per cent of them considered the Navy unfair to Negroes. The chief Negro complaint against the Army revolved around the fact that Negro troops are segregated. Although segregation, as has been previously pointed out, is only a minor complaint of Negroes in relation to civilian life, there is a strong feeling among them that no distinction ought to be made among men wearing Uncle Sam's uniform. The line of reasoning indicated in comments made to interviewers was that there shouldn't be colored soldiers and there shouldn't be white soldiers, there should only be American soldiers. Another important grievance against the Army was that Negro troops are not protected from abuses by civilians, particularly in the South, and by white MP's in the Army. In this connection, reference was made frequently to the recent incident at Fort Dix. Other com- plaints of a specific nature chiefly considered discrimination in terms of jobs, advancement or exclusion from particular branches of the service. A sense of the extreme bitterness which has been engendered among some Negroes is to be found in the following excerpt from a report by a Negro field worker: A Negro schoolboy in Chicago refused to salute the American flag. When the matter was brought to the attention of his parents, they said that they were proud that their boy had demonstrated such courage. They felt as he did. One of their friends, a Negro soldier, was shot in the Alexandria, Louisiana, riots. They would never again salute this flag, they said, or stand when the "Star Spangled Banner" was played, even if they had to pay for it with their lives. 368 - 16 Interviewing in connection with this study was conducted prior to the latest opening of opportunities to Negroes in the Navy but after the regulations announced by Secretary Knox in April. Resentment among Negroes regarding the Navy centered in the fact that, until re- cently, Negroes could get into this branch of the service only as messmen. Negroes with better education were more prone than others to believe that both Army and Navy treat members of their race unfairly. A majority of the Negroes interviewed expressed the opinion that Negro troops in the Army should be led by both white and Negro officers. Only a very few of the Negroes took the view that white officers alone should assume the command of Negro troops. But 30 per cent expressed a preference for having Negro soldiers under the sole control of Negro officers. A comparison between the attitudes of whites and Negroes respecting the armed forces is presented in the accompanying charts. ARE ARMY AND NAVY FAIR TO NEGROES? IS THE ARMY FAIR? IS THE NAVY FAIR? <<<<<<<< UNFAIR UNFAIR 45.5% UNFAIR UNFAIR FAIR 60% FAIR 74% FAIR 31% FAIR 14.5% DON'T KNOW 21.5% DON'T KNOW 17% NEGROES WHITES DONT KNOW 18.5% NEGROES DON'T KNOW 23% WHITES 369 - 17 - WHO SHOULD LEAD NEGRO TROOPS? WHITE 3% OFFICERS 23% NEGRO 30.5% OFFICERS 25% BOTH 58% 34% DON'T ? 8.5% NEGROES KNOW 18% WHITES Negroes and Civilian Defense Although more than three-quarters of the white sample felt that enough was being done in their neighborhoods to protect the people from air raids, there was considerably less satisfaction on this score among Negroes. Negro opinion was about evenly divided in regard to the adequacy of local precautions against air raids. In both groups, the better educated were less satisfied; but this difference was much more pronounced among Negro respondents than among whites. Among those whites who regarded air raid precautions as inadequate, almost all thought that some preparations had been made. But among the Negroes who expressed dissatisfaction, a majority felt that nothing at all was being done. 370 - 18 The outstanding plea of the Negroes was for air raid shelters; apparently, they did not know that New York City had decided against the construction of public air raid shelters for any parts of the city. Their next most frequent demand was for instructions as to what to do in case of air raids. About 90 per cent of the Negroes interviewed, and nearly as high a percentage of the white sample, said "No" in response to the question, "Are you doing any air raid work yourself?" Among the Negroes, 83 per cent admitted that they had made no effort to participate in activities of this kind; and among the whites, 87 per cent made the same acknowledg- ment. About six per cent of the Negroes and two per cent of the whites declared that they had tried to engage in air raid precaution efforts. In this situation, the behavior and opinions of the Negroes and of the low income whites stem from common economic difficulties. There is little to indicate that the Negroes' lack of interest in civilian defense activities results from any racial bias. On the contrary, it is an apathy manifested by economically under-privileged groups everywhere. Civilian defense activity is consistently associated with those elements in the population who possess property to protect, whose experience qualifies them for initiative and leadership and who have the financial means to purchase the equipment requisite for training. Negro Appraisals of the War In their expectations as to the duration of the war, Negro opinions are slightly more pessimistic than those of the American public as a whole. Negroes are a little less prone than the total 371 - 19 population to believe that the war will be ended in less than a year and a little more prone to think that it will continue for more than three years. Like the rest of the country, the bulk of Negro opinion, about one-half of those interviewed, holds that the war will go on for a period of 13 months to three years. That this pessimism springs from racial, rather than economic, causes is indicated by a comparison of Negro opinions with those of the low income white sample interviewed. A number of the poor whites are extremely optimistic about the chances for a speedy conclusion of the conflict. A fifth of them, a percentage twice as great as that among Negroes, thinks the war will last less than a year. And the percentage of those foreseeing a war of more than three years dur- ation is less than one-half that among the Negroes. In regard to the war's outcome, 71 per cent of the Negro sample indicated no doubt whatever that this country would be victorious. Only six per cent expressed a belief that Japan and Germany have a chance to defeat us. Among the minority anticipating compromise or defeat, there was a higher percentage of educated negroes than of those with inferior schooling. In these attitudes, too, the Negroes showed somewhat less confidence and optimism than the poor whites who were asked the same question. In the latter group, 89 per cent expressed certainty that the United States would triumph; only two per cent took the view that Japan and Germany have a chance to win, while four per cent - 20 - 372 indicated an expectation that the conflict will end in a draw. Perhaps the most significant indication of Negro attitudes toward the war is to be found in the responses to the following question: "Right now do you think it is more important to concentrate on beating Germany and Japan or to make democracy work better here at home?" This question affords the best available indication of the appeal which the Double-V Campaign has made to Negro sentiments. Nearly two- fifths of the New York Negroes felt that primary emphasis should be placed on the first half of their two-edged goal - democracy at home, as well as abroad. And it is noteworthy that about 12 per cent of them refrained from answering this question at all - perhaps because they were reluctant to voice an opinion out of keeping with the prevailing white pattern of thought. Just about one-half of the Negroes interviewed urged a concentra- tion of our attention on the foreign field. Contrastingly, however, the sample of low income whites was almost uniform in the conviction that the primary job is to defeat our external enemies; nine out of ten of them expressed this opinion. The striking difference between the two groups, comparable in their economic status, is formidable evidence of the degree to which racial grievances have kept Negroes from an all-out participation in the war effort. A comparison of the responses is indicated in the following chart. 373 - 21 - IS IT MORE IMPORTANT RIGHT NOW TO BEAT GERMANY AND JAPAN OR TO MAKE DEMOCRACY WORK AT HOME? o BEAT 50.5% GERMANY AND JAPAN 90% MAKE 38% DEMOCRACY WORK AT HOME 5% 11.5% ? DON'T NEGROES KNOW 5% WHITES Attitudes Toward the Japanese The feeling is strong among Negroes that this is a white man's war. This is a feeling fostered in part by the impediments to Negro participation and in part by doubts as to the benefits which victory may confer upon the colored race. Resentment against the white population has been carried over, more or less consciously, among Negroes into a desire to see the whites humiliated, to see white supremacy toppled by a people with darker skins. The military successes won in the Far East by the Japanese have given to many Negroes a measure of satisfaction. They are disposed to 374 - 22 identify themselves as brothers of the colored Asiatics who are assailing the white man's civilization - a disposition which has been stimulated by contemporary references to the Japanese as "little yellow men" or by other aspersions on their color. Indeed, it is reported by field workers that Negro children show a pronounced inclination in their play to pretend that they are Japanese soldiers; they are fond of imagining that they are in a position to avenge themselves against white oppressors. And adults frequently express a covert satisfaction over Allied reverses. An extreme instance of this attitude is to be found in a frank statement made by a Negro soldier on leave who had been made to ride in the Jim Crow section of a boat: "Boy, you know one thing, the Japanese gonna win this war. These white folks think they're better than us. The Japanese are our friends - they gonna look out for us. We've been taking a lot of stuff from these crackers, but they gonna get it back I ain't fixin' to fight no Japanese. These Japanese fighting for me. I'm gonna fight myself some crackers Brother, I'll sure be glad when the Japanese knock the hell out of them." Such opinions, even when couched in terms as violent as those quoted, do not necessarily denote a desire to see the United States defeated in the war. They are an expression of hostility to the mores of a white civilization. But those who voice them may merely desire to see the civilization changed, not conquered. The satisfaction over white humiliation may, indeed, be a reflection of confidence in the ultimate triumph of the society in which Negroes aspire to a larger 375 - 23 share; and the satisfaction of Negroes over white losses might very well diminish if defeat loomed as a real possibility. About one-half of the Negroes, a slightly smaller percentage than among the poor whites, indicated a belief that the Japanese intend to come over here and rule this country, if they win the war. The white and Negro samples were asked this question: "Just suppose Japan did come over here to rule this country, do you think the Negroes would be treated better or worse or about the same as they are now?" This was the one question in which significant differences relevant to the problem were obtained between the responses given by Negroes to white interviewers and those given to interviewers of their own race. The intimation of a preference for Japanese victory being tantamount to a treasonable utterance, Negroes apparently were reluctant to voice such a view to white strangers. On the other hand, the expression of this opinion to Negroes may have been more a reflection of bitterness than of deliberate judgment. A high percentage of those interviewed avoided giving any response. The following diagram shows a comparison of the answers given by the three samples - Negroes interviewed by Negroes, Negroes interviewed by whites and poor whites interviewed by whites. WOULD NEGROES BE TREATED BETTER UNDER JAPANESE RULE? NEGRO INTERVIEWERS NEGRO RESPONDENTS WHITE INTERVIEWERS NEGRO RESPONDENTS WHITE INTERVIEWERS WHITE RESPONDENTS I BETTER 18% BETTER SAME 16% WORSE 28% SAME 31% IIIIII SAME 30% WORSE 29% DONT KNOW 23% DON'T KNOW 33% 000000000 WORSE 52% DON'T KNOW 27% 376 - 24 - The striking fact revealed by these figures is that one-half of the Negroes interviewed in New York City expressed to interviewers of their own race a belief that they would be better off, or at least no worse off, under Japanese rule. And it seems almost equally significant that an additional one-quarter of the sample was in doubt on the subject. Only 28 per cent of the Negroes in New York expressed a conviction that life for them under the domination of Jaj old be worse than it is now. Educational differences on this question were striking. In both Negro samples, the better educated appeared to be more kindly disposed to Japanese rule than the less educated. This may reflect an actual preference for the Japanese among some; it may also arise out of a deeper bitterness and defiance among the Negroes exposed to intellectual influences who are more keenly aware of the discriminations against their race. Perhaps it would prove less evident among the colored masses of the south. Although identification of American Negroes and Japanese as kindred colored peoples has not been a major propaganda theme of the Axis shortwave broadcasts, it has been for some years a consistent thesis of the Japanese through personal contacts and printed matter. The reason most commonly given by Negroes for the anticipation of better treatment under Japanese rule was that the Japanese are also colored and, therefore, would not discriminate; this was an explanation offered more than twice as frequently to Negro interviewers as to white interviewers. 377 - 25 On the other hand, among those who expected that they would fare worse if the Japanese were to govern them, the principal explanation offered was that the Japanese do not like Negroes; a smaller number said simply that the Japanese do not consider themselves colored or that they are "different" from Negroes. Attitudes Toward the Germans Negroes view the possibility of a German triumph in an entirely different light - a reflection, apparently, of the degree to which they approach the war from a racial point of view. A mere one per cent of the colored sample expressed a belief that they would be better off under German than under American rule. And in this opinion there was no difference whatever between them and the white respondents who were asked the same question. There was, however, a substantial number of Negroes so embittered by the treatment accorded them in this country as to feel that Nasi intolerance could be no worse. It is significant in this connection that one-tenth of the poor whites felt that the Negroes would fare no worse under German domination than they do under American democracy. The reason most frequently given to support the opinion that Germans would treat the Negroes worse than they are now treated was that Germans hate the colored peoples and have no place for them in their "new order". In this connection, the better educated Negroes are more disposed than the others to feel that German rule would impose worse conditions upon them than at present. 378 - 26 The following chart shows the relative expectations of the white and Negro groups in New York as to Negro welfare under German domination WOULD NEGROES BE TREATED BETTER UNDER GERMAN RULE? NEGRO INTERVIEWERS NEGRO RESPONDENTS WHITE INTERVIEWERS NEGRO RESPONDENTS WHITE INTERVIEWERS WHITE RESPONDENTS SAME 22% - 14% SAME 12% DON'T KNOW WORSE 63% WORSE 71% DON'T KNOW 16% SAME 11% WORSE 76% DONT KNOW 12% CONCLUSIONS Societal evolution is necessarily a tedious process. Folkways do not change swiftly. But the whole history of human progress bears witness to the fact that they do change, slowly, gradually, under the pressure of man's striving for freedom and justice. American Negroes know that their aspirations cannot be realized at once. There is some measure of understanding among them that, if their environment is to be changed, they must adapt themselves to it 379 - 27 - painstakingly by education and self-discipline. However great their grievances, they have a fund of patience. But they need to know that the Government under which they live is their Government, that it is concerned with the protection of their rights and the attainment of their reasonable hopes. Many Negroes know this today; most of them are ready, with encouragement, to accept it as a premise in the approach to their problems. For Negroes, more than any other segment of the American public, have a feeling of warm filial devotion to the federal Government and they repose deep trust and hope in the President of the United States. Negroes are, in fact, potentially a source of the highest type of morale. They are inordinately proud of their loyalty and are responsive to the most minute gestures of sympathy and appreciation. The Government can easily promote among them healthier attitudes toward the war effort by giving them increased opportunities for participation and by assuring them that it recognizes the justice for their claims. The example of the federal Government is the most potent force available for erasing the discriminations which aggrieve the Negro population. Specifically, this example can make itself felt in the following ways: (1) By giving wider employment opportunities to Negroes in federal agencies. In the fact that the Government itself fails to employ Negroes in jobs for which they are qualified lies a pretext which private industry utilizes for its persistent discrimination against the colored race. The national capital is spotlighted today. If 380 - 28 Negroes here are given some chance to assume responsibility and are assured decent democratic treatment on a parity with other federal employees, the example cannot fail to have valuable repercussions throughout the country. (2) By giving Negroes a larger voice in the determination of national affairs. The appointment of a Negro to a conspicuous position with the Manpower Board would enhance the confidence of members of his race in an equitable distribution of the war's burdens. (3) By giving Negroes better chances to prove their devotion to the United States in the armed forces. Negroes who wear the uniform of the United States should be guaranteed, by whatever means may be necessary, the respect due to any man wearing it. The Negro's sense of discrimination in the armed forces could usefully be diminished either by the-establishment of a mixed volunteer unit which could be given opportunities for especially daring action or by the assignment of separate units of white and Negro soldiers together as parts of a larger combat force, such as a brigade or a division. (4) By efforts to enlarge employment opportunities for Negroes in private industry. The power of the Committee on Fair Employment Practices should be extended so that it can effectively enforce the President's executive order #8802. In this connection, the Committee might find it possible to work effectively by inducing individual employers to set an example for their industry by giving Negroes more and better jobs. It might also secure the cooperation of individual labor unions to guarantee the hiring of Negroes on a basis of equality with white workers. 381 - 29 - (5) By taking a position of unqualified firmness in test cases, such as that which developed over the Sojourner Truth Housing Project in Detroit, where Negro rights are involved. (6) By giving wider publicity both to its own endeavors for the removal of discriminations and to the contributions which Negroes are making to the war effort. In this connection, the Office of Facts and Figures could usefully employ radio and the films to promote a more honest portrayal of the Negro and his problems at this time. If these concrete steps are taken for the protection of Negro rights, the Federal Government can successfully call on Negro leaders, including institutions and organizations controlling and stimulating Negro opinion, to recognize and bear their responsibility for building the morale of Negroes. Given reasonable assurance of the operation of democracy at home, the full energies of the Negro people will be devoted as a part of the American society, to the promotion of the national cause. So long as inequities exist for Negroes in American life, the Axis propaganda machine possesses a powerful fulcrum upon which to rest the lever of domestic division. This fulcrum must be removed - not only for the sake of the Negroes, but also for the sake of assuring mankind everywhere of whatever race or color, that we are engaged in a people's war for freedom, justice and social security. 38 Such recommendations and suggestions as may appear in this report have not been cleared in advance with the Director of the Office of War Information and do not necessarily reflect his views or those of the Office of War Informetion. Recommendations and suggestions, if they do appear, are only submitted by individuals in the Bureau of Intelligence who have assemblod the data and they are offered for the consideration of appropriato authorities. BI-Misc-3 7-15-42 7 Henry Morgenthau, Jr. 383 1th THE Secret July 16, 1942 SURVEY OF INTELLIGENCE MATERIALS No. 32 Bureau of Intelligence Office of War Information 384 CONTENTS WAR TIME LABOR PROBLEMS page 1 Summary I. Beliefs Affecting Labor Attitudes Government's Attitude Toward Unions Labor, Labor Leaders and Unions Press Handling of Labor News Criticism of Management The Critically-Minded Workers and the Public II. Opinions on Controversial Issues The Right to Strike Wage Ceilings The $25,000 Income Limitation The 40-Hour Week Compulsory Bond Purchases Expanding the Labor Force CONCLUSIONS CURRENT OPINION News Emphasis Criticism of Information Policy Editorial Trends Newareels Developing Situations Organized Middle Class Rent Ceilings The Post-War Line of the N.A.M. Wisconsin Politics Add Negroes Anti-British Rubber and Gas Horror Spot page 1 page 2 page 3 page 4 page 4 page 5 page 5 page 6 page 7 page 7 page 8 page 9 page 12 page 12 page 14 page 16 page 16 page 16 page 17 page 18 page 18 page 18 page 18 page 18 page 19 page 19 page 19 page 20 page 21 385 SUMMARY Most Americans are now convinced that the weapons needed to fight the war are being produced at a satisfactory rate. As a result they are less critical than they were two months ago toward workers, labor leaders and executives. Nevertheless, four respondents in ten of a national cross sample recently interviewed felt that labor leaders are not doing all they can to win the ar. Seventeenand perworkers. cent of the respondents were dissatisfied with the contribution of executives Corruption and irresponsible trouble-making are the charges most frequently levelled against labor unions. Excluding workers, half of those interviewed feel that the Government has not been sufficiently strict in its treatment of unions. Nine respondents in ten believe that strikes in war industries should be banned for the duration. Three respondents in four believe that they should be outlawed even in non-war industries. On both issues the overwhelming majori ty of workers share the view of the general public. Although three-fourths of the sample approves of the idea of wage ceilings, there are many different conceptions of what wage control means. Even when the idea is carefully defined, respondents tend to hedge their replies with qualifications. A large proportion of those in favor of wage control believe that it should be applied only to wages above a certain amount. And there is a strong feeling that wages should not be frozen until they have been adjusted to the rise in the cost of living which has already occurred. In recent months there has been a notable increase in public understand- ing of the 40-hour week issue. Opinions on the desirability of retaining a basic 40-hour work week appear to be closely related to occupational status. Among farmers and the managerial and professional classes, half of those interviewed believe that the 40-hour week should be abandoned. But only two worker in ten are willing to accept a longer basic work week, and those opposed to any change feel strongly about the matter. Americans generally approve, with reservations, expanding the labor forces through the employment of large numbers of married women. But only six in ten believe that more Negroes should be hired. Eight out of ten are opposed to hiring aliens. 386 "The American people are aroused and determined today. They want our industrial mechanism to produce. If management and labor are unable to sink their differences, forget their suspicions, and work to- gether to make that mechanism produce as it should, then public indignation will sweep both management and labor aside and insist that rigid government controls be set up-controls which we might find it difficult to remove after the war." D. M. Nelson, March 23, 1942 WAR TIME LABOR PROBLEMS I. Beliefs Affecting Labor Attitudes There is evidently a definite relationship between people's satisfaction with the progress of production and their feelings toward the groups manning the production front. Of a cross section of the public interviewed in June, seven in ten of those who thought that production was going well believed that workers were doing all they could in the war effort; in contrast, only two in ten of those who thought that production was only going fairly well were satisfied with labor's contribution. This same pattern was evident in the public's evaluation of the contribution of labor leaders and of management. The relationship is confirmed by the changes in people's attitudes toward those responsible for production. Between March and June, as a result of first-hand knowledge and of official statements to the effect that we were "over the hump" in the battle of production, the public grew more satisfied with the rate at which the tools of war were being produced. During this same period satisfaction with workers, labor leaders and executives mounted sharply. In March and again in June a cross section of the public was asked whether these three groups were doing all they could do to help win the war. The following -2table shows people's responses on both occasions: EXECUTIVES WORKERS LABOR LEADERS March June March June 57% 73% March June 25% 36% Doing all they could 59% 67% Not doing all they could 26 Don't know 15 16 17 32 17 11 10 55 40 20 24 Government's Attitude Toward Unions Peoples' beliefs on a number of other questions evidently color their attitudes toward labor and toward labor issues. Their economic status affects their views on some of these questions. In the chart below it will be noted that workers and the general public see eye to eye or two questions, and differ considerably in their appraisal of the other two. BELIEFS THAT AFFECT PUBLIC ATTITUDES TOWARD LABOR General Public 68% "Production is going well" 65% 51% NO WANTED "Fear post-war depression" 50% "Government attitude toward labor is about right" "Labor will not 33% 47% 30% get.back gains giv- en up during war" 40% Workers 387 - Difference of opinion among various occupational groups on the Government's treatment of labor unions is even sharper than the chart indicates. In the managerial and professional class six out of ten people feel that the government has not been strict enough in its attitude toward unions. Only one war worker out of four shares this view. Labor, Labor Leaders and Unions Criticism of the Government's lenience toward labor unions probably re- flects some dissatisfaction with labor itself-with workers, their organizations, and their leaders. Despite the notable increase in public approval of these groups between March and June, what criticism there was of war production was largely directed against labor. Much of this criticism, however, was leveled against labor leaders rather than workers. Resentment about strikes appeared to be the most important cause of dis- satisfaction with labor. Four respondents in ten believed that strikes were delaying production, although one half of those who made this charge conceded that they were delaying it "only a little." Two respondents in ten believed that some war workers were deliberately holding back and giving less than their best to production. But only four per cent of the sample felt that any considerable number of workers were guilty of such a practice. Labor unions and labor leaders were far more frequently and sharply criticized than workers. A majority of the public recognized the notable accomplishments of unions in protecting and raising wage levels, improving working conditions, and "keeping workers from being kicked around." However, large numbers of people were unwilling or unable to specify any good things done by unions. Excluding workers, 17 per cent of all respondents said unequivocally that they had done -4 - - nothing good. Farmers were least prone of all occupational groups to credit unions with any worthwhile accomplishments. Most of those who denounced unions mentioned two types of abuses: 1. Racketeering, corruption, high dues and initiation fees. 2. Irresponsible demands, trouble making, and unnecessary strikes. Press Handling of Labor News The feeling that the Government is inclined to pamper labor unions is counterbalanced to some extent by the belief that newspapers are partial to management. One person out of every four interviewed felt that the press is unfair in its treatment of labor news, and most of this group felt that it leans to management's side. The facts appear to support this contention. Except in labor publications, labor's role in the war effort is seldom praised. The credit for production achievements is usually given by newspapers to "American industry", to "free enterprise", to "inventive genius". Workers are sometimes attacked editorially for striking and impeding production even during periods when strikes are demonstrably few. During May, when strikes dropped to an all-time low of 6/100 of 1 per cent of total man days worked, numerous editorials appeared denouncing striking workers and implying that strikes were widespread. Criticism of Management Criticism of management was only a little loss widespread than criticism of workers. One third of all respondents-and almost one half of all respondents with definite opinions on the issue-felt that the profits being made by the companies producing war materials are too large. The "selfishness of management" was frequently mentioned by respondents dissatisfied with the progress of war production. to than ⑉9 388 -5Unlike much of the criticism voiced against labor, criticism of management did not vary in accordance with economic or occupational status. The prosperous were just as critical as the poor. The professional, managerial, and white collar groups were somewhat more inclined than workers to feel that current rates of profit are exorbitant. The Critically-Minded A substantial portion of all the criticism voiced against the various groups on the production front is unrelated to economic status. It comes, rather, from a group of respondents on all economic levels who are dissatisfied with the progress of production and inclined to regard the public as dangerously complacent. This group, which includes a relatively large number of well-educated individuals, is far more critical than the public at large toward workers, labor leaders and management. It wants harder work all along the line. Workers and the Public It has been pointed out, however, that economic status does affect beliefs on certain questions. While the beliefs of one important group of people are primarily determined by their views on the progress of the war, the beliefs of other respondents are markedly influenced by their economic position. As has been seen, managerial and professional people are far more likely than workers to feel that the Government has been indulgent with labor unions. Workers, on the other hand, are more critical than the general public of the way the press handles labor news. Similar differences manifest themselves in response to other questions. As the chart on page 2 shows, workers are considerably more pessimistic than the public about the prospect of getting back gains given up during the war. Six out of ten people in the occupational and professional group feel that any sacrifices -6made by labor will be only temporary; only one-third of those war workers who are union members are confident of this. Thus executives and workers approach the question of whether labor should give up certain of its present prerogatives in an entirely different frame of reference. Previous surveys, as well as this one, have shown that workers are much more keenly aware than the public at large of the rising cost of living. They are not more inclined than the public to expect a post-war depression, but the fear of hard times to come may have more influence upon them. Workers are naturally more aware than the public of deficiencies in their housing, transportation and amusement facilities, although large numbers of respondents in all groups recognize that conditions are nothing to brag about. Farmers and residents of towns were especially critical of living facilities for workers-providing an accurate reflection of the deficiencies so conspicuous in many suddenly swollen small communities. A final factor which affects the opinion of workers on controversial labor issues is their fear of the temper of the public. Rightly or wrongly, workers believe that the general public is unsympathetic with their situation and unlikely to do them justice. This fear may very well complete a vicious circle by making them more reluctant to make concessions, thus reenforcing the resentment certain elements of the public now feel toward labor. II. Opinions on Controversial Issues All of the beliefs which have been discussed find reflection in people's views on controversial labor issues. There is a high correlation, for example, between the demand that labor make sacrifices and dissatisfaction with the Government's labor union policy. Similarly, those who felt that labor would get back the gains it relinquishes, were more prone than those who did not to demand 389 - sacrifices now. Despite these correlations, opinion on controveraial issues does not necessarily follow class or occupational lines. As has been seen, all Americans tend to view certain current developments, such as the progress of production, in very much the same way. Furthermore, workers are not unwilling to make sacrifices for the common good when they regard those sacrifices as necessary and reasonable. The Right to Strike Despite their fear that the rights they give up now may not be restored, workers were almost as prone as any other occupational group to feel that the right to strike should be given up for the duration. Ninety per cent of the general public and 84 per cent of the workers favored a ban on strikes in war industries. Fifty-five per cent of all respondents believed that the Government was the proper agency to enforce the ban on strikes. Twenty-eight per cent felt that unions should enforce it. Three respondents out of every four believed that strikes should be banned even in non-war industries during the emergency. On this issue, too, workers shared the view of the general public. Wage Ceilings The issue of wage ceilings is distinctly muddled. In general, it may be said that people approve of the idea of wage control, but tend to interpret it in such a way that it will not hurt themselves. There are many different conceptions about wage control current, and even when the idea is rigorously defined people tend to qualify their views. When asked, "If rents are kept from going higher during the war, and if profits are limited, do you think wages ought to be limited, too?", three people -out of four said "Yes." But two-thirds of those who approved of wage ceilings indicated that they would apply them only to wages over a certain amount. Some of those who favored ceilings were loathe to have their own wages fixed, and the highest approval of ceilings came from the group that would be least affected by them: executives and professional people, farmers and the non-employed. Workers object to a general imposition of wage ceilings on three counts. They feel that they would be unfair to all workers whose pay has not been in- creased in the past year, in view of the rise in the cost of living during that period. They point out that ceilings would be particularly unjust to those workers whose wages have gotten out of line with pay for similar workers in other industries. And they strenuously object to keeping the wages of workers receiving substandard pay where they are today-to putting a ceiling where they f eel the floor should be. Many workers and labor leaders feel that the President's wage proposal has been deliberately distorted. They emphasize the distinction between wage freezing and wage stabilization. The $25,000 Income Limitation Although it has received little support, except in the labor press, the President's proposal to limit individual incomes to $25,000 a year has won wide- spread approval. Sixty-four per cent of all respondents okayed the idea, and another 11 per cent had not made up their minds. Only one in four of those interviewed opposed the proposal. To many workers the $25,000 income limitation has evidently become a symbol of the idea of equality of sacrifice. Approval of the proposal increased as one progressed down the income ladder. The poorly educated were more prone to approve this proposal than the well educated. But it may be significant that welleducated young people were more inclined to favor the limitation than older people -- 390 on the same educational level. The national sample was not questioned on the subject of profit limitations. But a group of war workers who were questioned voiced strong approval of the idea. Only one in ten disapproved or expressed any qualification. The 40-Hour Week The 40-hour week is now a dormant issue, but agitation for its abandonment is likely to reappear at any time. As the man power shortage becomes more acute, for example, and plants now working 40 hours a week see the need to work longer, they may launch a campaign against it in an effort to limit their labor costs. It is reassuring to find that, except 1. rural areas, there is now widespread understanding of the true meaning of the 40-hour week. Understanding of the concept has increased perceptibly in the last two or three months as a result of official announcements, newspaper publicity and the explanations of labor unions. Understanding, however, has not produced uniformity of opinion. When asked whether workers in war industries who are now working 48 hours a week and being paid overtime for all hours over 40 should continue on this basis, only 53 per cent of the sample said that they should. 37 per cent of the respondents were opposed to overtime pay for all hours over 40; 10 per cent had no opinion. The chart on the following page shows the sharp difference of opinion on this question by occupational status: - 10 - SHOULD WAR WORKERS CONTINUE TO BE PAID OVERTIME FOR WORK OVER FORTY HOURS ? "Yes" responses Union war-workers 80% Non-Union war-workers 73% Non-war workers 61% Clerica and sales 57% Service workers 57% Housewives and unemployed 55% Managerial and professional 46% Farmers 34% Views are evidently related to people's conception of their economic interests. The opposition of many executives to the 40-hour week probably re- flects not only their belief that a longer basic work week is necessary to the attainment of top production, but also their desire to keep down labor costs. Farmers are opposed to the idea in large numbers not only because they are accustomed to working long hours, but also because prevailing wage scales in 391 - 11 - war industries make it hard for them to get good help. The overwhelming majority of war workers, particularly among those with union affiliations, feel strongly that the basic 40-hour work week is satisfactory and should be maintained. They regard it as one of the most precious of labor's hard-won gains, and they are fearful of not getting it back if they accept a longer basic work week now. They feel that the overtime pay they get is needed to bolster their earnings, which they regard as low in relation to the present cost of living . The overtime rate of pay, they point out, provides an incentive for giving up week ends and other time they want for themselves. Finally, they feel that the present arrangement discourages employers from working men excessive hours, and that management would be the only or a to profit from any change. A small minority of workers are reconciled to abandoning the 40-hour week. Most of those who have come around to this position feel that a change is required by the war situation. Among workers employed in plants which now make it a policy to work only 40 hours, there are some who favor some other arrangement because they feel that it might mean more money for them. By no means all representatives of management favor meddling with the 40-hour week. A number of executives emphasized the fact that wage rates are now adjusted to a 40-hour week, and would be thrown out of line by any change. It was pointed out, too, that the 40-hour week provides an element of flexibility in the wage structure: when the volume of business falls, wages are automatically reduced by the termination of overtime pay. More important than these economic arguments was the widespread fear among executives that any forced change in the present arrangement would have a detrimental effect on worker's morale. This fear appears to be justified. Of a group of workers who were drawn out at some length on the 40-hour week issue, many expressed the opinion - 12 that workers would feel bitter resentment about any change. A few predicted that there would be at least sporadic violence. It is certain that at the present time the abolition of the 40-hour week would be interpreted by workers as a defeat for the administration or a deliberate sell-out. Some loss of confidence in the government, which they now regard as a champion of their rights, would inevitably ensue. Compulsory Bond Purchases Six respondents out of ten said they would welcome an arrangement whereby the Government would require all employed people to take a portion of their pay in war bonds. War workers were more favorably disposed toward such an arrangement than any other occupational group. In general, however, approval varied in accordance with economic status, with the prosperous most in favor of the plan, and the poor least in favor of it. Some of the opposition to the plan may have resulted from the fear that the amount to be deducted would be too large. Expanding the Labor Force With the nation's industrial machine being used with unprecedented intensity and millions of men being drawn into the armed services, the necessity of expanding the country's labor supply is urgent. People were therefore asked to give their views on the employment of three groups which constitute important reservoirs of additional workers -- married women, Negroes, and aliens. Married Women Six out of ten of those interviewed favored the employment of married women in war industries. An additional 25 per cent gave contingent approval to the idea. The most frequently mentioned qualification was that women should not work if it meant the neglect of their family responsibilities. Others said they 392 - 13 favored the employment of married women only if there was a real shortage of labor or in cases where the husband's income was inadequate. The small minority (13 per cent) opposed to the employment of women also stressed family considerations and the need to protect men and unemployed single women from additional competition. The objections of some of this group and of some of those who qualify their answers could probably be overcome by greater stress on the need for women in war work and by the establishment of day nurseries and other facilities that would make it easier for women with children to accept employment. Women are more prone than men to favor the use of married women in war industries; and, as might be expected, women who are now working approve the idea more frequently than housewives and unemployed women. Among respondents of both sexes the young are more inclined to accept the idea of women working than are the old. The better educated are more in favor of the idea than are the less well educated. Negroes Only half of those interviewed worked in plants which now hire Negroes, but a somewhat larger number felt that their plants should employ them. It is not certain, however, that these people favored throwing all kinds of jobs open to Negroes, and some of them may simply have been giving lip service to democratic doctrine. It is impossible to say to what extent employee sentiment in favor of the employment of Negroes outruns employer practice. Those who are accustomed to working with Negroes are far more prone to favor their employment than those who are not. Nine out of ten of those respondents whose firms hire Negroes favored their employment; among other workers only three in ten voiced approval of the more extensive use of Negroes. - 14 Sentiment in favor of the employment of Negroes is highest in the Rocky Mountain and Pacific states, lowest in the south. But even in the south it is higher among respondents who now work with Negroes than it is among those who do not. Aliens Eight in ten of all employed persons interviewed were opposed to the hiring of aliens. War workers were particularly prone to believe that citizenship should be a necessary prerequisite for employment. Respondents in plants which now hire aliens were more inclined to approve their employment than respondents in plants where workers have to be citizens. But even among the former group the majority were opposed to the employment of aliens. Interviewing was completed before the President's recent statement advocating the fuller utilization of loyal aliens. CONCLUSIONS Deep-seated attitudes and economic status may unquestionably affect people's views toward workers and labor issues. Yet the Government has numerous opportunities to clarify and influence opinion in this field. The increase in public understanding of the meaning of the 40-hour week is one example of what can be accomplished. The issue of wage ceilings appears to be in particular need of clarification at this time. In connection with some issues, one informational approach will suffice for both workers and the general public. For example, there is need for allaying the fears of large numbers of people in both groups about the inevitability of a post-war depression. Similarly, the American people generally need to be educated to the necessity of employing more married women, Negroes, and aliens in order to 393 - 15 meet the present demand for workers. In connection with other issues, separate approaches are indicated for workers and the general public. Workers are much more apprehensive than the public about the prospects of getting back gains relinquished now. As a result, they are somewhat reluctant to make certain sacrifices even when they half perceive that they are required by the present situation. They should be given adequate guarantees that the gains they give up will be restored to them as rapidly as possible after the war. A fundamental objective of Governmental policy should be to reduce the divergence of viewpoint between workers and the public on controversial issues. Admittedly, the task is not an easy one. Large numbers of people now feel that the Government is partial to labor. On the other hand, any sudden change of policy, such as the abandonment of the 40-hour week, would cost the Administration the confidence of labor and lower worker's morale. Despite the difficulties, there are opportunities for reconciling the views of different economic groups. Everyone concerned is eager to do whatever is necessary to win the war, providing only that sacrifices are fairly imposed. Patient and persistent explanations of the need for indicated adjustments and painstaking efforts to be equitable are the prime requirements of Governmental labor policy today. - 16 CURRENT OPINION News Emphasis More than in any recent week, the headlines have been devoted to the fighting fronts, with Egypt and Russia getting almost equal attention. The dismay of Tobruk quickly disappeared, as stalemate in Egypt brought back the good news headlines. But the Russian retreat had a sobering effect, leading to increased demand for immediate counter-measures in the west. With plenty of bad news to talk about, the Nation's editors have gradually reduced their criticisms of the Government's information policy, which they had long complained, bitterly and masochistically, was keeping the bad news from them. On the domestic scene, the big news was the Nazi spy trial. Since li ttle actual news of the trial was forthcoming, reporters and editors alike tended to treat the story as an information battle between OWI and the Army, with the press lined up solidly on the side of OWI. In this atmosphere Mr. Davis' statement of policy received widespread attention and approval. Criticism of Information Policy Criticism of information policy now takes two major forms. Foremost is the assertion that the Army and Navy withhold too much news. Though the general public, whenever questioned, appears to believe that the suppression of news for security reasons is justifiable, editors complain that the armed forces withhold information which would be of no value to the enemy, but which would be of value to the American people. Another major criticism is that a number of Federal agencies are issuing more news releases than papers want or can possible use. To test the justice 394 - 17 - of this criticism, the Bureau of Intelligence compared the press release output of various agencies with the actual use of their material in two bellwether newspapers, the New York Times and the New York Herald Tribune. The following table compares the number of items released in two weeks by the agencies with the number of items appearing in the two newspapers combined. Although some stories are, of course, from other sources, if the number of stories is twice the number of releases, it may be inferred that all, or most, releases were used by both papers. Newspaper Releases White House 11 Newspaper Stories Releases Stories 29 War 60 34 28 15 Navy 34 68 State Treasury Justice 18 30 OPA 135 60 14 19 SEC 79 27 Commerce 30 31 Agriculture 52 13 WPB 107 102 44 4 ODT 15 14 Interior Editorial Trends Up to the middle of May post-war planning was given very little attention in the nation's editorial columns. Since the Wallace-Perkins-Welles team went into action, it has become the third most important topic. Since mid-May only civilian restrictions and military operations have been given more space. In the four weeks from April 19 to May 23, the biggest editorial topic was production. In the next four weeks, as the feeling grew that the conversion job was completed, volume of comment on production problems declined to one-third of its previous total. In the same period comment on civilian restrictions more than doubled. The shift of emphasis from the battle of production to restriction and inflation is accompanied by danger of greater group dissensions. The metropolitan press is anxious for farmers and labor to sacrifice; labor editors want to be sure that management isn't unduly profiting; farmers want to make sure that neither - 18 - labor or capital is getting away with anything. Newsreels After a famine period during which they were able to show very little war material, newsreels in June devoted increased attention to the fighting fronts and the United Nations. But the stories on actual land and sea engagements were necessarily belated, and those on our allies lacked news value. The informational possibilities of the newsreel have still not been fully exploited. Developing Situations Organized Middle Class B. C. Forbes, Hearst columnist and editor of Forbes Magazine, has given up his newspaper column, and with the blessing of Hearst newspapers is forming an Investors Fairplay League. His object will be to organize the unorganized middle class, which he characterizes as stockholders, insurance policyholders and savings bank depositors, as a pressure group to counteract labor and farm groups. Rent Ceilings Led by a group in Seattle, big and little property owners in several cities are reported to be organising a united front for higher rent ceilings. They may try to stage a national protest meeting in Chicago. If the real estate interests succeed in breaking through the rent ceilings, there is a definite threat of a rent strike among the CIO unions in Detroit. Workers in other cities might join the protest. The Post-War Line of the N.A.M. A recent address by William Wilson Cumberland may give a clue to the post-war line of the National Association of Manufacturers. Mr. Cumberland is a member of the Economic Advisory Commission of the National Industrial Con- 395 - 19 - Conference Board, an N.A.M. affiliate. He took the position that post-war prosperity depends on "getting rid of planners, government control, high taxes, and all the other paraphernalia of statism, which stifle the individual and waste the product of industry." Any post-war depression, he maintained, WO 1d be the fault of economic planners. Wisconsin Politics In Wisconsin a group of Democrats and Progressives have formed a Com- mittee for United Political Action, patterned after the Union for Democratic Action. Its stated purpose is the defeat of congressmen with isolationist voting records. Add Negroes A memorial-to-Waller meeting in Washington spent considerable time discus- sing the Eklund escape, calling it a manifestation of the callous attitude of officials in cases involving the health and safety of Negroes. Eklund was alleged to have killed four Negroes for no other reason that that he hated colored people. His second degree sentence, coming on top of Waller's execution, may be cause for future recriminations. Delegates of 29 organizations have voted to name the Washington Bureau of the National Association for the Advancement of Colored People their spokesman on such matters as poll taxes, Negro employment and vocational training. Anti-British Several studies have shown that about 20 per cent of the people in this country can be characterized as definitely anti-British. The quality of this feeling is brought out in an intensive study conducted by the Office of Public Opinion Research. On some issues, criticism of the British is voiced by a majority: for - 20 - example, over half of those interviewed disapprove of British colonial policy. About four Americans in ten still believe that the British were largely responsible for getting us into World War No. 1. Respondents assign a number of personality traits, good and bad, to the British. Over one half of them regard the British as snobbish and aristocratic, and a smaller number complain a bout their arrogance and selfishness. But most respondents believe that the British have many admirable characteristics. More than one half of those interviewed regard them as courageous and loyal, and they are also praised for their honesty and sportsmanship. The allegation that England is turning into a socialist state during the war is believed by only three people in ten, and three-fourths of those who do believe it think it would be a good thing for England. of those who don't feel that England is doing all she can to win the war, two-thirds maintain she should be doing more on the military fronts. About one person in seven feels that England would do all right if the Tories were thrown out of the British Government. Rubber and Gas During the rubber salvage campaign the Bureau of Intelligence conducted two series of interviews, one the day after the campaign was originally supposed to end and one when it did end. The results show that the campaign was well publicized. Almost everybody had heard of it. At the end of the first two weeks 59 per cent, and at the end of the campaign 68 per cent, had actually turned in some rubber. But at the end of the campaign one person in six acknowledged that there were some old rubber things around the house which should have been turned in. Over three quarters of the people interviewed felt that the rubber collection would bring in enough scrap to help the war effort. Two thirds 396 - 21 - indicated that they felt the rubber shortage was a serious one. Two questions included in the interviewing, and a pre-drive Gallup poll, are useful in showing a trend; 1. "Do you think gasoline rationing is the best way to save tires?" Before the Drive July 11 July 1 (Preliminary) Yes 62% 68% 70% No 28% 22% 19% Don't Know 10% 10% 11% 2. "Do you think gasoline rationing throughout the nation is necessary?" Before the Drive Yes 32% July 11 July 1 (Preliminary) 39% 40% No 52% 44% 43% Don't Know 16% 18% 17% Horror Spot Las Vegas, Nevada, was not noted for its respectability when it had a normal population of 8,500. Today 46,000 people live there - including many service men and thousands of war workers attracted by wages of $10 a day and up in a nearby plant. Negroes are pouring into the town at the rate of 1,000 a week, replacing whites in unskilled jobs. Living in trailers, tents, shacks or merely sleeping in parks, the workers face a winter of impossible housing conditions. Because of the housing shortage there is no red light district; vice is literally and flagrantly in the open. Rents have gone up 55 per cent to 155 per cent. Two-thirds of the re- tailers have failed to post their ceiling prices. Las Vegas is having a local in- flation spiral all its own. Sanitation facilities in the town are non-existant and epidemics are - 22 - a definite threat. Serious race trouble is also brewing. Some divisionist newspaper is almost certain to make public a scandal which is now a private one. Local authorities are trying hard but are unable to cope with conditions. Swift Federal help is indicated, and it is reported that it would be welcomed by many authori ties at both the local and state levels. 397 Sources of the Survey material:The report on "War Time Labor Problems" is based upon the following "War Time Labor Problems", Extensive Surveys Division, Report #27 "Control of Wages, Hours and Profits in the Furthering of War Production", Division of Surveys, Report #18 "How Long is the 40-Hour Week?", Special Services Division, Report #15 "Anti-Labor and Anti-Union Activities", Special Services Division, Report #16 "Widespread Understanding of LO-Hour Week Except in Rural Areas", Special Services Division, Report #17 "Government Statements on Labor (May 30-July 5)", Source Materials Division "Statements of Labor, Business and Miscellaneous Leaders on Labor Problems", Source Materials Division Weekly Media Report #22, especially the section on "The Labor Press", Division of Information Channels All of the above reports are available to authorized individuals through the Bureau of Intelligence of the Office of War Information. 398 Such recommendations and suggestions as may appear in this report have not been cleared in advance with the Director of the Office of War Information and do not necessarily reflect his views or those of the Office of War Information. Recommendations and suggestions, if they do appear, are only submitted by individuals in the Bureau of Intelligence who have assembled the data and they are. offered for the consideration of appropriate authorities. BI-Misc-3 7-15-42 7 Henry Morgenthau, Jr. 399 Secret July 23, 1942 SURVEY OF INTELLIGENCE MATERIALS No. 33 Bureau of Intelligence office of War Information T 400 CONTENTS THE ANTI-INFLATION PROGRAM IN OPERATION page 1 Summary Press and Radio Comment Price Control Will the Program Succeed? Knowledge of the Program Rationing The Rubber Salvage Campaign Wage Control Taxation and Profit Control Farm Prices Purchase of War Bonds page 1 page 3 page 3 page 4 page 5 page 7 page 8 page 8 page 9 page 9 Discouragement of Credit and Installment Buying page 10 Conclusions page 10 CURRENT OPINION page 12 Editorial Attitudes page 12 Inflation Politics page 12 page 14 Developing Situations Retailers France Negroes Press and Public page 15 page 15 page 15 page 16 page 16 401 SUMMARY In June, after two months experience with the anti-inflation program, people interviewed by the Bureau of Intelligence were as much in favor of the program as they had been in April. Those questioned included members of four important occupational groups-white collar workers, business owners, laborers and farmers. Nine respondents in ten approved of the idea of the Government's controlling prices during war time to prevent them from rising. Seventy-seven per cent of the sample-five per cent more than in April-expressed confidence in the Government's ability to keep prices down. In April six out of ten respondents favored "fixing wages so that they wouldn't go any higher." In June three out of four favored a "limit on how high wages and, salaries should go during the war;" most of them were opposed to outright wage freezing. Upper income farmers were especially prone to favor wage control. Laborers and lower income white collar workers were least in favor of it. Eight respondents in ten endorsed the idea of restricting profits in war time, although people's notions of what profit control entails varied widely. Three respondents in four approved of the Government's efforts to discourage installment buying. Despite this popular endorsement of the anti-inflation program, some storm signals are in evidence. There is considerable confusion about some aspects of the program, notably wage control. People have no more than a vague awareness of the program's scope or of how it operates. They fail to see the program as a unified whole. Although most people believe in buying war bonds and in controlling credit, only a minority see the importance of these measures in helping to block inflation. Many people do not see the need for the rationing programs now in operation. And people are sharply critical of the administration of gasoline rationing. There is thus a need for vigorous and sustained informational efforts to clarify, to justify, and to unify the component parts of the anti-inflation program into a coherent whole. 402 THE ANTI-INFLATION PROGRAM IN OPERATION The American public is now in a position to appraise the anti-inflation program on the basis of two months' experience with it. Ceiling prices are in effect on thousands of items. Sugar rationing is a nation-wide reality; and in the East gasoline rationing, which involves even more fundamental adjustments for those it affects, is in operation. Fortunately, the Bureau of Intelligence was in a position to check the extent to which this experience had influenced people's views on anti-inflation measures. In April, just before the President submitted his anti-inflation proposals to Congress, the Bureau had probed the opinion of members of four occupational groups on the program. The findings of this investigation were reported in Survey No. 29. In late June all of the members of the same group who could be reached were reinterviewed. Although some people had moved or were otherwise unavailable, these losses did not significantly affect the composition of the group. Thus the April and June surveys can be directly compared. It must be emphasized that the group studied was not a cross section of the general public. It was entirely composed of members of four occupational groups: owners of businesses (mostly retail stores and service establishments, such as barber shops and restaurants); white collar workers; farmers; and laborers. The first three groups included some persons of relatively high, and some of low, economic status. All of the laborers interviewed were in the low income group. Press and Radio Comment The re-survey, it was hoped, would also measure the impact of press, radio and periodical comment on the anti-inflation program. The program has been widely -2discussed in all media; in the second week of July more space was devoted to it than to any other subject in the nation's editorial columns. Much of the comment has been critical in nature. Not that commentators disapprove of the program. On the contrary, they take an almost proprietary interest in it, and insist that inflation is a grave and imminent threat. Their chief criticism is that Congress and the Administration have not taken the program seriously enough. In particular, they are furious about Congress laggardness in passing legislation to implement it, about its refusal until the nth moment to take a firm stand against the farm pressure groups, and about its attempts to hamstring the administration of the program through the injection of politics. A smaller but still formidable amount of criticism is directed against the President himself. Although he is the original proponent of the sevenpoint program, he is accused in many quarters of being unenthusiastic about it. A number of critics charge, or imply, that he is soft pedaling one of the most important phases of the program, wage control, out of fear of alienating his labor supporters. In view of the lukewarmness attributed to Congress and the President, many commentators question whether the anti-inflation program can succeed. Some maintain that it is already failing, and warn that if decisive action is not taken soon the retreat will become a rout. Despite all of this criticism and viewing-with-alarm, respondents who were re-interviewed in June, were as much in favor of the broad objections of the program as they were when it was launched. And they were more confident than they were in April of their Government's ability to control prices. Their views on various aspects of the seven-point program are summarized below. 403 -3Price Control Price control remained one of the most popular phases of the anti- inflation program. In June, as in April, nine respondents in ten favored the idea of the Government fixing prices during the war to prevent them from going higher. The key objective of the entire anti-inflation program, peace control is by its very nature the phase least likely to arouse opposition. As the chart opposite the next page shows, there is little difference among the four occupational groups in degree of approval for price control. Retailers, apprehensive about the effect of price fixing upon their businesses, are least in favor of the measure, but 85 per cent of them approve it. Farmers, who realize that price control affects the things they sell as well as the things they buy, are less enthusiastic about it than city dwellers, yet 89 per cent of them endorse it. will the Program Succeed? Despite the skepticism expressed by so many commentators, between April and June there was a notable upswing in confidence in the Government's ability to control prices. The adjoining chart shows the shift which occured. APRIL JUNE A small group of people did lose confidence in the Government's ability to keep prices down. CAN THE When a sked to indicate why they GOVERNMENT CONTROL PRICES? CAN CAN 72% 77% had changed their minds, one fourth of this group pointed to the prev- alence of profiteering, chiseling CAN'T 16% CAN'T DON'T KNOW DON'T know and other uncooperative practices. 15% These imperfections were often 8% 12% blamed on "human nature," upon -which these people of little faith tended to put a low appraisal. Some respondents had lost confidence in the Government's ability to control prices because it seemed to them that prices were still rising. Others had come to fear that the task of regulating price was too Gargantuan even for the Government. A few respondents expressed the relatively sophisticated belief that the program would fail because wages and the prices of farm products were not being rigorously controlled. The larger number of respondents who had gained confidence in the Government's ability to control prices were chiefly influenced by what they had seen accomplished in the intervening period. "They seem to be doing it," was a common answer. These respondents felt that retailers and people generally were complying with the law. The fact that price control regulations had been promulgated and regulatory machinery set up caused some people to have more faith in the Government's ability to keep prices down. As the chart on the opposite page shows, confidence in the Government's ability to control prices was especially high among laborers and white collar employees. It may be significant that those individuals who felt assured of the success of the Government's efforts were somewhat less prone than those who lacked confidence to expect a post-war depression, although a majority of both groups felt a depression to be inevitable. Knowledge of the Program Although most people believe in Government price regulation and have confidence in its success, many are unfamiliar with the details of its operation. Almost one third of those interviewed had not noticed whether ceiling prices had been posted in the stores where they traded. People exhibited a lack of knowledge of price control regulations not only when they were asked if they 404 ATTITUDES TOWARD ANTI-INFLATION MEASURES white collar workers APPROVE business owners PRICE CONTROL 93% 85% 93% 89% CONFIDENCE IN PRICE CONTROL 77% 74% 86% 72% APPROVE PROFIT CONTROL 86% 81% 84% 84% APPROVE WAGE CONTROL upper income group lower income group 83% 70% 80% 17-% 64% 11% 179% laborers farmers - The to la NOTHA la all st THOO DIST x w THOUR BVO999A 3 . or JOW DVORNSA in 2 x X 405 -5applied to such items as silverware, but even when they were asked about food products. As.many as four to six in ten did not know whether such items as eggs, milk, fresh vegetables and canned peas were or were not covered by price regulations. Retailers were less likely to give "don't know" answers on the items they themselves sold. But a quarter of the grocers and delicatessen owners did not know whether such an item as canned peas was covered by price regulations, and half mistakenly thought that milk was not covered. Retailers possessed no more knowledge than respondents in other occupational groups about those items not sold in their own type of store. Four retailers in ten did not know where their local price and rationing boards were located, and only one retailer in four had had any dealings with these boards. Most of these people felt that they had been well treated. A little booklet distributed by the Office of Price Administration through the mail, "What Every Retailer Should Know," had been read by four respondents in ten. Only one retailer in twenty planned to ask for any adjustments in the price schedules decided upon by the OPA in March. But over a longer period of time more retailers might decide to file appeals, as they hear the practice discussed or as their costs increase. Rationing People expect and are evidently reconciled to a more comprehensive rationing program. Eight in ten of those interviewed in June expressed the belief that additional things will be rationed. Food products were the items most frequently mentioned, with fuel and clothing tied for second place. Women were more inclined to expect further rationing than were men; well educated - -6. - respondents more inclined to expect it than the less well educated. More than one-half of all those interviewed expressed the opinion that the Government should make no advance announcement of its intention to ration a product. It may be conjectured that these people feared that such an announcement might precipitate hoarding. The rationing programs now in effect have been fairly well received. Most people are not convinced that there is a serious sugar shortage, and many magazine articles have appeared in recent weeks to encourage this skepticism. Nevertheless, sugar rationing is approved by three respondents in four. Approval runs a little lower in the country than in towns and cities, largely because farmers feel that the allotment for preserving is too small. In general, however, the sugar rationing system is regarded as equitable. Most of the car owners interviewed felt that their tires would not last for two years and were not hopeful about replacing them. Nevertheless, there was relatively little active resentment, although one person in four believed that the Government could have prevented the rubber shortage. But two years is a long way off; people may grow mistakenly optimistic about the prospect of getting rubber, or become more dissatisfied wi th the situation, as their tires become more threadbare. Fifteen per cent of all respondents expect to be able to get new tires within the next two years--even for pleasure driving. Curiously, car owners in the East, where both gasoline and tire rationing are in effect, were somewhat less inclined to regard rationing as an inconvenience than were car owners in the rest of the country. Possibly the expectation of rationing is more frightening than actual adjustment to it. Or the automobile may be even more indispensable in the West 406 -7- and Middle West than in the more compact and densely populated Eastern states. Views on the necessity for rationing may also have a lot to do with people's willingness to accept it. Two thirds of the car owners in the areas which have gasoline rationing regarded rationing as necessary. In those areas where gasoline is abundant, and where the issue is rather one of rubber conservation, people are reluctant to accept gas rationing. When car owners in non-rationed areas were asked, "Do you think nationwide rationing of gasoline to save tires is necessary?", 57 per cent of them said "No." Although they recognized the necessity for rationing gasoline, four car owners in ten in the East felt that rationing had been poorly handled, and another 25 per cent felt that it was being handled only fairly well. White collar workers and upper income business owners were particularly prone to complain. Most frequent criticism was that the rationing system was so lax and haphazard that it provided all sorts of opportunities for chiseling. Cheating by dealers had been noted by many. Other respondents maintained that rationing does not result in equitable distribution, and still other complained about the frequent unavailability of gasoline since rationing began. The Rubber Salvage Campaign As reported in last week's Survey, a special poll was conducted to measure the extent of participation in the scrap rubber salvage campaign. Seven in ten of those interviewed turned in some old rubber during the drive, but about one person in six acknowledged after it was over that there were some old artidles about the house which might have been turned in. In this survey, too, car owners in non-rationed areas expressed disapproval of nationwide gas rationing. But in response to a later question in the same interview, six motorists in ten said that they regarded gasoline -rationing as the best way to save tires; possibly more of them can be persuaded in time of the necessity for gasoline rationing. Wage Control In April respondents in the four occupational groups were asked: "Are you for or against having the Government fix wages and salaries so they don't go higher?" Six in ten approved the idea. In June the same group was asked: "Do you think there should be any limit on how high wages and salaries should go during the war?" Seventy-seven per cent of the group gave a "Yes" response to this question. They were then asked whether they believed in (1) freezing pay or (2) allowing some raises but setting top limits on pay for different "kinds of jobs. Eight in ten preferred the second alternative. These responses appear to confirm the evidence in last week's Survey that the public is far readier to accept wage stabilization than wage freezing. As might be expected, laborers and lower income white collar workers are most inclined to oppose wage freezing, but even among business owners and farmers three respondents out of four regard stabilization as the more desirable way of controlling wages. Taxation and Profit Control In June, as in April, the idea of limiting profits in war time was endorsed by eight respondents in ten. But people's notions of what profit control means vary widely, so this finding must be interpreted with caution. In the June interviews no question was included a bout taxation. There has been an enormous amount of comment in newspapers and on the air about the new tax bill-almost all of it to the effect that the bill drafted by Congress is inadequate. There is wide difference of opinion, however, as to the means 407 -which should be employed to raise additional revenue. Many of the more conservative newspapers and magazines still insist upon the necessity for a sales tax, and some predict that one will yet be enacted, either in the immediate future or after the elections. The labor press and liberal magasines are violently opposed to a sales tax. Farm Prices Although some radio commentators defended the House farm bloc for its stubborn stand against permitting the sale of Government-owned farm products at below 110 per cent of parity, newspapers and magazines were almost unanimous in their disapproval. The final defeat of the farm bloc may, of course, be expected to silence their criticism. Newspapers frequently discussed the subject of farm prices in conjunction with wage control, and this same tendency was evident in the farm press. Surprisingly, the farm press did not appear to support the stand of the farm bloc with any real enthusiasm, although it insisted that it was unfair to fix farm prices if wages were left uncontrolled. The view of the farm press evidently reflects the view of the vast majority of farm people. Although less enthusiastic than city dwellers about the idea, farmers are not opposed to the stabilization of farm prices. Some of them appear to recognize that stabilization involves price support, as well as price limitation. Purchase of War Bonds As one might expect, purchases of war bonds are heaviest among the most prosperous and among those whose incomes have increased since the war began. Arrangements for purchasing also exert a significant influence, with those who buy bonds through a payroll deduction plan tending to put a larger proportion of - 10 their income into them. People appeared to be no more aware in June than in April of the value of systematic purchases of war bonds in checking inflation. They bought them out of patriotic motives, because they regarded them as a good investment, and as a hedge against an expected post-war depression. Better educated and more prosperous respondents were somewhat more prone than others to see the value of regular bond purchases in clocking inflation. Discouragement of Credit and Installment Buying Three fourths of those interviewed in June were aware of the Government's efforts to discourage buying on credit. About the same proportion approved of these efforts. Only a minority, however, saw that one important purpose of the Government's campaign was the prevention of inflation. Most respondents felt that it was attempting to cut down on installment buying to prepare people for an inevitable depression, or because it needed more money for the conduct of the war. People were cold to the relatively novel suggestion that they select things they would like to have after the war and start paying for them now. Only 17 per cent of those questioned approved this idea. CONCLUSIONS After two months' experience with the seven-point program, people's con- fidence in their Government's intention and ability to control prices remains high. But it would be unsafe to assume that this confidence cannot be shaken. People's knowledge of the operation of the anti-inflation program is sketchy. Wage control and profit control, two of the principal phases of the program, are no more than vague and ill-defined objectives, about which there is considerable and growing 408 - 11 - confusion. And people have little understanding of the interrelationship of the various parts of the program. Large numbers of people question the necessity for sugar rationing, and a sizeable minority of Eastern motorists have not yet been persuaded of the need for rationing tires. The rubber situation remains confused, and car owners in non-rationed areas are not ready to accept a nation-wide gasoline rationing program as a means of conserving tires. The administration of gasoline rationing is widely regarded as lax and inefficient. In this atmosphere the persistent criticism of the anti-inflation program by press and radio commentators may ultimately disturb people's confidence. This is particularly probable if more rigorous restrictions become necessary, and the need for these restrictions remains obscure. All of these threats to the success of the program can be obviated. People are sympathetic with the objectives of the seven-point program, willing to undergo hardships, and to do whatever else they can to combat inflation. But they want to know concretely what measures are necessary to implement the anti- inflation program. They want to be sure that the sacrifices asked of them are necessary and, equally important, that they are equitably imposed. Information which takes people into the Government's confidence, which is at once clear and complete, is essential to the success of the program. The Government's position on each of the seven points must be clearly defined. The need for a specific rationing program, or for any other sacrifice, must be explained in one authoritative statement, and be given consistent and continuous follow up. If regulations are clearly explained and rigorously enforced, there is every reason to believe that the American people will give them their unreserved support. - 12 CURRENT OPINION Editorial Attitudes Inflation Inflation has developed into an editorial preoccupation. Fear of spiraling prices has become, indeed, almost an obsession in the minds of com- mentators during the past fortnight. Despite the gravity of the war news from the Russian and North African fronts, the cost of living program has been the prime topic of newspaper editorials, columns, magazine comments and radio news broadcasts. There is a frightened feeling that the price structure is cracking all along the line. Nearly all comments on the subject call for immediate and drastic action, chiefly in regard to farm prices and wage stabilization. The criticism is by no means confined to commentators habitually unsympathetic to the domestic policies of the Administration. It is expressed with almost equal vigor by publications with a reputation for liberality in their economic views. The New Republic, for example, in an editorial titled "How to Wreck a War Economy", vehemently attacks the "confusion and indecisiveness of Congress and the Administration". The wide range of agreement on the dangers of inflation is evidenced by the community of opinion in such dissimilar publications as the New Masses and the Magazine of Wall Street, both of which bitterly criticize a "politicking" Congress for failure to support the price control program. The farm bloc in Congress has been upbraided by newspapers all over the country and with especial vehemence by the Eastern metropolitan press; there is 409 - 13 general agreement that the regulation of farm prices is essential to any general price control structure. Wage control has, however, been the chief subject of editorial interest. The War Labor Board decision respecting wage scales in the Little Steel plants encountered general dissatisfaction. "It means", observes Ernest Lindley, for example, "higher prices - not only to the Government but, unless resort is had to subsidies, to the individual consumer. If wages are then to be raised again to cover increased living costs, the wage price spiral will continue." The New York Herald-Tribune terms the decision "without justification and appalling in view of the desperate need to halt inflation". And the New York Times says that it can "only lead to economic disruption and disastrous inflation". The bulk of the press is inclined toward sympathy with Leon Henderson respecting his difficulties with Congress. The general feeling appears to be that certain Congressmen are flagrantly playing politics in the face of the inflation danger. But the Henderson proposal to correct the dislocations caused by rising prices through the granting of subsidies is widely distrusted. The Pittsburgh Post-Gazette, in a fairly representative comment, warns that #subsidies may be justified to correct minor changes in cost structure, but only when the major source of increased cost has been plugged". The prevailing sentiment among commentators of all points of view is that vigorous, forthright action by the Administration is now imperative. If the more liberal critics are prone at the present time to concentrate their fire upon Congress, they are by no means satisfied with the President's conduct of affairs. And the more conservative commentators lay the blame squarely at the door of the White House. The President is responsible for the weakness of Congress, Walter Lippmann charges, for the President has set an example to Congressmen by his - - 14 - - unwillingness to take a firm stand. From every side there is an insistent demand that the President assume strong leadership on the home front. Politics Isolationist newspapers are now fully embarked on the fall congressional and gubernatorial election campaigns. All of the early indications as to their strategy suggest that they are looking for a knock-down, drag-out fight with no holds barred. One phase of the isolationist attack is remarkable only for its antiquity. The Hearst, McCormick and Patterson papers have been endeavoring lately to rejuve- nate the bugbear of Communism. They have published vituperative articles and ed- itorials depicting leaders of the Administration and their friends as radical crackpots and minions of Moscow. But there is a somewhat more subtle string to the isolationist bow. The newspapers which vehemently opposed the foreign policies of the Administration prior to Pearl Harbor now suggest that bygones ought to be bygones and charge indignantly that efforts to recall the pre-December voting records of Congressmen are a species of treason and divisionism. The New York Daily News, for example, asserts that the President, in defining the kind of candidate he would approve for the New York State governorship, "is narrowing eligibles down to a pretty exclusive coterie. This coterie, which the Administration is offering to the people as the only group fit to help run the country through the war, consists exclusively of politicians who backed up 100 per cent the series of Administration moves which preceded our ignominious disaster at Pearl Harbor". The isolationists are on the offensive. They have become more warlike than the "Warmongers". They insist upon a joint British-American invasion of 410 - 15 Europe -- at once. They want the Japanese eliminated from the Aleutians in double quick time. They are for an independent air force and a "recognition" of the importance of aviation in modern warfare. They are so impatient to get on with the fighting that they jeer at all plans for the betterment of the postwar world. In short, they are laying the groundwork for an accusation that the Administration has failed to prosecute the war with sufficient vigor and for the proposition that the war can be conducted effectively only by those who did not want to engage in it in the first place. Developing Situations Retailers Effective support for the Office of Price Administration is being mobilized by the American Retail Federation. On July 16, this organization requested all its member associations to send telegrams to the President, Leon Henderson and Congressmen in support of legislation sponsored by OPA. As a group, these associations are generally agreed that the OPA's price fixing program must be made to work. Most of them favor the OPA budget request and support the fixing of farm prices and wages. The members, in secret session last week, agreed to support Henderson's request that all prices be posted and that expert price inspectors be placed on the federal payroll. France Americans reveal a high degree of confusion when asked to distinguish between the Vichy government and the Free French. A recent Gallup poll conducted on a nationwide basis asked the question, "Do you happen to know who the Free French are?" Only half of the sample answered in the affirmative and gave definitions indicating genuine knowledge of the Free French movement. - 16 This informed half is pronouncedly sympathetic to the followers of General DeGaulle. Three-fourths of them express the opinion that the United States should deal with the Free French government, rather than with the Vichy regime. Four-fifths of them say that they think the Free French under DeGaulle should be made one of our allies and admitted as a member of the United Nations. Negroes There are signs of a developing movement among Negroes in New York City to resist induction into segregated Army units. Objectors regard segregation as a violation of constitutional rights, particularly of the principle of equality embodied in the 14th amendment. A young Negro has recently notified his Selective Service Board in New York that he would object to induction on this ground. He has complied with every order of the board through the appeal of his LA classification. He has also written a letter to President Roosevelt setting forth his contention and, in effect, challenging the President to make a statement regarding the integration of the Negro in all areas of American life as a part of our own war aims. Copies of this letter have been sent to Selective Service headquarters in Washington and to the local board. It appears that the young man has followed the directions of persons familiar with the law and desirous of transforming his individual case into an issue testing the constitutionality of the segregation of Negroes in Army camps. NAACP and Civil Liberties Union lawyers are in touch with the case, but no news- papers have as yet published the story. The issue is one which can readily be exploited as a fulcrum for the agitation of Negro opinion. Press and Public In a recent survey, the Bureau of Intelligence reported the relative 411 17 - prevalence of tensions and irritations in different cities, based on the number of people who expressed complaints on four or more out of eight kinds of discontent. An analysis of the press in these cities, rated on the same eight tests, shows that there is a very high correlation between the amount of criticism expressed by editors and the amount expressed by the public. An index of newspaper criti- cism would rank the five cities in the following order: most critical, Los Angeles; second, Boston; third, Chicago; fourth, Detroit; least critical, Atlanta. (Boston and Chicago were nearly tied for second). The public's "grievance pattern" ranks the cities in exactly the same order and again shows Boston and Chicago nearly tied for second place. It should be emphasized, however, that even in cities where the majority of the press is critical, it is only a minority of the public which falls into the pattern. This relationship of a carping press to a carping minority public is not necessarily causal. Nevertheless, it is borne out by a special study inside the city of Chicago. Readers of the Chicago Tribune were twice as likely to fall into the pattern of discontent as were any other group in the city. And when asked specifically whether U. S. material aid should be sent to Russia or to Australia, the Tribune readers chose Australia; the other newspaper readers chose Russia. This is perhaps a reflection of the Tribune's news policy more than of its edi- torial policy. A trend study shows that most major newspapers in the country emphasized Japan as our No. 1 enemy in the months immediately following Pearl Harbor, but more recently most of them have emphasized Germany - not so the Chicago Tribune. - 18 - The front page captions of the New York Times and Chicago Tribune dealing with the Axis countries were proportioned as follows: - Two months before Pearl Harbor Three months following Pearl Harbor Four months following March 1 Germany Japan Italy Germany Japan Italy Germany Japan Italy New York Times Chicago Tribune 73% 78% 22% 17% 5% 5% 28% 19% 59% 77% 13% 4% 59% 34% 36% 61% 5% 5% 412 Sources of the Survey The report on "The Anti-Inflation Program in Operation" is based upon the following material: Annotated tables on June interviews on the antiinflation program, Extensive Surveys Division "Rubber Conservation", Extensive Surveys Division, Special Report #9 "The Farmer in the War Economy", Division of Surveys, Report #15 Special reports, dated June 26, July 3 and July 10, on media treatment of the anti-inflation program, Media Division Weekly Media Report #24, Media Division "The Anti-Inflation Program", Survey of Intelligence Materials #29, June 24, 1942 All of the above reports are available to authorized individuals through the Bureau of Intelligence of the Office of War Information