Full text of Diaries of Henry Morgenthau, Jr. : Volume 583 : Part 1

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DIARY

Book 583

November 10 - 12, 1942

-A-

Book Page

Airplanes
See Lend-Lease: U.S.S.R.

Shipment to British Forces: See Lend-Lease

American Legion

See Financing, Government: War Savings Bonds
Appointments and Resignations

Brown, Prenties M.: HMJr asks Grace Tully to ask FDR to

urge Brown to join Secretary's staff - 11/11/42
a) FDR approves.

1) Draft of letter from FDR to Brown

b) HMJr-Gaston conversation

583

179
236

377
238

c) Brown letter: "Considering offer" - 11/12/42

376

(See also Book 592, page 50)

Hughes, Walter: Recommended by George Harrison

(Brotherhood of Railway and Steamship Clerks) and

Daniel J. Tobin to be Collector of Internal Revenue,
Cincinnati, Ohio - 11/11/42

Argentina

246,249.28

See Foreign Funds Control

-BBathrick, Mr.
See Financing, Government: War Savings Bonds
Brown, Prenties M.
See Appointments and Resignations
c-

Comptroller of Currency
See Financing, Government: Government Securities

-DDeferments, Military
Romig, George W., Jr. (Chemist in charge of New York
office of Alcohol Tax Unit): Granted 6 months
deferment - 11/10/42
(See also Book 591, page 53)

--Federal Deposit Insurance Corporation
See Financing, Government: Government Securities

Federal Reserve System

See Financing, Government: Government Securities

- F - (Continued)
Book Page

Financing, Government

November and December Financing ($13 billion):
See also Financing, Government: War Savings Bonds Book 582 and present book

Conference of Treasury group and Open Market Committee 11/10/42

a) Bell estimates
Conference; present: HMJr, Bell, Buffington, Haas,
Viner, Stewart, Eccles, Kuhn, Thomas, Rouse, Williams,

583

82,83

Young, Brown, Hemingway, Potter, Wood, Wiggins, Steele,

and Stonier - 11/11/42
Conference; present: HMJr, Bell, Eccles, Williams, and
Young - 11/11/42
a) HMJr discusses fundamental difference between

Federal Reserve and Treasury, and in spite of
that Eccles' fine cooperation since Pearl Harbor
b) Eccles reaffirms willingness of Board to comply
with any request from HMJr that excess reserves
be increased - 11/12/42
Conference: present: HMJr, Stewart, Viner, Bell, and
Haas - 11/11/42
Conference: present: HMJr, Bell, Buffington, Gamble,
Schwarz, Kuhn, Wanders, and Odegard - 11/12/42
a) HMJr's statement: Victory Fund Committees
to be asked to conduct widened campaign for the

enlistment of idle funds in the war effort

195
218

292
253
293

323,351

b) R. H. Grant, of General Motors Corporation, to

be assisted by list of six in connection with
December financing

325,358

11/12/42

354

c) State Administrators: Graves' telegram to Conference; present: HMJr, Bell, Viner, Stewart, Haas,
Brown, Potter, Steele, Wood, Hemingway. Wiggins, and
Stonier - 11/12/42
a) Hemingway (W.L.), president of American Bankers'

328

Association: Memorandum of statement made to

HMJr

346

Government Securities:
Proposed joint announcement of Comptroller of Currency,

Federal Deposit Insurance Corporation, and Federal
Reserve System concerning bank investments in and loans
upon Government securities from bank examination

point of view - 11/11/42
a) Discussion by HMJr, Stewart, Viner, Bell, and
Haas

232
253

War Savings Bonds:

American Legion participation discussed by Senator George
and HMJr - 11/10/42.

85,92

a) Waring (Roane) conference - Gamble memorandum -

11/13/42: See Book 584, page 5
Conference; present: HMJr, Bell, Kuhn, and Gamble 11/10/42

a) HMJr suggests transferring sale of F and a bonds
to Victory Fund Committees on December 1 "and have

this a clean-cut thing

105

- F - (Continued)
Financing, Government (Continued)
War Savings Bonds (Continued):
Conference; present: HMJr, Bell, Kuhn, Gamble,

Book Page

Buffington, Tickton, Bathrick, McClintock, and
Harold Thomas - 11/11/42
a) Bell memorandum on financing needs

583

149,181
178

b) Bethrick asked by HMJr, Kuhn, Buffington
"how much steam he can put behind drive
between now and Monday" - 11/12/42

Victory Fund Committees: HMJr's telegram to - 11/11/42.
Eccles' telegram to all Reserve Bank presidents 11/11/42.

361
235

233

Foreign Funds Control
See also Lazard Freres

Procedure for "ad hoc" blocking persons outside of the
United States by designating them special blocked
nationals

a) List of "special blocked nationals' (all in

Argentina) for presidents of all Federal Reserve

Banks

147

Petain, Marshal: Inquiries made at request of General
Eisenhower concerning location of assets in United
States or Canada - 11/12/42

385

campaign - Paul memorandum - 11/12/42

388

Puerto Rico: Situation should United States relations
with Spain deteriorate in view of North African

-GGewirts, Paul
See Lazard Freres
Gold

See Liberia

Grant, R. H. (General Motors Corporation)
See Financing, Government: November and December Financing

($13 billion)
-H-

Hanson, Leonard

"Who's Who" by Houghteling - 11/12/42
Hemingway, W. L. (President, American Bankers' Association)

371

See Financing, Government: November and December Financing

($13 billion)

Hochschild, Harold (President of American Metal Company,
New York City)

HMJr's recommendation to War Department - 11/10/42

a) Hochschild's letter to HMJr concerning - 11/12/42

Hughes, Walter

See Appointments and Resignations

b) Possible connection with a Hochschild in Mexico discussed
by General George Strong and HMJr - 11/23/42: Book 588, page 31

118
379

-IBook

Interdepartmental Valuation Committee

Page

See Lend-Lease

Internal Revenue, Bureau of
Personnel needs discussed by HMJr, Sullivan, Thompson,

Cann, and Miss Elliott - 11/10/42

583

-LLatin America
Argentina: See Foreign Funds Control
Lazard Freres
Paul memorandum on Frank Altschul's participation in
profits and approach made by their lawyer to a member

of the staff of Foreign Funds Control (Paul Gewirtz) 11/12/42

384

a) Discussed by HMJr, Gaston, Kuhn, Pehle, Schwars,
and Shaeffer - 11/13/42: See Book 584, page 21
1) Sulsberger-HMJr conversation:
Book 584, page 25
Lend-Lease

2) Sulsberger letter: Book 584, page 32

Report for week ending November 7, 1942 - 11/10/42

Interdepartmental Valuation Committee - final report
of - 11/11/42
War Shipping Administration: Proposal that all cargo
moving to United States ports be thus consigned to
(1) facilitate matching of available ships and cargoes,
and (2) compile more accurate information as to

126
273

quantities, destinations, and specifications of

cargoes en route to port - Treasury accepts proposal -

11/11/42

276

U.S.S.R.: Shipment of planes and tanks to - 11/10/42

129

United Kingdom:

Gold and dollar report for October - 11/10/42
Shipment of airplanes to British forces (for previous

reports, see Airplanes) - Hoflich report - 11/11/42.

Liberia
German Consul General and staff leave carrying 1000
ounces of gold - 11/12/42

136
269

389

- MMilitary Reports

British operations - 11/10/42, etc

148-A,287
403,404

"Voice of the Chief" broadcast - Hoflich report - 11/11/42..

289

a) Reaction to General Giraud's escape and new

situation in North Africa
North African Naval Situation (from British sources) Hoflich memorandum - 11/12/42.

Pacific Naval Losses - Japanese and United States: Hoflich
memorandum - 11/12/42

"The War This Week, November 5-12, 1942" - Office of

Strategic Services report

407
409

414

- M - (Continued)
Book Page
Morgenthau, Henry, Jr.

Selective Service Occupational Questionnaire - General

Counsel's opinion on filling out and returning -

11/10/42

583

-NNew York Times

See Lazard Freres
Norway

Wings for Norway, Incorporated: Deposits with United
States Treasury to pay for airplanes and spare parts
for training Norwegian pilots in Canada and United
States discussed in Stettinius-Treasury correspondence 11/10/42

132

-P Petain, Marshal
See Foreign Funds Control
Puerto Rico

See Foreign Funds Control

-RRomig, George W., Jr.

See Deferments, Military

-SSecret Service
Protection of the President: HMJr's memorandum to FDR

concerning placing agents in military status 11/11/42.
a) Gaston memorandum

243
244

b) Wilson memorandum on conference with representative
of General Marshall
Spain

See Foreign Funds Control
-T
Tanks

See Lend-Lease: U.S.S.R.
Thomas, Harold

See Financing, Government: War Savings Bonds

245

-UBook Page
U.S.S.R.
See Lend-Lease

United Kingdom
See also Lend-Lease

White memorandum on increase in birth rate - 11/12/42.

-VValuation Committee, Interdepartmental
See Lend-Lease

Victory Fund Committees
See Financing, Government

"Voice of the Chief"
See Military Reports

--War Savings Bonds

See Financing, Government

War Shipping Administration
See Lend-Lease

Wings for Norway, Incorporated
See Norway

583

390

November 10, 1942
9:30 a.m.
GROUP

Present: Mr. Bell

Mr. Gaston

Mr. Buffington

Mr. Odegard
Mr. Gamble
Mr. Thompson

Mr. Stewart
Mr. White

Mr. Sullivan

Mr. Paul

Mr. Haas

Mrs. Klotz

H.M.JR: Read this and then if necessary read
it out loud, Ted. (Telegram dated November 9, 1942,

from Mr. Henry Bruere handed to Mr. Gamble.)

MR. GAMBLE: I don't think it is necessary.
Patterson called about this.
H.M.JR: Mr. Gaston?
MR. GASTON: We have not heard any further word

on that so far as I know on the designation of those

men. I have a letter here from Mabel Newcomer, in
which she says: "I am speaking in Wilmington Friday
before a group of women's organizations, in New York
on November 17th before a group of social workers,
and in Springfield on December 4th for the Connecticut

Valley Vassar Club -- all on the tax program. I am

afraid that is about all."

H.M.JR: Write a letter for my signature saying

I am very much pleased, will you?

-2MR. GASTON: Yes, she is plugging right along.

H.M.JR: By the way, on that thing, inasmuch
as you seem to be handling the speakers bureau, what
about this professor from Wisconsin?
MR. GASTON: Harold Groves?

H.M.JR: Yes, could we put him on the circuit?
MR. PAUL: He is a good speaker.
MR. GASTON: I should think we might.
H.M.JR: Who would undertake that?
MR. GASTON: Crampton has been handling the

dates for speakers.

H.M.JR: But somebody has got to handle Groves

in the first instance.

MR. SULLIVAN: I will call him.
H.M.JR: Will you?
MR. SULLIVAN: Yes.

H.M.JR: Crampton is doing the dates?
MR. GASTON: He is keeping the dates.

H.M.JR: All right.
MR. GASTON: I handed Ferdie a letter from Lithgow
Osborne. He sent me a copy of a letter he had sent

you. He is anxious to have you talk at a Scandinavian-H.M.JR: His wife is a Dane - a countess - a Danish
countess.

MR. GASTON: He was over in Denmark Foreign

Service at one time - one of the Scandinavian countries.

-3He not only wrote me a letter, but he called me on the
phone. He is so anxious that you should participate.
H.M.JR: It means nothing in my young life; we

can't sell a bond there.

MR. GASTON: Nor a tax program.

H.M.JR: No. Do you want to go up?
MR. GASTON: He wants you to suggest somebody else.

H.M.JR: Do you want to go up?
MR. GASTON: No, I don't. He wants somebody.
MR. KUHN They are contributing three hundred

thousand dollars as a contribution for Lend-Lease,
and they want you to accept it.
H.M.JR: Tell them to send up handsome Ed

Stettinius; Oscar Cox is another good-looking

fellow. (Laughter)

MR. GASTON: He asked for Harry Hopkins.

H.M.JR: Don't worry, it is inconsequential, it

is unimportant; let him go to the Lend-Lease crowd.
We are too busy raising money. What else? I turned

him down. I wrote him that I would not go.

MR. GASTON: I haven't been able to see that man

that wrote you a letter.

H.M.JR: Let Sir Oliver Lyttleton go up there.
MR. GASTON: Is he here?

H.M.JR: Yes.
MR. GASTON: Or Cliff Mack.

-4H.M.JR: No, no, Cliff Mack is busy.
MR. GASTON: I was joking.

H.M.JR: Anyway, it isn't our worry. I mean,
he is interested on account of his wife. I am not
interested in his wife. (Laughter)
MR. GASTON: Ferdie and I are seeing Felix
Belair today.
H.M.JR: Good.

MR. GASTON: I called up that other man that

wrote you a letter. I haven't been able to reach him
yet; he is a bad actor.
H.M.JR: That man is a bad actor, too, is he?
MR. GASTON: Yes. He had this United States

Savings Bank up here. He is trying all kinds of dodges
to be able to open the new bank, and this is his final

dodge. He has been up on repeated appeals, and he

has started various lawsuits against the Comptroller,
and he has been a pain in the neck to them ever since
1933.

H.M.JR: How about telling the Treasury press

about this thing so in case they hear about it they

will know?

MR. GASTON: I don't think it is worthwhile. It
isn't anything that will come out. I will try again
to get hold of this fellow.
H.M.JR: Just so you know, there has been what is the man's name who is writing a book?
MR. GASTON: This Joseph Leib claims to be

writing a book.

-5H.M.JR: And he has been trying every possible

way to get me and my father by intimidation. He
claims that my father and I were in the sponging
business during the last war. Does anybody know
what the sponging business is? For those who don't
know, it is a middle-man who takes the cloth from a
woolen manufacturer and sponges and shrinks it; then

it goes from there to be cut into uniforms. He claims
that we were in all kinds of trouble with the War
Department, that we cheated them, and so on, and so

forth. I have been in lots of businesses, but I

haven't been in the sponging business. (Laughter)
Now, another man comes along - so in case you

people hear about it - what is this second man's name?
MR. GASTON: He has succeeded in keeping Leib

from putting this story in the book, and in return

for that he wants us to open up a defunct bank or
something.

(Mrs. Klotz entered the conference.)
MR. GASTON: Yes, that is what he wants.

H.M.JR: Well anyway, that is that.
What else, Herbert?

MR. GASTON: I don't have anything else.
MR. SULLIVAN: You remember I spoke to you last

week about these three hundred and fifty new Internal
Revenue offices opening up around the country?

H.M.JR: I thought you were going to do that
this afternoon.
MR. SULLIVAN: It might be well to postpone it,

but I wanted it on here because she wasn't here when

I spoke about it the other day, when I suggested it.
(Indicating reporter)

-6H.M.JR: Suggested what?

MR. SULLIVAN: I told you about these three

hundred fifty-three offices.

H.M.JR: What are you trying to make a record on?
SULLIVAN:
I don't want any remarks next
MarchMR.
about
it.

H.M.JR: What? I still don't get it; you have got
to be a little more explicit.
MR. SULLIVAN: I would like to have it on record

that I discussed it with you last week for a minute
and we are going to discuss it again this afternoon.
H.M.JR: And so what?
MR. SULLIVAN: Then I won't have to send you a
written memorandum. (Laughter)

MR. BELL: That is the follow-up system. (Laughter)
MR. SULLIVAN: The follow-up system in reverse.

(Laughter)

H.M. JR: He is the New Hampshire boy, and we have

got to watch him. (Laughter)

MR. SULLIVAN: The auditing of these war contractors'

cases has resulted in additional taxes of almost fourteen
million already having been paid, and total additional
taxes of seventy million being proposed. That is going
forward.
You recall that last week you sent me a Dow Jones

ticker on a so-called secret ruling on the Bonneville
Authority. We did issue such a ruling on October 26.

Now, the Wall Street Journal ran another editorial
on it yesterday morning. I see no reason at all why
we should not make this public.

-7H.M.JR: O.K.

MR. SULLIVAN: You have a ruling that whenever a
case is exempted from the decentralization procedure
and is sent in here to Washington a memorandum is to

come to you. You don't want to be bothered with those,

do you?

H.M.JR: Under the new policy since I have been

to England, we will discontinue that. (Laughter)

MR. SULLIVAN: That is what I thought, and also

advised the Bureau.

Did you happen to discuss Treasury business with
the American Ambassador to the Court of St. James?(Laughter)

H.M.JR: Is that nice? (Laughter)
MR. SULLIVAN: All right, what do you want me to
do about it?

H.M.JR: As I told Paul and the rest of you, don't

consult me.

MR. SULLIVAN: I get it.

H.M.JR: I don't want to know about it.

MR. SULLIVAN: All right, that is all.
H.M.JR: We didn't live in his apartment, did we,
Harry? We had one meal off the American Ambassador;

that is all, isn't it?

MR. WHITE: British Ambassador?

H.M.JR: No, Winant. We had one meal, and so did
twenty-six other people.

MR. SULLIVAN: That is all. Do you want Mr. Cann
and me at quarter of four?

-8H.M.JR:

Yes. You had better be here, Norman;

it is on their personnel problem.
Randolph?

MR. PAUL: I have to stay after the meeting anyway.

I will give you this story on the closing of the banks
yesterday. ("New York Times" handed to the Secretary.)

H.M.JR: You will give it to me later?
MR. PAUL: No, I will give you some more later,

a couple of little things.

H.M.JR: Isn't that part of the story? Is that

different from what we told them at my press conference?

MR. PAUL: That is just a report of your conference

yesterday.

H.M.JR: Yes, I saw that. I get it at the house.

They deliver the Times there in the morning.

Is everything else all right?
MR. BUFFINGTON: I have checked over the publicity

on tax savings notes with Ferdie Kuhn. I presume you

don't want to see the work that Deremus and Ryan, Pedlar
are doing.

H.M.JR: Not particularly, but I think this, Ferdie now, for instance, I have asked for what the War Savings
Staff would do, and I think you ought to do this for me.
That is why I have the room across there. I like those

things - different publicity. If it is going to be

done by the Treasury between now and the 1st of January put them up in that room. Then you can take me in there

yourself and say, This is what we are doing on tax

savings notes, this is war savings," and so forth - let's
get it all together.
MR. KUHN: Are the proofs in yet, George?

-9MR. BUFFINGTON: Yes.

MR. KUHN: That is good; we can put them up.

H.M.JR: Let's have it in that room and then have
one board and have it labeled over the top of the
board "Tax Anticipation Notes Publicity Exhibit," and
then they have something on something else that War

Bonds have put up in there for me. Will you? I mean,
this stuff that I asked for today, which I know you
haven't got.
MR. KUHN: We have it.
MR. ODEGARD: The stuff you asked for yesterday?
H.M.JR: Yes.
now.

MR. ODEGARD: Yes, sir, it is all in my office
H.M.JR: Really?
MR. ODEGARD: Yes.

H.M.JR: If you could have it put up on a board

in there then during the day, I will go in there and
see it. How is that?
MR. ODEGARD: All right.

MR. BUFFINGTON: That is all.
MR. GAMBLE: Would you feel disposed to give

five minutes during the day or tomorrow to the heads
of the twenty railroad unions?

H.M.JR: Sure, I would love to.
MR. GAMBLE: Fine.

H.M.JR: We can't get along without them. Today

or tomorrow?

- 10 MR. GAMBLE: Whichever is the easiest.

H.M.JR: Are you meeting with them?
MR. GAMBLE: We are having a meeting with them

yet to be set. It is to be set at your convenience

in the event you could see them.

H.M.JR: How long shall we allow for the ABA
tomorrow, half an hour?

MR. BELL: Yes, I think that ought to do it.

I haven't heard yet from Hemingway, but I understand
they are coming.

H.M.JR: You can do a lot in thirty minutes.
them.

MR. BELL: I think so, too, and then we can take

H.M.JR: Is it with or without Eccles? (Laughter)
MR. BELL: / Well, thirty minutes is all right
without. (Laughter)
MR. BUFFINGTON: He indicated it might be
Thursday. We ought to check with him.

MR. BELL: They will let me know today.

H.M.JR: Three-thirty.

- 11 MR. GAMBLE: Today or tomorrow?

H.M.JR: Wednesday. That is railroad unions?
MR. GAMBLE: Yes, sir.

H.M.JR: Now, when you come like that, shouldn't

Houghteling be here too?

MR. GAMBLE: He will be here. Now that you have

been so nice about that would you like to give us

about three minutes in advance of that meeting and

say hello to Mr. Pelley? We are trying to tie these

people up for a nation-wide drive.
H.M.JR: The railroad Pelley?
MR. GAMBLE: Yes, sir.

H.M.JR: Well, I can't do the crowd in the ABA,

but I - Pelley and I get along first class.

MR. GAMBLE: See him afterwards, say, for three

minutes?

H.M.JR: Will he be with the unions?
MR. GAMBLE: He will not be with the unions, but we

would like to have him come in. He is to play a part in
this program; we are trying to start a drive on all the
railroads.

H.M.JR: Do you want to give him the three-thirty
and give the unions three forty-five?
MR. GAMBLE: That would be excellent.

- 12 MR. GASTON: We had better let him out the back

door. (Laughter)

H.M.JR: All right.
MR. BELL: When is the ABA, three o'clock?

H.M.JR: Three o'clock.
Walter, how are things down on the farm?

MR. STEWART: Fine - going all right.
H.M.JR: Got your crops in?
MR. STEWART: Yes.

H.M.JR: Bell was here while I talked to my

apple man. Everything in the food and fruit line is

up except apples. (Laughter)

MR. STEWART: Stabilization. (Laughter) .
H.M.JR: By Christmas he thought maybe apples would

pick up. Isn't that just - all my eggs are in an apple
basket.

MR. WHITE: The Treasury's fight against inflation

is effective. (Laughter)

MR. SULLIVAN: Succeeding in one sector.

H.M.JR: On the apple front they would, too, just

on the apples.

MR. KUHN: Harold Thomas will do his best to be
here at ten tomorrow morning with McClintock.
H.M.JR: Somebody has got to be here.

MR. KUHN: He wants to. I had a good talk with him
last night and he wanted some more information which I

- 13 -

am going to try to get for him today, and in view of

the fact that he could not come today, the OWI people

would like to put theirs off until after you have talked
to the Advertising Council.

H.M.JR: All right, tomorrow. OWI will not be

here this afternoon?
MR. KUHN: No.

H.M.JR: Wonderful.
MR. KUHN: We had a good meeting last night with

them, at which Peter did a great job, and I think it was

useful all around. George was there and spoke, and Mr.
Bathrick was there.
H.M.JR: Where is Bathrick right now?
MR. KUHN: I haven't seen him this morning.
H.M.JR: Did they wear him out?

MR. KUHN: I don't blame him. He was listening
to people talk for about ten hours yesterday, from

ten in the morning until ten at night.
H.M.JR: What can be more tiring?

MR. BELL: He came in at a good time. (Laughter)
H.M.JR: What else?

MR. KUHN: That is all.
H.M.JR: George?

MR. HAAS: I don't have anything.
H.M.JR: Odegard?

MR. ODEGARD: You asked the other day about the

scheduling of this advertising by National Advertising.

- 14 -

I have the schedule for the three - General Electric,

Aluminum Corporation, and I.B.M., if you care to have
it. I can send you a memorandum on it.
H.M.JR: Do you have it in your hand?

MR. ODEGARD: I have it in my hand. It includes
a report on the whole thing from their Mr. Lane to me.

If you want it you can have it - also excerpts from
letters from a long list of National Advertisers whom

we have had contact with on this.

H.M.JR: I would like to have it.
(Memorandum dated November 9, 1942, addressed to

Mr. Odegard from Mr. Lane, handed to the Secretary.)
MR. ODEGARD: I ought to explain that that two

hundred and fifty thousand dollar appropriation involves
two insertions each for each of these advertisers during
that period of November 15 through December 31, based
on the charge of one hundred and eight thousand dollars

for the insertion of full-page ads in a selected list of

metropolitan newspapers which we have suggested that they
use.

H.M.JR: Who is Lane?
MR. ODEGARD: Lane is the man in the Callahan shop

who is in charge of our advertising.

H.M.JR: Good, I will read that. What else?
MR. ODEGARD: That other material that you asked

for is in my office. As I say, some of the posters are
in production so that we could not get the actual posters.
H.M.JR: Will you give them to Kuhn - what you have
got? He can put them up. I am pleased.
MR. ODEGARD: Yes. There is one other thing I
would like to mention and get some guidance on. The

- 15 Saturday Evening Post sent a writer down here last week,
Mr. Paxton, to do a piece on War Savings, comparing the
War Savings program here with the War Savings program
in Canada and England. I wanted anyone who has any

suggestions to make on that to let me have them. Also,
we have an opportunity for the baok cover of the

on problem of

Digest the general Treasury financing Reader's the
war. I have a draft of a statement, a very short state-

ment, to go on the back cover of the Reader's Digest.
I would like to show that to Randolph and some of the

others because I think it is extremely important. It

ought not to go on unless--

H.M.JR: I would like to see it, myself.
MR. PAUL: Over six million circulation.

H.M.JR. I would like to see it, myself.
MR. KUHN: For what issue?

MR. ODEGARD: It is for the January issue.

H.M.JR: I would like to see it, myself. Who is
seeing this article he is doing for the Saturday Evening

Post on War Savings?

MR. ODEGARD: I will see it.
H.M.JR: Anybody else?

MR ODEGARD: Kuhn will see it.

MR. PAUL: You had better have me see it.
H.M.JR: You mean on the Saturday Evening Post?
MR. ODEGARD: That is on War Savings Bonds - the
savings program.

H.M.JR: Are you going to cover it all, I mean, how
the thing was conceived, going back to the original,
before we had war savings, and all that?

- 16 MR. ODEGARD: I think not. He is not going into

the history too much.

H.M.JR: Is he going into personalities?
MR. ODEGARD: No, not at all if I can keep it out.

He may mention the Secretary of the Treasury and the

Minister of Finance in Canada; aside from that there

will be no personalities.

H.M.JR: What else, Peter?
MR. ODEGARD: That is all.
H.M.JR: Harry?
MR. WHITE: When Dean Acheson was here there was

a letter that Pehle had sent to Secretary Hull on wh ich
you asked me to submit a message to Pehle. I did not
know what was in the letter; I assumed Pehle did, but

he doesn't. They cannot locate the letter. If you can

tell me what is in the letter I can tell Pehle.
H.M.JR: What letter?

MR. WHITE: There was a letter Pehle sent to
Secretary Hull that you asked me to transmit a message

to Pehle about - first about the form of the letter

and also about--

H. M.JR: It was in Dean Acheson's hands. I haven't

got the letter.

MR. WHITE: I thought he left it here. Pehle does

not remember which one it is. Do you remember what
you wanted him to hold in abeyance?
H.M.JR: No.

MR. WHITE: I will find out.
H.M.JR: The point is, I do not think that Pehle

should write to Hull.

- 17 -

MR. WHITE: That was one thing - something about

the content you said to hold up.
H.M.JR: I do not remember.

MR. WHITE: I cannot write that letter to Ambassador
Winant. Currie said Winant knows. nothing about it, that
Winant's approval was to be obtained after - if and when
you approved, then they would ask for Winant's approval.
H.M.JR: I mentioned it to Sumner Welles, yesterday.
MR. WHITE: What?

H.M.JR: I showed Summer Welles a letter I had from
this man - the Bank of Manhattan - he wanted to come
down to see me. I showed him that letter and asked him

what about it. He knew nothing about it.
MR. WHITE: That is where it stands. I am not
writing that.

Pertinent to the discussion of a few days ago,
there were two articles that appeared in the Banker "The British Banker" which, as you know, is a very estimable magazine, and both these articles are on the
equality of sacrifice, and they emphasize the desire of
returning to the British their overseas investments

lost as a result of the war, after the war. I thought

you would be interested.

There are two points about the Chinese matter

that I want your opinion on. One is the question of
the unreasonable rate which the official rate represents as against the real rate which we have been talking about. It is constituting a more and more aggravating problem. One of the ways in which we might

correct that situation is to get China to lend-lease to

the United States for payment of, perhaps, some of the

money. I think it would be a good thing. It will not

cost her much and has many advantages. Is it all right
with you if we take that up with Lend-Lease?

- 18 H.M.JR: Lend-lease what?
MR. WHITE: Some of the yuan, 80 we can pay them

in yuan without buying it; so we would not have to buy

it at a special rate. We could maintain the official

rate and yet we would have yuan with which to meet the
expenses there. It does not amount to much.

H.M.JR: I will go "you one" better - why not let

them lend-lease in reverse the things that we need to

buy there?

MR. BELL: The soldiers need yuan to spend.
MR. WHITE: Probably some of those things might

not look well in Lend-Lease arrangements. (Laughter)
H.M.JR: You have a hard time living up to your

reputation. I want to tell you, after three weeks with
Harry, his reputation is amiss as far as I saw. (Laughter)
MR. WHITE: I regard that as a perfect record.

(Laughter)

MR. BELL: General Carter was going to discuss that
with the Lend-Lease organization - the question of lendleasing the yuan.
MR. WHITE: I did not know that he was.
MR. BELL: He said he would discuss it and then he

would get in touch with us later.

H.M.JR: Couldn't I leave it, as long as you and
Bell
are
in it - whatever the two of you agree on is
O.K. with me.
MR. WHITE: There is this item which I mention only
because there are possible implications. The Chinese
have asked us whether they couldn't use some of their

dollar funds in the Stabilization Fund, if necessary,

- 19 -

to pay for imports from Russia - commercial imports.
A "yes" answer is consistent with every position we
have taken, and unless you have some view to the con-

trary, we will continue to say "yes" on that.
H.M.JR: "Yes" will be consistent?
MR. WHITE: Yes.

H.M.JR: All right.
MR. BELL: The fifty million or the five hundred

million?

MR. WHITE: That is the fifty - just the fifty,

stabilization - what is left of the fifty. It will be

forty very soon.

We have been talking about silver for some time.

There is an opportunity now, if you want to use it, to
go before the committee to press for the passage of the
Green bill. The Army has asked us for this additional
silver. We can give it to them, actually, because
apparently the Defense Plant Corporation is not utilizing the silver which it asked us to lay aside, nearly

as rapidly as they had anticipated. So we can meet the

new demand of the Army with the silver which has been

previously allocated to Defense Plant. So you can either
meet it that way or you can take the position that as
long as that other silver is allocated, you cannot meet
the Army's demands and will need further legislation.
My own view is to meet the Army's needs and let it go
at that until the thing becomes more acute, rather than
take it up with Congress.
H.M.JR: Nobody has ever accused the silver people

of not being smart. If I come up there and press for

this legislation, the first thing they will say is,

"Well, have Mr. Donald Nelson and his people used the

silver that they said they needed?" The answer is no.
"Well, then, why not give the Army part of that?" That
would be the first thing that they would say, so I do
not want to go up and press for it.

- 20 -

MR. WHITE: I will first clear with WPB to make
sure we have their permission, and then work it out

with the Army.

H.M.JR: Does that sound all right?

MR. BELL: I agree with that.
MR. WHITE: There is some material that has been

going to your files from our files, to Miss Chauncey -

routine material - but we are trying to cut down on some

of the work. Unless you have a definite preference, I
would like to cut out sending such material. I have
got a lot of samples here; I will just read one. "You
will receive two and a half million. Please charge our
account; this is a repeat transaction." This is from
the Federal Reserve Board, a transaction of the Stabilization Fund. This practice had its origin at a time

when they were meaningful.

H.M.JR: Cut them out.

MR. WHITE: There are a lot of them of that character.
We have them in the regular stabilization records. That

is all.

MR. BELL: I have nothing.
H.M.JR: Thompson?

MR. THOMPSON: I have one deferment case; a chemist

in charge of the New York office of the Alcohol Tax Unit,
forty-two years old, unmarried - father, 79 years old,
is dependent. His two chief assistants have already left,
so they will be in bad shape if he goes.
H.M.JR: How long are you asking for?
MR. THOMPSON: Six months. He is over forty-two.
H.M.JR: O.K.

(Six months' deferment approved by the Secretary in
the case of Mr. George W. Romig, Jr.)

- 21 H.M.JR: Something else?
MR. THOMPSON: The Plate Printers' Committee gave

us seventy-eight names of prospective plate printers

that we could appoint, and we got ten. Sixty-eight
either declined or did not answer our letters. So on
the nine-hour shift that they have, the work program is
going along all right, but it looks as though they will
have to go to a ten-hour shift pretty soon.

H.M.JR: All right.
MR. THOMPSON: The teletype people are having a

time finding equipment and they cannot furnish the War

Department with sufficient teletypes, so I am scouring

around to see what machines I can pick up. They would

like to take from us what we have in our telegraph office.
H.M.JR: No.
MR. THOMPSON: We do not use it very much, and can

transfer all that business to the Secret Service teletype.

H.M.JR: It is just for an emergency. It is one

machine, only?

MR. THOMPSON: Just one machine.

H.M.JR: It is just for that extra emergency thing.

I would rather give up one of the teletype of Customs

in the field, than give up that machine.

MR. THOMPSON: We use it very little.

H.M.JR: Just in an emergency when there is an overload of things; I want to send out messages and have
them come back on my own teletype. I am sure there are

other machines.

MR. THOMPSON: The Secret Service machine is open

twenty-four hours a day.

- 22 -

H.M.JR: No, but to get the thing from there up

here - how many others in Internal Revenue?

MR. THOMPSON: We are using all the others suffi-

ciently to justify.

H.M.JR: No, I want this as a safety valve.
MR. THOMPSON: That is the reason I took it up

with you.

H.M.JR: No, there must be others around.
MR. GASTON: Does Harney still have one, Norman?
MR. THOMPSON: Yes.

MR. GASTON: Maybe we could part with that and use

the Secret Service instead.

H.M.JR: Who is Harney?

MR. GASTON: He is in Irey's office.

H.M.JR: Well, there you are.
MR. THOMPSON: I will check with Irey.

H.M.JR: If Harney has one let that float through,
but this one up here is definitely for a safety valve.
MR. THOMPSON: Fine. The military police guarding the
White House want to have their picture taken down here.

H.M.JR: That is all right.
Look, just so I get these things, I told some of the
people to stay.in at ten, and I want - I have got to catch
my breath - make it ten-fifteen. That is Bell and White
and Paul and Gaston, if they would come back at tenfifteen.

MEMORANDUM

November 10, 1942.

TO:

The Secretary

FROM:

Mr. Sullivan

Jhs

This morning I spoke to Professor Groves on the telephone,
and he advised me that he will be very happy to make speeches in

behalf of the Treasury on any dates that do not conflict with his
University appointments. I have notified Mr. Crampton of Professor

Groves' availability.

NOV 10 1942

Secretary Morgenthan
Mr. Paul

You have asked whether you are required to

fill out and return to your local draft board the
Selective Service Occupational Questionnaire (D.S.S.
Form 311), which was mailed to you by Local Board No.

9, District of Columbia, on October 16, 1942.

It is my conclusion that you are required to

fill out and return that form to your draft board.
Nothing in the Selective Training and Service
Act, or regulations issued thereunder, exempts the
head of an Executive Department from registration. You
have been duly registered and, therefore, are subject

to the regulations applicable to registrants. Section
159 of Executive Order No. 8545, dated September 23,
1940.

The Selective Service Occupational Questionnaire

is required to be sent to groups of registrants designated by the Director of Selective Service. Section
621.11 of Selective Service Regulations. A registrant

NOV 10 1942

Secretary Morgenthan
Mr. Paul

You have asked whether you are required to

fill out and return to your local draft board the
Selective Service Occupational Questionnaire (D.S.S.
Form 311), which was mailed to you by Local Board No.

9, District of Columbia, on October 16, 1942.

It is my conclusion that you are required to

to the regulations applicable to registrants. Section
169 of Executive Order No. 8545, dated September 23,
1940.

The Selective Service Occupational Questionnaire

is required to be sent to groups of registrants designated by the Director of Selective Service. Section
621.11 of Selective Service Regulations. A registrant

-2to whom the questionnaire is sent must fill it out
and return it to his local draft board within ten days
from the date of mailing. Section 621.12 of Selective
Service Regulations.
Although Form 311 was mailed to you on October

16, 1942, your local draft board is authorised to grant
an extension of time for you to complete and return

the form if you have a valid reason to require more time,
such as absence from the country. Section 621.12 of the
Selective Service Regulations.

(Signed) Randolph Paul

General Counsel

JAG:ST:c1

11/9/42

November 10, 1942
10:20 a.m.

ECONOMIC STABILIZATION

Present: Mr. Bell

Mr. White
Mr. Paul
Mr. Haas

Mr. Stewart
Mr. Gaston

MR. BELL: May I have a copy made of that for

my files? I want the minutes, too.

H.M.JR: Tell Mrs. Klotz and Miss Chauncey that

a copy of any communications between my office and

Justice Byrnes should be supplied to the people here
in the room automatically, with the exception of Mr.
Stewart.

Mr. Sullivan should also receive one if they

relate to wages and salaries.

Now, what do I do next, vis-a-vis Mr. Byrnes?

MR. WHITE: I think the situation is much clarified.
Mr. Byrnes would like a statement such as the kind you
have already prepared, to be used by him as the basis
for discussion and to permit the various members to
express their views on the matters which were raised
in that particular memorandum. He thought that that

was all he would want for the first discussion.

MR. BELL: Is that the one that we prepared and

pretty well finished?

MR. WHITE: It is the one which we will have
finished tonight. We promised him that he would get

it at the latest tomorrow morning and we would be
able to clear it and have it ready by tomorrow morning.
He will send it out to the various members, and you
will be present, and there will be some discussion. How
much you will participate - I seemed to gather from him
the impression that you would take a pretty active

part, but I am not sure of that.

PAUL: He wants to draw them out and get all
their MR.
views.
H.M.JR: Byrnes is having lunch with me tomorrow,
and what
am going
to ask him is whether I can bring
White
and IPaul
with me.
MR. PAUL: I think that would be enough.

H.M.JR: Says Paul modestly. (Laughter) I am

not saturated with the stuff. The point is, I am going
to treat this like a committee on the Hill. I just
haven't got the time to get saturated with it myself;
and, therefore, I want to take Paul and White with me.
Do you mind sarcasm?
MR. PAUL: No.

H.M.JR: I can cut it out.
MR. PAUL: No, just as long as I have a like
privilege.
H.M.JR: You have.

MR. PAUL: I like it.
H.M.JR: You have - anything in this room can

always go both ways.

MR. BELL: I can give you some ideas as to how
it has operated heretofore. Mr. McNutt and Secretary
Wickard both prepared memoranda on the subjects that
were up for the last meeting, and McNutt's memorandum

was circulated to all members of the group. Wickard

did not get his through in time, but he read it at

the meeting. The chairman asked each member of the
committee if he had any questions to ask McNutt and
Wickard or if he had any comments to make on the
memorandum. That is how the discussion proceeded.

H.M.JR: I am not going to make any bones about

it. I cannot change my method of operating the

Treasury. I was particularly interested to learn that
over at the English Treasury they do that. I mean,
they always have their experts. I would practically
have to stop doing everything else to saturate myself
with this, and I can't do that.
MR. WHITE: You will have an opportunity to read
this statement over very carefully before you get there?
H.M.JR: Why, yes.

MR. PAUL: Byrnes said that by circulating it
ahead it would save you from reading it.

H.M.JR: I want to read it myself; I have got to.
MR. PAUL: I mean, aloud.

MR. WHITE: Not only reading it, but if you have
one session on it--

H.M.JR: I will try to. I should have one.
MR. GASTON: One thing we want to pay particular

attention to in that memorandum is the outline of the
tax program.

MR. WHITE: There is nothing in it of that. That

is the second point.

MR. GASTON: The Byrnes letter?

MR. WHITE: The second part, in which you suggested

that Randolph have a discussion with him, which he will
describe and elaborate on in a moment; but the first

4task and the immediate task which we have and the

only task for this next meeting is the completion and
the submission of that memorandum in time for them
to submit it to other members.
MR. GASTON: That is the first letter to Byrnes

on rationing?

MR. WHITE: That is right, a description of
various motives. He said he was very favorably im-

pressed with it, and, personally, I think it is a

very good memorandum. With some slight changes it
might be a memorandum that could well be mimeographed

and given pretty wide publicity, but this is a decision
we
can make later. That is the only task we have for
them.
Now, Randolph can tell you about the talk he had

with them on taxes, which gives his view of additional

taxes and the problem which is before you on the matter.

MR. PAUL: We tried to feel him out a little bit

about his attitude toward the tax problem.

H.M.JR: As I understand it, the memorandum that
is going is one on which you have already been consulted.
MR. STEWART: Yes.

MR. WHITE: There will be another change.

H.M.JR: But people in the room here - please let

everybody have plenty of time to look at it before it
goes over.

MR. WHITE: We are working on it this morning and

will have a draft ready early this afternoon, which will
be close to a final draft unless there are further changes

made. We will have an early meeting this afternoon of
this group to give an opportunity to incorporate any

changes, to be mimeographed tonight or tomorrow, to be
in his hands tomorrow.

-5H.M.JR: Give them ample time so that they are
not rushed.
MR. BELL: Have you made any substantial changes?

MR. WHITE: I don't think they are substantial.
There are a number of small ones, but I don t think
they are substantial.
H.M.JR: Harry, could I just suggest when you go

out of the room that you fix a time for this after-

noon so that the people will allow ample time? Heretofore there has been criticism about being rushed too

much. Give them ample time. And apropos, just because

I have got it on my mind - it is a silly time to pop
it, but I have been trying to say it for ten days -

would you sometime talk to me about bringing Larry
Seltzer back?

MR. HAAS: I have talked to him about it. He can

come back on a part-time basis about November 15.

H.M.JR: Will he be through with this other thing?
MR. HAAS: He is working on that Port of New York

authority case, and if he drops that--

MR. PAUL: He is going to be a witness, isn't he?
MR. HAAS: Yes, he thinks he will be through about

November 15.

I have also talked to Don Woodward. He thinks
he can be in tomorrow from his insurance company.

H.M.JR: Good. Could Seltzer sit with us while

we are trying to price this thing?
MR. HAAS: I mentioned that to him. On this
particular thing?
H.M.JR: Yes.

-6MR. HAAS: I don't think the pricing is such a

problem.
man?

H.M.JR: Well anyway, don't you think he is a good
MR. BELL: Yes.

MR. PAUL: Larry Seltzer is a swell fellow.
H.M.JR: Harry, do you know him?
MR. PAUL: He has been with Tax Research quite a
while.

H.M.JR: He used to sit in originally with us on

the pricing; he was George's right-hand man.

MR. HAAS: I asked him if he could come down when

we were working on a particular financing. He said
he thought he could arrange that.
H.M.JR: What university did he go to?
MR. GASTON: Wayne University in Detroit.

H.M.JR: I was just thinking of another man, that

is all. And Woodward--

MR. HAAS: Woodward was coming in.

H.M.JR: I didn't mean to bust in, but I have had

this on my mind.

MR. PAUL: Woodward is a very fine fellow.

H.M.JR: I thought he was doing statistics for

Lew Douglas.

MR. HAAS: No, he had a break-down and an operation.

He was taken off the train in Philadelphia. He almost
died a few months ago.

H.M.JR: Now he is back?

MR. HAAS: He is back with the company. He is

taking it a little easier.

MR. PAUL: He had appendicitis.

H.M.JR: I am sorry to interrupt the train of
thought, but I have had this thing - I have been trying to clear this.
Now the way I understand the thing is that amongst

yourselves you will agree what time the thing will be

available. Is that right? Then I would like a copy
tonight so I can read it before I have lunch with
Byrnes tomorrow. I think that this is all right. The
thing that we will do - this is what I am groping for:
Byrnes made it very plain, and I think he is right,
that this is going to be the kind of thing that only

the principals can come to. He has in mind what happened to Wallace's meetings. So when I am not here
Bell will have to go for me, but my understanding
which I had with Bell when I took up the thing was that

I will always have Bell sit in so he will be posted.
Then in case I am not here and he goes, he will know
about the other arrangements I made and they are

entirely agreeable to him. I told Bell that when I do
anything on this Jimmy Byrnes front he will sit in

with me; but please keep it in mind that in case I am
not here Bell will go, so he has to be kept posted.
Is that right, Dan?

MR. BELL: Yes, I will try and sit in on some
of the meetings, too, preliminary to-H.M.JR: Which ones?

MR. BELL: White's and Paul's and the rest of them.

I absorb it a little better when I get the foundation.
MR. PAUL: I think that was very educational for
me.

H.M.JR: Bell did a fine job while I was gone.

MR. PAUL: I wanted to tell you that I took the
opportunity to try to discover all I could of Byrnes'

views. I discovered some of them the night before
from Ben Cohen, on relay through Ben. His views on

the tax are something like this, that first he feels
that we have got to do something about taxes or com-

pulsory savings on the inflation front. Otherwise,
all this other work of trying to control wages is
perfectly useless. He understands that basic point.
Second, when he comes to taxes he is firmly of
the opinion that there can be no increase in income
taxes. He thinks that there is no reason why we can

do today - or in January - what we could not do earlier

in '42 on the straight tax front. He thinks there is

a lot of resentment against additional taxes - that
the general feeling in Congress is against imposing
any additional taxes.
MR. WHITE: At this time?

MR. PAUL: At this time. Therefore, he says
what we will have to do is move in on the second front,

get through as strong a compulsory savings, not a
spendings tax program, because there won't be the resis-

tance to that, and it is kind of a flank attack; and
then later in the year of '43, after some of the objections

to taxation per se have been forgotten, we can perhaps

get some taxes through, but not now. He is not very

strong. He is pretty much inclined to take - if you

do take any taxes - to take a sales tax.

H.M.JR: I would like to make a suggestion with

which I hope you will agree with me. I would like you
as rapidly as it is physically and mentally possible to

see other people around town who are interested in taxes.

MR. PAUL: I have already moved on that front. I

tried to have Leon Henderson come to dinner last night.
He could not make it. I am seeing Lauch Currie Saturday.

-9H.M.JR: And you have got to see Eccles.

MR.WHITE: Eccles is in favor of higher taxes,

definitely.

H.M.JR: But Paul has got to see him.

MR. PAUL: That is right.
H.M.JR: I had this thought, that we might do this
thing - after all, I know. Jimmy Byrnes - it doesn't
mean that that is the last word. For instance, you
will find that Eccles and Henderson - I don't know
who else in town there is-MR. PAUL: Smith.

H.M.JR: Harold Smith is very important. They

have other ideas. Let's say that all of them, for

argument's sake, want higher income taxes. I think we

ought to come as near as we can to being of one mind

on this thing. Then I would like to try something
entirely different than I ever did before. Then I

would like to say to George and Doughton, "I would
like to have you pick three Democrats and three Repub-

licans, and let's spend a couple of evenings together,
inviting in Henderson and Eccles and the others."
MR. PAUL: A good idea.

H.M.JR: Then let them blow off steam. These
men won't be so busy, and with this thought in mind,
that instead of the Treasury coming up, we will do our

fighting there; and if we find it is impossible, that

if, for instance, Connally, or the Speaker or somebody
says, "Now look, Henry, there is no use; I have got you
licked; I have got the votes. Why come up and waste
your stuff on community property, and so forth, and
so on, we have done our best. I mean, I am just thinking out loud.

- 10 MR. PAUL: Incidentally, you got community property

through on the estate tax - the worst part of it.

H.M.JR: I am just thinking out loud. I may be

wrong; there are two ways to do the thing we have done;

One is to intellectually and honestly present the program and get thoroughly trounced.

MR. PAUL: Byrnes thinks very much along your lines.

He said, "Let's not go up there and butt our heads

against a stone wall. He said, We can get this all

agreed
on before, and then you can go up. We can stage
the show."

H.M.JR: Well, I think that that is a good frank
attack to these people on the Hill who say that they
are not going to ask the Treasury's advice. If they
think they are going to have the people like Eccles
and Henderson come up and sound off, we could stop

that. I think they will - if they won't go on my request,
then if necessary the President's request, and maybe
I could get this end of the Avenue pretty well lined

up so that whatever we agree on they will stick to.

MR. PAUL: I feel pretty sure that we can line up
all these others. I did see Eccles after he saw you.
He stopped in the office and was there until quarter
of seven.

H.M.JR: What do you think of that as an idea?
MR. BELL: Very good.

H.M.JR: I mean first have Paul do the groundwork
of seeing these people as rapidly as possible, and then

if they are not in agreement with Byrnes we will ask

Byrnes and Cohen and all the Administration people for
one evening or two or three evenings to sound off - have
kind of a smoker and see how near we can get together.
MR. PAUL: That is a very good idea.
H.M.JR: I mean, have as many meetings as necessary -

a smoker - I won't attempt to invite them for supper.

- 11 We might, but we can think that over.
MR. PAUL: You might have a buffet--

MR. BELL: Do it well in advance of January 1.

H.M.JR: I can still do it this year; I don't

know whether I can afford it next year, but this year
I can still afford it. (Laughter) Anyway, have enough
evenings until the thing is thrashed out, then certainly
Byrnes can't feel that we are trying to hog the thing.
We have the authority direct from the President, but I
don't want to use it.

MR. GASTON: I think that is exactly right. First

work on these fellows on this end and then use them to
work on the Hill.

H.M.JR: We can do it in a series of evenings;
and then after we get together, then invite the people
down from the Hill, including the Republicans.
MR. BELL: I think Byrnes can help you a lot.

H.M.JR: I have got a call in for Prentiss Brown.
Incidentally, I am going to try to get him to come to
the Treasury. . Did you know that?

MR. PAUL: No, I didn't know that. He is a fine
fellow. They feel his loss up there more than anybody's.
H.M.JR: I am going to try to get him to come to
the Treasury and help us just on this kind of stuff.

How does it sound to you, Walter?

MR. STEWART: It sounds good.

H.M.JR: In other words, if we do the spade work

between now and the first of January it will make life
so much better. We have been Sir Gallahad; we have

made our record.

- 12 MR. BELL: I think that is right. We have made
our record. Let's get some compromises here to get
some taxes.

H.M.JR: We have had the satisfaction of being
noble about it.
MR: GASTON: We laid pretty good ground work.

The thing has sunk in all over the country everywhere
that the points you made are correct, and the tax bill
did not yield enough revenue, and it didn't do what

it should do to control inflation. Everybody is con-

vinced of that.

MR. WHITE: More than the question of ability there.
I think by taking the position you did you make the
Congressional position that much weaker. If it wasn't
important, they wouldn't care what you did. They are
in a sense vulnerable before their own taxpayers that
they dislike the position that the Treasury takes.

I think much more has been accomplished than merely

the statement of a principle to which you subscribe.

MR. HAAS: If you don't do this type of thing,
the education which is involved is so important they
will hire a whole group of experts up on the Hill and
sort of duplicate the Executive Department. They are
talking about that now.

H.M.JR: Well, they may do that anyway, but this
thing - if we can get this group down here, we can have
an understanding. After all, we agree on something,
on a program on the Executive end. Then the last evening
would be with the President. On Byrnes' committee he
has got Agriculture and Labor, and they should sit in.
Then the last evening have the President say this what I want the President to do is to make a speech.
I want him to go out on the end of a limb once on taxes.
Does it sound all right?
MR. GASTON: Yes.

MR. PAUL: A swell idea. We are going to have a

little more time, too.

- 13 H.M.JR: Well, we have got six or seven weeks.
MR. PAUL: More than that, because there is

quite a period for them to organize their committees
in January.

H.M.JR: We have got two months, and I think we

ought to keep at this thing and at this thing. Then

we will get somewhere. And it will be so much easier
when you go up on the Hill.
MR. PAUL: You can't hurt my feelings by making
that easier.

H.M.JR: This will just jump the gun - anybody
who is sitting up nights and trying to circumvent
the Treasury on this thing.
MR. PAUL: One of our great enemies in that
respect was defeated - Boehne of Indiana.
MR. BELL: Was he defeated?

MR. PAUL: Yes, by a big margin, ten thousand

votes.

MR. BELL: What did you get in his place?
MR. PAUL: He won't be on the committee.

MR. BELL: You will get more Republicans on
the committee this year.
MR. PAUL: A share-the-wealth Republican in his
place.

H.M.JR: He may not be interested in taxes.
MR. PAUL: He won't be on the committee.

H.M.JR: Talking about share the wealth, Josh

Lee was kind of a wild fellow, too.

- 14 MR. GASTON: Maybe we had better talk to Willkie.
(Laughter)

MR. PAUL: It might not be a bad idea. I talked

with Douglas and Hugo Black last night and found them
very interested and quite informed about taxes.
H.M.JR: Douglas and who?
MR. PAUL: Hugo Black.

H.M.JR: Well, are we all right?
MR. PAUL: Yes.

H.M.JR: Walter, you sit in on that thing with me
at eleven, will you please?

TREASURY DEPARTMENT
INTER OFFICE COMMUNICATION
DATE

Secretary Morgenthau
FROM

November 10, 1942

Randolph Paul

There is attached, for your information, a copy
of a memorandum entitled "Tentative Tax and Savings

Program for 1943," which I received from Ben Cohen.

him

TENTATIVE TAX AND SAVINGS PROGRAM FOR 1948.

1. Tax Program
(a)

Regular Taxes - Apart from social security

tax and spending tax below referred to, it might be
well for the present, instead of seeking a general
revision to the tax law, to concentrate on the plugging

up of major leaks and the correction of glaring inequities.
These inequities are:

(1) Depletion allowances for oil and
other mineral.

(2) Tax exempt securities. In taxing
income from outstanding tax-exempt bonds

and possibly also from future issues, tax
credit should be allowed equivalent to the
increased yield he might have obtained from
an equivalent investment in a taxable security.

Such credit would tend to maintain existing
market differentials between tax-exempt and

taxable securities.

(3) Joint Returns. Tax on joint return
basis might be applied only to combined income
in excess of $2500, permitting combined income

43
2.

under $2500 to be reported separately by

husband and wife. (Consideration might also
be given to permitting combined income under
$2500 to be equally divided between husband and

wife by whomever earned, thus giving all states

the benefit of the community property principle
on combined income under $2500 income.)

(b) Social Security Taxes. A substantial increase
in the social security tax would seem desirable and if
obtained would remove the need of applying the proposed

compulsory saving plan or the victory tax to the low
wage groups earning less say than $20 or $25 a week.

If coupled with increased coverage and benefits, this
would constitute an acceptable and highly benefitial
form of compulsory saving.
(c)

A graduated tax on retail spending. It is

suggested that coupons be required for all spending

for essential consumption items (except those specifically
exempted by the government, because of their abundance,

or for special policy reasons such as might be present
in the case of milk and bread, the consumption of which
might be encouraged within the limits allowed under

44
3.

specific rationing schemes.) Each adult individual
should be entitled to a minimum amount of free
coupons, say $1,000, (coupons acquired in excess of

that amount would be subject to a graduated tax,

starting at 10% on the first $500 excess with an

additional 10% increase in the tax until the tax
reaches 100%, or there might be some advantage in
gearing the scheme from a $50 per month free coupon base.

2. Compulsory Lending, collectible at the source.
A stated percent, say 10 or 15 or possibly 20
percent, of all salaries, business drawing-accounts,
wages, in excess of $25 per week, a similar percent
of all dividends and interest payments, a somewhat
smaller percent on all fees and commissions earned

by firms and individuals bearing their own overhead
expense. No interest should be paid on compulsory

lending, but principal should be returned within 5

years after the close of the war, with provision for
earlier payments in cases of actual need.
The privilege of applying compulsory pro tanto

credits on income tax might be allowed to a limited

extent in specified cases. The credits might be allowed

\ 4.
for life insurance premiums, not exceeding a specified

portion of the taxpayer's income, or for the payment

of a limited class of debts or in the case of special
hardship such as that of a taxpayer whose income has

been sharply reduced from that of the preceding year.
Consideration should be given to extension the
compulsory lending scheme in appropriate form to

corporations, not 80 much because of its stabilizing
effect as because of it s merits in reducing the cost of
financing the war and in reducing the need for high
pressure war bond campaigns.

3. If these proposals are properly integrated into
the tax system, it might be possible to drop the victory

tax entirely. It might also be possible to substitute
for, or add to the present high salary controls, a
special tax of 50% of all net income in excess of $25,000,

after the payment of all other taxes, of 75% of such
income over $50,000, and 100% of such income over $100,000.

November 10, 1942.
11:10 a.m.
FINANCING

Present:

Mr. Bell
Mr. Buffington
Mr. Stewart
Mr. Eccles

Mr. Rouse

Mr. Piser

Mr. Goldenweiser
Mr. Draper
Mr. Szymczak

Mr. Williams
Mr. Young
Mr. Haas
Mr. Baker

H.M.JR: Well, gentlemen, the question before the
House is should we have a combined effort to raise
twelve or thirteen billion dollars between now and the

first of January, with the hope that we can rest in

January and let them do something else, or do it in
the usual way that we have been doing it, in two bites,
and we have been spending quite a lot of time.
Mr. Eccles came to the house Sunday. I ruined

his golf for him on that day; he didn't play at all. I

thought if he had the financing on his mind he would go
over eighty, so he thought he would rather not play.
(Laughter)

MR. ECCLES: Yes, I'll say.
H.M.JR: Then we had this Victory Fund Committee

in all day yesterday, and I think from all accounts it
was a good meeting.

I think we can follow the usual procedure and let
Mr. Bell tell us what we have in the way of money and
what we need from now until the first of January -

the first of February, and then we can continue the

discussion. So, Dan, if you will tell these gentlemen-MR. BELL: All right.

H.M.JR: Is Sproul ill?
MR. ECCLES: He is in California.
MR. BELL: We went out of October with about

three and a half billion dollars, and I figure that we
need three billion dollars in November, three billion
dollars in December, and about four billion dollars
in January. That is based on the present bill program

which would give us six hundred million dollars in each

of the months of November and December, and two hundred

million dollars in January when the present cycle runs
out.

We estimate that we will get six hundred million
in tax notes in November, five hundred million in

December, and five hundred million in January; and I admit

that those estimates may be low, but I still do not want

to depend on those notes too much until they have been
proven for several months.

We expect to get eight hundred million dollars in

November from savings bonds, a billion and seventy-five
million in December, and a billion seven hundred and

eighty-five million in January. On that basis we would
go out of November with three billion four, and go out of
December with about three billion, and out of January

with three billion.

If we adopt the program that you have just suggested

of trying to get thirteen billion dollars instead of the

ten billion six, which we need for November and December,

and we are successful in getting that much, I think we

could run until possibly the first or the middle of

February before having another major financing or another
drive. About that time we would run out of money.

-3That, of course, would eliminate the four billion
dollar contemplated financing here in January. This

contemplates taking up the two hundred and thirty million
dollars of maturing notes on December 15 - cash.
H.M.JR: Are you through?
MR. BELL: Yes.

H.M.JR: Rouse, no one has told me - what is the
condition of the bond market?
MR. ROUSE: The bond market?

H.M.JR: I mean the Government security market.
MR. ROUSE: The Government security market, during

the past ten days, has pretty well gotten over the
psychological effect of the two's and the one and a
half's. The certificate financing was very successful,

and the certificate market is in excellent condition.

In fact the prices of them have gone beyond where they

should be from our standpoint. The one and a half's
are still in some supply, but the one and a quarters of
March '45, which were in full supply, all through
October, dried up and there is a small premium bid, but
there is a premium bid for the two's of '50-'52.
The selling we are seeing in the marlet now is in
anticipation of a reopening, or the equivalent of the
registered two and a half's, '62 - '67. We are having

a substantial amount of selling from insurance companies,
pension funds and endowment funds, looking for the oppor-

tunity of reinvesting in the tap two and a half's, socalled. That is where the supply is.

Excess reserves have been fluctuating about two
billion dollars, and everybody appears to be very comfortable. The news of the past week or ten days has put

the October situation pretty well behind us. These
people are interested in other things and talking about
other things. Now they are looking ahead rather than
behind.

H.M.JR: As we continue to get this flow of good

news, what effect will that have on the Government bond
market - Government security market.

MR. ROUSE: I think our active participation in
the war, and more activity as evidenced by the African

developments, will bring the war home to people more

closely, plus the additional casualties that are coming
into every community. I think it should help the distribution, especially of the war savings bonds and the
distribution to individuals if such a campaign is carried
out as is talked about.

H.M.JR: Marriner, I do not know - a commitment
has to be made by either the Federal Reserve Board
or the Executive Committee. Is the Executive Committee I mean, are you gentlemen ready to advise me that you
would like me to go ahead with a drive and participate

in this drive? I mean, have you got that information,

or do you want to ask me some questions? It is the
Executive Committee, isn't it?

MR. ECCLES: Yes, it is the Executive Committee.

I discussed this letter with the Board, too. I had

not had a chance until yesterday because, as you recall,
I saw Dan on Friday and you on Friday, and then I saw
you on Sunday - Saturday intervened - and then I was

here yesterday at this meeting. I left here at four

o'clock and met with the Board and gave them a report
of the developments up to last night, and then we discussed the whole situation. This morning we met at
nine o'clock, and we have been discussing the various

aspects of it for a couple of hours. Bob and Hap
Young and Al Williams joined us. Al and Hap are the
banking members of the Executive Committee. Hap is

the alternate to Sproul. We discussed the whole situation
this morning.

I think, as I interpret the discussions with the

Board last night and with the Committee this morning,

they are favorable to a drive, trying to get a substan-

tial amount, but it is like I said the other day, it is
a conditional thing. They think that it can be done if

-5other things are done, and they would favor a drive and
favor doing what is necessary to make the drive successful.

If any of the rest of you-MR. WILLIAMS: That is correct.

H.M.JR: For instance, I do not see - Bell told me,

one of the things is, should we or should we not have a

certificate. I do not know whether you fellows want to
go into that this morning or not.
MR. ECCLES: We are prepared to go into the whole

thing, and I think while these men are here that we
should give - we have not much time, we feel if a drive
is going to be made that we need just as much prepara-

tion as possible because there is lots to be done.

H.M.JR: There are two thoughts. One is that we
should start the 23rd or 24th - then you see, you go
right into Thanksgiving; and another one would be to
start on Monday, November 30.

MR. ECCLES: That is too late.

H.M.JR: You think that is too late?
MR. ECCLES: tyes, I think it is pushing it over

too far into December.

MR. BELL: You mean to start on the first?
MR. ECCLES: Start on the 24th and run over to the

7th. You ought to figure two weeks, there - allow for
that long.

H.M.JR: I don't know as I understand - as to when

we are going to start, that is the question.
MR. ECCLES: That would be the 24th.

H.M.JR: That is a Tuesday.

-6MR. ECCLES: Well, Monday, the 23rd.

MR. BELL: The question was raised as to whether

that could not go over to the first, that starting time.
MR. ECCLES: Al, what do you think about that?

MR. WILLIAMS: As to the effect of the additional
week?

MR. ECCLES: Start on November 23 - do you have
any strong leanings?

MR. WILLIAMS: No, I have no strong leanings. I

think the 24th - the additional week is not sufficient
to do a thorough job of expanding and intensifying the
organization.

MR. ECCLES: You would have the drive go just as

long whether you start on the first or the 24th. It

is merely a question of the starting date.

MR. YOUNG: I think you would start the last week
in November - the 23rd, and give us more time.
MR. ECCLES: I do not believe that it would make

an awful lot of difference - the exact week. I mean,

if we saw that the time between now and the 24th crowds

us, I think you could push it over to the first. If

we could be ready by the 24th, I think that would be
better.

H.M.JR: Marriner, between now and Thursday morning

I want to settle this thing - are we going to have a

drive and when, and then have everything focused toward

that thing. I mean, I would like to announce when I

have my regular press at ten-thirty Thursday morning,

either that we are or we are not going to have a drive,
and if so, when; then concentrate, if it is going to be
the 23, which is a Monday, concentrate everything; or

if it is going to be a week later - the 30th.

MR. ECCLES: There is a lot for these Victory Fund
Committees to get organized; there is a lot to do in
getting additional war loan accounts set up in these
banks, and getting banks that now have war loan accounts

to carry larger balances to avoid a shift of funds which
is very important; if you are going to make a big drive
you have got to keep the funds in the banks. You cannot
have a lot of them coming out or you will upset your
whole
financial picture, and there is quite a job to be
done on that score.
MR. SZYMCZAK: That would speak for waiting until

the last of November in place of the 23rd.

MR. ECCLES: I think it could be done if we started

Thursday. If by Thursday the Victory Fund Committee
could start to expand and get organized and the Reserve
Banks started to work on the member banks, and get the
banks which do not have war loan accounts prepared to
take war loan accounts.
H.M.JR: You would have ten days from Thursday to

get ready.

MR. ROUSE: It requires Board action - the war loan
deposits require Board of Directors action.
MR. ECCLES: They could call special meetings, I

suppose. Well, let's do this. Could we leave the ques-

tion of the date, whether the 24th or the first, and let
us consider it? We did not discuss that aspect of it
very long. I would like to think about it and maybe
check it with some of the other bank people.

H.M.JR: Let's call it the 23rd or the 30th. They
are both Mondays. The only question I raised - it was
the Victory Fund Committee raised it--

MR. ECCLES: It is a proper question.
MR. BUFFINGTON: They would like to have until the

first, if possible. They think they can do more in

-8getting this added personnel in if they have that additional time. They do feel that if you go ahead on the
24th that they can effectively utilize the volunteer
directive personnel that they have.

MR. ECCLES: I would give a lot of thought to their
advice because we are going to put a lot of responsibility

on them. If they want the first, I certainly would not

press them.

H.M.JR: They did not say definitely.
MR. BELL: No, they did not recommend the first.
They just say, "If it could be put over it would help
us tremendously and we would do a better job."

H.M.JR: Bell and I talked about it and I think
Bell ought to tell you what it means if we went over in
the 30th in the way of over-draft.
MR. BELL: We will be out of money, as it looks
from these estimates, on the 27th. We are spending

pretty heavy on the first of this month. Whether it will
keep up or not, I don't know. If it does we will run
out of money before that. But according to this we

would not have an over-draft with more than two or three
hundred million dollars on the 30th when we opened it.

MR. SZYMCZAK: The more money you need and the more

of an over-draft you have, the easier it is for the Victory Fund Committee to go out and sell. I mean from
two points of view, you have deposits, you have excess
reserves and you have the organization.
MR. BELL: We might even decide that before we

open it we want a larger over-draft than that so we

would leave some balances.

MR. ECCLES: This is a point; Doctor Goldenweiser

made it. I think it is important to think of it in
this way. I think if you will you might feel better

about it. In effect, really, what you have is a five
billion dollar balance with the Fed. I mean, that is

-9what you have got at all times, and it is an overdraft,
in a sense, but you give to us a certificate of deposit;
that is what it amounts to. We would like, all of us,
for the Treasury to feel that in considering the ques-

tion of balances, that there is this five billion dollars

available as a balance that can be drawn upon. It would

make the financing much easier where we are going to

raise large amounts to be used over a period if you
would let the actual balances run very low or disappear
and begin to use this overdraft or this balance with

Fed. It is a revolving fund, and then as you get the
money in, you pay that back. It is an automatic instrument, here, that just works automatically; that is what
it does. We would like you to look at it and feel that
that is really a balance you have got there.
H.M.JR: I appreciate Doctor Goldenweiser's naming

the child, but there has got to be an awful lot done to

educate the public on this thing, because there has been

this terrific criticism which I had to take personally on
account of the last financing. A number of people
talked about it and said the only thing worse would have
been if the Federal Reserve had handed in a subscription,

itself. There is an awful lot of education that has to

be done. It is easy enough to educate the people in
this room, but when it comes to the others who do not
want to understand it--

MR. ECCLES: I think this is true, though - that is
quite a different thing than direct purchases, because
it was used in this manner - this overdraft privilege during Mr. Hoover's regime, and during peace regimes.
I mean, no one has looked upon the use of these funds

for a few days - an overdraft privilege - as a direct

purchase, and at the time we got the legislation from
Congress that very clear distinction was made.

H.M.JR: That is right.
MR ECCLES: It was for this purpose, primarily,
and I think that there would not be the same criticism
at all as there would be if you put an issue out of a
fixed amount and then Fed had to take up part of the
issue.

- 10 -

H.M.JR: Well, Marriner, I think the thing -

whatever we decide to do, we have got to have the most

careful press conference, and go into the thing more
.

carefully with the newspaper men than we ever have

before.

MR. ECCLES: Could we do this - could I give you
what I think we are all agreed upon as a recommendation
on the whole program?

H.M.JR: Have you got it written out?
MR. ECCLES:- I have got the figures, but I would

like to - I have to say something. Piser, will you

give the Secretary some of those copies? I have the
original here.
(Two papers entitled "Treasury Financing in December 1942 and January 1943" handed to the Secretary.)

MR. ECCLES: That is Number 1 - that is the first

choice, and this is the alternative. There are two
different programs here. If I can make a preliminary
statement--

H.M.JR: How much time do you want for your statement? (Laughter)
MR. ECCLES: Just a few minutes so I can get to

this figure here. (Indicating)
We feel that - and I would like Al Williams, a
little later, to discuss certain aspects of this - I
won't go into the detail of it, but in order to put

a program over with the public and with the banks,
there is a good deal of educational work that has got to
be done, and clarification of quite a number of points

that has got to be made. We feel that this is a transition from one type of financing to another. We are
getting onto a real war financing basis. It is important
that the public be taken into our confidence completely

on the picture, and that they see it, so they will know
exactly just what it all means and get an understanding

of it.

- 11 -

We feel that this is of such great importance that

a radio address should be made and it should cover not

only the specific terms of the financing and the future

needs of the Government, but some of these other questions should be answered in this radio speech to be made,

and even the question of, possibly, the views of the
Treasury with reference to - we must do all we can to get
more in taxation. Don't let them think we are just
going out and financing this thing with borrowing; let
them feel that much more should be gotten in taxation.
Have them understand why it should be gotten, and how

important it is that investors should come into this,
and the duty of corporations - what is available for
corporations, the duty of savings institutions,

insurance companies, and 80 forth - individual investors and

banks. Give them all a picture of what part they are

expected to play in this. We feel that all this is terribly
important.

Now, getting down to the specific problem - and we
would be glad if you were willing to make such an address to submit some suggestions and recommendations that we

feel that you posail bly should include in such an address.
H.M.JR: I would be more than pleased to receive
them.

MR. ECCLES: Now, getting down to the specific problem,

we feel that we should approach this financing, not from
the standpoint of November at all, but we should think of
this as a December and January financing. November will
be practically over at the time the radio speech would
be made, and it could be stated that the Treasury's
balances are nil - that we start December with a clean
sheet so far as having funds are concerned.

Our thought is this, we would take this sheet, the

budget deficit of twelve billion four - our estimate of
the budget estimate. Piser's figure is eleven billion

four for these two months, taking the estimated expenditures as given out by the Budget, less expected tax

assets, and so forth, eleven billion four, but we have
added a billion just for the purpose of figuring.

- 12 -

That twelve billion four less "special issues to
trust accounts" - four hundred million - really means
and this is a figure that could be stated to the pub-

lic - that the Treasury, after taxes, will actually
need, to take care of their estimated expenditures,
about twelve billion dollars.

H.M.JR: Excuse me, what is the difference between

these two sheets?

MR. ECCLES: We have added a billion dollars to

one. One is eleven four, and the other is twelve four.
Just take the eleven, now.

This would give the public some gravity of the

size of the job. Here is twelve billion dollars that

the Treasury estimates will be needed here, approximately, that must be secured from the banks and the

public. That is the way they intend or desire to

finance that requirement; that the war savings or war
bonds campaign that will be going on continuously for
December and January will give two and a half billion.

Now, Dan figures it will be more than that. This is

conservative. I think it will be closer to three than
two and a half.

From tax notes other than what would be sold
during this campaign - at the end of December and
during the month of January, you see, these are on tap

all the time and there will be a substantial amount of
taps, of notes, sold at the end of December, and during
January - we estimate a conservative amount of five

hundred million that would just come in currently during
this two months' period. The Treasury bills will give
us six hundred million new money in December on a basis

of the present amount of Treasury bills; in January,
if you do not increase the amount of Treasury bills
at all, you get two hundred million, so that you get
three billion eight without doing anything. I mean,

this is just an automatic - this is financing that is

already going currently.

- 13 -

Now, I think that three billion eight is very
conservative. That is four billion, anyway, you might

say. That would leave an eight billion that would be
needed from the drive or from all other sources.

Now, our thought is that you should indicate that
you want in this campaign about six billion dollars.
You open the two's and a half and make a coupon issue
out of them; the one and three-quarters bond; make a

real drive on the tax notes, particularly the two-

purpose note that is an investment note as much or

even more than it is a tax note. We give a quota to
each Federal Reserve District for their share of the
six billion, and announce that you are going to get that you want six billion, and that you are going to
make a drive for it over this two weeks' period, using
the Victory Fund Committees.

You have offered a choice of three issues. To
the extent that you make the drive, the banks will
likely be required to take some of that amount; but the
amount that the banks would be required to take would
depend upon what was left after the drive, and the more

that is gotten through the drive, then the less the
banks would have to take.

Now, that puts the pressure on the banks, and on

the public, to go out and get it outside of the banks.

Criticism has been made that we get too much from the

banks. We said, "If we get it from the banks it is because the banks and the public, generally, do not take
enough, and therefore we are putting it on you." We

are pushing it right out to the banker, not to the

public, generally. These committees would go out and
get just as much as they can get, and when that is over
with, then what is left we would expect the banks to
take.

Now, in the one and three-quarters percent bond

- 14 -

and the tax notes, so far as their own taxes are concerned, they can take tax notes for their own taxes.
Then you could say that in January you would not
make a drive, but any additional funds that might be
required you would expect to get through Treasury bills

and certificates. Now, that would be about two billion
dollars, we estimate, that you would have to get in
January out of Treasury bills and certificates, having

your balances practically run out by the end of January,
creating an overdraft preliminary to another big campaign to get funds for the next two or three months.
Now, six billion does not sound too ambitious.

An estimate of this sort gives the public a clear picture of what the needs are for December and January,
and lets you know exactly where you expect to get the

funds, and that the banks are only expected to take

what they fail to sell. The responsibility, then,

for what the banks take is not up to the Treasury;
it is up to the committees that are making the drive.

My thought in issuing a certificate now, is that

it does compete to a considerable extent with the

short tax note; that if a salesman goes out to sell

securities, and if all he sells is a certificate, if

he did not have the certificate he would be more likely
to sell one of these bonds or one of these three-year

tax notes. I do not like to see the effort put in
by a lot of salesmen to try to sell certificates if
we can avoid it. That is the one argument against
a certificate. That is number one.
The alternative plan - take a look at that.

H.M.JR: As long as you are going from one plan

to another, let me take that telephone call, may I?

(The Secretary left the conference temporarily.)
MR. ECCLES: Well, now, if the deficit is what we

figured, eleven billion four, that would leave eleven
billion to be raised.

- 15 -

MR. DRAPER: That is the lower figure?

MR. ECCLES: Yes, if you put it at twelve, deduct
three eight from that and that would leave you, if

you figure it as eleven, seven two; or if you figure
the deficit as twelve, it would leave a deficit - the
money needed to be raised - at eight billion.

Now, we have put down here - this is the second one -

that then if you want to announce eight billion as the
funds that are required, then you would include the
seven eighths. You would have the four issues and

get eight billion, and then not undertake, in January,

to do anything with either bills or certificates.

We feel that to get the six is an easier figure,
and you get more flexibility than if you leave open
January - not for a drive, because when it comes to
bills and certificates, the public is not concerned
about that. You could always get what you need in
bills or certificates to fill in what you need in
January, and you have got an ace in the hole, always,

without making any drive at all.

H.M.JR: What do you think, Dan?

MR. BELL: Well, I certainly do not like, in each
Federal Reserve district - I think if we are going to
make an over-all limit it ought to be the over-all
limit that includes the banking financing as well as
the drive through the Victory Fund Committees.
MR. ECCLES: I agree with that, Dan.

MR. BELL: I would like to see the Secretary, when
he makes that over-all limit, say how much he expects
to get from the banks. Then there is no question in
the end about it being a failure by anybody. We have
told them beforehand that we want four billion dollars
from the banks, and I think it is in everybody's mind,
then, what he wants.

- 16 MR. ECCLES: But that does not mean the banks will

come in with four billion. You still might have a
failure.

MR. BELL: We have got it set up 80 that it is

almost sure of success to the extent of the money we

need, but I think that if you have the Secretary say
that he is going to take whatever we did not get outside of the banking system from the banks, and then
these unfriendly newspapers are going to say, "Well,

it was a failure." I do not think you can get around
it.
MR. ECCLES: It does notamount to a failure. He
has to say the total amount he wants. In an over-all

picture, you have to say eight billion, or what you

are after. The committees would be lost without some

indication of what is to be gotten.

The question is, if you want to get eight billion

and you say you are going to get four from the banks,
then that means you are going to get four from the public.
You have as much chance of a failure that way because

if the public does not come through with four billion,
then what? It seems to me that you have got to forget
the question of failure and say we need six or eight

billion; then that is the drive and you are going to
have to get it.

H.M.JR: Bell tells me you have been on this thing
for three hours yesterday - on the same thing - and there
is no use hounding him. He does not agree with you.

He said for three hours you did this thing yesterday,
and there is no use. He has thought this thing over
very carefully. He talked to me about it this morning,
and possibly he is a little bit more conscious of what

I went through, because he was by my side the whole time

the last time, and he wants to protect me, not as an

individual, but as an official - the head of the Treasury so that I do not have to go through the very same situation I did last time. I have said right al ong, if the

thing does not go well - they do not know this committee
exists; they do not know who is a member of it; that is
no reflection on the committee. I mean, the name of

- 17 the committee or the member; that was never once mentioned.

In the papers it was all Henry Morgenthau, Jr. - or were
you mentioned once? Bell wants to look after the
Secretary of the Treasury.

MR. ECCLES: I do not see that that protects you

any more than this other method.

H.M.JR: But listen, you have been on this for
three hours yesterday; you have had your day in court,

and Bell and I did not agree with you. There is no

use pounding us into insensibility on this thing. I
mean, for three hours you were on this thing - what is
the use of pounding us into insensibility on this
thing?

MR. ECCLES: Your idea is, we will make our recom-

mendation. As I said, we unanimously agree that it
would be a mistake to put a quota on the banks at
first. We all unanimously agree.

H.M.JR: Gawd, there are a lot of other people
in the room. I do not know what they think.
MR. ECCLES: We discussed it this morning. I
told them the issue and I am speaking for the Committee.
They can speak for themselves, if you want.

H.M.JR: I would like to hear them once.
MR. BELL: Do you all agree there ought to be a
quota on each bank? That is what I thought you said.
MR. ECCLES: Here is what I said. We all agree

that you should state if you need six or eight billion
for this financing - what the total amount is that you

want, and that you should then not give the banks a
quota, but then you should say, "We are going to make
this drive for two weeks; we are going to raise whatever we can possibly raise, and then what is left over,

whether it is three billion or two billion or four
billion or five billion - whatever it is; after we have

- 18 done all we can through a two-weeks' drive, then we
expect the banks to take up the balance." I mean, we

feel that any other approach to that would be disastrous - just disastrous.
H.M.JR: How could it be disastrous?

MR. ECCLES: I mean, if you go out and merely say,
"We want four billion from the banks, and then we are

going to get all we want from the public."
H.M.JR: That is not what Dan says.
MR. ECCLES: As I understand it--

MR. BELL: I am perfectly willing to have the

Secretary announce that we have been thinking of November and December, and I had just as soon go to December

and January. I would like the Secretary to announce
that he needs eleven or twelve billion dollars the next
two months, and that he is going to offer all of these
securities and the Victory Fund Committee will have them
for the next two or three weeks for sale for anybody that
wants them, outside of the banking system. During the
drive we will open up the seven-eighths and the one and
three-quarters to the banks for two days, and we will
take two billion dollars from the banks on each one of
those issues, and that sets the banks. When you get

through if you have got thirteen billion dollars it

has been a huge success, and you can so announce it.

You are almost certain, in this program, of getting
the eleven, because I think you would get it without
any drive, 80 far as outside of the banking system is
concerned.

MR. ECCLES: But you don't want eleven in a drive.

MR. BELL: You want eleven, all told. We haven't

ridden this horse yet. The Secretary is entitled to
some experience before he goes out on a race track.

MR. ECCLES: You are talking about getting thirteen.

All we are talking about in this drive is to get six or
eight.

- 19 -

MR. BELL: I have hopes of getting thirteen.
MR. ECCLES: You have got to get thirteen. I mean,
that is what you have got to get.
MR. DRAPER: He means - don't you mean, Dan, thir-

teen before these other credits for which we have allowed

almost four billion - three billion eight - savings
bonds, tax notes, Treasury bills, and so forth?

MR. BELL: That is thirteen including those.
MR. DRAPER: That is right, so his figures practi-

cally jibe with ours.

MR. BELL: I am taking it up to December 31.
MR. DRAPER: That is right. We were going through

January.

MR. BELL: If this program goes, and we get thirteen
billion dollars, and then on January 1 we will have

about six billion dollars to carry us through January

and part of February, at which time you can have another
financing like we have had in the past or you can have
another drive.

H.M.JR: The only difference-MR. SZYMCZAK: There is no question, I think,

between us on the amounts or the drive or banks. It is
just a question of whether or not you should announce

at the same time that you want four billion from the
banks.

H.M.JR: That is all, and you are going to do it
anyway. Bell simply says if you are going to get four
billion from the banks, why not say so in the beginning
instead of making it look - as they will surely twist

it - as if the thing was a failure and I had to go to
the banks for the four billion. You are going to do it

anyway, so why not say so? It is a much franker procedure.

- 20 MR. ECCLES: You may want three from the banks, or
you may want five.
MR. BELL: Supposing you only want three and you

got four; it just cuts down on subsequent bank financing;

that is all it does. What I am trying to do is to make
this first step sure. There is no difficulty about
getting your money, I don't think, that you need, and
you might get a great deal more than you need. It
certainly doesn't put the Secretary out on a limb. In

my opinion--

H.M.JR: I am not going out on a limb if I have

my wits about me.

MR. ECCLES: What assurance is there that the banks

will come through at four?

H.M.JR: I will tell you what assurances - wait a
minute, nobody has mentioned this, and this is terribly
important. The ABA appointed a committee to work with
the Treasury and the Federal Reserve, and they will be

in here tomorrow and they, at their own offer, are going
to set a quota for each bank in the United States as to
how much it should do, and they are going to see that
they take it, by Gawd. I will put it up to them tomorrow,
just the way we did to the Victory Fund - "Can you do

this first job - take four billion dollars, two billion

of each of these securities?" and I will get a "yes" or
a "no". They are going to tell each bank how much they
will take.
MR. SZYMCZAK: Then the question of timing - would
you make that announcement simultaneously with your

drive or before your drive opens, that you are going

to get four billion from the banks; or would you try to

make your drive first and then make the announcement
later?

H.M.JR: No, what Bell and I have in mind, and I
don't see that there is so much difference, we think that
when this thing is announced that the American public is
entitled to know everything.

- 21 MR. SZYMCZAK: We agree with that.

H.M.JR: The whole business - and if we have in

mind to get from the banks two billion dollars of two

different securities, that that is part of the picture.
Now, if we want to give them all the facts - if the

Victory Fund Committee is not able to raise as much
money as we expect - if they should fall down - we have

said here that we can always increase our bills by that
amount, but that is a safety factor to see us through.
MR. BELL: Yes.

H.M.JR: The only difference I can see is - between
Eccles and ourselves - is that we want to tell the
whole picture and we expect, within this period, to

sell two banking securities, to raise four billion.

MR. SZYMCZAK: There is just this thought that
Marriner expressed to us, yesterday, and again

today, and that is that if you do not say, at the outset, that you are going for four billion to the banks,

then the banks, and the investment bankers, and the
Victory Fund Committee would all unite to get as much

as possible by this popular drive.

MR. ECCLES: And reduce what the banks have to take.

MR. SZYMCZAK: You may still want to take four billion

from the banks, but that would only increase the total
amount you would have.

H.M.JR: But, Szymczak, unfortunately, there are

a number of people in this country that do not like

what the Open Market Committee and we are doing. They

look forward to twenty or thirty years - ten or twenty
years - and they see that instead of financing this war
at an average of four and a half percent, we are going

to finance it at two percent, and it is worth a lot of

money to them to wreck us. Unfortunately, you can buy

a certain kind of publicity and they are not going to
sit back. They are going to do everything they can to

undermine the people in this room in order to get the

additional high rate of interest.

- 22 -

Now, if you take time in this campaign and tell

the whole story, 80 if we go after four billion it is

part of the program--

MR. ECCLES: Isn't this telling the whole story?
You are implying that what I am proposing is not to
tell the whole story.
H.M.JR: Yes.

MR. BELL: You are leaving an open end on the
banks; that worries me.
MR. ECCLES: You are leaving an open end on the
public.

MR. SZYMCZAK: May I ask this other question? The

committee of the ABA that is studying this is coming in
tomorrow. They are studying it along the lines of the

four billion, or just the question of quotas?

MR. BELL: I gave Mr. Hemingway the whole story,

but they are studying it from the standpoint as to what

the banks should do in helping the Treasury program.
One is that they should get behind the Treasury program
and sell as many securities as possible outside of the

banking system; and that should be their first duty.

The second is that they should see that every issue goes

over where it is a banking issue, and to see that that
goes over, they want to write formulas in their letter
telling them about the way they should subscribe to
securities, based on their deposits or other resources.
MR. SZYMCZAK: That brings us to another point

which Al Williams brought out this morning, and that is
a lot of the bankers want to go all the way, as you know,
but they want to know something about the pattern of
rates, they want to know something about the reserve
picture, they want to know something about the ratio

policy, and there are certain other questions in their

minds.

H.M.JR: They will be down here.

- 23 MR. SZYMCZAK: Fine.

H.M.JR: And I have invited Eccles, and whoever he

wants to bring, to sit with us when I see them, so it
is one family, and if there is any thought of playing
one against the other, it cannot be done.

I think I can answer you, Marriner, may I?
MR. ECCLES: Yes.

H.M.JR: Couldn't we do this, in order to satisfy

what Eccles has in mind - and a quota is a good thing why don't we set a very low quota for ourselves with
the public?

MR. SZYMCZAK: By districts - to you mean the total

quota, or by districts?

H.M.JR: No, no, an over-all. I mean, set one that
we feel is an absolutely sure fire; then if we go over

it by twenty or thirty or forty percent, that is all

to the good. I think, if I understand what Eccles has
in mind, that would take care of his point.
MR. ECCLES: No, that is not my point. My point

is to tell the public that you want what you are going
to need here, which figures eight billion dollars,
approximately, to take you through. That is about
what you need after you get four billion from these
current war savings and other issues. You have got

about eight billion left. Now, if you are going to give
the public the full picture of what you are going to have

to spend for December and January, and you deduct from it

what you get from these other sources, it leaves eight

billion, and you have got to let the public know or
you are not telling them the story. You need eight
billion dollars. Now the question is, where do we get
eight billion? If you say we are going to get four

billion from the banks, that means we are going to get
four billion from the public, and as much more as we
can.

- 24 -

H.M.JR: You don't object to that, do you?

MR. BELL: Well, I still think it leaves you out on

a limb by leaving that banking issue open. Whatever
you put into the banks after you have your drive is going

to be a failure.

MR. ECCLES: Announce four billion, if that is your

point. My point is that you have--

MR. BELL: Announce that at the beginning?

MR. ECCLES: My point is, if you are going to take
the public into your confidence on your whole financing
need for December and January, if no more financing is
done in December and January, then you are going to

need eight billion dollars - that is where you come out.
MR. BELL: That is about right if you want to go

out of January with no balance.

MR. ECCLES: Now, the public is going to be interested -

the first question that is going to be raised is where

do you get the eight billion dollars and how do you expect

to raise it? Now, if you want to say that we expect
to raise four billion from the banks and four billion
from the public, then of course-H.M.JR: Is that what you want to say?

MR. ECCLES: I think you are taking more of a chance,
and putting the Secretary more on a limb that way than

if you - my suggestion is to protect the Secretary, and
I think you protect the Secretary more fully if you say
you are going to get all you can get from the public
and then the banks are going to take up the balance,

whether it is one, or two, or three, or four, or five.
Everybody knows that the banks are the last line of
defense, and they are going to have to be used to take

up what is left over.

H.M.JR: Now let me ask Bell. Bell, if it was left
entirely to you, how would you announce it?

- 25 -

MR. BELL: If it was left entirely to me, I think

I would go back to the original.
H.M.JR: What is that?

MR. BELL: I would not announce any over-all limit.
I would say that we are going to have a drive to sell
as many securities outside of the banking system, and
then all I would announce would be the four billion
dollars from the banks as the limit.
Now, I know the Victory Fund Committee all feel

that you have got to have an over-all limit, something
to shoot for, but I think if you had that program, and
said that what you are going to get from the banks are
those two issues of two billion dollars each, and then

you came out with this thirteen billion dollars - I
think it would be hailed as a great success.

H.M.JR: Well, I mean, if the eight billion dollar
figure - say you are going to get four billion dollars

from the banks and four billion dollars from the public-MR. BELL: Or any more that they want to subscribe

over and above, but four billion is the limit from the
banks.

MR. SZYMCZK : You wouldn't mention the four billion
from the public?

MR. ECCLES: If you mention the over-all figure, it

is a natural deduction. I think if you are going to take
them into your confidence you have got to give them the
story. The Victory Fund has to have something to shoot

at.

MR. ROUSE: With a general statement it won't be
as hard to get something satisfactory as the extreme

position indicates.
H.M.JR: I do not think this is nearly as important
as spending the time on the organization and getting the
salesmen together, and all those things. I mean, it

- 26 seems to me - Eccles has his ideas, and he may be right;
we have ours; we may be wrong, I do not know, but I

would like to think more about it. I do not think the
thing is going to sink or swim on that.

MR. SZYMCZAK: No, it is just a question of whether
you are going to mention the total amount that you expect.

If you mention the four billion from the banks, then by
deduction, that is what you expect to get from the public,
and if you do not get that, the reaction will be bad.
H.M.JR: Could I think about it some more the rest
of the day? I would like to say this. The more I have
listened to this discussion the more I realize how many
things there are to do, and with Thanksgiving coming

on the 26th, I am very much inclined to start this on
the 30th.

MR. SZYMCZAK: I think you are right.

H.M.JR: If you do start it on the 30th and get
three full weeks ending the 19th - you could end the

thing, definitely, on the 19th, the Christmas week comes
a week later, you would have three full weeks in December and you would not come into the people who want to

shop for Christmas. You would get three full weeks in

December.

MR. SZYMCZAK: Are you doing anything with the war
bonds?

H.M.JR: There are a lot of things which are being
done and I have got their statements here, and as to
the publicity - we are clearing everything, working
through not only OWI but, which is more important, the
Advertising Council. They have a lot of things on the
fire. The only thing about which there is any argument
is on the F and G bonds. They plan a big drive beginning

with the 16th of November. I think I am correct - they,
so far, have said they would discontinue this in every
place except the State of New York, but the State of

New York people are coming down here tonight to have an

additional conference, with the possibility of their
giving that up as well. Isn't that the status of that?

- 27 MR. BUFFINGTON: Mr. Secretary, four of the
Executive Managers, Perry Hall, Patton, Bendere, and Grunigen,

are in my office now, and they think some very definite
statement should be made that the F and G drive is

called off in all states or they feel that the confusion
will not permit them to do a good job on this deal.
They came in this morning to see me after I talked with
you. We planned to have a meeting with Mr. Bell as
soon as we can to discuss it with Gamble, but I do

think, after listening to an hour's conversation this
morning, that that is vital to the success of this
undertaking.

MR. WILLIAMS: I think that is correct, Mr.Secretary.
H.M.JR: To answer Szymczak - as far as I know that

is the only thing. They have got a lot of other drives

which would not in any way bother, but the F and G drive we have been over everything.

MR. BELL: I think that is right.
MR. SZYMCZAK: Can I ask one more question? Shall

George Buffington and all of us go right ahead with this

Victory Fund Committee - have them get organized and get

going, or do you want us to wait, I mean, on this plan
of expansion and hiring people.

H.M.JR: As far as I am concerned. I do not know
what Williams had in mind - I haven't talked about keeping up the excess reserves or anything like that, because

I take it that you people will do everything that is

necessary to be done. I could spend a couple of hours

on that, but I take it that is what you are going to do.

MR. ECCLES: That is right. You will have substantial
reserves if you let your balances run out. That will
become deposits-instead of the Treasury, it will become

deposits of other people and will help you in your drive

and, likewise, it would mean the excess reserves would
automatically increase as the balances the Treasury has

with Fed disappear and you get an overdraft. All that
will automatically build up the excess reserves so you

ought to have a substantial amount of excess reserves on
this program.

- 28 -

H.M.JR: I still lay more stress on the excess

reserves than I think you people do.

Williams wanted to say something.
MR. WILLIAMS: My mind has been active on a some-

what different, but I think even more important phase
of the program than the details of the program imme-

diately ahead. As I see the picture, we are entering

into a new phase; we are going over from a monthly to

a bi-monthly basis, with a lull in January which gives
before. We are thinking of thirteen billion from
November 30 to January 1. Now, I think that calls for a
general statement of policy, a bringing together of

us the figures of a magnitude that we have never had

policies from whatever sources from which they emanate

and tie them together in a general pattern which might
prevail throughout the war and be announced by you to
the country.

Now, I called together the ten banks in Philadelphia

that had made supplementary contributions. We subscribed

two hundred million to those two's and one and a half's.

By any fair standard, we should have produced two hundred
and sixty. The burden of our conversation was what can

we do to avoid a repetition of this, and the bankers
were willing to do their share, but they said, "Now, you
can overload a willing horse. There are a lot
of banks in this district that are not doing what they
should." We said that there ought to be a quota - a bank

quota, and there is a lot to be said for having that
self-imposed.

MR. ECCLES: Individual banks?

MR. WILLIAMS: That is right. You experimented with
it and we experimented with it, and I have got some very

interesting results here by specific banks which I

think will throw light on the general point that I am

making.

Here is a bank that subscribed five million and

their quota was four million six. Here is one that

- 29 -

subscribed fifteen and their quota was thirteen. Here
is another that subscribed four million and their quota
was three. Here is one that subscribed a million
four and their quota was five eight. There is one that
subscribed two hundred thousand and their quota was

eight hundred and fifty. Here is one that had a six
hundred million eight hundred thousand subscription

and their quota was two million eight.
MR. BELL: Based on deposits?

MR. WILLIAMS: Well, that is based - it is a combination of adjusted deposits and what we call adjusted
capital. The reserve did not come into it; we purposely
eliminated it. You could work out any rational system

for the distribution. I think the principal point is
that there was wide variation here in what the banks

did.

"Well, If they said, "we are not going to criticize

the small country banks that did not come along because

there are a lot of questions in their minds and they

want those questions answered." Well, what are some

of those questions? The question that they raised was

what is going to be the attitude in the future towards
an all-out effort on the part of the bank in support of

the Treasury's program that extends to liberal borrowing?
What is going to be your attitude toward a marked shift

in the capital deposit ratio? What is going to be the
attitude toward certain maturities? A man specifically
told me that he had been criticized for purchasing

Governments. For over five years, when we were coming
along asking him to buy Governments, he had responded

to our request, but, he says, "You had better get integrated on this."
MR. ECCLES: The examiners?

MR. WILLIAMS: Now, the examiners - the State Banking Commissioners - in the country are meeting next Monday and Tuesday, and it would seem to me that if the

regulatory authorities here in Washington could get together
on what was not a detailed announcement of policy, but

- 30 something that was general enough to be of guidance,
if we could have an announcement from you, Mr. Secretary,
as to what you were expecting the banks to .do - the
insurance companies, the pensions and other trust funds,

and the corporate business interests of the country - if

we could make an announcement concerning the shift to

a bi-monthly basis, if there is likely to be one. I
do not think you would have to be definitive, but I
think you could give to all of the interests of the
country a statement that would weld them together.

We are in a natural transition period here, now. W,
are intensifying the organization of the Fictory Fund

Committee; we are in a new phase of the war. There would

be a lot to be said for the laying down of a general
policy which might prevail. You could reiterate your
stand on the two percent, which I think could bear repe-

tition.

H.M.JR: That is all right with me.
MR. ROUSE: I should have amended my statement or

added to it to say that Dan's speech to the IBA in
New York facilitated this transition in the market the

last three weeks very materially. The general comments which

you are all familiar with have been said before, but

it did register; there isn't any question about it.

H.M.JR: What the "Time" magazine called "eyewash".

Well, anyway, I agree with everything you say, and

I think, Bell, if we could get Preston Delano in on this
and possibly - is he well received by the State? Couldn't

he go to the meetings?

MR. BELL: Yes, he and Leo and Marriner's crowd
could get together on some kind of a statement. He
has already made a statement on this ratio.
H.M.JR: Couldn't Preston go up representing me and
talk to them?

MR. BELL: I think so.

- 31 MR. ECCLES: The FDIC and the Federal agencies ought

to get together first - the Federal Reserve, the FDIC,
and the Comptroller's office should get together on a

statement, and then that statement should be prepared and

it isn't necessary for any one individual, necessarily,

to discuss it except to say that this is a policy of the

Federal Agencies, and the Federal Agencies recommend to

the State Bank Commissioners the adoption of a like
policy. If the Federal Bank Commissioners know, specifi-

cally, the policy which has got to be written out - they
have got to write it out - the policy that the Federal

Agencies have all three agreed upon, it would seem to
me that there may well be a resolution passed in which the
commissioners--

H.M.JR: Which are the three agencies?
MR. ECCLES: The FDIC, the Comptroller's Office,
and the Federal Reserve.
H.M.JR: Would you have time?

MR. BELL: I will take care of it.
H.M.JR: Would you call a little meeting?
MR. BELL: Yes.

H.M.JR: Then maybe Preston could go up.

MR. BELL: When is that?
MR. SZYMCZAK: Monday and Tuesday in Philadelphia.

H.M.JR: Couldn't somebody from the Treasury, the
Fed, and the Comptroller's Office go up there and have
some one person talk for the three?
MR. ECCLES: Have somebody go up and present a written

statement and suggestor request that they might adopt a
similar policy in convention assembled then you have

pretty well accomplished it.

- 32 MR. WILLIAMS: I had just one more point. I
think it would be unfortunate if the War Savings Staff
made a vigorous drive on F and G's. It would cut
across our territory, taking them into trust companies
and elsewhere, at a time when this was going on.

H.M.JR: I agree with you. The thing is - look,
you asked me a question. I agree with you. We will

go back - I have cleared the decks with OWI. They said
not only they would not put anything in our way, but
they would also assist us. You might be interested to
know they are supervising for the Government fifty-two

different publicity campaigns. I have got to see the

Advertising Council tomorrow morning at ten. I want to
know how much help I can get from them, and I want to

see the ABA, so I want to keep this thing fluid until

Thursday morning.

MR. SZYMCZAK: In other words, we will stand by
with the Victory Fund Committee until Thursday.

H.M.JR: I think so, don't you, Dan?
MR. BELL: We will send a telegram telling the
Secretary's decision on Thursday if he announces it at

his press conference.

MR. BUFFINGTON: They are now in the process of

sending to us suggestions for an enlarged organization,
which should be here by Thursday. So the minute we get
word here they can start to proceed with enlarging their
organization.

MR. SZYMCZAK: Because that is a job in itself, as
you know.

MR. ECCLES: What ought to be done is that a very
comprehensive statement or wire should go out to the

chairmen. They are all in the dark. They don't know

a damned thing about what is going on here. It seems
to me that the sooner that we can get--

H.M.JR: Thursday morning isn't holding it up.

- 33 MR. ECCLES: No, but you ought to prepare in the
interim a comprehensive wire that would bring up to date
these chairmen, these bank presidents.

MR. BELL: That is right.
MR. ECCLES: With reference to the organization
of the Victory Fund Committees, their managers were
in here; but they are the chairmen and they are not
here. They should be advised, it seems to me, so that
they can go ahead and get back of these managers to
expand this organization.

Then the Board, in turn, has got to advise their
chairmen that the expenses of this organization, which

have been approved by the Treasury according to this

wire that you would send them, will be paid for, for
the time being, by the Federal Reserve; that the Secretary would expect to put this on a reimbursable basis

at such time as appropriations were made available to
meet the problem. When it comes to the question of
this big expansion and increased expenses, we have got

to let them know, now, that they have got to pay for it
for the time being. That could be done simultaneously

with your approval of this expanded organization, when
your wire is sent out to them as chairman. Do you agree
with that, Dan?

MR. BELL: Yes, that is all right.
H.M.JR: Well, now-MR. BELL: Bob Rouse suggested that you might want

to open it on Friday, right after Thanksgiving, making

your speech Thanksgiving Eve, and letting Thanksgiving

day be a day of interim so that your material could all
get out.

H.M.JR: That would gain-MR. BUFFINGTON: That is a bad day to open, follow-

ing a holiday, in between a holiday and a week end.

- 34 MR. BELL: Is that bad?
MR. BUFFINGTON: There will be a lot of people who

aren't available and a lot of men who aren't going to

start off with a bang on this thing.

MR. BELL: We could give up the holiday.
MR. ROUSE: We could take the advice of the Victory

Fund Committee, I think, very largely, about the opening.
MR. BUFFINGTON: They have already urged that that
not be done, as you remember, Dan.

H.M.JR: What did they say? Give them Rouse's
suggestion, anyway. There are three days suggested,
the 23rd, the 27th, and the 30th.
MR BUFFINGTON: I would follow the recommendations
of these four men.

H.M.JR: I would listen to them, anyway.
Now, my schedule is this - this ABA is coming in
tomorrow. Who over at your place, Marriner, could help
us both draft a statement for me for Thursday - who
over there could help?

MR. ECCLES: Let us discuss it, here. You mean a
statement for the press, not the radio?
H.M.JR: No, no, for the Thursday announcement, on
the assumption we are going to do it.
MR. ECCLES: Let me discuss it.

MR. BELL: We would also like to have their help
with this Banking Committee. They are going to sit here
and try to write a statement and also the formulas. The
formulas have to be given quite a bit of consideration.
H.M.JR: ABA are coming in at three o'clock on
Wednesday.

- 35 MR. BELL: And they are prepared to stay over a day

or two.

H.M.JR: I wanted Eccles and somebody else from his

shop to come in.

MR. ECCLES: Well--

H.M.JR: Tomorrow afternoon at three. Could somebody from your committee stay over?

MR. ECCLES: I think that Al Williams ought to be

here and maybe Hap, too, because it is the ABA boys

that deal with all of their boys.

MR. WI ILLIAMS: I can give them the advantage of

these calculations.

H.M.JR: I think things are going to happen so fast

between now and Thursday morning that if they could stay

on it would be very helpful.

MR. ECCLES: How are you fixed, Hap?

MR. YOUNG: I can stay.
MR. ECCLES: These two fellows can work with the ABA.

H.M.JR: There is another thing. I have asked Bell -

it would be the Fed, the Treasury, the FDIC, and the Comp-

troller - to get together on what you want to agree to

put up to the State bankers, and Williams and Young

could help us on that, too. There is plenty to be done.

MR. BELL: I think Sienkiewicz might help us on
this publicity. He is a very good economist and vice
president of the Federal Reserve in Philadelphia.
MR. ECCLES: On what is that?

MR. BELL: On drafting all of our material in the

next ten days.

- 36 MR. ECCLES: Let's have him come down.

H.M.JR: Sienkiewicz?

MR. BELL: Yes, he is an economist and vice president of your (Williams') bank.
H.M.JR: Could you have him here tomorrow morning?

MR. WILLIAMS: Yes, we will get him down.
H.M.JR: Well, everybody think between now and--

MR. ECCLES: Of course, before you draft your statement for the press you have got to have a lot of these
discussions, because that is what will make up the
statement.

H.M.JR: That is right. We will start drafting.

You might start drafting, and then we can get together
tomorrow morning sometime.

Walter, do you want to say anything?
MR. STEWART: I have nothing to add, Mr. Secretary.
H.M.JR: Goldenweiser?
MR. GOLDENWEISER: No.

H.M.JR: Draper?
MR. DRAPER: No.

H.M.JR: Well, let's be in close touch with each

other the next two days.

No., /
82

TREASURY FINANCING IN DECEMBER 1946 AND JANUARY 1945

(In millions of dollars)

Budget deficit
Special issues to trust assombe
Securities issued to the public and the banks

11,600

Savings bonds - December - January 8,500

Tax notes - other them in compaign
Treasury bills - December
Treasury bills - January

500

Other accurities issued

3.000
7.800

Compaign including 2 1/2 and 1 3/4 per can't

bonis, 7/8 of 1 per can't certificates, and
tax notes

Treasury each balance at end of January

8,000

Mr. 832

TREASURY FINANCING IN DECEMBER 1948 AND JANUARY 1943

(In millions of dollars)

Budget deficit
Special issues to trust accounts
Securities issued to the public and the banks
Savings bonds - December and January

Tax notes - Other than is campaign
Treasury bills - November
Treasury bills - January

2,500
900
600
200

Other accuration issued

Campaign including 2 1/20 and 1 3/4 per cant
bonds and tax notes

Certificates and additional Treasury bills January

Treasury each Milence at end of January

12,600

3.000
8.800

6,000

2.800

FINANCING PROGRAM FOR NOVEMBER-DECEMBER

In our cash
estimates

May be added

by a drive

Total

From banking securities:

Treasury bills
7/88 C/I's
(Nov. 1 - $.5M)
1-3/4% bond

$1,200 M

$1,200M

2,500

2,000

5,700 M

5,700M

Non-banking securities:
7/86 and 1-3/4% securities above

500 M

Savings bonds

1,875 M

Tax notes

2-1/26 bond (tap)
(Need $10,675M)

625

2,500

1,100

1,000

2,100

1,000

1,500

2,500

3,975

3,625

7,600

9,675

3,975

Non-banking funds

7,600

Banking funds

5,700

Total

$13,300 M

November 10, 1942

500 M

$13,300 M

Nov. 18, 1942

Sullivan phoned Sen. George's secretary
said this American Legion Commander

is going to send a committee to Washington

to confer on this matter.

861

Mr. Sullivan and Mr. Gamble read this.

November 10, 1942
12:33 p.m.
HMJr:

Senator

Hello.

George:

Hello.

HMJr:

Walter?

Yes, Henry. How are you?

HMJr:
G:

Oh, I'm alive and kicking. How are you?
Fine. Did you have a nice trip?
Very, very interesting and very encouraging.
Well, it must be.
Yes.

Looks like things are breaking.
Yeah, breaking our way at last.
Pretty fast.

HMJr:

Yeah.

Well, that's fine. Henry, I - I wanted to make
a suggestion to you.

HMJr:

Please.

You know down in Georgia

HMJr:

Yes.

our local bond folks, the people that are
selling, they called on the American Legion the State Legion

HMJr:
G:

Yes.

and they built up a fine program, and
they re going to - they're going to take care
of about eleven hundred - about a million one

hundred thousand bonds in November.

-2-

HMJr:
G:

Is that
They' 've already got it underway.
Yeah.

Which will be about two million - ah - two million
about over - over their quota.

HMJr:

Yes.

And those men who are familiar with it tell me

HMJr:

Yes.

that if you would - if you would request the

National Commander
HMJr:

Yes.

to put it on, say in January or February, all

over the country
HMJr:

Yes.

that they would - they would sell a lot of

bonds.
HMJr:

I see.

And it's one of the - one of the - they've got one
of the best programs worked out, one that has the
finest direct personal appeal

HMJr:

Yes.

....and they just know it can be worked because
it's being worked with us now

HMJr:

Fine.

on a big scale in a fine way.

HMJr:

Fine.

-3G:

And the National Commander would be very glad

to do it, because he's familiar with what the

Georgia Legion folks have done.
HMJr:

Well, it sounds very interesting and very encouraging.

Now I think that if - if you'd just ask him if

they wouldn't duplicate the Georgia program throughout the country, say during the month of January
or February - or I'd say January

HMJr:

Yes.

well, I think it - I think it would get real

results.
HMJr:
G:

Well, I'11 get on it right away.
All right. He'11 be here, you know, to talk

tomorrow over at Arlington with the President,

for a few minutes.
HMJr:

Well, I'll have Sullivan contact him. He knows
him.

Yes, he knows him, knows him well. He knows some-

thing about this Georgia situation, I dare say,
but my reports that are reaching me indicate that
they're going over big down there. They - they've they thought they had a job they couldn't do, but

they're going to do it and do it - they're going to

exceed the State's quota.
HMJr:

Well, maybe the volunteer War Bond program isn't
80 bad.

No, it'11 work that way. Those fellows feel that
they' ve got something worthwhile to do, you know.

HMJr:

Yes.

and they're glad to do it.

HMJr:

Well, I hope I can see you soon.

Yes, thank you, Henry, thank you. I hope to see
you.

90
-

HMJr:
G:

I'11 get right on this.
All right.

I just had a very important conversation
with Senator George and I want Miss Chauncey
to let John L. Sulliven and Ted Gamble read it.
And between the two of them, I'd like to see
something done about it today, still, and I'd

be glad to write a letter or telegram to the

National Commander of the American Legion and

say in this telegram that the suggestion is made
by Senator George. And then send a copy of my
telegram to Senator George. But I'd like to personally be kept posted, because I consider it
very important, considering the fact that it came

from Senator George. I'd like a report on it
this afternoon without fail.

and what can be done from Gamble and Sullivan

MEMORANDUM

November 10, 1942.

TO:

The Secretary

FROM:

Mr. Sullivan

JhS

Commander Roane Waring of the American Legion is

leaving tomorrow afternoon for New York. However, he is
returning Thursday, November 12th and will phone me in the

morning when he arrives. He is anxious to see you and if you

will set a time either in the late forencon or afternoon I will
have him here to meet you.
I have phoned Senator George and advised him of
developments.

115Thu
10

the

November 10, 1942

Otto Jeidels came in to see the Secretary at 3:30.
Mr. Jeidels told the Secretary that as he undoubtedly knew
he was the partner of Lazard Freres and was quite happy
there. However, he had been recently approached by Mr.

A. P. Giannini to join the Bank of America, and before he
committed himself, knowing of the differences between the

Bank of America and the Treasury, he wanted to know whether

he
could get the approval of the Secretary on his joining
the Bank.
The Secretary's reply was as follows:
"I have never since I have been at this desk told any
banking institution whom they should or should not employ,
and I think it would be very foolish for me to start at this
time. Mr. Mario Giannini came in to see me sometime within
the last twelve months, and we had a very frank talk, and from
that day on the Bank of America has complied with the rules of
the Treasury, and I have no complaint about the Bank. Since
Mr. Mario came in, and since they employed the attorney, I
think his name is Kelly - I am not sure - here in Washington,
things have been going all right and Kelly has been very
constructive. If the Bank of America wants to employ you
or anybody else, that is their business. "
Mr. Jeidels thanked the Secretary very much, and said
he was very happy to hear that the Bank of America had com-

plied with the policy of the Treasury; that he hoped it was
not improper for him to submit the matter to the Secretary,
and that if the Bank of America had not complied with the

spirit of the government authority that he would have felt
it improper and disloyal to join the Bank of America.

November 10, 1942
4:10 p.m.

INTERNAL REVENUE PERSONNEL

Present:

Mr. Sullivan
Mr. Cann
Mr. Thompson

Miss Elliott

H.M.JR: What I wanted to know, gentlemen, was this.
Would you give me a thumbnail sketch of what you are

doing to get ready for the first of January.

MR. SULLIVAN: Twenty-four hundred people are to
be employed on the first of December; three thousand

on the first of January, which is a total of fifty-

four hundred people. We think that will be adequate to
handle the additional work required by the new tax

bill.

H.M.JR: How are you getting those people?
MR. CANN: We are getting those people, Mr. Secretary,

by having each one of our local collectors contact the

people every way that we possibly can, through schools

and through local contacts. You see, all the offices
of Civil Service, to my knowledge, have thrown up their
hands in that they are unable to supply us with adequate
accredited lists.
H.M.JR: What success are you meeting with?

MR. CANN: We have just started this, Mr. Secretary,

as you no doubt know, and we have not had any comprehen-

sive reports because, as Mr. Sullivan just told you, we

plan to put these people on commencing December first.

H.M.JR: Are you going to have a school for them?

Are you going to teach them?

-2MR. CANN: We generally send around from Washington,

teachers from our school unit that we have over there.
Then, of course, they will be assigned, as you know,
probably,
to older and experienced deputies in breaking
them in.
H.M.JR: Are you trying to get women, mostly?

MR. CANN. We are putting the emphasis to use women

wherever we can possibly get them, where they are qualified.

H.M.JR: What do you pay these people when they

start?

MR. CANN: We are increasing the pay as much as we

can and stay within prescribed standards - eighteen

hundred dollars.

H.M.JR: You start at eighteen?
MR. CANN: Eighteen hundred dollars. Wait a minute,

let me correct that - eighteen hundred dollars to our
zone collectors, our deputy collectors. Now, our clerks

in the office start from fourteen forty up.

H.M.JR: Now, how many of those five thousand - I
have been getting my news from the Wall Street Journal-MR. SULLIVAN: They have had better access to you

lately than we have. (Laughter)

MR. CANN: We are going to put on twelve hundred

Grade 6 deputy collectors at an annual rate of twentythree hundred dollars. Now, actually, what will happen
there, Mr. Secretary, we will promote people that we

now have in the field offices that are in a lower salary

grade, and move them up so that those which we hire will
be in the lower grade. Then we propose to put on twelve
hundred Grade 5 deputy collectors.
MR. SULLIVAN: I think the Secretary wants to know
what proportion of those do you expect will be women?

-3-

H.M.JR: No, I just wanted - I mean, if you can't
get - for instance, are you using the radio, or anything like that - the local radio?
MR. CANN: We have done this, I happen to be a
member of the American Institute of Accountants, and

through that agency at their last convention in Chicago

we had a statement made pointing out the openings and
the advantage of women entering Government service in
the Internal Revenue.

H.M.JR: Have you circulated the women's colleges?

MR. CANN: I would say locally, yes; I would say

from Washington, no.

H.M.JR: There is a list of seven or eight hundred

colleges.

MR.SULLIVAN: I think that is a very good suggestion.
H.M.JR: And they all have employment services for

graduates.

MR. SULLIVAN: I think that is a good suggestion.
that.

H.M.JR: Miss Elliott, upstairs, could help you on
MR. CANN: We have been contacting, Mr. Secretary,

more particularly commercial - these commercial schools,
of course, have their people--

H.M.JR: But the trouble with that is, from what
I gather, all those people, they have all had the cream I mean, everybody has been to them. You have got to go
to new sources. I mean, everybody has been to those

things. It is all right to go to them.
jobs.

MR. SULLIVAN: We cannot bid against industrial

-4H.M.JR: But I think you will find that unless we

go to something new - now, what I am thinking, I want to

talk to Miss Elliott. I just wondered if you couldn't

get somebody, maybe some of these colleges might give

a short course for us right in some of these colleges,
or send a Treasury man to the college.

MR. SULLIVAN: Well, you mean have the girls go
back there and have one of our men--

H.M.JR: Go to the colleges.
MR. CANN: You mean have, for example, some courses
in taxes?

H.M.JR: I mean, whatever they are going to have to

learn. I mean, supposing - there is a certain routine
they have to learn; you have to teach them.

MR. SULLIVAN: That is correct, but I think they

would have to learn with the other people who are going
in the course.

H.M.JR: Where are you going to run this school?
MR. SULLIVAN: Around in the different schools.
MR. CANN: We send them to each collector's office.
We have done that for a long period of time.

H.M.JR: As I say, I may be wrong, but I think
you are going to be disappointed. We just had that

little experience with the English Purchasing Commis-

sion, the way they tried to get the people from all the
business schools and everything. It may be a little

easier if you are going to want them in the field. I
think you are going to have a tough time here.

MR. CANN: These are not for here, Mr. Secretary.
This supplemental appropriation, which is what we are

referring to, is entirely for the field.

H.M.JR: That is fifty-five hundred?

-5MR. SULLIVAN: Fifty-four hundred.

MR. CANN: Yes, fifty-four hundred and seven, and
twenty people for the departmental, here in Washington.

For example, if you take a city like Detroit I was just talking to a collector. They are reaching
out trying to make these contacts that you refer to -

although I did not discuss academic subjects.

(Miss Elliott entered the conference.)
H.M.JR: This is quite different from war bonds.

We are talking about how we can get fifty-four hundred
new employees for Internal Revenue, and I raised the
question about going to the women's colleges. I am

afraid when we go to accountants and schools of commerce

all that we are going to find is that they have been

pretty well skimmed. Tell Miss Elliott, just briefly,
the kind of job it is so she could be thinking about

it and make some suggestions. I want to get up a letter
to the women's colleges telling them what we want graduates, you see - and tell them what the jobs are.

MR. CANN: These positions, Miss Eiliott, would
start in anywhere from sixteen twenty to eighteen hun-

dred per annum, largely composed of two classes of

jobs; first, outside officers, which are deputy collec-

tors in two grades, for example, Grades 5 and 6. Now,
each one of these deputy collectors would have to know
and have to be able to administer, check, and advise

taxpayers on probably somewhere in the neighborhood of

ninety different types of taxes. Of course, a great
deal of their work would pertain to income tax and
social security employment taxes.

Now, these people on the outside jobs would be
called upon to contact people whom they had never met

before. That is to say, we take our collection districts.
Take a city like Detroit, we divide that city geographi-

cally and we have deputies which would be assigned certain blocks. They might have Mr. Brown, Mr. Smith and
Mr. Jones, and have never seen any of them.

-6The different types of people and conditions
would call for judgment and discrimination in the
handling of those people. The collection of taxes,
which is the primary function of the deputy collector,
calls, as you would no doubt guess, for great discretion
and diplomacy. A woman would have--

H.M.JR: All at eighteen hundred? It sounds

awfully low to me.

MR. SULLIVAN: This has recently been raised, Mr.

Secretary. It heretofore has been as low as fourteen
forty and sixteen twenty.

H.M.JR: But all of these jobs but twenty are out-

side of Washington.

MISS ELLIOTT: Are they regional? Do you know just

about how many you would need in each region?

MR. CANN: Yes, indeed, we know that. We would

break it down - referring again to Detroit - we would

know how many we .would want in Saginaw and in the other

places in the Upper Peninsula. We have that all blocked
out based on the number of income tax returns which were

filed for preceding periods. We can determine fairly
accurately what the increase of returns will be.
MISS ELLIOTT: Most of the colleges have rather
well-organized appointment bureaus and if a very clear
and concise letter was written to these appointment
bureaus, and the number needed in certain divisions -

for example, take universities like Wisconsin, Ann

Arbor, Illinois University, and Chicago, and so on, if
the letter indicated how many people we needed in that

particular region they could pretty nearly tell you

whether they had--

H.M.JR: Would you be willing to sign the letter?
MISS ELLIOTT: Yes.

100

-7H.M.JR: I think it would be a personal touch -

mean, they know who you are, and they don't know

the rest of us.

MR. CANN: If she were to sign the letter, Mr.
Secretary, and suggest that they call at the office of
the local collector there--

H.M.JR: It is just the idea, "Oh, look, Miss
Elliott is writing us from the Treasury. She says
they need twenty people. That is nice of Miss Elliott
to think of us. It That would be their attitude, that you
are doing them a favor. "That is nice.
"

MISS ELLIOTT: In turn, would the collectors know
that these colleges-MR. CANN: We would have to let the collectors know.
MISS ELLIOTT: Know that a letter was going to these
colleges, or they would say, "What are these colleges
calling us up about?"

H.M.JR: A copy of her letter could go out in

advance to the collector, couldn't it? It could be in

the collector's hands, say, a day or two in advance of
Miss Elliott's to the college. Could that be done?
MR. CANN: Indeed it could.

MISS ELLIOTT: Let me think about that a little

while.

H.M.JR: Suppose you think about it. Mr. Sullivan's
room is almost below you. You might talk to him.
I

am only thinking; this is not prearranged. It is a
difference of - this is just another letter from the

Government service wanting people, but if, on the other

hand, a little personal touch--

MISS ELLIOTT: There are so many women and I am

trying to get them not to go into the WAACS and the

WAVES if there is another service they are efficient
in, if they can be made to understand that this is an

101

-8emergency and has a future in it. Another thing that

I think women are worried about now is that they are
going to be drawn into things and then will be dropped

when the men come back and want the jobs.

MR. CANN: That is what my wife says. She says I
should let her go back to work because she is going to
be called up here - mobilized into something.
H.M.JR: Did she used to work in the Government
and she wants to go back now?

MR. CANN: Yes, she hounds me every night.

H.M.JR: I knew Miss Eiliott would have some ideas.
MISS ELLIOTT: Those women would never transfer

to the Internal Revenue office in Greensboro if they
thought that within eight or nine months or a year or
two years, they would be dropped and a man come back

and take their place. You will never be able to get
good women to do this.

H.M.JR: Aren't these new jobs?
MR. CANN: We are faced with that, and these posi-

tions are all for the duration only. That, you know,
is a handicap.

MR. SULLIVAN: That is true, but you certainly can
assure them that the burden of work that the Bureau will
have to carry is not going to be lessened within the next
fifteen years.
MR. CAN N: We do that.

H.M.JR: Excuse me, this fifty-four hundred, Miss

Elliott, is not to take the place of men dropped; it is
to take care of additional taxpayers.
MISS ELLIOTT: Then these people would not be taken

on just for the duration?

102

-9MR. CANN: No. As a practical thing, we tell
people that we are putting on now - they read "appointment for the duration" and we try to explain to them,
"Now just be practical, we know that this emergency
for revenue is going to exist for years after this war
is over and this very substantial block of taxpayers
will continue. Therefore, while other departments will
be curtailing personnel when this emergency is over,
the Bureau of Internal Revenue will not be curtailed."
That is what Mr. Sullivan said.
MISS ELLIOTT: I think that statement should be made

in your letter to these personnel people - to these

appointment bureaus. Everybody is working hard to get
people and there is a tremendous appeal for women.

H.M.JR: That is what I have been telling these

men. They do not believe me.

MR. SULLIVAN: We don't?

MISS ELLIOTT: There is a tremendous drive on that.
There is hardly a day passes - for example, this morning

Mr. Phillips, the head of our appointment bureau, called
me up about the situation there at the college. There
were two people there who have been offered better posi-

tions, and we have got to increase their salaries down
there if we hold them.

MR. SULLIVAN: We won't let you - salary stabiliza-

tion. (Laughter)

MISS ELLIOTT: You will in that bracket.
MR. THOMPSON: People will be very fortunate to

get into Internal Revenue because that is one of the
agencies that will not be decreasing its forces.
MISS ELLIOTT: I would be perfectly willing to sign
a letter to these people saying I am interested in this
because it looks like something - I would write that

kind of a letter. I wouldn't want to commit myself, you
see, to a letter that did not have in it-- (Laughter)

103

- 10 H.M.JR: Only for war bonds you do that. (Laughter)
MISS ELLIOTT: You see, I have told the women my only

advice is, tell the truth and sell bonds. (Laughter)

MR. CANN: Let me ask you. this, Miss Elliott. Do
you think that there would be a substantial number of
women available as of, let's say, December first and

January first, at that particular time of year? That
is what I am thinking of.
MISS ELLIOTT: A substantial number?

MR. CANN: We are talking here about fifty-four hundred jobs, now, Mr. Secretary. Of course, a number of
those jobs college women would not be interested in because I assume they might not be interested in typing
and stenographic jobs.

MISS ELLIOTT: There are many college women going

out with A.B. degrees in English who do not want to

teach - don't want to do the other. I think you will
find that if this has a degree of permanency in it and
assurance of future in it - if this assurance is given

these appointment bureaus - I would not be willing to
venture the number that you would find, but I think you

will find more - I will put it that way - on that basis.

Now, for example, we have a four-year course at the
college and those women go out with an A.B. degree; they

have training for office work but with a regular college
degree. We are doing that really to prevent girls from
going into these business schools and taking one year,

who really want to do office work. Many of our students
who are taking A.B. degrees in English are also taking
the business course, some because they do not want to do
that other work.

MR. CANN: This is fine.

MISS ELLIOTT: I think that if a letter is written
in such fashion that it will give the appointment
bureaus the assurance that this is not just a temporary
thing and will be over and that these girls will be

104

- 11 dropped when the thing is over, that they can actually
call in and can write students who already have positions,
that you can interest a good many. Now, just how many,

I do not know. In transferring to the-H.M.JR: I think the way I would start the letter
is something like this: Due to the fact that there will
be - how many more taxpayers next year?

MR. CANN: Six or eight million.

H.M.JR: Due to the fact that six or eight million
taxpayers will be added to the tax rolls, it is necessary
for us to add fifty-four hundred more employees to take
care of these additional taxpayers. That is true, isn't
it?

MR. CANN: That is correct.

H.M.JR: And then go on from that so they get the idea

this is not just to replace the people, but it is to
take care of the six or eight million additional taxpayers.

MISS ELLIOTT: If I should sign the letter I would
have to say that this has been brought to my attention

and in view of this, I am calling their attention to it

with the hope they would be interested in going into
the Internal Revenue Department.

H.M, JR: Supposing they fix up a letter for you.
Don't sign anything you don't want to; I don't have to

tell you that. But it occurred to me there must be

so many agencies writing to colleges, but if they got
one from you it would make a lot of difference and it
might be helpful to us.

MISS ELLIOTT: I will be glad to try it.
MR. CANN: We will be glad to work up a draft of

a letter.

H.M.JR: And Mr. Sullivan will get in touch with you.

105

November 10, 1942
4:45 p.m.
WAR BONDS

Present:

Mr. Kuhn

Mr. Bell

Mr. Gamble

H.M.JR: I am beginning to have this crystallized
in my mind, what I want to do. I don't know whether

Kuhn told you.

MR. GAMBLE: He did, yes, sir.

H.M.JR: I haven't seen Bell. Did I pull you

out of a conference?

MR. BELL: Yes, they are going ahead. We are

about through.

H.M.JR: This won't take very long. I will tell

you the way I feel. I think that on the 1st of December
we should transfer the sale of F and G bonds to the
Victory Fund Committee - on the 1st of December - and

have this a clean-cut thing. I will give you what is
in my mind. This thing for them - Kuhn was here - is
a mental hazard. They can argue that it shouldn't be,
but it is. The men are volunteers, and we are relying
on them largely. I explored them; there is nothing
else in their mind. Some say that when they get this
there is something else - an endless row. Is that
right, Ferdie?
MR. KUHN: I am not sure; I have one remark

after you get finished.
H.M.JR: Anyway, we have pretty well decided that
we have to start this thing on November 30, which is a

106

-2Monday, and there are a lot of arguments on both

sides. But there is the conflict of personnel - I
mean, there is this whole fussing. I should think
that you War Bond fellows would say, "Let's get through

with this thing; we will concentrate on payroll deduction, which is our job. E Bonds is our job; the hundred thousand dollar thing is something else." As

far as I am personally concerned, as to appearing
before Congress or anybody else - I mean, in my own
mind, the amount that we get from a number of employees
and the amount and the percentage that we get from

the workers of the country will be the decisive factor

in my mind, not the F and G bond thing.

As far as the War Bond State Administrators -

that doesn't enter into the thing at all as to measur-

ing success. I mean, it adds to the total; it is a

difference of, say, five hundred or seven hundred and

fifty or six hundred or eight hundred. But as to the
final success, in my mind, has this thing this year

been a success or not, the amount of F and G bonds

that you sell really is not a contributing factor.

MR. GAMBLE: I think that is partly true - but

I don't think it is wholly true.

H.M.JR: I said, "In my mind."
MR. GAMBLE: Yes.

H.M.JR: I have carefully said, "In my mind," see?

Now, I have another job. As I say, this other job
is to sell this other. I have another organization
and we can't keep up this damned bickering every time

we get out another rule - well, a word in here, or
this, or something. It is getting under my skin.
MR. GAMBLE: I agree on that.

H.M.JR: Maybe it shouldn't get under my skin,
but here I have got two sales organizations, and I am

107

-3responsible for both, and I want them to work smoothly.

As far as I can tell, this is the only point of friction. My mind is crystallized towards removing-

MR. GAMBLE: I think it is the only point of
friction at the moment, but I think it is continuing.
H.M.JR: No, I don't see - I mean, certainly from

the standpoint of the Victory Fund Committee there is
Inothing
can see.that they have mentioned; there is nothing that
MR. GAMBLE: They are now talking about publicity,
and they mentioned the fact that the War Savings Staff
receives promotional benefits they have not received,

and it is questionable as to what they should have,
the kind of market they are trying to reach.

H.M.JR: That is why this Advertising Council
has to dome in. That is what I have got that exhibit
in there for.
MR. GAMBLE: Our only fear has been, Mr. Secretary and we have thought about this wholly from the stand-

point of the Treasury - our only fear is that you are
going to lose a market that is not going to be canvassed by anybody. We take no claim for selling the
F and G bonds. Seventy-five percent of those have
sold themselves on the market. We think that will

continue to be true, that the investors will buy

them whether the Victory Fund people are assuming

the responsibility or we are.

We think our over-all@promotion has helped announce

and back up the distribution of F and G bonds, but we
do feel that when we have such drives as the motion
picture industry drive, for example, that those people
go out and reach a group of investors of F and G bonds

who would not otherwise be reached.

H.M.JR: What they did was they sold themselves

first.

108

-4MR. GAMBLE: That is true, but when we have farm

activity we feel that we sell F and G bonds to a class
of people that would not be reached by the Victory
Fund people - the labor unions, for example.
H.M.JR: Well, there are not many farms.

MR. GAMBLE: I appreciate the fact that there
aren't many, but you take the way our program is set
up - it is organized to reach a group of people in
this country that no one else is organized to reach.

H.M.JR: All true, and you were in the field

alone and had to cover the field for me.

Now we are coming along and I have to reach everybody says I am not reaching enough people, which

is true. All right, I have to get another class of
salesmen, another kind of organization to do it, and
I am severely criticized for not doing it. I have
got this organization. It is, I suppose, a little bit
similar to what a motion picture producer has to do,

first-run houses and second-run houses, which one is he
going to get; a nd when he gives the big theater in New
York that seats-MR. GAMBLE:

five thousand, he treats it

differently, that is true.

H.M.JR: Is he going to distribute the pictures

and hold his pictures back from the mass? There is

that conflict always, isn't there?

MR. GAMBLE: We recognize that.

H.M.JR: There is that conflict.
MR. GAMBLE: We know that, and know that it is
not healthy.

H.M.JR: You have not talked with Bell, and I am

not going to decide tonight, but I just wanted to let

109

-5you know that my mind is going to crystallize towards

it. I got this idea during the night to make the cutoff date December 1.

MR. GAMBLE: But I don't think, personally, that
you should deprive the War Savings Staff of the right
to sell either the F and G bond or a similar bond.
H.M.JR: Or do what?

MR. GAMBLE: Or a similar bond. By the same token

you shouldn't tie the Victory Fund up.

H.M.JR: If I am going to do it, Ted, it is going

to be a clean-cut piece of business. I can't have
this bickering. I send telegram after telegram out:

and as soon as I send them out, they misunderstand it.
MR. GAMBLE: I am not asking you to do that, but

give serious thought; for example, it is not going to
be long until the War Savings has completed its payroll savings. We have a direct contact with one
hundred and fifty thousand firms, and thirty million
people.

H.M.JR: You haven't thirty.
MR. GAMBLE: Twenty-three million three hundred
thousand on pay-roll savings. Now employed in those plants

where we have twenty-three million there are thirty
million people.

H.M.JR: But of the twenty-three million exposed

to it there are not twenty-three million--

MR. GAMBLE: There are twenty-three million three
hundred thousand on pay-roll savings now, buying every
pay day, twenty-three million three hundred thousand.

H.M.JR: Well-MR. GAMBLE: My only point is that we have contact with

those people, and I don t think that you should overlook

110

-6the fact that you have an organization that can, when
we have done our ten percent job, go into those places,
maybe, with something similar to the G bond. Mr. Bell
has often spoken of the fact that we should go to E's,
work E's, give them an opportunity to buy in excess of
ten percent when we have gotten the ten percent.

H.M.JR: There is nothing to keep them from signing up for more than ten percent.
MR. GAMBLE: There is nothing to prevent it, but

in many instances they may be people who would be

buying the limit of E bonds, and we can reach them and
sell in those places.

H.M.JR: The first thing to do is, if this would

sweeten the pot any, it might be well to raise the

limit on E bonds as of December 1.

MR. BELL: As of January 1 would be better, a

new series.

H.M.JR: I haven't talked to Dan during the day,
but I can't stand - this seems to be the biggest

hurdle.

MR. BELL: I haven't crossed the permanent bridge

at all. I hadn't thought about that. But I did tell

Ted this afternoon that I thought it was important for
this big drive that you have got in contemplation,
that this other drive be postponed until at least

January 1, because I don t want any excuse when this

thing is over for failure.

H.M.JR: But look, Dan, they say that starting -

I know these people - I know the same thing; they are

trying to beat the gun. Up in Boston they are trying
to get a lot of people, and there are only so many people
to go around.

If I am going to do it at all, I am going to make
a clean-cut thing; I am going to stop the one definitely
and start the other.

111

-7MR. BELL: As I say, I hadn't thought much about

it from that angle, but I was thinking about it from
this--

H.M.JR: I can't stand this wrangling any longer.
MR. KUHN: Could I ask Dan a question? Will this
stop the bickering between War Savings and Victory

Fund?

MR. BELL: It is the only thing; I don't know of

anything else. Ted said there was something else.

MR. KUHN: I am not just sure that it will, but I
hope it will - each has a job to do. They want a
liberty bond.

MR. GAMBLE: They don't want a G bond.
bond.

H.M.JR: We are not going to give them a registered

MR. BELL: I think if you took the recommendation
of the Victory Fund Committee you would eliminate F
and G entirely.
H.M.JR: They said so.
MR. KUHN: They said so in here.

MR. BELL: There is not the demand for strict
investment bonds as there is in the investment field,
they claim, and this is an investment bond.
H.M.JR: They said so.

MR. BELL: They would eliminate it altogether if

they had their recommendation, Mr. Secretary.

MR. KUHN: There are only two things that bothered

me in that little talk I had with them. I liked the

clear-cut way they said what they wanted, and no doubt, it

112

is a mental hazard, but I didn't like their trying to
follow that up, trying to follow your indications up

with suggestions that you ought to abolish the F and
G bonds first; and secondly, that you make this
arrangement permanent. Now, I don t think that you
ought--

H.M.JR: Once you do it, it will be permanent.
MR. KUHN: It will be?
H.M.JR: You can't throw it back and forth like a
football. They asked me about permanency. We are on a

twenty-four hour basis; the very fact that I am going

to change shows that we are on a twenty-four hour basis.

I reserve the right to change my mind any day. I
announced that the day I walked into this office. I
was most criticized for it, and it is the most sensible
thing I have ever seen. Remember how I was criticized

by the very fact - vacillating - meeting the situation

as it comes up.

Anyway, Ted, some time during tomorrow we will
have another talk.

MR. GAMBLE: I think in fairness to Mr. Graves
and Mr. Udegard and others who feel very keenly about
this we should have another meeting.
H.M.JR: Where is Graves?
MR. GAMBLE: Graves is sick.

H.M.JR: I c an't wait on him.
MR. GAMBLE: I understand he will be here tomorrow.

H.M.JR: I can't take all this pressure. If Graves
is here, I will talk to him; but there is no reason
for me to talk to Odegard. He is on publicity. I mean,

I am not going to be high-pressured

113

-9MR. GAMBLE: It is not a question of high pressure.
We recognize - don't think we are not sympathetic to
your problem - sympathetic to Mr. Bell's problems,
because we are.

H.M.JR: I am not going to be subjected to all

this high-pressure stuff. I can't take it these days.
I mean, I have got to make up my mind quietly. If
Graves is here, of course I will see him, but I don't

see what argument he can give. I don't want to be high

pressured.

MR. KUHN: I think you should see Mr. Graves.

H.M.JR: If Graves is well, I will see him.
MR. GAMBLE: He will be here tomorrow, and he

would only do as I am trying to do, point out the
plus and minus side, that is all. I think you are
entitled to know this.
H.M.JR: Well, you have all day tomorrow.
MR. GAMBLE: You don't want us to call this drive
off until after we have had this chat tomorrow?
M.JR: No, no, because I haven't decided yet
that I am going ahead with the whole drive.
Bell.

MR. GAMBLE: We are prepared, and I told Mr.

MR. BELL: You ought to make that decision first,
I think.
H.M.JR: No, I haven't decided yet that I am going
ahead with the whole drive, and I won t until between
now and tomorrow night.

MR. GAMBLE: We are prepared to fill the role we

think we should fill in this picture, get all of our
people in line for it.

(Draft of suggested telegram to War Bond Administrators
handed to the Secretary.)

114

- 10 H.M.JR: This is not enough. It doesn't do what

I want.

MR. GAMBLE: I appreciate that, but I wanted you
to know that we are prepared.
H.M.JR: I will see you and Odegard and Graves
tomorrow after I have decided whether I am going to

go through with it.

MR. KUHN: I would like to tell you what Mr.
Bathrick had to say any time you are interested and
want to hear about it. He spent all day yesterday
with the Victory Fund people and the evening with

the War Savings people. He suggested the formation
of a committee - an advisory sales committee - made
up of big merchandising men from the corporations.
He gave me the names of six. I can give you those
names: John Schuman, the president of General
Motors Acceptance Corporation; Tarry Kittinger, the

vice-president of Shell Oil; Bill Howard of Macy's,

who has been active on the retailers' things and who
knows the retailers around the country; Wilson, the
vice-president of Goodyear Rubber in charge of advertising and merchandising; Mr. Grant, and Mr. Bathrick.
He also would like very much to have a banker on that
committee of seven because he said there are all kinds
of questions that they will need. to answer.
H.M.JR: That Schuman is enough.

MR. KUHN: Well, anyway, if you would like the
formation of such a committee, he would like to have
those people come down here next week. He would like
them to spend a day in absorbing the information from
the people who have got it to give, about the types of
securities and so on and so forth.

Mr. Bathrick thinks that this committee will
enable you to go to the executives of the corporations
by industries. That is, the oil man here will be able

115

- 11 -

to handle the oil industry and all their outlets.
H.M.JR: That was my suggestion.
me.

MR. KUHN: I am just batting back what he gave

H.M.JR: Do it by industries.
MR. KUHN: He thinks that that kind of committee
can comb the big men in the industrial field and also

give & push to the ten-percent pay-roll thing. He said
in those industries that they control they ought to be
able to say, "You have got to get to the ten percent."

H.M.JR: If it is a by-product of this, they can
give back - I will swear - don't think I am not with
you fellows, but as Bell told Graves, I can't let the

tail wag the dog, and the dog is - I mean, you fellows
are doing about one-eighth of the total.
MR. GAMBLE: We were not thinking of that, Mr.

Secretary.

H.M.JR: I am just thinking, and I will see
the three of you tomorrow. Don't let Graves get out
of bed if he is not well.
MR. KUHN: Bathrick also talked about advertising.
He says that the Government bond is the one thing that
no stockholder can get up and yell about if his company
spends money on promoting, except possibly transportation rubber conservation.

H.M.JR: I mean, they can't complain.
MR. KUHN: He said no stockholder could complain.

He said if those people get together he thinks that
the Treasury can get a lot out of them in the way of
money for continuous advertising - a share of their

continuous output. He said those people are running

short of copy; they haven't anything to sell, haven't

anything to say.

116

- 12 MR. BELL: They are advertising scrap drives and
everything else.
MR. KUHN: He said none of those things are as
good as war bonds, because all of them have a contro-

versial aspect. He says that the people are not going
to raise their hands and say, "Mr. Secretary, we would
likt to put up this money. " He said that somebody else
has got to go to them, and I think we can use the
Advertising Council as an intermediary in that kind of
thing, so he is very much impressed. He was particularly impressed, he told me, with what he heard last

night. He said that that was a deeply impressive story.

It shows how thoroughly the thing has been done up to
now with very little in the way of expenditure of money
on organization.

H.M.JR: I would say he was fairly well sold.
MR. KUHN: He is well sold, and he would like to

come on the committee.

H.M.JR: You speak to me about this again tomorrow

morning - the very thing that you have said now - repeat
it tomorrow morning.

MR. KUHN: All right, at that meeting with Harold

Thomas. He is coming down.

MR. GAMBLE: I don't want to make any case, but

this is something that you might think about. We have

a hundred-million-dollar promotional campaign laid down

back of this war, bond effort. When we start doing this

sort of thing, setting up a parallel organization to

do somewhat the same thing, there might be some merit to
be thinking about some kind of a merger of these organiza-

tions without having them lose their identity.

H.M.JR: Listen! Supposing you have a full page
contributed by General Electric, is there any reason
why that page can't be divided so that you present all

of the Treasury securities? I am just using that.

117

- 13 MR. GAMBLE: There is some merit to that, but

that is my very point, that you are not going to get

one group of people and one department that is out

carrying its bags from door-step to door-step, pro-

moting this sort of thing that it has for eighteen
months, to enter into this - and a voluntary organization - unless you do something in the Treasury to
centralize that.

H.M.JR: For the moment it is centralized in me.
MR. GAMBLE: That is correct.

MR. BELL: It was the purpose of the committee to
advise you on these very matters.
MR. KUHN: Bathrick says one is general public;
the other, not.

H.M.JR: This group that I am getting in of five

or six men to advise me on sales, and the Advertising
Council has advised me on that, and the OWI. Of course,
my own common sense - for whatever it is worth - tells
me we have got to put the weight where it will do the

most good; that is all. Each fellow will get recognized
according to his ability to produce. That is the business

world, isn't it?

MR. GAMBLE: That is right. But I think there
still would be some coordination here in the Treasury.
H.M.JR: That is what I am trying to do right now.
MR. GAMBLE: And not through a committee, but

people who are actually going to operate it; that is

my point.

H.M.JR: O.K. Kuhn sits in on everything that I
am doing so he can tell both sides what is going on.

118
0

November 10, 1942

My dear General Strong:

Mr. Harold Hochschild, President of
the American Metal Company, New York City,

has asked me to write you in his behalf.

He is very desirous of entering the Intelligence Service of the Army.

I have known Mr. Hochschild all my

life and can assure you of his integrity
and intelligence. Mr. Hochschild has had

wide business experience and speaks a number
of languages.

I would appreciate it if you would

give him an appointment to see you.

Yours sincerely,
(Signed) H. Morgenthau, Jr.
Major General George V. Strong,

Assistant Chief of Staff, G-2,

War Department,

Washington, D. 0.

Treasury Department

19
Division of Monetary Research

119

Date DateNov. 10, 194219

Miss Chauncey

To:

The tables for transmi ttal

to the Secretary of State differ
from those being sent to the President

in that certain military figures are
not broken down.

MR. WHITE

Branch 2058 - Room 2141

Treasury Department

Division of Monetary Research 120
DateNov. 10, 194219
To:

Secretary Morgenthau

Original of this report
appended to prepared letter to
the President.

MR. WHITE

Branch 2058 - Room 214}

120

SECRET
121

November 10, 1942

Experts to Ruesia, Free China and selected blooked
countries as reported to the Treasury Department
during the eleven-day period ending
October 31, 1942

1. Exports to Bussia
Exports to Rucsis as reported during the eleven-

day period ending October 31, 1942 amounted to
845, 701,000 as compared with $55,083,000 during the

previous ten-day period. Military equipment amounted
to $18,417,000 or 40 percent of the total and included
12 light bombers, 45 fighter planes and 109 military
tanks. (See Appendix c.)
2. Exports to Free China
No exports to Free China were reported during
the period under review.

3. Exports to selected blocked countries
Exports to selected blocked countries are given
in Appendix A. Most important were exports to
Switzerland amounting to 82,724,000.

ISF/grs
11/11/42

SECRET
122
APPENDEX &

Summary of United States Reports to Selected
Countries as Reported to the Treasury Department
from Export Declarations received

During the Period Indicated V
(In thousands of dollars)

11-day
Period ended

U.S.S.R.

Free China
Snain

Switserland
Sweden

Pertugal

French North Africa 2/

Total
Domestic Reports

10-day

Total
Domestic Reports
July 28g 1941 to

Oat. 32. 1942

Oct. 20. 1942

Aug. 1, 1942 to
Oat. 31. 1962

e 45,701

$ 55,083

$ 365,855

8 742,941

6,933

97,720

757

2,858

281

4,249

11,537

117

2,625

18,056

796

9,743

2,088

6,305

Period ended

361

2,724

211

Treasury Department, Division of Monetary Research

July 31. 1942

November 10, 1942

1/ Many of the export declarations are received with a lag of several days or more.
Therefore this compilation does not accurately represent the actual shipment of
a particular period.
2/ Includes Marocco, Algeria and Tunisia.

MVF/EFM/gra

11/10/42

SECRET

APPENDIX B

123

Exporte from the U. s. to Free China and U.S.S.R.
as reported to the Treasury Department
July 28,(Thousands
1941 - October
31, 1942 V
of Dollars)
Exports to

Exports to

32,758

98,902

6,938
4,889
4,853

9,608
13,315
26,174
26,119
32,509

Free Ohina

July 28,1942
1941 - Jan. 24, 1942

Jan. 26 - Jan. 31

Feb. 1 - Feb. 10 2

Feb. 10 - Feb. 20
Feb. 20 - Feb. 28 3
Mar. 1 - Mar. 10
Mar. 10 - Mar. 20
Mar. 20 - Mar. 31

WHA

2,921
2,879
8,058

28.556
42,435

4,836

Apr. 1 - Apr. 10

Apr. 11 - Apr. 20
Apr. 21 - Apr. 30

5,335

May 11 - May 20
May 21 - May 31
June 1 - June 10

1,872

51,698
66,906
50,958
26,652
18,000
26,160
12,764
53.799
49,919
35,657
33,940

2,827
296

May 1 - May 10 5

2,533
3.399

2,707
1,664
7,900

no21-June 30

June 11 - June 20
-

21 - 4

3,066

21 - y

2,850

590

35,669

14,970
23,325
112,492
24,339
44,434
30,947
14,564

206
192

July Aug. July July 11 1 1 July July July 10 20 31

Aug. 11 Aug. Aug. 10

855

902

1,885

11 -

55,083
45.701

$ 107,256

$1,109,615

Aug. Sept.11 Sept. Oct. Oct. Sept.21 Aug. Oct. Oct. Sept.10 Sept.30 Sept.20 10 20 20 31

Oct. 21 - Oct. 31 4
These

TOTAL

figures are in part

11-day 8-day instead Beginning Due to period. period. of with week, February except where 1, taken figures otherwise from are copies given indicated. of for shipping 10-day period manifests.

Commerce, changes this report in reporting is incomplete procedure for by the the period Department indicated. of

November 9, 1942

seury Department, Division of Monetary Research

SECRET
124

APPENDIX 0

Principal Exports from U.S. to U.S.S.R.
as reported to the Treasury Department during the eleven-day period
ending October 31, 1949
Unit of
Quantity

Quantity

TOTAL EXPORTS

Value
(Thousands

of dollars)
# 45,701

Military Equipment (618,417)
Ammunition

Aircraft
Light bembers (2 engine A-20)
Fighters (1 engine P-40)
Military tanks
Light tanks (M-3)
Light tanks n.e.s.
Medium tanks

Medium tanks n.o.s.
Ordnance Combat Vehicles
Scout care

Light armored care
Ordnance combat vehicles n.e.a.

Explosives

20 mm. Cerlikon guns

All other.

6,835
No.
No.

No.
No.
No.
No.

12
48

4,606

2,225
1

58
10

2,710
No.
No.
No.

806
109

Lb.

7,234,860

1,400
450

1,484

SECRET
125
Page 2

Appendix C (Con't)

Unit of

Quantity

Non-Military Goods ($27,284)
Food products

Industrial, agricultural & electrical
machinery & parts.

Quantity
---

Value
(Thousands

of dollars)
$

6,147
6,080

Iron and steel afgrs. & semi-afgre.
Motor trucks, metercycles and parts.

3,534

Metals and manufactures n.e.s.

1,557

Aluminum & manufactures.

Cotton, wool & other textiles
Leather and manufactures

3,496
--

1,473

1,434

706

Chemicals and related products
Petroleum products
Rubber and manufactures.
Merchant vessels

All other.

1,042

497

450

378
490

Treasury Department, Division of Nonetary Research November 10, 1942

MVF/EFU/grs

11/10/42

126

TREASURY DEPARTMENT
PROCUREMENT DIVISION
WASHINGTON

OFFICE OF THE DIRECTOR

November 10, 1942

MEMORANDUM TO THE SECRETARY:

There is submitted herewith the operating
report of Lend-Lease purchases for the week ended
November 7, 1942.

It is proposed that, effective December 1,
1942, all Lend-Lease shipments will be consigned

to the War Shipping Administration, and they will
likewise act as the forwarding agents. The
procuring agencies under the Lend-Lease program

will continue to participate as heretofore with
the exception that there will be a single consignee
and a coordination of the respective efforts by the
War Shipping Administration.

Chifton E. Mack

Director of Procurement
PORVICTORY

BUY

ONDE
STAMPS

Ports

chases)

Allocations

for Purchase

Obligations (Pur-

Purchase Authoriza-

Requisitions Cleared

tions (Requisitions)
Governments at U. S.

Deliveries to Foreign

Total

$1735.3

$1654.9

$ 703.0

(1790.4)

(1724.1)

(1620.6)

683.5)

$2327.3

$1796.8

(2327.2)

foreign governments.

U.K.

$1007.1

$ 561.1

$590.1

$756.9

$672.4

$622.9

Russia

(739.2)

(669.3)

(617.3)

(567.3)

(1202.7)

(1062.8)

(1049.1)

$117.0

(115.2)

$1234.9

$1065.3

$1053.6

( 996.3)

( 544.0)

LEND-LEASE

$56.7

China

AS OF NOVEMBER 7, 1942

(In Millions of Dollars)

(56.7)

(40.4)

(40.0)

$40.1

$40.0

$39.8

$20.2

(20.1)

TREASURY DEPARTMENT, PROCUREMENT DIVISION

DELIVERIES TO FOREIGN GOVERNMENTS AT U. S. PORTS

$3.7

$2.8

(3.7)

STATEMENT OF ALLOCATIONS, OBLIGATIONS (PURCHASES) AND

(2.6)
Expenses

Administrative

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

Note: Figures in parentheses are those shown on report of October 31, 1942.

$275.1

( 4.2)

( 14.4)

$ 19.0

$ 18.8

$ 15.1

$ 4.7

( 17.7)

( 17.9)

(324.9)

Miscellaneous

Undistributed and

TREASURY DEPARTMENT

129

INTER OFFICE COMMUNICATION

DATE Nov. 10,1942
TO

FROM

Subject:

Secretary Morgenthau

Mr. Hoflich
Shipment of Planes and Tanks to the U.S.S.R.

1. During the month of October, 150 planes
were sent to the Soviet Union from the United
States. Of these, 113 were Curtiss P-39 and P-40
fighters, and 37 were Douglas A-20 Boston light
bombers.

2. Military tanks shipped to Russia in
October totalled 143 (71 light - under 20 tons,
72 medium - 20-40 tons.)

-2-

130

Table A

Shipment of Planes and Tanks from the

United States to the U.S.S.R.

Shipments

during
October 21-31, 1942

Cumulative Total
January 1, 1942
to October 31,1942

Planes

Fighters

1,046

Bombers

836

Total

1,882

Tanks

Light

1,551

Medium

1,437

Total

Based on export declarations received.

2,988

-3-

131

Table B

Shipments of Planes and Tanks to the U.S.S.R.
by months *

Fighters

Bombers

Total
Planes

Light

Medium
Tanks

Total

Tanks

123

115

238

172

210

March

170

238

159

258

417

April

120

174

287

216

503

139

June

127

104

2310

143

206

349

July

123

134

257

151

157

308

202

126

328

299

261

August

560

112

155

162

317

113

150

143

1,551

1,437

2,988

January, 1942
February

May

September

October

Total 1942 to
October 31

1,046

836

1,882

Based on export declarations received.

-3-

131

Table B

Shipments of Planes and Tanks to the U.S.S.R.
by months

Fighters

Bombers

Total
Planes

Light

Medium
Tanks

Total

Tanks

123

115

238

172

210

March

170

238

159

258

417

April

120

174

287

216

503

139

June

127

104

231

143

206

349

July

123

134

257

151

157

308

202

126

328

299

261

August

560

112

155

162

317

113

150

143

1,551

1,437

2,988

January, 1942
February

May

September

October

Total 1942 to
October 31

1,046

836

1,882

Based on export declarations received.

132

NOV 10 1942

Dear Mr. Stettinines

I have received your letter of November 2, rela
tive to the desire of Winge for Nervey, Inc., to deposit
with the United States Treasury funds to pay for airplanes

and spare parts to be purchased by this Government and
transferred to the Reyel Norvegian Government for the train

ing of Norvegian pilete.

This Department is prepared to receive any desetions which may be made by Winge for Nerver, Inc., for the

purpose indicated is your letter. Upen receipt of the dena.
tions, the money will be deposited is an appropriate special

deposit account with the Treasurer of the United States.
When your office advises the Treasury Department with respect
to purchases made and the applicable appropriation to be you
inbursed, funds will be withdrawn from the special deposit
account and transferred to the proper appropriation.

IS is assumed that your office will complete the
arrangements with Winge for Norway, Inc. The check should
be made payable to the Treasurer of the United States and

forwarded to this Department for attention of the Division

of Bookkeeping and Warrants.

Very sincerely yours,
(Signed) H. Morgenthan, Jr.

Secretary of the Treasury

Renorable z. R. Stettinine, JT.,
Administrator, Lead-Lease Administration,

Washington, D. 0.

Photo file in Diary
Del. by Mess. Sturgis
5:20 11/10/42

Orig. file ,returned
direct to Miss Browning,

A & D.
EFB:hbw 11/10/42

133

November 9, 1942

Copies to: Mr. Bell

Dr. White
Mr. Paul
Mr. Gaston

The Secretary would like to have
Dr. White prepare an answer for

the Secretary's signature after

you gentlemen have conferred together.
N.M.Chauncey

134

OFFICE OF LEND-LEASE ADMINISTRATION
FIVE-FIFTEEN 22d STREET NW.
WASHINGTON, D.C.

E.R. Stettinius Jr.
Administrator

November 2, 1942

Dear Mr. Secretary:

I understand that Wings for Norway, Inc. would like
to make a deposit with you to pay for airplanes and spare

parts to be purchased by the United States Government and
transferred to the Royal Norwegian Government for training
Norwegian pilots.

Wings for Norway represents a Swedish-American drive

to raise funds in the United States to provide airplanes for

young Norwegian pilots continually arriving in Canada and the

United States to learn to be pilots. I understand that Wings
for Norway would like to deposit additional sums with the
Treasury in the future to further this same purpose.
If these deposits are accepted by the Treasury, the
procedure for obtaining planes and spare parts will be as
follows: Requisitions will be filed by the Norwegian Government with the Lend-Lease Administration. The Office of LendLease Administration will promptly notify the Treasury of
planes and spare parts procured and transferred to the
Norwegian Government. OLLA will also notify the Treasury of
the appropriation from which the expenditure was made so that
the appropriation can thereupon be reimbursed with funds deposited by Wings for Norway.

On behalf of the Office of Lend-Lease Administration I strongly recommend the purposes and program of Wings

for Norway. If we can be of any further assistance in this

connection, please consider our services available to you at
all times.
Sinceres yours,

The
Stettinius, Jr.

BUY
UNITED
STATES
SAVINGS

BONDS

The Honorable

The Secretary of the Treasury

BOARD OF ECONOMIC WARFARE
OFFICE OF EXECUTIVE DIRECTOR
WASHINGTON D.C.

NOV 1 1942

The Honorable

The Secretary of the Treasury
Dear Mr. Secretary:

In connection with the report BL-10b, "Trade
Policy toward Sweden," transmitted under date of
November 7 for discussion at the meeting on
Thursday, November 12, Mr. Cass Canfield, Chairman of the Sub-Committee informs me that a

minority report by Mr. Harold H. Neff of the

War Department will be submitted and circulated
to the members of the Board within the next few
days.

Sincerely yours,

While
Parking
Executive Director

135

THE BRITISH SUPPLY COUNCIL IN NORTH AMERICA
Box 680
BENJAMINFRANKLINSTATION

TELEPHONE: REPUBLIC 7860

WASHINGTON, D. c.

November 10, 1942.
SECRET

Dear Dr. White:
1.00
i

follows:
figure

the

The

Oct.

doll.r figures for October are as

Tilm money evidently does not yet
Oct. z

Oct.16 Oct.23 Oct.30

Total Gold

(incl.Belgian)

787

765

790

793

124

222

233

237

1016

1039

1008

1023

1030

105

201

.10

210

700

684

08)

698

705

Official Dollar
Balance

Total Gold
and Dollars

Less: Beigian
Gold

Scattered Gold
Gold Reserve

against irregiate

liabilities

AVAILABLE GOLF
AND DOLLARS

Yours sincerely,

T.K Dewley.

Dr. H.D. White,
Director of Monetary Research,

United States Treasury,
Washington, D. C.

Fabily

RECEI
to notsivill
Eudshold

137

NOV 10 1942

Dear Mr. Davis:

Reference is made to various communications
addressed to this Department concerning the payment out
of blocked French Government funds to the American Red
Cross of certain sums covering expenses in connection
with the purchase and shipment of food packages for
French prisoners of war.

By direction of the President, this Department

has approved the transfer of $220,000 to the American
Red Cross in reimbursement for past shipments and has

withheld action on the remaining applications to effect
such transfers.

It is requested that this Department be
consulted prior to your effecting any future purchases
of prisoners of war supplies for which you contemplate

being reimbursed from blocked dollar funds.

Very truly yours,
(Signed) H. Morgenthau, Jr.

Sent by Mess. Givens 4:27 11/10/42

File direct to Mr. Paul
CC in Diary
Mr. Norman H. Davis,
Chairman,

American Red Cross,
Washington, D. C.
MLHoffman:JWPehle:cwh 11-9-42

TREASURY DEPARTMENT

138

INTER OFFICE COMMUNICATION
DATE NOV 9 - 1942
TO

FROM

Secretary Morgenthau
Randolph Paul

In connection with our reply to Mr. Hull's

letter concerning the payment of blocked French funds
to the American Red Cross for shipments of food
packages to French prisoners of war, you inquired as
to how the Red Cross could become the creditor of the
French Government to the extent of $200,000 without
our approval.

Foreign Funds Control has never undertaken

to control the activities of the American Red Cross.
The purchase of relief goods by the Red Cross with
its own or this Government's funds and the export of
such goods are controlled by the State Department and
the Board of Economic Warfare.

We understand that the American Red Cross

is the executor of agreements which were entered into
by the United States, British and French governments
whereby certain amounts of canned meat were to be purchased and shipped to French prisoners of war each
month beginning October 1, 1941. The Foreign Funds
Control became involved in such transactions only after
the shipments had been made and the Red Cross, having

used its own funds to pay for the meat, sought reimbursement out of French blocked funds.

There is attached a proposed letter to the
Red Cross indicating that before further shipments
are made for which the Red Cross will want reimbursement out of blocked funds, the Treasury should be consulted.

his

STRICTLY CONFIDENTIAL
139

y dear Mr. Secretary:

Further reference is made to your Department's
letter of October 14, 1942, in which certain specific measures
were suggested for consideration by this Department in connection with the implementation of the Argentine program

referred to in such letter.

Your letter was in response to my letter of
September 18, 1942, which requested a report on the mission

to Argentina of representatives of your Department. As
you know, this Department was particularly interested in
this mission and was prepared to send its own represents-

tives to Argentina for this purpose. We appreciate your
furnishing us with a copy of the report, which has been
carefully studied by this Department. We have not found

this report particularly helpful in the evaluation and
solution of the Argentine problems to be met.

It is noted that your letter refers to the development of an Argentine program of which the financial measures
suggested are only a part. This Department would appreciate

receiving full information as to the entire program in order

that it may be in a position to integrate its financial controls with the other portions of the program.
The development of a satisfactory Argentine program

in the financial field has been the subject of considerable

discussion for many months between representatives of our
respective Departments. As you know, this Department has
been contending that Argentino financial transactions sub-

ject to the jurisdiction of this Government should be placed
under supervision and control through the issuance of an

order freezing Argentina, accompanied by appropriate general
licenses. Inasmuch as your Department has objected to such

an overall control of Argentine transactions, a series of
specific measures designed to enable this Government to

140

.2obtain more complete information concerning Argentine

nationals and transactions and to control Argentine financial transactions in so far as possible on an ad hoe basis

have been discussed with representatives of your Department.
The specific measures which have now been approved

by your Department and which are described in items (1), (2),

and (3) of your letter are designed to implement, in part,
an ad hoe program. Since your letter was received, this
Department has taken the following action with respect to
those measures included in your letter:

(a) By letter dated October 22, 1942, we

forwarded to your Department the names of 64

persons and firms in Argentina having unsatis-

factory ratings according to the records of the
World Trade Intelligence Division of your
Department, together with a summary of certain

information concerning the undesirable activities
of such persons and firms. It was proposed in
the letter that these persons and firms be subjected to ad hoe freesing action immediately and
be given immediate consideration for inclusion
in The Proclaimed List. These cases were discussed at meetings attended by representatives of
our respective Departments, and your Department
approved the immediate application of ad hoc

freezing action to 44 of these persons and firms.
Appropriate instructions have been issued to the
Federal Reserve Banks ordering that such persons

and firms be ad hoo blocked. For your information in connection with the procedure employed
in taking such action, there is enclosed a copy
of Confidential Circular No. 158A to all Federal
Reserve Banks and a copy of a telegram dated
November 2, 1942, sent to such Banks.

(b) By letter dated October 30, 1942, we

forwarded to your Department the names of over

180 individuals in Argentina who are closely
connected with firms on The Proclaimed List, and
proposed that such individuals be subjected to
ad hoo freezing action immediately.

141

3(o) By letter dated October 31, 1942, we
forwarded to you a list of exchange houses in
Argentina, which, as reported by the Embassy in
Buenos Aires, have continued to deal in dollar
currency transactions in the black market. We
proposed that these firms be subjected to ad hoc
freezing action immediately.
(d) By letter dated October 31, 1942, we
proposed the application of ad hoe freezing action
to Banco de la Provincia, Banco de la Nacion, and

Pascual Hermanos and proposed action with respect
to Shaw Strupp and Company which would enable

this Department to supervise the transactions
subject to our jurisdiction which are engaged in
by such firm.

With respect to item (4) of your letter, this

Department by letter dated October 30, 1942, submitted for
the consideration of your Department a proposed general rul-

ing which excludes transactions Between persons in Europe
and persons in the American Republica from outstanding general

licenses and requires that before any such transaction may
be engaged in, ft must receive the specific approval of the
Treasury Department.

With respect to the country-by-country analysis of
TFR-300 data, referred to in your letter, you are advised
that such an analysis has been under preparation for some
time, and as soon as such an analysis is completed with

respect to any particular country in Latin America, it will

be furnished to you.

The success of any Argentine ad hoo program is

necessarily dependent upon the ability of this Government to
obtain adequate information concerning persons within
Argentina engaged in undesirable activities and concerning
undesirable transactions subject to our jurisdiction engaged
in by persons within Argentina, and to obtain this information
in ample time to prevent these undesirable activities. Under
existing circumstances the primary SOUFCES for obtaining

this information are the representatives of this Government

stationed in the field, in particular the officers and personnel of our Embassy and Consulate staffs in Argentina.

142

In the light of the above, it is believed that
the following steps are desirable in connection with the
administration of the ad hoe program described in your
letter, and these steps are recommended for your considerations

(1) Our Embassy and Consulate staffs in
Argentina should be made thoroughly familiar
with the functions and purposes of the ad hoo
program described in your letter and should be

requested to compile lists, on the basis of the
information available to them, of those Argentine
persons, firms, and accounts which should in
their judgment be subjected to ad hoe freezing
action. Such lists should be made promptly
available to this Department, with your comments
and such other information as may be available
to your Department.

(2) In addition, the State Department

should advise the Treasury Department of any
other persons, firms, and accounts in Argentina

which, on the basis of all the information
available to the State Department, the State
Department believes should be subjected to
ad hoe freesing action.

This Department will, of course, continue to advise your
Department of those cases in which, on the basis of informa-

tion available to this Department, it is believed that ad

hoe freezing action should be taken.
This Department desires to cooperate fully with
your Department in the implementation of the Argentine pro-

gram referred to in your letter. This Department strongly
recommends, however, that additional measures be adopted

30 as to enable this Government to supervise and control
more adequately Argentine transactions.
You state in your letter that the Argentine program the
which has been developed is designed to prevent, within to

limits of our control, economic operations beneficial

143

-5the Axis. It is the view of this Department that the program
described in your letter is inadequate to prevent such operations, although it will have some effect in that direction.

The program described in your letter contemplates the control
of transactions through the application of ad hoe freezing
action to cortain persons and firms in Argentina. The program
does not envisage the control on an ad hoo basis of individual
transactions, which may be inimical to this country's war
effort, but which may be engaged in by persons who would not
be subject to ad hoe freezing action on the basis of the

standards set forth in your letter.
It was to meet this particular objection that this
Department has suggested that arrangements be made with the

Office of Censorship sotthat all financial communications

between the United States and Argentina will be examined and

the information contained therein forwarded to this Department, and, in case of communications relating to the more
important transactions, that the contents of such communications will be received by this Department in advance of their

transmission to destination. By utilizing the information
thus obtained from Censorship, and from other sources concerning Argentine transactions, this Government would be

in a positIon to single out those transactions which appear
to be of an undesirable character, and require the American
banks or institutions which are parties to such transactions

to hold up their execution until we obtain further informtion as to the nature of the transactions. This Department
is prepared to take such action immediately if you have no

objectIon.

So long as this Government attempts to control
inimical Argentine transactions, through the procedure of
an ad hoc program, as distinguished from an overall additional supervision

and control, this Department is of the opinion that

measures such as those referred to above are essential ad in hoc

order to give the fullest possible effect to such an
program. Nevertheless, this Department is still strongly
of the view that Argentine financial transactions subject to
our jurisdiction should be subjected to an overall super-

vision and control. It is impossible adequately to control

144

-6inimical financial transactions subject to our jurisdiction

which are engaged in by persons within a foreign country such
as Argentina through a procedure whereby such transactions
are freely permitted unless this Government has already ob-

tained positive information, prior to the time they are en-

gaged in, indicating that they should be examined. Any progran which is fully adequate in this respect must be based
on the premise that transactions are prohibited unless this
Government is furnished with full information concerning such
transactions and is satisfied that such transactions should
be approved. Since the time that this Department recommended

in May,1942, the issuance of an order freezing generally all

Argentine nationals (accompanied by an appropriate general

license), the information which has come to the attention of
this Department concerning Argentine activities more than
confirms the views of this Department as to the necessity
of such an overall control.

It is understood that the principal objection to a
public order freezing Argentine nationals, which was raised
by representatives of the State Department at the meeting
hold in May, 1942, to consider this matter, was the contention
that such an order would have an adverse effect on certain
friendly groups in Argentina and on our good neighbor policy
in general. In view of developments since that time, in-

cluding official statements relating to Axis activities in
Argentina, it is suggested that the issues involved be recanvassed.

Recognizing the political considerations involved,
I am of the opinion that this Government can not justify its
failure in this case to take adequate steps designed to prevent transactions, subject to our jurisdiction, which are

engaged in by persons within a country maintaining diplomatic

and commercial relations with the enemy and which may be

detrimental to our war effort.

Very truly yours,
Henry Morgenthau, Jr.

Secretary of the Treasury.
The Honorable

The Secretary of State.
Enclosures

JED/ma - 11/6/42

File direct to m Paul
By Messenger Short 11:17 11/10/42

PROCEDURE FOR .. AD HOC" BLOCKING PERSONS OUTSIDE OF THE UNITED STATES 145
BY DESIGNATING THEM SPECIAL BLOCKED NATIONALS

CONFIDENTIAL
Treasury Department
FOREIGN FUNDS CONTROL

November 2. 1942

CIRCULAR NO. 158A

Reference is made to Confidential Circular No. 158 concerning the
procedure to be followed in "ad hoc" blocking. The procedure described

therein is designed to be used with respect to persons within the
United States. The procedure described below is to be used with respect to persons located outside the United States whether or not they

have assets within the United States.
1. General Procedure

Persons who are "ad hoc" blocked under the new procedure will be
found by the Secretary of the Treasury to be "special blocked nation.

als," and special blocked nationals will have the status under the
Order of persons who are nationals of a blocked country. This office

will forward to the Federal Reserve Banks the names of persons who
have been designated as special blocked nationals, together with the
general blocking instruction described below. Upon receipt of these
names the Federal Reserve Bank will send them to those banks, broker.

age houses, shipping concerns, etc., within its district, which in its

opinion are handling a substantial volume of business transactions for
foreign account, together with instructions (of the type indicated be.
low) to the effect that such persons have been determined by the Treas.
ury Department to be special blocked nationals and that no transaction
in which they have an interest may be effected unless licensed by the
Treasury Department. This office will send to the Federal Reserve
Banks, along with the blocking instructions, information for the use
of the Federal Reserve Banks, giving some indication as to why each of

the persons is being blocked. Such information will be transmitted
with a covering letter referring to this Circular and to the applicable
blocking instruction.

2. Form of Blocking Instructions

The basic blocking instruction to be sent from this office will
generally be in the following form:
You are hereby advised that the persons named below
have been designated special blocked nationals.

201

3. Form of Unblocking Instructions

The basic unblocking instruction to be sent from this office will

generally be in the following form:

You are hereby instructed to inform appropriate insti.
tutions within your district that effective here insert date the
following special blocked nationals have been unblocked.

4. Action to be taken by the Federal Reserve Banks
The Federal Reserve Bank will notify those banks, brokerage houses,

shipping concerns, and other institutions within its district, which

are handling a substantial volume of business for foreign account, that
the named persons have been designated by the Treasury Department as

special blocked nationals. In sending the names of special blocked ns.
tionals to any such institution, the Federal Reserve Bank shall send a
letter modeled after Form Letter E-6. The notice of unblocking may be
handled by a letter modeled after Form Letter E-7.
In those cases in which a special blocked national is known to have
assets in this country, Form Letter E-6 should, of course, also be sent
to the banking institution with which such assets are held.

Any institutions holding property in which any special blocked na.
tional has an interest will be required to file appropriate TFR-300 reports, and in those cases in which TFR-300 reports are filed, the Fed.
eral
Reserve Bank
shall No.
prepare
in Confidential
Circular
158.Form TFR-AH-1 in the manner prescribed
5. Text of Form Letter E-6

You are hereby notified that the Secretary of the Treasury, pur.
suant to the provisions of section 5(b) of the Trading with the enemy
Act, as amended, has designated the persons named herein as 'special
blocked nationals" and has ordered that such persons sha. 11 be deemed

to be nationals of a foreign country and shall be treated for all pur-

poses under
Executive Order No. 8389, as amended, as nationals of a
blocked
country.

Pursuant to the direction of the Secretary of the Treasury, the
special blocked nationals named herein are entitled to the privileges
of of general licenses, except that they are not entitled to the privileges

any general license which by its terms is limited to a national or
nationals of a country named therein, and, in addition, they are not
entitled to the privileges of General License No. 53.

146
3

In accordance with these instructions you are directed to block

all of the accounts, safe deposit boxes, securities, etc., that any
such persons may have with you or in which you believe any such person

has an interest. Please notify us when you have taken this action, and
advise us of the name of any other institution in which you believe any
such person has an account and the name of any business enterprise in
which you believe he has an interest.

No payment or commercial or financial transaction in which any
such person has an interest may be effected by you except as authorized

by an appropriate license. You may not participate in any financial
transaction; forward any draft, bill of lading, invoice, or similar doc.

ument; honor any instructions to make payments, to buy or sell secur.
ities, etc., in which any person named herein has an interest, unless
the transaction has been licensed. Any application filed by you with
respect to any transaction in which any such person has an interest
should indicate that such person is a special blocked national.

Within fifteen days of the date on which you receive this letter,
you should submit to us reports on Form TFR-300 as required under Pub.

lic Circular No. 4C. The report on Series L of the form should show
the property held by you on the date you blocked such property.

If you have any questions, please communicate with here insert
the name of the individual in the Federal Reserve Bank designated to
handle such inquiries of our staff.

6. Text of Form Letter E-7

Reference is made to our letter to you of here insert date ad.
vising you that the following person has been designated as a special
blocked national. The Treasury Department has requested us to inform
you that effective here insert date such person is no longer aspecial
blocked national.

J. W. Pehle

Assistant to the Secretary

147 11/2/42

COPY

200/101.20

Salaries and Expenses
Foreign Exchange Centrol 1940 and 1941

TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS:

Reference is made to Confidential Circular No. 158A. You are hereby
advised that the persons named below have been designated as special
blocked nationals.

Argentina de Representaciones Cia.
Bauman, Carl Sydney (Jr.)
Benvenuto y Cia.

Borello, Jose
Burkert, Luis

Camara de Comercio Italiana

Crocitto Cuonso, Francisco
Dannemann, Otto, S.R.L.
De Sousa, A. J.

Federacion de Circulos Alemanas de Beneficencia
Federic, Helmit
Freeschle & Cia.
Goggi & Cia.

Handalakamission - Junta Consultiva de Conercio
Hermann & Goldachlager
Junge, Hans

Kahlke y Cia.
Kohl and Buraschi
Koppel and Company

Lira y Cia., Rudolpho A.

Henri Meior

Merello Hermanos

Muller, Fernando Enrique
Myalovich, Mauricio
Nippon Gave

Olssen, 02af

Ortelli, Elvesio
Pick, Adolfo

Renshaw, A. L.
Rojas Campordo, Antonio

Hotaprint Argentina, S. de R. L.

Schuls, Francisco

Schwabe, Gras & Cia.
Schwars, Pable

S.I.M.A.I. (Soc. de Importanian de Motores Agricolas Ind. de Resp. Itada.)
Dr. Arnoldo Stoop

148

Sudamericana de Bombas, s. R. L., Cia.
Antonio Tomaselli

Dr. Into Witte
Wejahn, Hart
Wohlmuth, Lee

Warst, Dr. Oskar
Yamashire Normance

The address of each of the above-assed persons and firm should be given
as"Argentina."

/S/J.W. Pehle
J. W. Pehle

Assistant to the Secretary

NOT TO BE RE-TRANSMITTED

A
COPY NO.

BRITISH MOST SECRET
J.S. SECRET

OPTEA No. 389

Information received up to 7 A.M., 10th November, 1942.
1. NAVAL

FRENCH NORTH AFRICA. 9th. The discharge of assault convoys over
beaches continued.

ALGIERS. Shipping entered harbour during the day. Shore labour
WES most cooperative. A United States transport was sunk, one of H.M. Destroyers
disabled nd one of H.M. Antiaircraft ships damaged by bombs. One of H.M. Destroyers
THAN blown up from unknown cause and another has now sunk.

ORAN. FORT SANTON is still holding out after bombardment by one of

H.M. Battleships and harbour cannot be used until Fort is reduced. Two French Destroyers were engaged by two of H.M. Cruisers, one being set on fire and be ched,

the other returned to ORAN. One of H.M. Corvettes was sunk in collision.
CASABLANCA. The French battleship JEAN BART is burnt out and at
least 11 destroyers sunk or damaged.

BIZERTA. The French authorities are blocking the harbour entrance.
One of H.M. Destroyers sank a U-boat and another sank is French submarine on the 8th

Th: Italian cruiser torpedood yesterday by one of H.M. Submarines has returned to
PAL.RMO. Two enemy cruisers and 3 destroyeru were attacked by aircraft off MESSINA
and one ship WILS torpedoed.
2. MILITARY

2GYPT. 8th. Our forces continued their advance to within 20 miles
of SIDI BARRANI. Among 1100 prisoners captured was the Commander of the Italian
Pavia Division.
3. AIR OPERATIONS

WESTERN FRONT. 9th. 47 United States bombers were sent to attack
ST. NAZAIRE dock installations. About 100 tons of High Explosive were dropped and
reports indicate attack very successful. Three bombers missing. Bostons bombed
and probably damaged the NEUMARK raider at HAVRE.

9th/10th. 228 bombers were sent out - HAMBURG 213, leaflets FRAICE

15. Weather conditions HAMBURG disappointing with severe icing conditions and heavy

cloud over objective. 15 aircraft missing, one crashed.
FRENCH NORTH AFRICA. 8th. 23 United States Spitfires arrived at
airfield ORAN. 4 R.A.F. Hudsons are missing from patrols in the CASABLANCA
area. 9th. There were 61 serviceable R.A.F. Spitfires at MAISON BLANCHE airfield
ALGIERS. About 11 French bombers were destroyed in the air.
PAFAROUI

GGPP. 8th. Fighters and fighter-bombers heavily damaged mechanical
transport in BUQ BUQ and SOLLUM areas. At night bombers attacked mechanical transport near SOLLUM and HALFAYA and started many fires.

149

November 11, 1942
10:10 a.m.
FINANCING

Present: Mr. Bell

Mr. Kuhn
Mr. Gamble

Mr. Buffington
Mr. Bathrick
Mr. Thomas

Mr. McClintock
Mr. Tickton
H.M.JR: Mr. Thomas wants to ask us some questions

about this whole drive. I have time now, and I want

you (Bell) to sit in on it.

The first question he asked was - I had your memo-

randum on how müch extra do we expect from the E bonds

out of this thing. I mean, we want nothing over and

above what they had already told us?

MR. BELL: The billion eight hundred and seventyfive is the quota for November and December of all

three series. I really don't know how it is broken

down. I merely added the six hundred and twenty-five
as a guess as to what you might get. Some people think

it is high. I think the most of it might come in
series F and G bonds.

H.M.JR: Dan, we are not asking these gentlemen

to do anything other than they already plan to do on
the E bonds. We are not asking for additional help on
the E bonds. I have seen what you people have done.

My heavens, all the stuff that is piled up in the next
three or four weeks - it just leaves me breathless.

MR. THOMAS: That is the thing I wanted to find
out, Mr. Bell.
(Mr. Buffington entered the conference.)

150

-2MR. THOMAS: There has been an addition to the

one billion eight figure, which is, we might say,

normal expectancy on the E, F, and G's as operating

to date. One billion eight is the expectancy on the

E, F, and G's.

MR. BELL: That is right, for the next two

months.

MR. THOMAS: Now you have added six hundred and

twenty-five million. How much of those are E's, how

much F's, and how much G's?

MR. BELL: I haven't split it. The staff did
not put this figure in. I merely put this down as
something that we might shoot for. This is not a
staff quota at all.
MR. THOMAS: If it is to be the quota, then I
think we have got to ask you to tell us what you expect
in the way of E's, F's and G's, because, of course,

your markets and methods of promotion are quite different on E's than they are on the F's and G's.

MR. BELL: I think that is right, and I think the

staff would have to break this down.

H.M.JR: I just sent for Harold.
MR. KUHN: The quota on the F's and G's in November

is two hundred five, and in December it is two hundred
twenty.

MR. BELL: That four hundred and twenty-five

million for the two months.

MR. KUHN: That is right. That is part of the

one, eight.

H.M.JR: How much is that?
MR. KUHN: The quota you asked me about yesterday

for F and G is two hundred and five million for November.

151

-3

H.M.JR: Two hundred five in November?
MR. KUHN: And two hundred twenty in December.

That is part of the one billion eight hundred seventyfive.

H.M.JR: Gamble is coming, but Graves is sick,
unfortunately. What other questions do you have? Go
right ahead.

MR. THOMAS: You have six hundred twenty-five that
has been added to that. How do you break that down?

MR. BELL: I don't know how we would break it

down, frankly, and that was of course a figure just
put in there by me without any consultation with the
staff. They might take some exception to that figure.
The executive managers thought that it was high, too.
(Mr. Gamble entered the conference.)

H.M.JR: You ought to know about this first-hand.

Bell had down a figure for E, F, and G for November and
December of one billion eight hundred and seventy-five,
and then he put down six hundred and twenty-five as a
possible addition. Do you know what the six hundred

and twenty-five represents? Is that some figure that

you people supplied?

MR. GAMBLE: No, that is a figure that Mr. Bell

put down.

H.M.JR: Just for good luck? (Laughter)
MR. BELL: And I rounded it off, you notice.
MR. GAMBLE:

Two and a half billion.

MR. THOMAS: You understand, Mr. Bell, that we

have no quarrel with it; we just like to define. it so

that we can think in terms of the markets and possibil-

ities and methods of promotion.

152

-4MR. BELL: I think we have to discuss it with
the staff to see whether or not we can increase the
E's during the Christmas period, and what we can do
with F and G's on the other side.
H.M.JR: This thing has to be changed now anyway

for concentration pretty much in December. I think, if

you would make a note, you might give us a new figure

of what you think you are going to do in December.
MR. GAMBLE: This billion eight seventy-five

represents our goal for November and December.

H.M.JR: November is through; you can't do anything
more about November. It is finished.
MR. GAMBLE: December a billion seventy-five

million.

H.M.JR: A billion seventy-five million?
MR. GAMBLE: Yes.

H.M.JR: That is for E?
MR. GAMBLE: That is for E, F, and G, our quota
for the month.

H.M.JR: Two twenty is-MR. GAMBLE: Two twenty is F and G's.

H.M.JR: So it is a billion and seventy-five less
two twenty; that is eight fifty, E's. This is December

now. That is what you really want,Mr. Thomas, isn't
it?

MR. THOMAS: Yes, sir.

H.M.JR: There is no use, I don't see what is the
sense of saying you are going to do much more than
that.

153

-5MR. GAMBLE: We won't, and six and a quarter -

I think the six and a quarter--

H.M.JR: Six twenty-five? I put E's down for

eight fifty. We are lucky if we get it.

MR. GAMBLE: Yes, sir, it is a big task for us.
H.M.JR: And with this contemplated switch-over
if we do do it on F and G, I put F and G down, say, for
-

two hundred.

MR. THOMAS: What do you mean by the contemplated

switch-over, if I may ask?

H.M.JR: I am giving very serious consideration,
after the first of December, to having F and G sold
by the Victory Fund Committee rather than the War
Bond Staff.

MR. THOMAS: Let me ask you this question, if I
may.

H.M.JR: Ask anything you want.
MR. THOMAS: Who do you think are your prospects
for F and G's?

H.M.JR: George, you answer that.
MR. BUFFINGTON: Individuals who have accumulated

excess savings, trust funds, institutions and some
corporations. Some corporations will buy them on the
theory that they are redeemable at will of the purchaser,
although ten to twelve year obligations. Unions will
buy them; some societies; other funds of that type, and
we have felt for some time that those are the types
of people whom the Victory Fund Committees are constantly

in contact with on other types of general market securities.

MR. THOMAS: Now then, if that is the case, you
have got corporations - what is that about two hundred
thousand?

154

-6MR. BUFFINGTON: Mr. Thomas, generally I would

not say that G bonds - if there were two hundred thousand corporations - that those two hundred thousand
corporations are prospects, because generally corpora-

tions will buy a short-term security with a temporary

employment of capital.

MR. THOMAS: I am merely outlining the total first.

There are about two hundred thousand corporations, and
only a hundred thousand that are prospects. It can't
be much more than that.
MR. BUFFINGTON: Yes. Dan, how many people are

there running over five thousand dollars a year income

tax?

MR. BELL: I don't know.
MR. BUFFINGTON: I think there are four and a half
million who receive an income over five thousand dollars
a year.

MR. THOMAS: Do you think that income of five
thousand makes a man a prospect for F and G?

MR. BUFFINGTON: If he has bought his quota of

E's, I think the next best thing would be to start on
G bonds. I don't think all of them are prospects,

but a larger number than a hundred thousand are. As

you increase the sale of E bonds and get to that point
of the limit that they can buy, we would certainly
think that the next thing they would be interested in

would be G bonds.

MR. THOMAS: I guess we will have to leave that

to difference of opinion, Mr. Buffington, because I
don't think you have a prospect list that big.

H.M.JR: While we are on that, do you have an
opinion as to whether, in view of this campaign, I
ought to leave the F's and G's where they are or transfer
them over to the Victory Fund Committee?

155

-7 MR. THOMAS: I was just trying to think in terms

of the analysis of this problem along that line. If

I may, let me put down the figure of a hundred thousand.
individuals, which might be five hundred thousand
according to your analysis. Maybe you have got twenty
thousand associations so that you have got three hundred
and twenty thousand prospects according to my guess, and

that is all it is. How many of those have already bought
F's and G's? There are a lot of corporations, for example, that have bought the full amount. Don't we have
records here in the Treasury Department where that
could be checked back to find out?

MR. BELL: They are pretty old, aren't they?
MR. GAMBLE: That would not be easy to get.

MR. BELL: We don't keep up-to-date statistics

on the F and G bonds.

MR. THOMAS: I hope I am not--

H.M.JR: You are doing just what I want, only
better. (Laughter)
MR. THOMAS: You are very kind.

H.M.JR: I have got from now until eleven, and
you are doing exactly what I want, so keep right on,
will you please.
MR. THOMAS: If you have no records to check back

against this--

H.M.JR: Will you wait two minutes until Tickton
comes in? We will find out whether we have or haven't.
But would you mind going back, while we are waiting for

Tickton, as to my question, have you any feeling yourself about what you would do about the F and G's?

MR. THOMAS: This whole thing is leading up to

that very point, Mr. Secretary.

156

-8-

H.M.JR: That is all right.
MR. THOMAS: Your F's and G's have so far been
sold by the War Savings Staff?

H.M.JR: Yes, sir.
MR. THOMAS: With the exception, maybe, of quite
a while back when the Victory Fund Committee had them

for a short period of time. If we could analyze the

total prospect list and see how good a job the War
Savings Staff has already done, then we could better
determine whether it should be shifted or might be
shifted.

H.M.JR: What we did along those lines - I asked

these two investment councils, Moody's and--

MR. BELL: Standard Statistics.
H.M.JR: Monday we sent out a return postal card
to a thousand people inquiring if they had ever been
approached by any representative of the Treasury on

any Government bond issue. Now, of course, we have a
man who is advising with us, and this man corresponds

regularly with a hundred and fifty people, and he wrote
them a letter and asked if they had ever been solicited.

Not one of them had ever been solicited to buy a Government bond.

(Mr. Tickton entered the conference.)
MR. THOMAS: Don't you think there are a lot of
people who have bought F and G's who have never been
approached?

H.M.JR: He asked if they had bought any.
MR. BELL: One question asked was, "Have you bought

any," and the answer was, "No," in most cases. Another
was, "Have you been solicited?" They said, No," in
most cases. "Have you got money to invest," and in
most cases it was, "Yes."

157

MR. THOMAS: Of course, that is the kind of

information that I am trying to drive at.
H.M.JR: You will get it - I mean, in this case
I am one jump ahead of you, because two thousand postal

cards were supposed to have gone out to these lists.
MR. BELL: Last Saturday, yes.

H.M.JR: They are to come back to them, and they

would analyze the cards for us just for that sort of
thing.

You ask Tickton what you are asking me.

I was shocked to find out - I mean, if that is true

all over the country, then we have done a very bad job
on F and G's.

MR. THOMAS: Roughly, as I have set the figures
down, there are about two hundred thousand corporations.
I was wondering if you had any information as to how
many of them had bought F's and G's, and in what quantities.
MR. TICKTON: Well, the answer on F's and G's is
that the people in Chicago who have been sorting Savings
Bond stubs have had so many stubs of series E to sort that

they have kind of chiseled us out of the statistics on the

number of corporations that have bought series F and G's.

We have gone along with them, because the E accounting
problem has been more than they have been able to cope

with, so we let them chisel us on the F and G's.
H.M.JR: So the answer is that you don't have it?
MR. TICKTON: The answer is we don't have it.

H.M.JR: That is the answer.
MR. THOMAS: Then without factual information upon

which to base this thing, I think perhaps there are
two factors that we might take into consideration in
relation to the question that you asked. One is the
fact that your War Savings Staff operation is a long-

term operation. It is really not a drive operation.

They have, of course, much contact with most of these
two hundred thousand corporations and will have more

as time goes on with the pay-roll allotment plan.

158

- 10 Now, psychologically they have been quite stirred

up. I might add, Mr. Secretary, that I had the privilege
of being at that Kansas City meeting, and it was perfectly wonderful. Psychologically I think they are
quite stirred up about the prospect of selling F and
G's;and thinking of the long-term operation of the
War Savings Staff and the possible effect of taking F
and G's away, I think that might be something of a
blow.

Now, that is purely opinion, and it is rather an

intangible sort of a thing, but I think it is definitely
a factor.

H.M.JR: Well, I am asking you for an opinion. I

have got the other psychological factor on the other
side, and there seems to be a real mental hazard for
these Victory Fund fellows. I have just got to make up
my mind where it will do the least harm and the most
good.

One of the things which is in my mind is that we

may let the F and G die anyway, because it is a demand

obligation, which is not a healthy thing. I can justify
the E; but if we can sell a long two and a half, socalled tap issue, successfully, there is not much justification for the F and G; and the War Savings people

might feel a little happier if they knew we were going
to let the F and G die anyway within a month or so. I
mean, there has been some criticism of the fact that
we are selling so many of these demand obligations,
and some Secretary of the Treasury is going to have
them hit him in the face maybe the day that peace is

signed. There is that factor, but I appreciate the
thing.

But on the other hand, we are talking here about a

very large campaign. I am not going to try to sell you,
but they are down for two hundred and twenty million in
December as against a possibly very much larger figure
that this other crowd might do. But as you sit around

today, I wish you would be thinking about it. If you

get any very definite ideas, I would be glad to have

159

- 11 them because certainly between now and tonight I have
got to make up my mind.

MR. THOMAS: What I was driving for was to try
to get some fact here upon which we could say whether

six hundred and twenty-five additional million dollars
is possible. I don't know.

H.M.JR: I wouldn't count on it. I would just
strike it off. I wouldn't count on a dollar over the

eight hundred fifty.

MR. GAMBLE: I wouldn't either.
H.M.JR: I would much rather have a minimum which

would be definitely attainable and anything above that
would be a pleasant surprise.
MR. THOMAS: What other securities, Mr. Bell,

do you propose to sell in this drive for the three and
a half billion dollars which I believe is required?
MR. BELL: The securities that we have been talking about, seven-eighths percent certificate of indebtedness to run for one year; one and three-quarters percent
bond--

H.M.JR: Excuse me, Dan, don't you want to tell

them as you go along which one of those we need pub-

licity on and which we don' t? I mean it would make

it easier for him. You don't want any publicity on
the certificates particularly.
MR. BELL: I don't think so, except that if you
are going to have over-all publicity, it might be

mentioned some as to what it is and the kind of funds.
H.M.JR: As you go along on the seven-eighths

certificates, we will need general publicity or a lot

of publicity. Explain it.

MR. BELL: It is a one and three-quarters percent

bond, somewhere in the neighborhood of five to seven

160

- 12 -

years, wherever it fits, and it is in line with the
seven-eighths percent certificate. Generally speaking
it is a banking security, and would not need a lot of

publicity, although it is expected that some of it
and some of the other could be sold outside of the
banking system.

Then there are tax savings notes which are already

in the picture, but which would need more publicity,
and on which the drive could be intensified and more
money gotten, I think, than the last two months. We

figured you might get two billion one out of that.

MR. THOMAS: That is total ordinary expectancy
plus a drive?

MR. BELL: That is right.
MR. BATHRICK: What is the ordinary expectancy?

MR. BELL: We got eight hundred million in the

last two months, in each of the last two months. In
my estimates I put five hundred and fifty million
dollars for the next two months without any drive.
MR. BUFFINGTON: We got nine hundred.

MR. BELL: I meant a billion eight.
MR. KUHN: A billion eight for the last two

months.

MR. THOMAS: You say you have put in an additional

five hundred million for each of the next two months,

but the Secretary says we are thinking now about December,

so that brings it down to five hundred million. Is
that the idea?

MR. BELL: What I am thinking of in this statement

is November and December.

H.M.JR: Well, November is out, Dan.

161

- 13 MR. BELL: But you have to raise money to replenish your balance.
H.M.JR: Let me explain what we want: how much

money from certain securities in December during this
drive, and which ones we want to put the heat on - they
don t care what we do on November; they will not take

any part in it, but for December the kind of securities,

who the possible buyers are, how much, which ones we
want the heat on.

MR. BELL: Let's talk about two months, two
billion one hundred million dollars which means two
months' money.

H.M.JR: In which months?
MR. BELL: I don't care whether you say November

and December, or December and January.

H.M.JR: Wait a minute. If we are going to do any
of this - tell them what we are going to do beginning

with the 30th of November, from then on.

MR. BELL: I don't think you can change this program any.

H.M.JR: All right, let's start over again.
MR. BELL: The seven-eighths percent and the one
and three-quarters percent bond-MR. THOMAS: Any extra over your usual financing

operation that you expect to get from those?

MR. BELL: We have expected to open those two

securities to the banks, say, not to exceed two bil-

lion dollars on each of them, and we thought we might
get as much as five hundred million dollars combined
outside of the banking system in addition to the four

billion dollars.

162

- 14 MR. THOMAS: From whom?

MR. BELL: Outside the banking system.
MR. THOMAS: Yes, but who are those people outside?

MR. BELL: They would be the corporations and individuals who wanted short-time money, and that is not a

high figure. That is a conservative figure. On the
last certificate issue we got six hundred million
dollars outside the banking system.

MR. THOMAS: By your usual processes without any
special drive?
MR. BELL: Yes, the Victory Fund Committee did work

on it, but certainly not as intensive as they would work
on a drive of this kind.
MR. THOMAS: Would you say that your seven-eighths

certificates and your one and three-quarters bond
probably did not need any special promotion?

MR. BELL: I don't think that I would give them
special promotion, but I think I would let the Victory

Fund Committee have them to sell; if they approach a

man, and he says, "I don't want a two and a half, or,
"I don't want a tax note," then they can say, "I have
They
a seven-eighths and a one and three-quarters.
will have them available to sell.
MR. THOMAS: By personal solicitation?

MR. BELL: That is right.
H.M.JR: May I interrupt? The ABA, American
Bankers Association, is coming in at three. The
ABA appointed a special committee to work with us on
this. Whatever they do ought to be coordinated through
here the same way. I don't know whether they have a

publicity committee, but they will be in at three this
afternoon, and they have got certain ideas. Whatever

163

- 15 publicity is directed at the fourteen thousand members,

that ought to - also, if you would make a note of that,
possibly you might want to sit in, if you are here all

day, with the American Bankers and find out what they
have in mind. You see?
MR. THOMAS: Yes, sir.

H.M.JR: Davis wanted a special committee just to

work with us on this. The interesting thing that they

are going to do is, looking at themselves and industry,
that they want to fix a quota for each bank in the
country themselves.

MR. THOMAS: That is definitely a rifle-shot job.
H.M.JR: But then how to reach them - what their
publications are, I don t know.
MR. THOMAS: We would be very glad to work with

them any way we could.

H.M.JR: I would like you to; I want it all

synchronized through the Advertising Council. I don't
want them going off preparing a lot of copy which might

not fit in with our whole plan. So I am asking you to
take on the whole job and not have the ABA up on its

own.

MR. THOMAS: On these tax notes, we laid before

you, Mr. Buffington, a rather modest little program on
A's and C's. I think there is where we had better
start and go back and take another look at it in the
light of this drive and see how much we can help
you to effectuate that.
MR. BUFFINGTON: Fine.

MR. THOMAS: Would you think there was anything

different we might do in view of this drive?

164

- 16 MR. BUFFINGTON: No, Mr. Thomas. In conversations

with Mr. Lemmon and the other advertising people, we

felt that we should intensify more the type of material
that we are sending out. I still question how deep
down into that forty-three million you are going with
the sale of the A notes. A big difference of opinion

has developed since that meeting in New York.

MR. THOMAS: Not forty-three million by a long

shot.

MR. BUFFINGTON: No. However, on the C notes -

they are the biggest money raising feature in the setup, and I think a great deal can be done in addition
to what has already been done to expend the purchases

by corporations and other people seeking that variable
maturity which you get in the series C notes.
We are planning to send out with the December 15

tax bills seven and a half million of the A folders,

which we are very much pleased with, which the Ryan and
Pedlar Company worked out. That will go out probably

in connection with the "Know your Tax" folder. Then
we have additional data that Doremus is working on for

distribution to corporations. Certain corporations will

send that to their customers and vendors, and we think
we can increase materially the distribution of the C

notes through that means.

MR. KUHN: We have got a head start on the tax

notes, thanks to the work that the Advertising Council

has been doing.

H.M.JR: I know.

MR. BELL: I put down two billion one hundred mil-

lion for tax notes, and I think that is very conservative.

The reason I kept it low is because the Victory Fund Committee has already been working pretty hard on those notes.

But I still think that that is low. More could be done
there.

165

- 17 Now, we have a two-and-a-half-percent bond which would

be a long-term bond, possibly the 20-25 year area, and

that will be a tap and will be available to anyone

except banks having demand deposits. I put down for

that two and a half billion - I think that we could get
possibly a billion dollars without any drive.
MR. THOMAS: You want an additional billion and
a half from that source?

MR. BELL: That is right.
Now, these are pretty rough figures, and I think
they are all pretty conservative, except possibly that
savings bond, extra money. I think we will get more
than five hundred million on the two short ones outside

of the banking system.

MR. BUFFINGTON: Yes, based on what we have done

recently with a similar type of security; a's hr. Bell

said we got six sixty-seven outside the banking system

on that last offer of seven-eighths certificates, with

the assistance of the Victory Fund Committee. I would
think they would do a fair job on the one-and-threequarters-percent bond. Mr. Thomas probably would like
to ask to whom you are going to sell those two and a
half's.
MR. THOMAS: Yes.

MR. BELL: Insurance companies, savings banks, trust

funds, and other individuals.

MR. THOMAS: All right, do you have anything else?

MR. BELL: That is all. That totals about seven

billion six hundred million out of a total of thirteen
billion three hundred million.
to

MR. THOMAS: The conclusion I would come to, subject
comments from anybody else, because these are matters

of opinion, is that you have here relatively a narrow

166

- 18 -

market operation, and that the thing that is indicated
is a specific promotion to these particular people, and

that probably general advertising and general promotion
is not indicated. That would be my opinion of the situation
as I see it now.
What do you think about that?
MR. McCLINTOCK: I would rather have Don react to

that. I concur heartily; I will say that right now.

MR. BATHRICK: I agree with that. If I understand

this thing, I agree with that heartily. The thing that

keeps occurring to me is, how much increment do you

attribute to any campaign you put on? What is it good

for, up to twenty-five percent, thirty percent, or

what in the campaign? I mean, you must have some figure
in mind.

H.M.JR: We are "babes in the woods" on this thing;

we don't know.

MR. BELL: Just as a stab in the dark, I think

that outside of the banking system we ought to raise

about four billion dollars without any intensified

drive other than what has already been done, is now
being done by the War Savings Staff, and otherwise.

think we ought to raise three billion six hundred
million dollars with the drive.
H.M.JR: How much?

MR. BELL: Three billion six.
MR. KUHN: Additional?

H.M.JR: Just one minute - now you cut out that

six fifty which you put in there, six twenty-five for

War Savings.

MR. BELL: No, that is in there, because I was

expecting some of the others to go over where any of
them are under.

167

- 19 H.M.JR: How much is the figure that you used?
MR. BELL: Three, six.

H.M.JR: I would use three then.
MR. McCLINTOCK: May I ask a question? This is

a little confusing to me. Mr. Bell, to what degree

do these issues here overlap the normal market for the
F and G bonds? I mean, to what degree does the F and
G bond and the service features, and so forth, appeal
to the same groups of people who would normally buy
these issues here described?

MR. BELL: I think the two-and-a-half-percent
long tap might be in the same group as the series G

bond.

MR. McCLINTOCK: That is the principal one, although

the others by shadings of interest--

MR. BELL: To some extent they are in the same
category.

MR. Mc CLINTOCK: I will ask this question, if I
may, because I am a little confused about it in my

mind. Perhaps it is out of ignorance of the situation.

You mentioned that because of the demand features of
the F and G's, and the hazard which they hold, there was

a possibility that they might be permitted to die and

that would mean, of course, either that these issues
would replace them as a normal financing operation,
or that you would replace the F and G's with a new type
of bond which might be a little unlike any of the bonds

that are here. But if this drive that is contemplated

for the last two months of this year is now possibly
for December only or possibly for a carry-over into
January, should be to emphasize the F and G bonds, it
would seem to me that there might be a little inconsistency of policy in greatly expanding the sale of F and
G bonds when you know they are hazardous. Rather, the
emphasis might be placed upon these other issues which

168

- 20 form the same purpose, and do present a marketing

problem which is a great deal simpler. It is a
rifle shot, a highly specialized market, whereas, the
F and G's begin to overlap on the whole savings.

H.M.JR: Your question is to the point and is
intelligent. The two-and-a-half-percent issue that

we had in mind to push would be a coupon bond.

MR. BELL: That is right.
H.M.JR: How long?

MR. BELL: In the territory of twenty to twenty-

five years.

H.M.JR: Yes, a twenty or twenty-five-year bond
with a coupon, not registered.
MR. THOMAS: With resale features?

MR. BELL: Banks can't hold them.

H.M.JR: Except to the banks.

Now on the other side is the F and G, which if
held to maturity is just under two and a half percent,
a twelve-year bond. From the Treasury standpoint there
is no comparison. The so-called twenty to twenty-five-

year, two-and-a-half-percent is a much more desirable

security to have in the market than the F or the G

bond.

Therefore, we like to think we are intelligent
and honest, not only with ourselves, but with the
people we serve - the public. Therefore, if I decided
to do this thing - I compare the Victory Fund salesmen -

and maybe they will not like it to their face - to

subscription salesmen for the Crowell Publishing Company. They used to have seven magazines - I do not
know how many they have now - and you could buy any

one of the seven, or they would give you a combined

169

- 21 rate if you buy the lot, but he has a group-MR. BATHRICK: A package.

H.M.JR: Yes. Now, the Victory Fund people
have in this package both the two-and-a-half-percent
tap issue, as we call it, and they would also have
the F and G - they are honest about it, that they
would not push the F and G and they simply have it in

their package. If the fellow says, "I want a G bond;

like it," they can say, "All right, I have it in my
portfolio and I can sell it to you.

On the other side, so you get the picture, you

have got some of these very high-powered drives ready
to go, one in New York on November 16. That is for

the whole country, is it?

MR. GAMBLE: Just for New York.

H.M.JR: They say that they are going to have
ten thousand salesmen selling. They have got this

drive all ready to go. The Victory Fund said, 'They
will go in there and they will muddy the waters for us,
and then we come along two weeks later and try to do

the thing," plus giving the argument that they would
be drawing a lot of the security salesmen into this
thing and putting on an intensive drive for two weeks.
At the end of two weeks, having given their time, they
are tired, exhausted, and they have to go back - I am

talking about the Victory Fund Committee - and see
exactly the same people and try to sell them over again.

Now, I don't know whether - I have tried to answer

your question and give you a little bit more. I mean,

I want you to have as much as you can; so if you could
formulate an opinion and help me make up my mind, it

would be good. If we transfer the thing, the F and G

will be carried along in the portfolio. It will not be
pushed beginning with the 1st of December. Does that
answer you fully?

170

- 22 MR. McCLINTOCK: Yes, it does, Mr. Secretary, and

it does have a definite bearing upon the type of promotion, the marketing analysis, and the approach to
that whole marketing problem involved in Mr. Bathrick's
thinking or in the thinking of Mr. Thomas's group. I

did want to clarify it in my mind, because I was a little
confused.

H.M.JR: Do you differ with anything I said?

MR. BELL: No, I don't differ with it. I think

you might find situations where a man might ask a
security salesman who has this basket of securities
to go over his investment requirements, and I think
that security salesman might say very well to him that,
"You need a G bond in your investment as well as these

other types," not pushing it especially, but saying,

"Look over the investment requirements. You might
very well say, "You ought to have a G bond, because it
is a good bond."

MR. THOMAS:Doesn't the thing come back to your

fundamental policy in the matter? Do you want to
push these F and G's, or don't you? The way I understand this thing, the Victory Fund crowd would carry
it, but the War Savings Staff would really put some
pressure on it.

H.M.JR: No, if I am going to make the decision
as to what they want - every time we send out a telegram on this thing, it is misunderstood, and there is
always some word in the thing that they hang a hat on,

and they twist the thing. I don't think it is enough.
I am either going to do nothing, or cut this cord which

has been bothering everybody now for months, but just
to say to the War Savings people, "I don't want any
campaign;" I don't think that is enough, because I compliment them to think that they are so high powered that
they would go out and do it anyway. That would muddy

the water. I had too narrow a squeak on the last one,

due to many reasons, and I don't want any more narrow

squeaks in the two years that I am still here, God
being willing. I don't mean Roosevelt. (Laughter)

171

- 23 -

So there are certain things, and this is the only
thing, as far as these two sales organizations, for
the moment, that I am conscious of, that have to be
cleared up. But it is a disturbing element between
two sales organizations both working for the same man,

and same crowd.

MR. THOMAS: I think it probably comes back to

your basic policy, your viewpoint. I mean, whether
you want to organize a high pressure operation on F
and G's or whether you just want to let them go along.

H.M.JR: I can answer that; I don't want a high

pressure thing on F and G's.

MR. McCLINTOCK: Mr. Secretary, doesn't the

overlapping - actually all of these other issues are
not War Savings issues. I mean, they are a different
kind of financing operation. Doesn't the confusion
lie in the F and G area? Whereas, there is an overlapping, and there are the stresses and strains that

take place in that area, an area which you would perhaps

like to liquidate anyway, get out of it, and if so,

that might help solve the problem. I mean to simply
permit them to die and then to replace them either on
the War Savings side with a new type of security, which
might add some flexibility to the E situation, or on
the general financing side, would permit each of the
operating groups, the Victory Fund group and the War

Savings, to have a perfectly defined market. I can see

there is an overlapping of their activities, and that

confusion and difficulty will undoubtedly continue as
long as there is that ambiguity between the two groups.
MR. KUHN: As long as the issue remains sold.
MR. McCLINTOCK: Yes, sir.

MR. GAMBLE: Will it be aggravated if they con-

tinued to call it a War Bond after it is turned over

to the other group? Then we will have two bond sales
instead of an investment.

172

- 24 -

bond.

H.M.JR: No, no, it wouldn't be called a war
MR. THOMAS: You would drop the name, war bond.

H.M.JR: Is it on the face of the bond, the G?
MR. BELL: Yes, I am sure it is.
H.M.JR: That could be taken care of through the

publicity, through the circulars.

MR. BELL: Of course, that is an over-print; and
as we get out the new stock, it could be changed. It

is just an over-print; it isn't in the engraving itself.
In the engraved part it is "United States Savings Bond."

H.M.JR: There you are.
MR. GAMBLE: We would want it understood that it
was not going to be the war bond type.

H.M.JR: If we do that, I can assure you that
now it will not be; I can assure you that. I mean,
I am just as anxious not to do anything to hurt your
organization as anybody in this room. We certainly

won't, if that is your worry.

MR. GAMBLE: That is one worry.

H.M.JR: You can forget that one.
MR. THOMAS: Mr. Bathrick, going back to your

question, I don't think from what I know of the situation that there is any evidence that would give an
answer to your question.

MR. BATHRICK: It doesn't seem so. To me it goes

back to the fundamentals, deeper than that. If I understand this, Mr. Secretary, the purpose of this conference
this morning is to help you determine in your mind
whether or not you want a campaign starting for the next

173

- 25 -

two months. Looking at it as an over-all picture for
the next two years, we will say - or any time that

you want to designate - first I would think you would

have to determine what you would normally do, your
normal expectancy. If you do nothing more than you
are now doing - in other words, how much money do you
want to go into February 1st with, and how much could

you logically assume that you would get if you did nothing
more than you are doing now?

Undoubtedly you have got a cushion and a figure

that you put up which, of course, is the thing to do.

I am thinking more from the standpoint of one campaign

after another, every sixty days; it is bad for an overall picture. If you have got any degree of safety in

your operations up to February 1st, which I presume then

will be starting all over again; if you have any degree
of safety of doing no more than you are now doing, and

putting a little burr under the operations that are now
going in the various sales forces, you can accomplish
that job. Then start February 1st with a real campaign,
all-inclusive, covering all the angles and all the mar-

kets, the entire markets, because certainly some consider-

ation has got to be given to what this victory tax is

going to do to the public psychology as of January 1st
or when they get the first pay check with their reduction,
in my opinion.

You are going to have a selling job to do on the
public's mind, and they have got to have a better understanding of the importance of these various bond issues,

not what they are, but just buy something. I. would be

interested from the standpoint, first - I don't care what
they buy, buy something, some kind of a bond, some kind

of an issue. You can very easily break your package
down. You want X number of dollars in the next number
of months, and here is the way you want them, and you
might have a campaign on a couple of issues and let the
others take their course. So as not to bore you and

string this out, I would say that the decision, if that
is what the purpose of this is - I would say the decision

174

- 26 will have to be made on the basis of how much of a
safety factor have you in it now, to accomplish your

end. How well can you do between now and February 1st
without any campaign? Then you will probably decide

that you do need a little lift on a couple of issues,

and direct any campaign to those issues, and then have
everybody going and have plenty of time to prepare for
an all-out push, an all-inclusive campaign February 1.

Now, with my brief knowledge of the situation here,
gained in a couple of days, it would look to me like
the decision should be based on that. Does that make
sense to you from the standpoint of the problem?
MR. THOMAS: Yes, it does. If I may ask you one
question - do you mean that this campaign beginning
February 1 is to be a continuing campaign?
MR. BATHRICK: I would think it would have to be.

MR. THOMAS: I prefer that kind of an operation
myself, but I understood - maybe rightly or wrongly -

that there was a need for a special drive to get this
three and a hal f billion dollars.

MR. BATHRICK: If there is a need for a special
drive between now and February 1, the thing to do is

just say, "Well, we are going to have it," and let's

get going on it. If there is not a need - if you have

so much of a cushion in there between now and February
1, that maybe you can squeak through anyway, I would
say shush a campaign.

H.M.JR: Well, there is another thing which you

have got to throw into this thing, and that is the

relationship of the Treasury with the Congress, and

that is, I think, that Congress has felt, and felt
wrongly, that we have not done enough to seek money outside of the banks. That is one of the factors why I

would sort of like to get a campaign going by the 1st

of December, to not only impress the Congress, but the
people who are interested in Treasury financing, that

175

- 27 we are not leaving a stone unturned to get every dollar
we can outside the banks.

MR. BATHRICK: Could that committee be satisfied

on the basis that as a continuing and a long-haul
proposition you very definitely have a program to do
the majority of your financing other than through the
banks.
I think we have got to do something a
little H.M.JR:
bit more-MR. BELL: More tangible.
MR. BATHRICK: You mean in the next sixty days?
H.M.JR: Yes.

MR. BATHRICK: Then that is your answer. I would
say you would have to do it.

MR. KUHN: Mr. Bathrick, in line with your comment,

suppose that you conduct this campaign beginning December

1 on very special targets, let's take the tax notes;
those are the biggest slices of it. Was that what you

had in mind as an alternative?

MR. BATHRICK: Yes, and that would not create a

lot of publicity.

MR. THOMAS: That is right. That comes back to

the point; it is a specific job.

MR. BATHRICK: They would say, "The Treasury went

out on a campaign and set themselves a quota, and fell

short." I would think that would be handled, possibly,

by direct mail and direct contact. In that case, it

would not be generally known whether you hit your target
or not or whether you had a campaign on. I would not

think it would be harmful.

176

- 28 H.M.JR: Would not?
MR. BATHRICK: No.

MR. McCLINTOCK: We all deeply appreciate the
tremendous burdens under which you are laboring, and

the unhappy pressures of criticisms; but I think that
probably no matter what is done, there will still be
people on the Hill who will be critical and complaining about one thing and another. If there is a possibility of carrying through from the fiscal standpoint,
I think Mr. Thomas will agree that a much more intelligent, long-term and constructive job could be done if
plans are now laid for a full operation and continuing

operation rather than sporadic drives one after another
with different names attached to them, which inevitably
results in confusion.

If those in Congress who are critical of the
planning activities were thoroughly cognizant of the
fact that these plans were, other than banking, definitely
fixed in policy and definitely followed by the strongest
kind of promotional and selling activities, any legitimate
man, any legitimate critic, certainly would be silenced
by that. I suppose you can't bow too much to those who

are merely trying to be difficult.

MR. BATHRICK: I visualize outlining our job for
a year in advance, laying out a campaign to handle it
that way, broken down by months. In other words, this
month you do that; the second month you do this, and

so on, a continuing thing, because I don't believe the

public can be allowed to lapse back as they are wont
to do with this war news today.

I think it very clearly has a psychology, that
they will lapse and say, "We got that over with,
now what?" I think they have got to be continually
din ge d. The only way to do it is to lay down a job

a year in advance; in January we do this; in February
we do this. Have our whole organization all over the
country and the buyers, too, conditioned that it is

177

- 29 -

coming. I may be wrong, but that is the way I visualize

it from what I have heard here.

H.M.JR: Could I interrupt you a minute? What I
would like to do - I hope you people allowed enough
time - I have two appointments from eleven to eleven-

thirty - I wish you would adjourn into Mr. Bell's
room and talk this thing over for thirty minutes.
Maybe in thirty minutes you will be a little further

along. Then I would like to see you again at eleventhirty. Maybe between eleven-thirty and twelve we can
decide the thing.

new 11,1944
178
FINANCING PROGRAM FOR NOVEMBER-DECEMBER

In our cash
estimates

May be added

by a drive

Total

From banking securities:

Treasury bills
7/8% C/I's

(Nov. 1 - $.5M)

1-3/4% bond

$1,200 M

$1,200M

2,500

2,000

5,700 M

5,700M

Non-banking securities:
7/8% and 1-3/4% securities above

500 M

Savings bonds

1,875 M

Tax notes

2-1/2% bond (tap)

(Need $10,675k)

625

2,500

1,100

1,000

2,100

1,000

1,500

2,500

3,975

3,625

7,600

9,675

3,975

Non-banking funds

7,600

Banking funds

5,700

Total

$13,300 M

November 10, 1942

500 M

$13,300 M

179
November 11, 1942
11:36 a.m.

Grace

Tully:

Hello, Mr. Secretary.

HMJr:

How are you?

Fine, thank you.

HMJr:

How are

Good morning, sir.

Good. Grace, I just had Senator Prentise Brown
in to see me
Yes.

HMJr:

and I've asked him whether he wouldn't like
to come into the Treasury as sort of an
assistant to
Uh huh.

work with me....

HMJr:

Yes.

and he's giving it very careful consideration.

HMJr:
T:

Yes.

HMJr:

And if he was over here, of course, he would be

Uh huh.

useful to the President too.

HMJr:

There are things he could do for the President.

Yes.

HMJr:

And I wondered if you could ask the President

Yes.

HMJr:
T:

if he would drop him a little line

.... urging him to come with me.
Yes.

180

-2HMJr:

Because that would help enormously.

Yes. All right, grand, Mr. Secretary. I'11 pass
it along in a memo to the President and let you

know.
HMJr:
T:

HMJr:

And would you let me know?

Fine, sir.
Because if he's here, there are lots of things he
could do for the President as well as myself.

Yes.

HMJr:

And I think it's the alternative of doing that or

Yes, yes.

HMJr:

And

And I think he'd probably rather stay with the

possibly practicing law in Detroit, you see?

Government, don't you?

HMJr:

I think so.

Uh huh.

HMJr:

And he - he'd be in here as Assistant to the
Secretary.

Uh huh. All right, grand, Mr. Secretary. I'11
let you know.

HMJr:

Right. Thank you.

Fine, sir. Goodbye.

181

November 11, 1942
11:45 a.m.

FINANCING

Present: Mr. Bell

Mr. Kuhn
Mr. Gamble

Mr. Buffington
Mr. Bathrick
Mr. Thomas

Mr. McClintock

H.M.JR: Have you got it all fixed, Dan? You had
forty-five minutes; you ought to be able to settle

three billion dollars in forty-five minutes.

MR. BELL: I expressed my views as to the drive,
why we ought to have it, and what I told you when you
first came back; that I thought we had put out banking

issues long enough, and that we should now do something

on the drive end, particularly in view of the criticism

that we had, and particularly in view of what I thought
we would get around the end of the year. After telling
these gentlemen that, they thought this was more of a

psychological attempt, and they thought that if that

were the case they would go ahead and have the drive and
concentrate on the two issues, such as the tax notes and

the two and a half; bringing the others in, of course,
as a side issue, but not using all of your ballyhoo on

this particular drive that you would on a subsequent
drive where you could be better prepared. I do not
want to talk for them; they can talk for themselves.

I think that is about the gist of it.

MR. BATHRICK: Yes, that is as I understand it.
H.M.JR: If we decide to go ahead, could we have

what I think is known in the business as institutional
copy - sort of laying out the whole Treasury program,
not just war bonds or tax notes, but giving the whole
picture to the public?

182

-2

MR. THOMAS: Mr. Secretary, we rather thought

that that was a pretty big job. I think it can be

done. We can certainly furnish you some material

along that line. It isn't only a question of furnishing the material, it is to get the avenues of communication and information available to you and organize
on the basis where you can get the story over to the

public. I rather think the time element is a bit
short. It seems to me that if we were to think in
terms of starting a long-term financing the first of

February, and getting this organized from that stand-

point and launching such an effort at that time, that
purely from the timing standpoint, it might be better;
also from the point of view of effectiveness, it might
be better.

H.M.JR: Let me just press a little bit on this.

What I was thinking about - somebody said that some of
these advertisers - quoting you (Kuhn) - are beginning
to run out of copy ideas, 80 they would be very glad--

MR. KUHN: I was quoting Mr. Bathrick; he said
that in his talk with me yesterday.

MR. BELL: In a letter this morning - I forget the

name of the company - they said they had run out of
material to advertise their own product because they

were entirely in the war effort, and they thought, now,
that they ought to go more to educating the people in
this war.

MR. McCLINTOCK: Mr. Secretary, there is a very

great reservoir of copy, both on the air and in space,

magazines, newspapers, and outdoors advertising. I
think you have a question, however, of the proper

position of the Treasury from the standpoint of its
over-all marketing problem, and whether or not it would
be desirable to do a total market information job;

that is, to all consumers on this, rather than, with

the shortness of time, to concentrate the appeal much
more effectively through those channels which reach,

primarily, the market that is the only market that you
have for these special issues.

183

-3I would think, Mr. Thomas, that that would be the

inclination of your skilled group on it, would it not,
that with the time available to do a whole job - indeed,
to do a job through all the consumer channels - might
result in some confusion. You are driving, here, at a

highly limited market, which can be reached, and certainly we can help - and I know Mr. Bathrick can,
in that area,
toocritics.
- and it would also provide adequate
answers
to the

H.M.JR: Let me just - I am not quite satisfied.

Maybe I cannot be satisfied, but what I was thinking

is the possibility of some full-page ads in the larger

cities, which would set out in not too many words,
what the Treasury's money needs are, possibly from
now until June 30, the end of our fiscal year; and outlining, if we can - we would have to give you the form
for the copy - how we propose, in a general way, to
get this money; we will be coming to the public for this
money, and that there are various sales counters where
they can go, that have this merchandise, and where they

can buy it. Not so much as a sale, but just kind of a
laying down of the principles, so people will get into
their minds what the over-all picture is for the next
seven months. Now, I saw this ad that IBM - please
don't tell. me who wrote it because I want to criticize

it - I think the spirit was fine, but I think the ad
was wrong. I do not think - you were asking me about
F and G - I do not think it was strictly ethical - if
I don't buy more bonds it means more taxes.

MR. McCLINTOCK: It was not ours, Mr. Secretary.

H.M.JR: I do not know who wrote it, but it is not
strictly ethical, that by buying more bonds it means
your taxes would be lower. If I had seen it I would
have asked them not to run it, but I do think, just on
account of that sort of - don't turn me down this morning, see? But the idea of the possibility, on Monday,
November 30, in the various big cities, of a full page what are there, a hundred cities over a hundred thousand?

184

-4MR. BELL: Ninety-two.
H.M.JR:

An explanation so that the average

boy or girl of high school age could understand it.

MR. THOMAS: That is a big physical problem, don't

you think so?

MR. BATHRICK: Yes.

MR. THOMAS: It is not only a question of writing
the ad, it is a question of organizing the facilities
to have the ads actually run.

H.M.JR: Well, think about it. Everything is
difficult.
MR. THOMAS: Well, we are here to serve, Mr. Secre-

tary. If that is what you want, we can certainly take
a whirl at it.
H.M.JR: No, no, it is not what I want. I would
like you to think about it. If I am wrong after you

have thought about it, and you do not think that the

effort is worthwhile, tell me so. I am not - I think
it would be helpful if you digest it, and if your
sales people think it is not worth it, O.K. You do
not know me terribly well, but on this sort of thing I
will listen to the last hat. I may disagree with you
at the end, but there will be no bad feeling about it;

there will be no bad feeling. After all, I ask adver-

tising and sales experts to come in and advise me, and

then, just because they advise me differently - well,

that is that; that is all. I have got you people here

because you are supposed to be shoemakers and you ought

to know your lasts. Now, I am not a shoemaker; I

have just got some intuitions. I think I know what I

mean, but I can very easily be wrong.

MR. BATHRICK: May I ask one question? What is

the purpose of that ad that you are talking about now?

-5-

185

H.M.JR: The purpose of that ad is this - after all,
when I started out with this thing, I said, "There are
a hundred and thirty-five million people in this country,

and I would like everybody to have at least a ten-cent
stamp, from there up. I think everybody in this country
can afford to buy a ten-cent war savings stamp, and from
there up, and everybody should.

Now, we have all of these different campaigns going;
they have not been synchronized. What I am trying to do

is, to talk in terms of General Motors, when you write

institutional copy you are talking for all of your children.

You lay down certain principles. When you used to do it
I thought it was very good copy. I simply want to go
to the hundred and thirty-five million people and say that
between now - December 1 and June 30, the United States
Government is going to spend so much money. Some of it

is going to munitions, and so much of it is going to

maintenance, and so much of it is going into administrative purposes; and we are going to raise so much of it

in taxes, which leaves a deficit of so much. That deficit
we are going to try to raise with the help of a hundred
and thirty-five million people. We want to raise every

single dollar we can outside of the banks. "Now, we have
the following kind of merchandise, and we will be coming
to you from time to time." I do not know how much detail,

but that is the idea that I have in mind to get over the
big broad thing.

MR. BATHRI CK : My only criticism on that would be,

Mr. Secretary, that a lot of the people that are going
to buy the ten-cent stamp are not concentrated in these
cities of a hundred thousand or more. That is the kind
of an ad I visualize. Certainly I would go along that
the job should be out there. I mean, the public should
know just exactly how much you need every month and what

you are going to spend it for, but that is such a good
piece of copy to educate the whole United States, I
would suggest that that be withheld until such time as

we are ready to go across the board.

186

-6H.M.JR: Well, you may be right. Think about it
the next day or two, and talk about it. You can compare
it to the report to the stockholders of the country,
see? I am not pushing any one of my children more
than the other; I am giving them all the same breaks,

but with the taxes and all of these things that happen,
I think you could stop a hundred people on the street
and if one in a hundred knew what this five percent
Victory Tax is, I think they would be lucky - or what
it means to them.

MR. McCLINTOCK: Mr. Secretary, as between us -

what you said and what Mr. Bathrick said - I concur
that that is a thing that should be done, not only once

but repeatedly. It is only through repetition that the

knowledge can be gained, but most. of all, in that
piece of copy that you are projecting in your mind
you want the people to clearly understand that you are
not depending alone, on the one hand, on the payroll
deduction or, on the other hand, on the financial opera-

tions of banks; that there lies in between there a

great market which you are now cultivating with the

varied issues that are available. Isn't that the real
essence of what you wanted to say there to meet criti-

cism?

H.M.JR: In part, but I wanted to get over the
whole picture; what we are spending, the deficit, and
how we are going to raise the difference. And then,

eventually, we would want to go to explain - I mean
we might as well be wholly frank - we have got to have
more taxes - we have just got to have more taxes; we

cannot do it all through borrowing. But that is something else again. I mean, whether I want to do that
through this way or not. That is another problem, but

try to clear the air, think about it.

But I gather from what everybody said, we will go

ahead with this thing and we will direct the publicity
to this very specialized channel.
MR. THOMAS; That would be my thought.

187

7H.M.JR:

the tap issue.

which would be the people that buy

MR. KUHN: And the tax notes.
H.M.JR:

and the tax notes. And then consider-

ing this suggestion I am making - whether November 30

is the time to do it, or whether it should be postponed,
I do not know.

Now, how much more time will I be able to get
immediately out of you people?

MR. THOMAS: That is a very difficult one to answer

until I begin to rearrange affairs 80 that I can make
time available. I did not know you were going to want
it.
H.M.JR: I think I need a lot of time between now
and November 30 from somebody.

MR. THOMAS: I thought you meant over the next few
days.

H.M.JR: Yes, I do.
MR. McCLINTOCK: We have someone who would be avail-

able to concentrate on this, and certainly have the
skilled force already set up and in fine order, which
can be thrown into gear instantly on the interpretation,
preparation, and promotion of materials that you are
interested in, now that the policy has been set. So I
should think that those men would be able to-MR. THOMAS: Maybe I misunderstood. I thought you

meant between now and the week end.

H.M.JR: I meant between now and the 30th of November.

MR. THOMAS: Well, we can give you - I think I can
say we can give you a lot - almost all you would require.

188

-8H.MJR: Now we have an immediate problem and

that is the announcement for tomorrow morning at ten-

thirty.

MR. BELL: We are working on an announcement and

I intended to go over it before this, but I haven't

had time.

H.M.JR: You are going to have those men, now?
We brought George Wanders down from the Tribune, borrowed

him for a day or two, to help us. I think Mr. Thomas,

if he could help a little, today - are you here for all

day or not?

MR. THOMAS: I was scheduled to go back on the one

o'clock train, but I will change that if you wish.

H.M.JR: If you could see us through until later--

Do you fly?

MR. THOMAS: But where do you get the planes?

H.M.JR: I will get you a seat about four.
MR. THOMAS: That will be fine.

H.M.JR: I should think we would be through by

then, wouldn't we?

MR. BELL: I should think so, if I am going to do

any of this other, concentrate on what we have to do in
the way of sending out messages.
H.M.JR: There is Mr. Thomas and Wanders, Kuhn,

and what is the man from Philadelphia?
MR. BELL: Sienkiewicz.

H.M.JR: Sort of give them the problem.
MR. BELL: Do you want me to discuss this problem
quite frankly with Wanders?

H.M.JR: Sure, if he is going to help write it.

189

-9 MR. BELL: You said a day or two.

H.M.JR: He is all right, isn't he, Ferdie?
MR. KUHN: Yes.

H.M.JR: Couldn't this thing begin to shape itself

up into a statement for tomorrow morning?

MR. BELL: I think so. We have already got some
drafts around. Eccles has been trying to get me and I

know he has a draft.

H.M.JR: But I mean, if you just sat with these
people from now immediately on, and then put them to
drafting--

MR. BELL: Well, we will have it by this evening.
What time is your press conference, in the morning or
afternoon?

H.M.JR: At ten-thirty in the morning.
MR. BELL: We will have to have it this evening.

H.M.JR: I will have to see it. Don't you think

Mr. Thomas would be useful on this thing?

MR. BELL: I think he would.
H.M.JR: Well, now, when are you and Mr. Grant
going to get together with your committee?
MR. BATHRICK: Next week. We have had five
acceptances.

H.M.JR: Did anybody turn you down?
MR. BATHRICK: No, no one has turned me down. I

have not talked to him this morning; Grant had two.
H.M.JR: Then you fellows are going to be here
next week, is that the idea?

190

- 10 MR. BATHRICK: Yes, sir.

H.M.JR: They will want a place to work here.
Will you tell Norman Thompson to fix them up with
enough room so they can stretch their feet and get

fresh air for the brains? (Laughter)

MR. BELL: I told Norman that he might expect
this so I think he is moving someone out.

MR. KUHN: We talked quite a lot in Dan's office
about the date of the campaign, that is, the nature of
this pointed, directed campaign at a specific group of
prospects, and also we talked a little about the F and
G's. You might be interested to hear what was said
there from Mr. Thomas or Mr. Bathrick.

H.M.JR: All right, Mr. Bathrick.
MR. BATHRICK: I think Mr. Thomas is better quali-

fied to handle that. If you state what you did in
there, I will go along with that.

MR. THOMAS: The first feeling about the matter is
that if you have reached the fundamental conclusion that
the F and G's are going to be soft-pedalled and not a
pressure operation, then the decision as to whether they
belong in the Victory Fund Committee or in the War Savings

Staff is relatively less important than if you were going
to put on a drive. Now, the Victory Fund hittee, psychologically, has a point, that they want a complete
package when they go out to sell somebody - they want

F and G's as well as these other securities. How impor-

tant that is, Mr. Secretary, I do not know. I recognize
that it might be quite important from the point of view

of the War Savings Staff. We all went to Kansas City.

We steamed up everybody in the country on F and G bonds;

that was one of the things that was to be done. Everybody went back home and immediately got busy on it.

Psychologically, I think it gave the whole meeting

at Kansas City a lift, and I think that the value of

your War Savings Staff is very great. I was very much
impressed with it.

191

- 11 -

I just wonder what would happen, though, if just at
the time they are beginning to get organized and practically ready to shoot, suddenly the word goes out, "All
off on F and G's. You are not even going to handle
them any more." In other words, the problem is a
psychological problem more than anything else. I do

not feel, and I am in a position to cite it, although
I again say that I do not think it is very important,
one way or the other.

MR. BELL: Would you feel the same way if the
campaign now in the making was just called off, say,
for this month - next month?
MR. THOMAS: You mean if this campaign did not

start until the first of January?

MR. BELL: Say, "Don't do anything on F and G's
until January"?
MR. THOMAS: To whom are you talking?

MR. BELL: I am talking to the administrators.
MR. KUHN: The War Savings people. The idea is

that the road would be cleared for the Victory Fund
Committee during the month of December. They would

have the F and G's in their package, although they
would not push it.

MR. BELL: There wouldn't be this other overlapping
campaign at the same time.
MR. THOMAS: I would make up my mind what I was

going to do with it; it would be one way or the other.
H.M.JR: That is the way I feel.
MR. BELL: The reason I asked the question, you

said you had this lift built up under the War Savings
Staff and this would be a let-down.

192

- 12 H.M.JR: Which would you rather have me do, postpone
the thing or make up my mind where it is going to
be?
MR. GAMBLE: I think I would rather have you make

up your mind which way it is going to be and settle it
once and for all.

H.M.JR: I will most likely take a walk in the park

and make up my mind by myself. (Laughter)

MR. THOMAS: You see the difficulty I would have
as an individual in recommending a course of action
to you because I do not understand the problem well
enough from the point of view of the Victory Fund
Committee.

H.M.JR: I am glad to have you talk as a part of
the War Savings Staff, and have you feel that way. I
think that is all for the good, and that is the way we
hoped you would feel, and I have all the more respect
for you for that. But I am torn between two things.
I will have to make up my own mind, like I do on all
these things, then hope I am right.
Mr. McClintock, if we make up our mind to go ahead

now, and then rapidly, with the help of these sales

councilors, you people can have something ready for me

definitely, beginning with the 30th, can't you?

MR. McCLINTOCK: Mr. Secretary, I speak only on
behalf of Mr. Thomas, now, because, as I told you over

the phone, he is the Council's sole policy maker.

H.M.JR: I will direct it at him, then.
MR. McCLINTOCK: I think he would say "yes",

wouldn't he?

MR. THOMAS: We would be very glad to join with
Mr. Bathrick's committee any time he wants. We can get

our forces together and we can jointly discuss the

193

- 13 problem and lay out some sort of a program.
MR. BATHRICK: We can get going right quickly, and
we certainly would want you.

H.M.JR: And the American Bankers will be in on it.
So the answer is yes, that we will have something in
plenty of time?
MR. THOMAS: Yes, we will have something, but let

me point this out, that that is preparation of copy;

then comes the problem of organizing to see to it that
it appears somewhere; that is another problem.

H.M.JR: How much help can you give us on that,
Mr. Bathrick?

MR BATHRICK: Well, I think we could give quite a
bit of help.
MR. THOMAS: I think between us we can do quite a

bit along that line, but that really is a big problem.
MR. McCLINTOCK: And the Victory Fund Committee

ought to be very helpful with respect to the local banks.
MR. KUHN: Is the Federal Reserve engaging in a

promotion of its own, or will they be in with us on this?
H.M.JR: You know the setup, don't you?
MR. KUHN: As regards the Victory Fund Committee--

H.M.JR: The presidents of the twelve Federal
Reserve banks are directly responsible to me on this
thing.

MR. KUHN: On promotion?

H.M.JR: On everything. They are my agents. They

are directly responsible. Is Harold going to be in this
afternoon, Gamble?

194

- 14 MR. GAMBLE: I couldn't answer that.

MR. KUHN: His secretary said that she believed

that he would.

H.M.JR: Has anybody got any afterthoughts?
MR. BUFFINGTON: On this question of getting this

publicity out, I think the American Bankers' Association, working with these men, can be of help. We have
8 man suggested to us by Doremus and Company, and